A minister has outlined upcoming reforms to address the Housing Benefit and Universal Credit ‘cliff edge’ for claimants in supported housing and temporary accommodation, due in autumn 2026
The DWP has issued an update regarding forthcoming changes that will affect housing benefit and Universal Credit claimants who face a so-called ‘cliff edge’. Ministers are finalising amendments to legislation that could have far-reaching implications for the financial circumstances of claimants.
The underlying cause appears complex but carries significant weight. At present, claimants experience what is described as a ‘cliff edge’ if they reside in supported housing or temporary accommodation.
This leads to them losing benefits when they start to earn income. The point at which this occurs is now set to be revised, with modifications anticipated before the year concludes.
The regulation centres on what is referred to as ‘earned income disregards’. The Department for Work and Pensions is looking to raise the amount people can earn that is disregarded when calculating housing benefit.
The matter was brought to public attention following a parliamentary question tabled in recent days. Lola McEvoy, a Labour MP for Darlington, asked the DWP what the ‘planned timetable is for the implementation of the earned income disregards; and what assessment he has made of the potential merits of these changes.”, reports the Mirror.
Changes were announced during Rachel Reeves’ Budget last year. However, specifics regarding the implementation date remain to be confirmed. The Budget papers stated at the time: “The government is introducing new earned income disregards in Housing Benefit for claimants in supported housing and temporary accommodation. This will reduce the financial cliff edge when moving into, or progressing in, work, ensuring that work pays.”
A minister has now provided further details in response to the Labour MP’s enquiry. Stephen Timms – Minister of State (Department for Work and Pensions), said: “As announced at Autumn Budget, the department will be introducing new earned income disregards for those in receipt of Housing Benefit and live in Supported Housing and Temporary Accommodation. These disregards will help smooth the transition between the Universal Credit and Housing Benefit for individuals in Supported Housing and Temporary Accommodation as they move into work or increase their earnings, ensuring work always pays.”
“The new disregards will be in place from autumn 2026. This will require legislative changes and be accompanied by IT changes made to local authority IT systems. In preparation for this, we have already begun engagement with stakeholders to ensure that the implementation meets the needs of those affected. This is accompanied by clear communications to support local authorities, housing providers and third sector organisations to ensure that eligible customers are aware of and able to utilise this change.” Industry specialists argue the present system is deterring numerous individuals from pursuing work. In a briefing note to the DWP, homelessness charity St Mungo’s explained: “Supported housing exists to help people to live as independently as possible, helping improve their quality of life, their well-being, their health, and their employment prospects.”
“Yet people in supported housing face a specific barrier and disincentive to work due to the way the welfare system is configured. Whereas people in receipt of benefits in the Private Rented Sector become steadily better off the more they work, people in supported housing see their benefits taken away more quickly and can actually become worse off when they work more hours.
“This is because of an anomaly in the benefit system where people in supported housing are still receiving Housing Benefit for their rent but are on Universal Credit for their living costs. The way these two benefits interact, and the high Housing Benefit taper rate (set at 65%), means that people hit a ‘cliff edge’ after which they become worse off as they increase their hours. This puts residents at risk of accruing arrears as the rent becomes unaffordable.”
The charity stated that “because of this cliff edge and the fear of people not being able to afford their rent, we often see residents’ securing jobs that they need to turn down because they are ‘too many hours’.” It cautioned that those already in full-time employment frequently request reduced hours or abandon work altogether when part-time options are unavailable.
It noted: “Residents can also understandably be anxious about entering employment whilst in supported housing, due to the complexity and risk associated with the current benefit rules. When St Mungo’s clients were asked in its 2023 survey – ‘What barriers put you off from going into work, if any?’ 27% of its residents stated ‘I’m concerned that working whilst living in homelessness accommodation will cause problems with my benefits’.”



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