Reform Benefits System To Support Young People And Save Taxpayers Millions, Says YMCA

An independent evaluation report, looking at two key policy recommendations proposed in YMCA’s ‘Breaking Barriers to Work’ report (August 2023), has concluded that such reforms could yield significant savings for Government and the taxpayer, while ensuring young people in supported housing have the financial means to achieve independent living.

Assessing the economic viability of the proposed recommendations, Stonehaven found that implementing these modest reforms could yield substantial benefits for taxpayers and residents. While the proposed policies would incur an estimated cost of £130 million per year, they have the potential to save the Government in tax receipts and welfare spending up to £11 for every £1 invested, with the possibility of increasing to £18 when considering broader health, societal, and justice impacts.

YMCA’s ‘Breaking Barriers To Work’ report, which formed the basis of this study, highlighted how young people face additional financial challenges due to lower benefit levels and minimum wage rates compared to older adults. Those under 25 receive lower Standard Allowance rates and lower minimum wage rates.

Rising food and energy prices further strain their finances, as these increases outpace the rise in Universal Credit. Additionally, young people in supported accommodation receive 20% less welfare support despite facing similar living costs as older individuals.

The complexity of the Universal Credit and Housing Benefit systems for those in supported housing means that working more can see them worse off, and this acts as a strong disincentive to employment. All of this is culminating into the perfect storm for future generations.

Stonehaven’s findings suggest mitigating these risks through mechanisms such as a grace period for those transitioning out of supported housing or simplifying benefits to eliminate cliff-edge scenarios, which often force young people back to square one.

YMCA strongly recommends that the next Government seriously consider these recommendations, as the analysis indicates they would likely pay for themselves within a five-year parliament while offering a much-needed lifeline to young people in supported housing, each of whom continues to battle with the ongoing cost of living crisis.