The Chancellor's recent budget was presented as one designed to protect the most vulnerable in society. But will it really protect them if it means services for those vulnerable groups have to be withdrawn? For us at Step by Step, on the frontline of youth homelessness, the answer is increasingly unclear.
On any given night, Step by Step accommodates up to 285 vulnerable young people. These are homeless young people—some are living on the streets, others are sofa surfing, and many are escaping unsafe home environments. Every one of them needs a safe place to stay, stability, and support to rebuild their lives. This includes our supported accommodation Foyer, placements in people's homes through our Supported Lodgings Service, and foster care placements. In addition to this, we support hundreds more every year through our counselling, prevention, and wellbeing service, Launch.
Our Foyer and Supported Lodgings services are absolutely crucial in preventing homelessness for young people. These services aren't just supportive—they are lifesaving for many who would otherwise have nowhere to turn. They are funded through contracts with local authorities, helping councils meet their legal obligations to accommodate under-18s and care leavers up to the age of 21. However, under the Chancellor's current budget, these contracted services are set to become financially unviable. If these services disappear, it will leave hundreds of young people without the safe housing and structured support they desperately need. We cannot allow these critical lifelines to vanish because of budget cuts.
The Employers NIC changes, both the reduction in threshold to £5,000 and the increase in rate by 1.2% to 15%, will result in an additional £66,000 in annual costs for us. This is equivalent to the cost of more than two full-time frontline service staff—staff who work directly with young people to provide the support they need to thrive.
The increase in minimum wage to £12.21 for over-21s is another financial hurdle, especially given our commitment as a Real Living Wage employer. We fully agree with the principles of paying a fair wage, and many of our funders require this standard. However, it is widely speculated that the Real Living Wage will soon rise to £12.60 per hour, putting further pressure on our wage bills. This means our internal costs will continue to rise, as will agency costs significantly above the budgets in the multi-year local authority contracts, making it increasingly difficult to sustain these services without further financial support. This isn't just about meeting the minimum—pay increases filter upwards. If our entry-level wages rise, then seniors, managers, and others also need to see proportional increases.
These pressures are not only direct; they affect our suppliers as well. Many of our partners and suppliers will face the same NIC increases and wage changes, which means that we will likely see price hikes in everything from utilities to essential supplies. This indirect impact remains unpredictable, but it will undoubtedly add to our financial burden.
Step by Step, as a charity, cannot afford to subsidise statutory provision, yet we may soon be faced with that very scenario. These young people are not just statistics; they are individuals facing homelessness with nowhere else to turn. If these services are lost, they will lose not only their housing but also the chance for stability and a future.
According to guidance from the Charity Commission and the National Audit Office, charities delivering contracted services on behalf of public bodies should not be expected to subsidise these costs with their own funds; instead, full cost recovery—including administrative overheads—should be a fundamental aspect of fair and sustainable contracting. These contracts have always been tight, but the current financial changes make them impossible to sustain without further support.
We must ask ourselves whether we, as a society, are willing to see these vital safety nets disappear. If we allow this to happen, we will be abandoning young people who need our help the most—leaving them homeless, unsupported, and without hope for a better future.
We're calling for fair treatment for charities. If the government is willing to subsidise cost increases for public sector bodies like the NHS, then charities—who are delivering statutory support on behalf of local authorities—should receive similar consideration. The NCVO and other organisations have already written to the Chancellor, urging her to extend this support to the charity sector, and we fully back this call.
Without this support, vital services will be lost—not just at Step by Step, but across the country. Local authority contracts for supported accommodation are all set within clear financial limits, and these pressures are replicated nationwide. According to Ofsted, there are over 7,000 young people aged 16 and 17 in supported accommodation across the country. These are homeless young people, and if these services disappear, they could be left without the accommodation, counselling, and support they so desperately need. These young people have already faced more challenges than most of us can imagine—should they now pay the price for budgetary decisions?
We urge you to amplify our voice. Your support is crucial in ensuring that young people are not left to fall through the cracks because of budgetary constraints. Let’s make sure that vulnerable young people are genuinely protected.
Jack was unable to live with his mum as she wasn't able to find permanent accommodation. He presented himself to our Youth AIMS drop-in advice service where he was able to receive support and look at the next steps available to him.
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