Over 300,000 residents in supported housing and temporary accommodation are set to benefit from new welfare rules that will allow them to keep more of their earnings without facing a corresponding drop in housing support. The changes, laid in Parliament today, aim to remove the disincentive to work that has left vulnerable individuals trapped in dependency.
For years, the Universal Credit and Housing Benefit systems have been out of sync, creating a 'cliff edge' effect where increasing working hours led to losing crucial housing benefit. This system, according to the government, had resulted in landlords discouraging residents from taking on more work, fearing it would jeopardise their rental income.
The new Housing Benefit (Earned Income Disregards) Regulations 2026 will introduce five earned income disregards for working-age claimants in supported housing and temporary accommodation. These changes align the calculation of Housing Benefit with Universal Credit, ensuring that every extra hour worked translates to a net gain for the individual.
Sir Stephen Timms, Minister for Social Security and Disability, said the old system was actively pushing vulnerable residents away from work. He welcomed the new rules as a fix to this issue, stating that residents can now keep more of what they earn and that taking a job or increasing hours will always be better than relying on benefits.
The reforms are part of the government's broader strategy to overhaul the welfare system and remove barriers to employment. This includes other recent initiatives, such as rebalancing Universal Credit and introducing 'Right to Try' legislation for sick or disabled individuals. Further support is being provided through programmes like 'Connect to Work', offering tailored local assistance to 300,000 people.