Support and protect

Originally posted on September 15 on Inside Edge 2, my blog for Inside Housing

There is good news, bad news and some continuing uncertainty in today’s long-awaited government announcement on the future funding of supported housing.

Originally expected before the summer recess, it finally came in a written statement from work and pensions secretary Damian Green. This follows the deferral of implementation of the LHA cap and 1% rent cut on the sector to allow more research and consultation.

The good news seems to be that:

• The LHA cap will be deferred again until 2019/20 for supported housing and also for co-operatives, almshouses and community land trusts
• After that core rent and service charges will be continue to be funded by housing benefit or universal credit but a new funding regime will ensure that ‘the sector continues to be funded at current levels, taking into account the effect of Government policy on social sector rents’
• For costs above the LHA rate, Wales and Scotland will get extra funding and in England ‘we will devolve funding to local authorities to provide additional ‘top up’ funding to providers where necessary, reflecting the higher average costs of offering supported accommodation, compared to general needs’.
• ‘In recognition of the need to manage the transition to a new funding regime carefully, we will ring-fence the top-up fund to ensure it continues to support vulnerable people’
• The Shared Accommodation Rate (the lower rate of housing benefit for under-35s) will not apply to people living in supported housing
• For refuges and hostels, the government ‘will work with the sector to develop further options to ensure that providers of shorter term accommodation continue to receive appropriate funding for their important work’.

The move on the LHA cap in particular has been welcomed by the National Housing Federation and Community Housing Cymru.

Taken together, these measures should remove a lot of the uncertainty that has dogged existing supported housing projects and put the development of new schemes on hold. Green’s statement that ‘supported housing is of vital importance to vulnerable people’ will get a general welcome.

The obvious bad news is that the 1% a year rent cut will apply to supported housing from 2017/18 to 2019/20. The existing exemption will remain for specialist supported housing and fully mutual co-operatives, almshouses, CLTs and refuges. As with social housing, providers will also be able to appeal if the cut will threaten their financial viability.

However, the statement also begs all sorts of questions that could bring more bad news when they are answered.

That was definitely the case a week later when a DWP official confirmed that the LHA cap will apply to all tenants from 2019 rather than just new tenants as in the original proposal.

Labour’s John Healey argues that the announcement means that the government ‘will press ahead with deep cuts to housing benefit for some of the most vulnerable including the homeless, frail elderly, veterans and others is a terrible misjudgement by ministers’.

And he highlights in particular the fact hat there is no commitment on funding for the top-ups on the cap to make up for the original Budget estimate of £1bn savings.

There certainly does seem room for interpretation in the quote I highlighted in italics in my second bullet point. Until that is made clear, and until the details of the new system are much clearer, the uncertainty hanging over the sector will not go away.

Likewise the commitment to ‘ensure that vulnerable people in refuges are not adversely affected as a result of the LHA rates’ seems to stop short of the exemption indicated by Theresa May at prime minister’s questions last week.

When it comes to the new system, forgive my cynicism, but doesn’t a ring-fenced fund for supported housing sound a lot like Supporting People? Or at least the regime that existed in England before this government removed the ring fence after 2010 and local authorities inevitably slashed their funding?

Green talks blithely of giving councils ‘an enhanced role in commissioning supported housing in their areas’ but the teams that used to do this under Supporting People have disappeared. And can we really be that confident that the second ring-fence will prove to be any sturdier than the first, especially when this work is not a statutory responsibility?

Supporting People continued in Wales, Scotland and Northern Ireland and, though funding is under pressure, it continues to prove its worth.

Or take another bit of the good news. The exemption from the shared accommodation rate for supported housing means that the sector can continue to help vulnerable and homeless young people. But what happens when they’ve been helped? With social and private rented housing unaffordable on housing benefit, will they be stuck in supported housing because they have nowhere else to go?

What about the rent cut (again this only applies directly to England)? The exemption for ‘specialist supported housing’ is welcome but the impact could still be hugely damaging. Homeless Link said last year the definition of ‘specialist’ covers very few supported projects and would protect very few homelessness services. It warned that figures from a number of different organisations (both large and small) showed that many homelessness services could become unviable within one or two years of the cut being applied. The same could apply across all non-specialist supported housing.

And what about sheltered housing? It’s not specifically mentioned in the statement but presumably it will be subject to both the rent cut and the new top-up funding to make up for the LHA cap. Thank goodness there is not already a crisis in local authority funding of social care for older people to contend with.

More questions like this are bound to emerge as the details of the new system are scrutinised and the implications for particular types of supported housing become clearer. In the meantime who will commit to investment in new provision?

Perhaps more answers will appear in the full consultation and evidence review to be published shortly. Perhaps more clarity will emerge in continued discussions between the government and the sector. Until then it’s impossible to say how good this news really is.

UPDATE: Homeless Link has released a statement welcoming the move on the LHA cap but warning of a ‘devastating impact’ from the rent cut.

Chief executive Rick Henderson said:

‘We are now effectively facing the frustrating prospect of contradictory policies. The welcome decision to temporarily remove LHA Caps from supported and sheltered housing will be instantly undermined by the 1% rent reduction planned from April 2017 – a hugely disappointing and damaging move. The Government has already suspended the rent reduction once due to the devastating impact it was predicted to have, and the same concerns are still valid today. Its implementation will result in a squeeze on supported housing services, which is likely to risk services closing and lead to an increase in the number of people who find themselves homeless.’