On Wednesday 26th November the Chancellor announced her Autumn Budget for 2025. This was the first fiscal event since the Comprehensive Spending Review (CSR) in June, and an opportunity for the Government to clarify its intentions and values after several months of mixed headlines. As the CSR contained a number of announcements to do with housing and homelessness, we weren’t expecting a lot of relevant changes for our sector from this Budget.
After getting off to a strange start due to the Office for Budget Responsibility accidentally publishing its analysis of the Budget early (and thus leaking all of the Budget’s key announcements in advance), the Chancellor delivered a speech setting out changes to taxes, public spending, state benefits, and measures to cut the cost of living. She stated her intention of ensuring the country has “fair taxes, strong public services, and a stable economy.”
Benefits and homelessness
Particularly relevant to Homeless Link members will be some of the changes announced relating to benefits and a review of government spending on homelessness.
Probably the most positive news coming out of the Budget was the Government stating that it will scrap the two-child limit on benefits, a policy which was implemented in 2017 and which has driven spiralling levels of child poverty across the UK. This change will reduce family poverty and should also have a positive knock-on effect on family homelessness.
The second positive change for the homelessness sector wasn’t announced in the Chancellor’s speech, but features in the full Budget document: a change to Housing Benefit rules to introduce a new earnings disregard, so that people living in supported or temporary accommodation can earn more before their benefits start to be tapered down. This will help to tackle a long-standing problem where residents of supported and temporary accommodation lose more money from benefits than they gain from working, once they start working more than a couple of hours a week.
We’re over the moon to see this fantastic announcement, which Homeless Link, many of our members, and our colleagues across the sector have been campaigning on for several years. While it might sound like a very technical policy change, this should make a significant difference to people living in supported accommodation and recovering from homelessness, enabling them to move into work and prepare for independent living when they’re ready.
The third positive announcement, which was also set out in the Budget document, was that the Chief Secretary to the Treasury (James Murray MP) will lead on a review of value for money in government spending. This review will cover a few specific areas of spending, of which one is: “Homelessness services, to assess funding and delivery models, including ways to improve the supply of good value for money and good quality temporary accommodation and supported housing”.
This is an exciting announcement and a win for our Breaking the Cycle campaign, through which we’ve been calling for a review of all government spending associated with homelessness, and reforms to ensure funding is spent effectively and geared towards prevention. It’s also a really meaningful development to see supported accommodation funding clearly associated with homelessness, after far too many years of these areas being siloed off from one another. This is especially important in the context of the Government’s development of new regulations and licensing for supported accommodation, and continuing issues with the loss of dedicated funding for the support element of supported housing.
We’ll be keeping a close eye on how this review develops and looking to proactively feed into it on behalf of Homeless Link members.
Cost of living
The cost of living is an ongoing issue for people at risk of or experiencing homelessness, as well as for homelessness organisations and our workforce. Improving the affordability of daily essentials is an important part of homelessness prevention, and helps to ensure that those recovering from homelessness can meet their daily needs and have financial stability.
As part of its attempts to tackle the rising cost of living, the Government will implement a one-year freeze on prescription charges and regulated rail fares. The Government aims to lower energy bills by shifting the burden of funding some energy efficiency and renewables schemes away from bill-payers, and either fund these itself or end the scheme.
The Chancellor also announced an increase to the National Minimum Wage, so that those aged 21 and over will earn at least £12.71 per hour from April 2026. While this is positive news for lower earners, homelessness service providers are likely to find it difficult to fund this increase on top of previous increases to the Minimum Wage and employer National Insurance Contributions, and in the face of already insufficient funding contracts.
There will also be changes to tax relief on salary sacrifice arrangements for pension contributions. The Government will cap the amount that can be sacrificed without paying National Insurance Contributions at £2,000 per employee from 2029 onwards. For those organisations operating salary sacrifice arrangements, this is another measure that will increase overhead costs, on top of existing financial pressures resulting from Minimum Wage and NICs increases. Homeless Link will continue to raise these issues with MHCLG, and organisations representing the wider civil society sector.
What wasn’t in the Budget
Disappointingly there was no movement from the Government on increasing Local Housing Allowance rates to return them to the bottom 30th percentile of rents, despite extensive campaigning from the homelessness sector on this. Insufficient LHA rates are a key issue affecting the lack of housing affordability in the private rented sector and driving increasing rates of homelessness. This also contributes to people finding themselves stuck in temporary accommodation or unable to move on from supported accommodation. We will continue to lobby the Government on this issue alongside the rest of the sector.
What next?
We will be proactively engaging with civil servants on the implementation of the new Housing Benefit earnings disregard and the review of value for money in government spending.
In the meantime, as the Government hasn’t yet published its Homelessness Strategy, you can still get involved in helping to ensure the strategy makes the changes necessary to deliver a system that works to prevent and end homelessness.
Check out our Breaking the Cycle campaign materials here to take action.
