Housing Assistance Payment: Potential impacts on financial incentives to work. ESRI WP610, January 2019

Roantree, Barra and Regan, Mark and Callan, Tim and Savage, Michael and Walsh, John R. (2019) Housing Assistance Payment: Potential impacts on financial incentives to work. ESRI WP610, January 2019. [Working Paper]

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Abstract

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.

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