Benefit rule change ‘will make it easier for claimants to return to work’

Martin Shipton

New rules that end the “cliff edge” loss of income faced by residents in supported housing and temporary accommodation when they increase their working hours are expected to benefit thousands of people in Wales.

Under the system inherited by the current UK Government, people living in such accommodation often received help with their day-to-day living costs through Universal Credit, while support for their rent was paid separately through Housing Benefit.

The two systems had different rules about how much someone could earn before their benefits started to be reduced. For people receiving Housing Benefit, those rules were less generous than for people whose support was provided entirely through Universal Credit.

As a result, some residents who moved into work or increased their hours could see their Housing Benefit reduced more quickly, leaving them worse off despite earning more. In some cases, the fear of losing support with housing costs acted as a disincentive to take on work. This created a cliff edge that trapped people on benefits rather than supporting them into work and financial independence.

The reforms will help make sure that people living in supported housing and temporary accommodation, including nearly 50,000 young people across the UK who are starting out in employment, are better rewarded for taking up work or increasing their hours.

As part of the Government’s stated commitment to move from a welfare state to a working state, the regulations change how Housing Benefit is calculated so it aligns with Universal Credit, strengthening work incentives for more than 325,000 residents in supported housing and temporary accommodation.

Prime Minister Andy Burnham said: “People should never have to choose between keeping a roof over their head and being able to work. But the system has been rigged against some of the very people trying their hardest to get on, particularly young people starting out, who are being left worse off for earning more.

“We’re putting that right through a common-sense change that will help people keep more of what they earn. This is what progressive welfare reform looks like: helping people into work and giving families the security and breathing space they need to get on. That’s how we make Britain better off.”

‘Better off’

Sir Stephen Timms, Minister for Social Security and Disability, said: “For too long, the system has been doing the opposite of what it should: it discouraged some of the most vulnerable residents from working rather than helping them into jobs.

“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.

“This is a promise from our Autumn Budget now being put into action, and it’s part of a much bigger effort to overhaul a welfare system that has trapped too many people in dependency for too long. We’re building a system that rewards work and lets people hold on to more of what they earn, while continuing to protect those who need it most.”

Jamie-Lee Cole, strategic communications lead for Welsh homelessness charity The Wallich, said: “This is a great example of policy which tackles an unintended problem with the benefits system and will help more people out of poverty. Supporting people into good, well-paying work is one sustainable way out of homelessness.”

Ms Cole said the charity had seen over the years how the benefits system sometimes worked against people in supported or temporary housing who were ready and able to be in the workplace.

‘In limbo’

She said: “At The Wallich, we’ve long advocated for this change. Part of the ‘Creating Opportunities’ part of The Wallich’s mission is to help people truly leave the threat of homelessness behind. We felt that the policy was more of a hindrance than a help for many, setting some people up to fail, keeping them in limbo.

“We’re so pleased that this will no longer be the case.”

She said people supported by the charity could feel more positive about moving forward, with improved economic prospects and a better future for many who were stuck in the system.

“It’s great news for social mobility and a clear step towards tackling homelessness for good,” she added.

In Wales, 10,535 people were housed in temporary accommodation at the end of July. Most will be receiving benefits and could therefore be better off as a result of the rule change.

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