This cruel quirk in the benefits system is making young people homeless – but Labour can fix it

As the countdown continues to Wednesday’s (30 October) long-awaited budget, a movement is growing. A movement to end an injustice which has left many homeless young people stuck in a world where getting a job leaves them unable to afford the essentials.

Over the last decade, Britain has been slowly transitioning to universal credit. One-by-one, legacy social security titles like jobseekers’ allowance and the working tax credit have been brought into this colossal single heading. A few hundred thousand people, however, are still migrating into the new system and still receive housing benefit. This includes those in supported accommodation – such as the traditional ‘hostel’ services run by organisations like Centrepoint. And the rules have not kept pace with reality.

The situation is stark. People in supported accommodation are left financially worse off once their working hours go beyond a minimum threshold. So, for example, someone living in supported accommodation might be working part-time and as a result of doing a great job, they are offered more hours. However, if they seized that opportunity, they would be left with less money overall. In fact, in some cases they could earn more by just not working. That cannot be right. Society is generally supportive of benefit taper rates; that as you earn more, your social security benefits are cut by that same amount, so that it pays to be in a job rather than unemployed.

However, there is an impossibly cruel quirk in the current system where those in supported accommodation, stuck on the legacy housing benefit, see this vital financial support cut at a faster rate than their pay is rising. Worse still, if they lived in the private rented sector, they would be on universal credit – and getting a fairer deal. This is particularly damaging for young people trying to escape homelessness. They may be just starting to dream of a life away from instability and danger, only to be held back by a system that seems to have forgotten them. They are young people who, against all the odds, are ready to start their careers, but are left with no choice but to say no to opportunities to develop and receive higher pay. If their salaries were to rise, their housing benefit would drop so fast they simply would not be left with enough money to pay for the basics.

This is clearly hugely unfair, and it is not just Centrepoint which thinks so. More than 140 organisations in the #PlanForThe136k group such as the YMCA, DePaul, New Horizon Youth Centre and the National Housing Federation have written to the chancellor urging her to right this wrong.

This week, the financial sector joined the rallying cry with Nationwide Building Society, Coventry Building Society and the Co-operative Bank uniting, to insist the Treasury to take down the barriers, blocking young people in homelessness from entering and excelling in the workforce. Hundreds of campaigners have written to their MP and thousands have added their name to an open letter written by Aimee, a young woman who spent time in supported accommodation and who describes the current system as having a “devastating” effect, which could be so easily rectified. And Aimee’s right. Young people in homelessness have already had to overcome immense challenges to enter the workforce, and we are setting them up to fail.

At Centrepoint, we do everything we can to help those we support into a job and a home – that is one of our key missions, but this is being made nearly impossible. Support workers are left in a horrendous position, having heartbreaking conversations with young people who are doing nothing more than trying to build themselves a future.

Securing a great job should be a moment of pure celebration, but all too often the opposite is true, as young people in supported accommodation realise they will probably have to turn it down. This situation of course cannot stand morally, but this lack of productivity unsurprisingly has a huge economic impact too. Centrepoint estimates the cost of youth homelessness to run to £8.5bn and a huge part of this is due to unemployment. Addressing this issue alone is no panacea – but our research has found the government could save more than £12m a year by adopting a fairer policy for young people. The savings would be much larger in practice because it would benefit thousands more people in supported accommodation, of every age.

The government must level the playing field and undo this systemic injustice. Until they do, homeless young people are putting their ambitions on hold and maybe never getting to experience the joy of a well-earned paycheque. It would be simple for the chancellor to make work pay: change the housing benefit taper rate for homeless people in supported accommodation so it matches the universal credit rate. This is not about special treatment but common-sense fairness that will help people leave homelessness behind for good.

Balbir Kaur Chatrik is Centrepoint’s director of policy.

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