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Housing Benefit: withdrawing entitlement from young

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Housing Benefit: withdrawing entitlement from
young people
Standard Note:
SN/SP/6473
Last updated:
17 February 2015
Author:
Wendy Wilson
Section
Social Policy Section
This note covers policy announcements on the withdrawal of Housing Benefit entitlement
from young people. The note considers evidence on the potential impact of withdrawal and
provides early comment from housing organisations and those working with young homeless
people.
In his speech on welfare given at Bluewater, Kent on 25 June 2012, the Prime Minister
presented a number of ideas for future benefit reforms. The proposals for consideration
included removing access to Housing Benefit for people aged 16-24. The Chancellor made
reference to the need to find an additional £10bn in savings from the welfare bill during his
speech to the Conservative Party Conference 2012 – he went on to question whether young
people who have never worked should have access to independent housing.
The Prime Minister returned to this theme during his speech to the 2013 Conservative Party
Conference on 2 October during which he called for everyone under 25 to be “earning or
learning.”
In an interview during the 2014 Conservative Party Conference, the Prime Minister pledged
to remove entitlement to housing benefit for unemployed people aged 18 to 21. He also
stated that young people between these ages would be unable to claim Jobseeker’s
Allowance, and would instead have to claim a Youth Allowance.
Information on how the tax-benefit system currently treats claimants between the ages of
18-24 can be found in Library note SN/SP/3793.
This information is provided to Members of Parliament in support of their parliamentary duties
and is not intended to address the specific circumstances of any particular individual. It should
not be relied upon as being up to date; the law or policies may have changed since it was last
updated; and it should not be relied upon as legal or professional advice or as a substitute for
it. A suitably qualified professional should be consulted if specific advice or information is
required.
This information is provided subject to our general terms and conditions which are available
online or may be provided on request in hard copy. Authors are available to discuss the
content of this briefing with Members and their staff, but not with the general public.
Contents
1
The status of the “policy”
2
2
Potential impact
4
3
Comment
6
1
The status of the “policy”
In his speech on welfare given at Bluewater, Kent on 25 June 2012, the Prime Minister put
forward a number of ideas for future benefit reforms. The proposals for consideration
included removing access to Housing Benefit for people aged 16-24.
Subsequently, when speaking to Andrew Marr prior to the 2012 Conservative Party
Conference, the Prime Minister confirmed that savings in the welfare bill would need to be
found in 2015-16 “which starts before the next General Election.” He said:
We have to find those spending reductions and if we want to avoid cuts in things like
hospitals and schools and the services we all rely on, we have to look at things like the
welfare budget, where we are still spending £80 billion on working age welfare. 1
George Osborne’s speech to the Conservative Party Conference (9 October 2012) confirmed
the need to find an additional £10bn in savings from the welfare bill and indicated that young
people might be a possible target:
And if we want to go on doing that, and limit the cuts to departments, then we will have
to find greater savings in the welfare bill.
£10 billion of welfare savings by the first full year of the next Parliament.
Iain Duncan Smith and I are committed to finding these savings while delivering the
most radical reform of our welfare system for generations with a Universal Credit so
work always pays.
Because it's not just about the money - it comes back to fairness and enterprise.
For how can we justify the incomes of those out of work rising faster than the incomes
of those in work?
How can we justify giving flats to young people who have never worked, when
working people twice their age are still living with their parents because they
can't afford their first home?2
However, the Minister, Steve Webb, said, in response to parliamentary question on the
impact of withdrawing Housing Benefit from people under 25 on levels of homelessness and
poverty in the next four financial years:
1
2
Inside Housing, “PM warns of further welfare cuts before election,” 8 October 2012
NewStatesman, ‘George Osborne's speech to the Conservative conference: full text’, 8 October 2012
2
Current Government policy does not include withdrawing housing support from people
aged under 25.3
DWP officials reportedly told Inside Housing magazine that they were “looking at changing
the criteria around Housing Benefit, with a reduction in eligibility for under-25s one of a
number of options being considered” but that “any changes would affect future claimants
only and we would still ensure that vulnerable people remain protected.”4
The Prime Minister’s speech to the 2013 Conservative Party Conference contained the
following references to restricting Housing Benefit for under 25s:
Today it is still possible to leave school, sign on, find a flat, start claiming housing
benefit and opt for a life on benefits.
It's time for bold action here.
We should ask, as we write our next manifesto,5 if that option should really exist at
all.
Instead we should give young people a clear, positive choice:
Go to school. Go to college. Do an apprenticeship. Get a job.
But just choose the dole? We've got to offer them something better than that.
And let no one paint ideas like this as callous.
Think about it: with your children, would you dream of just leaving them to their own
devices, not getting a job, not training, nothing?
No - you'd nag and push and guide and do anything to get them on their way. and so
must we.
So this is what we want to see: everyone under 25 - earning or learning.6
The policy was again discussed during the 2014 Conservative Party Conference. In an
interview with Andrew Marr, the Prime Minister pledged that young people aged 18 to 21
would no longer be entitled to Housing Benefit or Jobseeker’s Allowance:
At heart I want us effectively to abolish youth unemployment. I want us to end the idea
that aged 18 you leave school, go and leave home, claim unemployment benefit and
claim housing benefit. We should not be offering that choice to young people. We
should be saying to people you should be earning or learning. 7
Under the proposal, Jobseeker’s Allowance would be replaced with a six-month Youth
Allowance. After six months, if the young person has failed to find a job or apprenticeship,
they would be required to do community work. On 17 February 2015 the Prime Minister
again repeated a commitment to require 18-21 year olds who have been out of work, training
or education for six months to carry out community work of 30 hours per week alongside their
job search (10 hours per week) in order to remain eligible for benefits.8 The community work
3
4
5
6
7
8
HC Deb 17 October 2012 cc343-4W
Inside Housing, “Housing Benefit limit only for future claimants”, 19 October 2012
Emphasis added.
Telegraph, “David Cameron’s speech – in full”, 2 October 2013
BBC, ‘Tories would tighten benefit cap to fund apprenticeships’, 28 September 2014
BBC News, Unemployed should do community work, 17 February 2015 [accessed 17 February 2015]
3
programme has been estimated to cost £20m and would be funded by ‘initial savings’ from
the implementation of Universal Credit.9
2
Potential impact
The Institute of Fiscal Studies assessed the impact of removing Housing Benefit entitlement
from these claimants in its Green Budget (February 2015):
If entitlement were only removed from those aged 21 and under, it would reduce
housing benefit (or universal credit) expenditure by around £700 million, but the
spending cut would fall to around half that if those with children were exempted.
The Prime Minister recently announced that a future Conservative government would
remove housing benefit eligibility from those aged 21 and under who were claiming
jobseeker’s allowance (JSA).29 This would affect less than a quarter of housing benefit
claimants aged 21 and under who were not employed (and less than 20% of this group
as a whole). Other out-of-work claimants are entitled to either employment and support
allowance or income support because they are disabled, carers or lone parents with
children aged under 5. However, it would affect some couples with children and lone
parents with older children. We estimate that this change would affect around 24,000
families and reduce spending by £120 million a year.
Spending on Housing Benefit for young adults
Spending (£ billion, 2015--16 prices)
21 and under
Under 25
Not employed
0.3
0.6
0.6
1.3
Without children
All
Without children
All
All
0.4
0.7
0.7
1.6
Note: Figures are housing benefit spending as of August 2014.
Source: Authors’ calculations using DWP Tabulation Tool.10
A series of PQs were tabled in 2012 (and more recently) in an attempt to elicit information on
the potential numbers affected although the focus at that time was on the under 25s, for
example:
Mr Watts: To ask the Secretary of State for Work and Pensions (1) what the cost is of
housing benefit for the under 25s;
(2) what the cost is of housing benefit to under 25s living in private sector
accommodation.
See: HC Deb 30 January 2014 c671W for the answer (includes table).
Mr Byrne: To ask the Secretary of State for Work and Pensions how many recipients
of housing benefit under the age of 25 years (a) have children, (b) are orphans, (c) are
care leavers and (d) have parents in prison.
Steve Webb: Information on the number of housing benefit recipients who are
orphans, care leavers or who have parents in prison are not collected on the housing
benefit data source (SHBE). The information that is available for those aged under 25
years by family type is shown in the following table.
9
ibid
4
See: HC Deb 19 October 2012 c468W for the answer (includes table)
Sheila Gilmore: To ask the Secretary of State for Work and Pensions (1) what
assessment he has made of the capacity of parents of housing benefit claimants aged
under 25 to house their children; (2) what estimate he has made of the number of
recipients of housing benefit under the age of 25 years who are unable to live with their
parents due to (a) overcrowding, (b) a breakdown of the relationship and (c) abuse
experienced in the home.
Steve Webb: No such assessment has been made, as current Government policy
does not include withdrawing housing support from people aged under 25.
Sheila Gilmore: To ask the Secretary of State for Work and Pensions what estimate
he has made of the number of claimants of housing benefit under the age of 25 who
are (a) undertaking apprenticeships and (b) undertaking another form of training.
Steve Webb: Information on the number of housing benefit recipients under the age of
25 who are undertaking (a) apprenticeships and (b) another form of training is not
readily available and could be provided only at disproportionate cost.
Sheila Gilmore: To ask the Secretary of State for Work and Pensions how many
housing benefit recipients under the age of 25 live in a (a) homelessness hostel and (b)
domestic violence refuge.
Steve Webb: The information requested is not available. 11
Sheila Gilmore: To ask the Secretary of State for Communities and Local Government
what estimate he has made of the number of housing benefit recipients aged under 25
who have (a) been accepted as homeless by a local authority and (b) slept rough in the
latest period for which figures are available.
Mr Prisk: The figures collected by my Department from English local authorities
relating to households accepted as homeless and to rough sleepers do not include
information on the number of people concerned who are aged under 25 and receiving
housing benefit.
In the absence of underlying data, the Department has not made an estimate of the
number of people in these categories. 12
Lord Willis of Knaresborough: To ask her Majesty’s Government how many 18–21
year olds and 22–24 year olds in England are (1) employed, (2) employed and claiming
housing benefit, and (3) employed and claiming housing benefit and on an
apprenticeship.[HL305]
The Parliamentary Under-Secretary of State, Department for Work and Pensions
(Lord Freud) (Con): Since May 2010, the number of out-of-work Housing Benefit
claimants has fallen. Action this Government has taken is bringing the ballooning
housing benefit bill under control - saving the taxpayer around £6bn by the end of this
Parliament
Housing benefit has always helped those in and out of work. The average rate of
increase of housing benefit claimants in work has slowed under this Government,
having increased by more than 50% in just 18 months under the last Government. And
we have seen a fall in the number of housing benefit claimants in the last year.
10
11
12
IFS Green Budget, February 2015, pp211-12
HC Deb 29 October 2012 c59W
HC Deb 29 October 2012 c44W
5
(1) Analysis of the Labour Force Survey for the most recent period Jan-Mar 2014
shows that:
Of those aged 18-21 in England, around 1,567,000 are employed.
Of those aged 22-24 in England, around 1,242,000 are employed.
(2) (3)The information for those in work or undertaking apprenticeships, is only
available for HB recipients whose claim is not passported: that is for those who do not
receive the following benefits: Income Support, Jobseeker’s Allowance (IncomeBased), Employment and Support Allowance (Income-Based), or Pension Credit
(Guaranteed Credit).
The information that shows those in work for HB recipients whose claim is not
passported can be found at:
https://stat-xplore.dwp.gov.uk
Guidance on how to extract the information required can be found at:
https://sw.stat-xplore.dwp.gov.uk/webapi/online-help/Stat-Xplore_User_Guide.htm
Those in apprenticeships are recorded as being in work and cannot be separately
identified.
The economic status of all Housing Benefit (HB) recipients is not available and could
only be provided at disproportionate cost.13
The IFS pointed out in The £10 billion question: where could the Chancellor find welfare
cuts? (October 2012) that more than half of Housing Benefit claimants under 25 have
children:
The Prime Minister and the Chancellor have mentioned two other specific areas where
they believe the current benefit system is too generous. The first is Housing Benefit for
the under 25s, who comprise almost 400,000 (8%) of the 5 million Housing Benefit
claimants. Abolition of Housing Benefit for this group would save nearly £2 billion per
year. Realistically though, it seems highly likely that some of the group will be made
exempt from this cut. A crucial issue here is how the government would distinguish
between those who can and cannot reasonably be expected to live with their parents.
For example, more than half of Housing Benefit spending on under-25s goes to
individuals who themselves have dependent children: might the government include
them in the group who could reasonably be expected to live with parents? The
answers to these kinds of questions will determine how much less than £2 billion per
year the government would save from this policy, and how workable it would be in
practice.
3
Comment
Organisations working with homeless people expressed their concerns in the wake of the
Chancellor’s 2012 speech:
Crisis Our fear is that if this cut goes ahead thousands of under-25s, many of them very
vulnerable, will be left with very little choice but to try and get by on friends’ floors,
13
HL Deb 26 June 2014, cWA178
6
squats or even the streets. A disaster for them, and a disaster for us all. The
government should instead be focusing its energies on helping young people back to
work, ensuring there is a strong safety net to prevent, reduce and resolve
homelessness for all and building many more genuinely affordable homes.
Crisis brands housing benefit cut 'irresponsible'
Homeless Link Our young people face rising rents and high levels of unemployment. Homelessness
amongst the under-25s has also increased – often driven by relationship breakdowns
in families.
This idea, if it comes to pass, will do little to help young people with no family home or
no option but to move out. Nor will it help those who have to claim housing benefit
because they are in low paid jobs and face high rents. In fact it could have a
devastating effect on youth homelessness.
We need to be realistic about family life and ensure that ideas to save money today, do
not risk damaging the prospects of young people with no family to fall back on. We
should instead be investing in their futures.
Benefit cut for under-25s risks damaging future prospects of disadvantaged young
Shelter Young people are already facing an incredibly tough time, with high unemployment,
rising living costs and flat-lining wages for those lucky enough to have a job. Removing
such a vital source of support will be a huge blow for young people struggling to set
themselves up in life.
Shelter responds to Conservative welfare reform plans
Chartered Institute of Housing
It is impossible to create economic growth without a mobile workforce. It is crucial that
everyone has access to help with housing costs to stimulate growth in the economy
through jobs and stable homes. Blanket age based exclusions don't support growth
and they fail the fairness test.
Ministers have already said they want every new policy to support economic growth.
It's unclear how these cuts will pass that test.
CIH fears cuts to housing benefit for under 25s will frustrate growth agenda
In a letter to the Guardian (10 October 2012) Professor Mike Stein of the University of York
drew attention to past policy initiatives which limited financial support for young people:
The chancellor's proposals to reform housing benefit for the under-25s are not new
(Analysis, 9 October). The Thatcher government's Social Security Acts of 1986 and
1988 were underpinned by the assumption that families should take greater financial
responsibility for their young people. This resulted in the ending of income support for
16- and 17-year-olds, except on proof of "severe hardship", and the abolition of
"householder status" for under-25s, by the introduction of lower rates of income
support for this age group. The impact of these changes proved disastrous.
First, many care leavers for whom family support was not an option experienced
poverty and homelessness. This led to campaigning activity by care leavers which
7
resulted in "exceptions" for limited periods. However, it was not until the introduction of
the Children (Leaving Care) Act 2000 that there was a comprehensive response to
address their plight.
Second, there was a larger but at that time lesser-known group of abused and
neglected older teenagers who suffered greatly at the hands of their parents. In order
to qualify for benefits so that they could leave their families, or remain in their own
accommodation, they had to prove "severe hardship" or "estrangement" at regular
intervals. Many gave up on these draconian tests, officially described then, and
proposed now, as "safety nets", but which reflected the long shadows of the deterrent
poor law. They either remained and suffered at home or ended up homeless. We have
become increasingly aware of the problems of maltreated young adults and developed
more compassionate and effective policies to prevent youth homelessness. It would be
inhumane to turn the clock back.14
Concerns around the potential withdrawal of Housing Benefit from under 25s prompted a
Westminster Hall debate on the subject in November 2012.15
After the Prime Minister’s October 2013 speech several commentators criticised the potential
impact of removing Housing Benefit entitlement:
Grainia Long, chief executive of the Chartered Institute of Housing, said: “This would
be a dangerous move. How do you build the economy without a young, mobile
workforce? It would mean that young people would be unwilling to take risks such as
moving for work because there would be no safety net for them.”
Frances O’Grady, the TUC general secretary, said: “Given the government’s awful
track record of helping young people find jobs, the Prime Minister’s threat to ban the
dole for under-25s will simply push hundreds of thousands of young people, including
those with young families, even deeper into poverty.”
Sally Hunt, general secretary of the University and College Union representing staff in
further and higher education, said: “Educational underachievement costs the UK
economy an estimated £22bn a year. We will not resolve this massive problem by
forcing young people into unstable, low paying employment or inadequate training.” 16
November 2013 saw the Institute for Public Policy Research (IPPR) publish a new report, No
more NEETs: a plan for all young people to be learning or earning. The author,
Graeme Cook, describes the report in the following terms:
This paper sets out a strategy for radically increasing the proportion of young people
who are learning or earning, by fixing the broken school-to-work transition system and
establishing a distinct work, training and benefits track for those aged 18–24. This
approach is underpinned by two new initiatives: a youth allowance, to keep young
people out of the adult welfare system, and a youth guarantee, to ensure they stay in
touch with the labour market.17
In response to the Prime Minister’s 2014 pledge to remove Housing Benefit for young people
aged 18 to 21, housing and homeless organisations again expressed concerns:
14
15
16
17
Guardian, “Housing Benefit plans are not new”, 10 October 2012
HC Deb 21 November 2012 cc168-175WH
Independent, “David Cameron: Young people under 25 would not be able to claim employment or housing
benefits under Tory Government,” 2 October 2013
IPPR: http://www.ippr.org/publication/55/11516/no-more-neets-a-plan-for-all-young-people-to-be-learning-orearning (accessed 31 December 2013)
8
The Chartered Institute of Housing:
We also have concerns about the proposals to cut housing benefit for 18 to 21-yearolds and lower the benefit cap. Cutting housing benefit for under 21s fails to take into
account the reality of many young people’s lives, and it could also mean that young
people would be unwilling to take risks such as moving for work because there would
be no safety net for them.18
Centrepoint:
Many young people being supported by Centrepoint need support because their
families are no longer able to support them. Others have fled domestic abuse.
These young people are able to move towards living an independent life thanks to the
lifeline housing benefit gives them.
For Centrepoint young people, claiming housing benefit is a short-term solution to a
situation they find themselves in - providing them with a safety net from which they can
get their lives back on track. We fear that this cut could lead to an increase in youth
homelessness with some young people, unable to live at home, being forced into
rough sleeping.19
Shelter
Young adults who don’t meet the exemption criteria will seemingly no longer be able to
get any help with the rent. If they don’t have anywhere else safe and secure to stay,
they will face homelessness.
[…]
Shelter opposes removing housing benefit from under 21s, because every young adult
deserves somewhere safe and decent to live.20
Shelter also stated that their campaigning helped abolish the proposed removal of Housing
Benefit for under 25s:
Stopped the removal of Housing benefit for under 25s
In partnership with others, we successfully stopped this proposal becoming policy
when it was first proposed in 2012 and 2013. Although this idea has recently been
revived, its scope has been reduced, meaning it would only impact 18 -21s, rather than
under 25s. This is something we’ll continue to challenge next year to prevent it
becoming government policy. 21
The IFS’s Green Budget (February 2015) highlights the limited savings that might result from
restricting benefits for the under 21s and refers to other, potential, unintended
consequences:
In summary, total spending on housing benefit and jobseeker’s allowance for those
aged under 25 is less than £2.5 billion a year, or around 1% of the total social security
budget. This means that even dramatic changes, such as the removal of entitlements
for sections of this group, would deliver only a small reduction in spending.
18
19
20
21
The Chartered Institute of Housing: ‘CIH comment on Conservative proposal to freeze working age benefits’,
29 September 2014
Centrepoint, ‘Housing Benefit is not a choice but a lifeline for homeless young people’, 14 October 2014
Shelter, Blog: ‘The illusion of home’, 30 September 2014
Shelter, Blog: ‘Things to be cheerful about’, 29 December 2014
9
Of course, changes in this area of the system need not be motivated by a desire to
reduce expenditure – cutting or removing entitlements would have a significant impact
on the incentives facing some young adults as they make important decisions around
work, training and where to live beyond the end of compulsory education. But again
there would be real trade-offs. Big reductions in entitlements could leave those whose
parents were unable to support them without any means of support, and any
exemptions could create new distortions to individuals’ incentives. For example, if
those with children were exempted, there would be a stronger incentive for young
people to have children. And if, as the Conservatives have recently proposed, only
those housing benefit recipients claiming JSA were affected, there would be a stronger
incentive for young people to claim employment and support allowance instead, or be
a lone parent (with a child under 5) in order to qualify for income support. These issues
would have to be borne in mind when making changes to the benefit entitlements of
this group.22
22
IFS Green Budget, February 2015, p212
10
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