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Housing cost element of Universal Credit: withdrawing entitlement from 18-21 year olds

Published Thursday, March 23, 2017

This Commons Library briefing paper provides information on the decision to restrict entitlement to the housing cost element of Universal Credit for young people aged 18-21. The paper sets out the exemptions that will apply and includes comment on the potential impact of the measure.

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The Regulations

The Universal Credit (Housing Costs Element for claimants aged 18 to 21) (Amendment) Regulations 2017 (2017/252) were laid before Parliament on 3 March 2017 and are due to come into force on 1 April 2017.

Early Day Motion 1014, praying against the Regulations, had (at 23 March 2017) attracted 82 signatures.

The Regulations implement a Conservative Party Manifesto commitment and the announcement made as part of the Sumner Budget 2015 when George Osborne, then Chancellor, announced the removal of entitlement to the housing element of Universal Credit from young people aged 18-21, with some exceptions, from April 2017.

Policy rationale

The stated rationale is to “ensure young people in the benefits system face the same choices as young people who work and who may not be able to afford to leave home.” 

A related Budget announcement (summer 2015) set out plans to introduce a Youth Obligation for 18 to 21 year olds on Universal Credit from April 2017. Young people will be expected to participate in an “intensive regime of support from day 1 of their benefit claim, and after 6 months they will be expected to apply for an apprenticeship or traineeship, gain work-based skills, or go on a mandatory work placement.”

The measure was initially forecast to save £40m by 2020/21. In response to a PQ answered on 24 January 2017 the Minister said around 10,000 people would be affected, saving an estimated £95 million over the course of the current Parliament. Savings estimates have since been revised: the Spring Budget 2017 forecast savings of £65m by the end of 2019/20.

Exemptions

The Regulations specify the categories of young people who will be exempt from the removal of the housing costs element of Universal Credit. These exemptions include:  those who may not be able to return home to live with their parents; certain claimants who have been in work for 6 months prior to making a claim; and young people who are parents. Section 2 of the full report provides information on all the exemptions that will apply.

Reactions

Organisations such as Shelter, Crisis, and Centrepoint welcomed the limitation of the impact to 18-21 year olds  as opposed to the wider age group first mentioned of 16-24 year olds, but are actively lobbying against the removal what they describe as an “essential safety net” which can offer a lifeline to young people faced with homelessness. Crisis has said that the measure could undermine attempts to address homelessness through the Homelessness Reduction Bill which is currently progressing through Parliament. The Scottish Government is opposed to the implementation of the Regulations in Scotland.

Commons Briefing papers SN06473

Authors: Wendy Wilson; Richard Keen; Cassie Barton

Topics: Benefits policy, Homelessness, Housing, Housing benefits, Working age benefits

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