Roantree, Barra Callan, Tim Savage, Michael Walsh, John
Year of Publication:
ESRI Working Paper No. 610
Since March 2017, a new income-related housing support for those with a long-term housing need called Housing Assistance Payment (HAP) has been available throughout the state. This paper examines the potential impact on financial work incentives of transferring long-run Rent Supplement recipients onto HAP with tenants' rental contributions assessed through a national Differential Rents scheme, initially proposed by the Housing Agency but yet to be implemented. While such a system would strengthen the financial incentive for most long-term Rent Supplement claimants to be in full-time paid work, a small minority would continue to face quite weak incentives. This is driven by the receipt of multiple means-tested benefits - in particular, jobseekers allowance and one-parent family payment - which results in some low-income individuals facing very high effective marginal tax rates from relatively low levels of earnings.