The DWP has introduced rule changes affecting more than 325,000 people in temporary accommodation or supported housing, removing a benefit "cliff edge" that cut housing-top-up payments as earnings rose. The reform aligns housing-top-up treatment with Universal Credit tapering and is expected to improve work incentives, helping an estimated 50,000 young people. Campaigners continue to call for an unfreezing of housing benefit amid record temporary accommodation numbers and rising council spending.
DWP Rule Change Lets 325,000+ Claimants Keep More Earnings by Removing Benefit 'Cliff Edge'
DWP confirms new benefit rules that will affect more than 300,000 claimants
From Monday, the Department for Work and Pensions (DWP) introduces new rules designed to help more than 325,000 people in temporary accommodation or supported housing keep a greater share of any extra earnings. The reform targets a sharp reduction in housing-top-up payments that previously discouraged claimants from taking on extra hours or longer shifts.
What’s Changing
Under the previous system, households whose housing support was topped up by housing benefit — rather than fully included within Universal Credit — could see their entitlement cut steeply as earnings rose. That mechanism reduced some benefit entitlement by 55p for every £1 a claimant earned until the top-up reached zero, creating a significant "cliff edge".
The new rules align housing-top-up treatments with the Universal Credit taper, ending the differential treatment and aiming to remove that disincentive to work. Ministers say the change will strengthen work incentives and estimate around 50,000 young people starting their careers will benefit.
Prime minister Andy Burnham said: "People should never have to choose between keeping a roof over their head or being able to work (PA)
"People should never have to choose between keeping a roof over their head or being able to work. We're putting that right through a common-sense change that will help people keep more of what they earn. This is what progressive welfare reform looks like: helping people into work and giving families the security and breathing space they need to get on," a government statement said.
Context And Pressure For Further Action
The policy comes amid record levels of temporary homelessness in England. Official figures show 135,580 households were in temporary accommodation at the end of March, housing more than 177,530 children. Campaigners say that further reforms are needed, including unfreezing housing benefit in the upcoming Budget to improve affordability for the poorest renters.
Research from Citizens Advice highlights the wider problem: fewer than 2% of advertised private tenancies are affordable for people relying on housing benefits. Local costs are also rising sharply — councils in England spent a record £2.9bn on temporary accommodation in the year to April, equivalent to just over £8m a day and an 88% increase over five years.
Bottom line: The DWP change removes a sharp penalty that deterred extra work for many claimants in supported or temporary housing, but campaigners and charities say more must be done to address housing affordability and rising local authority costs.
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