Housing cost element of Universal Credit and 18 to 21-year-olds

The Regulations

The Universal Credit (Housing Costs Element for claimants aged 18 to 21) (Amendment) Regulations 2017 (2017/252) came into force on 1 April 2017.

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

Policy rationale

The stated rationale was 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 were 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 a year 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.

Ad hoc statistics released on 11 January 2018 showed that of new claims for the housing element of UC in April, May and June 2017 “less than 6% of 18-21 year olds who applied for support for housing costs were refused it.”

Exemptions

The Regulations specify the categories of young people who are 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 apply. Government guidance on the exemptions has been published: Memo ADM 6/17.

Reactions

Organisations such as Shelter, Crisis, and Centrepoint welcomed the limitation of the impact to 18 to 21-year-olds  as opposed to the wider age group first mentioned of 16 to 24-year-olds, but lobbied against the removal what they describe as an “essential safety net” that 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 Act 2017 which came into force on 3 April 2018. The Scottish Government opposed the implementation of the Regulations in Scotland.

Reinstating entitlement

On 29 March 2018, the Government issued a Written Statement which announced that the regulations would be amended “so that all 18-21 year olds will be entitled to claim support for housing costs in UC. In return for ensuring that young people who secure a tenancy will have access to financial support, the Government said that they would have a “Youth Obligation – an intensive package of labour market support for 18-21 year-olds looking to get into work.”

The rationale for the change is framed in terms of reducing youth homelessness and rough sleeping:

This decision ensures that there are no unintended barriers to young people accessing housing on the basis of their age alone and getting into work, and is in line with the Government’s launch of the Homelessness Reduction Act and our commitment to eradicating rough sleeping by 2027.

The Regulations (SI 2018/1129) were laid on 5 November 2018. The relevant provisions will come into force on 31 December 2018.