Those who are both young and homeless are among the UK’s most vulnerable. Many live in supported or temporary accommodation across the country, some ‘sofa-surf’ friends’ houses, and a number are without a roof over their heads whatsoever. The government is trying to resolve these problems. Its chief reform has been to move people off welfare benefits and into work, coupled with providing opportunities to work and introducing the minimum wage. Welcome as these initiatives are, their implementation has not gone far enough.
A host of problems face homeless young people when trying to get work. Personal factors, such as lack of self-confidence and unrealistic expectations, cause problems. These are exacerbated by social factors, such as enduring stereotypes of the homeless in the eyes of employers, and structural factors like high housing costs and a lack of support to aid their move from training into employment. Most unhelpful are the financial problems inherent in the benefit and tax system – disincentives to work are in-built in the system.
Contrary to images in the media, the majority of young people are not workshy, but struggle to overcome a variety of barriers placed in their way. They want work and rightfully see employment as a key aspect of being an adult, of improving social status, self-worth, and ending a reliance on benefits.
However, they also want to be better off working than on benefits. When starting a new job, the steep withdrawal of housing benefit and the payment of income tax and national insurance suppress any financial incentive. This ‘poverty trap’ affects thousands of young people and, given that many hostel clients claim housing benefit, the terrible administrative problems that it poses when moving into employment further worsens this work disincentive.
In the case of Amanda, who works full time for the minimum wage while living in a south London hostel, the benefit trap is crystallised. Her gross income of £130 a week is almost halved by rent contributions and by income tax payments. Worse, at 22 she is too young to qualify for the new Working Tax Credit. After associated costs, such as evening meals, she is left £20 per week better off than she was on Job Seekers’ Allowance. This is quickly swallowed by other costs such as travel, lunchtime meals and socialising with colleagues.
Generally, the government should acknowledge that young homeless people who are seeking work are particularly in need of assistance. A range of solutions is required, including a cash rebate scheme which encourages homeless young people to sustain employment through a regular top-up to their wages, with the huge benefit of actually making work pay. This could be funded by central government or ring-fenced local authority budgets.
More specifically, wholesale reform of housing benefit is needed. The Department of Work and Pensions is carrying out trials of potential reforms, but their proposals run the risk of tinkering rather than seriously improving. The steep benefit withdrawal experienced upon entering work should be reduced. The horribly complex administration must be slashed, and a special claims process for the young homeless should be considered, making claiming simpler. Tax credits should be extended to the under-25s to act as a further work incentive, rather than starting at the seemingly arbitrary cut-off age that it currently does.
It is vital that the issues of poverty and exclusion, which this government started to tackle with alacrity from 1997, do not drop off the reform agenda. Homeless young people do want to work, but the financial disincentives are often so great that, when coupled with social and personal factors, starting work is simply not an option. We must make it one.