Young People Live Lives of Luxury on Housing Benefit... Or Do They?

George Osborne has announced the Conservative Party would cut housing benefit for under-25s after the next election as part of £25billion spending cuts, removing a vital lifeline for many homeless young people who are already struggling financially. Such a move would be catastrophic for the 6,000 homeless young people Centrepoint supports each year.
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George Osborne has announced the Conservative Party would cut housing benefit for under-25s after the next election as part of £25billion spending cuts, removing a vital lifeline for many homeless young people who are already struggling financially.

Such a move would be catastrophic for the 6,000 homeless young people Centrepoint supports each year. For many, returning to their family home isn't an option: some would be re-exposed to violence or abuse, for others there would simply be no room for them in already overcrowded accommodation.

Under-25s are already disadvantaged in the benefits system: they receive a lower rate of Jobseeker's Allowance or Income Support of £56.80 per week, compared to the over 25s rate of £71.70, and are restricted to the Shared Accommodation Rate meaning they can only afford to rent a room in a shared house in the private sector, with research showing that they can access as little as 1.5% of the shared market in some areas.

In reality, new research by our charity shows that many homeless young people are left with less than £1 a week after budgeting for bills and other day-to-day expenses.

Over half (55%) of the 200 homeless 16-25 year-olds surveyed were in debt, with some owing as much as £3,339.

A review of 157 budget plans showed 56% of young people had less than £1 a week of disposable income, once their bills and basic expenditure had been accounted for. Food and travel expenses were among the highest outgoings and just over half (58%) said they were struggling to get by on the amount of money they had.

Worryingly the most common reason for borrowing money was to pay for basic necessities such as food (22%), in addition to rent (15%), transport costs (10%) and bills (8%). Very few young people had borrowed money to pay for social activities or special occasions.

Leo Alexander, 21, who is staying at a Centrepoint hostel in central London, was interviewed as part of the research. He got into debt after taking out payday loans.

"There have been a few times I have had to borrow the money just because I needed to pay for essentials," he said.

"It is like a weight over your shoulders, you can't really relax because every minute you think I owe money, where am I going to get it from? When you realise you have made a mistake it's too late and you are already in the debt."

There are of course, varying levels of financial capability among homeless young people. While some may have learned about money management from their parents, difficult relationships and family breakdowns have left others with a limited understanding of budgeting.

Increased access to financial education, greater sources of affordable credit and proactive interventions can help ensure homeless young people are not left with unmanageable levels of debt. It is vital the government works with the financial and voluntary sectors to ensure debt problems do not undermine young people's attempts to live independently and leave homelessness behind.