Make work pay for the homeless

Business Action on Homelessness (BAOH) is a fervent believer in the ability of business to make a difference in the lives of homeless people. The economic challenges we confront today make that still more necessary: businesses can and should help those furthest from the labour market progress towards employment.

When BAOH was launched in 1988 with the objective of helping homeless people back into society via the workplace, the focus of much government and sector attention was on reducing the number of rough sleepers.  There has been a lot of progress since then in preventing homelessness and reducing rough sleeping.

But there wasn’t initially much effort directed at supporting people back to work — the emphasis was on getting people off the street, particularly in London.  Things have moved on considerably since then, and the value of work as the best route out of homelessness is now well established, with funding and services targeted specifically at this goal.

So we have made reasonable progress. The question now is: where next?  Can we identify the policy drivers that will enable more homeless people to gain and sustain employment; and identify how businesses could play a bigger role in supporting these outcomes?

Make work pay

Most homeless people that I meet are keen to enter, or re-enter, the world of work.  An improved financial outcome is rarely the primary motivation.  But homeless people are risk averse.  So if the financial outcome of a move into work is only marginal, those marginal economics are frequently a deal breaker.  

‘I want to be out working and living the same life as everybody else.’  — BAOH client.

In fact, research undertaken on our behalf by the New Economics Foundation in 2008 clearly demonstrated that work doesn’t always work out for homeless people. Those returning to work are often confused about benefits entitlement, struggle to make ends meet and lack in-work support. People working part-time can actually find they are worse off working than if they are on benefit. Delays or errors over housing benefit payments, particularly for those who can only find casual work, also make matters difficult — or even unbearable.  

Welfare-to-work and benefits systems are designed to encourage people back to work and to help them get on with their lives.  So it is ironic, if not perverse, that these same systems can be the very barrier that holds them back. The reaction from homeless individuals is entirely rational.  It is not difficult to see why, when you have experienced losing everything, it can feel safer to hold onto a world of dependence, rather than risking spiralling back into debt and homelessness by taking up an offer of work that might leave you worse off financially. As one of our clients put it:

‘It’s just the thought of losing everything, if I lose my flat that’s it, I’m back on the streets again, and that’s not going to happen.  I refuse for that to happen.’

To change the incentive here, we need to find ways to reward those people who choose to return to work through a benefit system that makes that transition at least as financially manageable as their current situation, if not better. At the moment, for every extra £1 earned in work, 65 pence of housing benefit is withdrawn. When combined with the council tax benefit, this taper goes up to 85 pence of withdrawn benefit.  So the economic motivation to return to work, given the economic risk, is pretty thin.

There are good arguments for introducing a ‘better off in work’ credit.  For example, it costs £25,000 per year to support a homeless person on benefit.  Using some of this per capita expenditure to motivate a homeless person back into work could, from the research we have done, enable a substantial percentage of that £25,000 to be saved.  

BAOH welcomes wholeheartedly the government’s commitment to involve the voluntary sector in delivering its welfare-to-work services. But the introduction of the new Work Programme should place an even greater emphasis on payment by results. Those agencies that have the greatest experience of supporting people facing multiple barriers into the workplace are often the most financially vulnerable.

These organisations should, if they are successful, receive full cost recovery for their work supporting government welfare-to-work programmes; and we believe that payments should be calibrated to meet the level of investment required. This will help ensure that those with the greatest needs are matched up with the best voluntary sector agencies, helping them thereby to make a successful transition into the workplace.

Collaborate to bring results

Government and the homelessness sector have an important role to play together in providing the support and environment conducive to work.  The Places of Change programme, which is delivered by the Homes and Communities Agency, has catalysed change in the culture of hostels by funding projects that bring opportunities for homeless people to move out of hostels and into work and a settled home. We would like to see this extended and continued beyond 2011.

The voice of business — the prospective employers of homeless people — needs to be heard more clearly in shaping policy. Adequately supporting homeless people into work, and helping them achieve successful working lives, requires an understanding of the skills requirements of employers.

But business, assuredly part of the solution, is sometimes part of the problem. Fear, ignorance and stereotyping of homeless people create barriers to employment.  I had those very emotions myself.  But I have learnt to understand things differently, and at BAOH I work alongside great organisations — like Marks & Spencer, Royal Mail, Carillion, and KPMG — who share my conviction.  

Homeless people are vulnerable to losing their job in a set-up-to-fail context if employers do not understand the difficulties that formerly homeless people can encounter in and around the workplace. Our mission at BAOH is to use our expertise and influence to educate and encourage employers to open up their workplaces to homeless people to overcome these issues.

The following quotation explains why. It’s from an ex-offender and a BAOH client, aged 44, who has been using cannabis since he was sixteen.

‘I have been a long term user of cannabis, but I am proud to say I have knocked that on the head for the last six months. I’m really overwhelmed, really pleased...this job has given me the springboard to that.’  

We — the public sector, the voluntary sector and business — must make it our communal goal to do what we can to support homeless people back to work.   

John Varley is Chairman of Business Action on Homelessness and Group Chief Executive of Barclays.