A new Department for Work and Pensions (DWP) rule came into force this week affecting Housing Benefit and Universal Credit claimants. The rule change, implemented on Monday, October 5, means that over 325,000 residents in supported housing and temporary accommodation will keep more of what they earn when they take up work or increase their hours.
Previous system discouraged work
Before the change came into force, people living in supported housing and temporary accommodation often received financial support from Universal Credit and Housing Benefit. However, the two benefits had different rules about how much someone could earn before their benefits are reduced. Therefore, residents who moved into work or increased their hours saw their Housing Benefit reduced quicker, leaving them worse off despite earning more through their job.
This often meant that residents did not feel encouraged to work as it could see them with less money to change their living circumstances. To strengthen work incentives and as part of the UK Government’s commitment to move from a welfare state to a working state, the regulations have been changed so now the Housing Benefit is calculated so it aligns with Universal Credit.
Charity welcomes change
Welsh homelessness charity, The Wallich, has long been advocating for this change as it believed the previous system was "more hindrance than a help for many, setting some people up to fail". Jamie-Lee Cole, strategic communications lead for 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 homelessness and we’ve seen over the years how people in supported or temporary housing - people who were ready and were able to be in the workplace - the benefits system sometimes worked against them."
"At The Wallich, we’ve long advocated for this change. We felt that the policy was more hindrance than a help for many, setting some people up to fail. We’re so pleased that this will no longer be the case, people we support can feel more positive about moving forward, increasing economic prospects and a better future for many people who were stuck in the system. Great news for social mobility and a clear step towards tackling homelessness for good."
Government response
Prime Minister Andy Burnham said: "People should never have to choose between keeping a roof over their head or 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."
