More than 325,000 people living in supported housing and temporary accommodation in the UK will be able to keep more of their earnings when they take up work or increase their working hours under new benefit rules that came into force on Monday.
The changes are designed to remove a “cliff edge” in the benefits system that could leave some people financially worse off after earning more.
Under the previous system, many residents in supported housing and temporary accommodation received Universal Credit to cover day-to-day living costs, while their housing costs were supported separately through Housing Benefit. However, Housing Benefit and Universal Credit operated different rules for calculating how much claimants could earn before their benefits were reduced.
For some people in supported accommodation, this meant Housing Benefit could fall more quickly as their earnings increased. In certain cases, taking on additional hours could therefore result in little financial gain or even leave a claimant worse off.
The government said the situation created a disincentive for people to enter employment, increase their hours or pursue higher-paid work.
The new regulations align the treatment of earnings under Housing Benefit with Universal Credit for working-age claimants in supported housing and temporary accommodation.
Widespread Benefits
The Department for Work and Pensions said the reforms will benefit more than 325,000 residents, including nearly 50,000 young people starting out in employment.
Prime Minister Andy Burnham said “People should never have to choose between keeping a roof over their head or being able to work,”
He said the previous system had left some people “worse off for earning more”, adding that the reforms would help people keep more of their income while moving towards greater financial independence.
Sir Stephen Timms, Minister for Social Security and Disability, said the old system had discouraged some vulnerable residents from working. “We’re putting that right, so that residents keep more of their earnings, and so that working more hours leaves people better off than staying on benefits,” he said.
The reforms introduce five new earned-income disregards for working-age Housing Benefit claimants living in supported housing and temporary accommodation. The disregard amounts, which determine how much of a claimant’s earnings can be excluded when calculating Housing Benefit, will be updated annually.
