The Department for Work and Pensions has introduced new earnings rules affecting more than 325,000 people living in supported housing and temporary accommodation. From October 5, the way Housing Benefit is calculated will change so that people who enter work or increase their hours do not see their housing support reduced as quickly as before.
According to the Birmingham Mail, the change is intended to remove what the government described as a “cliff edge” in the benefits system. Many of those affected receive Universal Credit for day-to-day living costs while their rent is covered separately through Housing Benefit, leaving them subject to two different sets of earnings rules.
Housing Benefit Rules Will Move Closer to Universal Credit
Until now, Housing Benefit and Universal Credit have treated earnings differently. People receiving Housing Benefit could see their support begin to fall under less generous earnings rules than those whose assistance was provided entirely through Universal Credit.
That difference meant some residents moving into employment, working additional hours or increasing their income could lose Housing Benefit more quickly. In some cases, according to the Birmingham Mail, this could leave people financially worse off even though their earnings had risen.
The new arrangement changes the Housing Benefit calculation so that it aligns more closely with the approach used under Universal Credit. The government says this will allow people in supported housing and temporary accommodation to retain more of their earnings when they work.
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 when they earned more, particularly younger residents beginning work.
Burnham described the measure as a change intended to help people keep a larger share of their earnings while maintaining housing security. Sir Stephen Timms, the Minister for Social Security and Disability, also said the existing system had discouraged some vulnerable residents from working rather than supporting them into employment.
Ministers Link the Change to Wider Welfare and Homelessness Policy
Timms said the revised rules are intended to ensure that working additional hours leaves residents better off than remaining on benefits. He also described the measure as a commitment from the government’s Autumn Budget that is now being implemented.
According to the Birmingham Mail, Timms placed the change within a broader effort to reshape the welfare system. He said the government wants a system that rewards employment while continuing to provide protection for people who need support.
Homelessness Minister Florence Eshalomi linked the new earnings rules to the government’s wider homelessness policy. She said employment can form an important part of recovery for people living in temporary or supported accommodation.
Eshalomi said the government is investing more than £4 billion in efforts to end homelessness and described the earnings change as an intervention designed to help people enter secure employment or increase the income they receive from work.
She also said the government would continue supporting people in temporary accommodation by seeking to provide safe and stable placements, addressing the unlawful use of bed-and-breakfast accommodation for families, and improving access to support services.
For the 325,000 residents covered by the rule change, the immediate effect is a different calculation of Housing Benefit when their earnings rise. The policy is intended to narrow the gap between Housing Benefit and Universal Credit rules while allowing affected claimants to keep more of what they earn.
