Residents in supported housing were found to be “discouraged” from seeking work under the benefits system, due to Universal Credit and Housing Benefit tapering when they take on paid employment.
Supported housing is mostly funded through Housing Benefit paid by local authorities. Once a person in supported accommodation works enough hours that their Universal Credit gets reduced to nothing, their Housing Benefit also starts to taper, leaving them responsible for paying their rent.
“This discourages young people from going into work, as most or all of their earnings end up being spent on their rent, and they don’t feel a financial benefit from working,” YMCA’s report states, adding that this can limit aspirations and worsen mental health.
Mental health was the most common reason among respondents for not being in paid work or for working under 16 hours per week, accounting for 47 per cent of YMCA residents asked. Some 13 per cent said that if they got a job or worked more hours, they would recieve lower benefit rates.
YMCA is recommending that people in supported accommodations should receive a Universal Credit work allowance, which would enable them to keep the majority of their income and remove the financial barrier to entering the workforce.
The research, which was carried out with residents in YMCA-supported accommodation, also found that current benefit levels were “insufficient” to cover basic living expenses, particularly for those under 25-years old.
Two-thirds of respondents to the charity’s survey said that they did not believe benefits would give them enough money to live on, with only six per cent saying benefits definitely did give them enough to live on.
YMCA has recommended that an Essentials Guarantee should be established for people on benefits, to ensure that the standard allowance of Universal Credit meets the determined costs of basic essentials.
It is also recommending that the benefits sanctions – a complete withdrawal of Universal Credit payments for non-compliance with the person’s claimant commitments – be relaxed for young people and alternative methods of engaging and supporting them be put in place.
Some 59 per cent of the residents who had received a sanction said this was due to missing a meeting at the Jobcentre, and the majority of these individuals felt they had a valid reason and had tried to communicate this.
Denise Hatton, chief executive of YMCA England and Wales, said: “We believe that young people, especially those in supported housing, deserve a fair chance to build a better future.
“Our research highlights the pressing need for increased benefits, better funding models, and improved support for mental health. It's time to remove the barriers that hinder their path to work and independent living. Together, we can create a society where every young person has the opportunity to thrive."
A spokesperson from the Department for Work and Pensions said: “Universal Credit is designed so that working always pays more. We have increased benefits in line with inflation alongside reducing the taper rate from 63 per cent to 55 per cent and increasing the work allowances by £500.
“We know certain groups including young people face barriers to employment which is why we committed £3.5 billion of additional investment at the last Budget to get more people into work. This includes expanding our Youth Offer so more young people on Universal Credit can access our Youth Employment Programme and specialist employment support delivered through our network of job centres and Youth Hubs.”
