Councils will be given ring-fenced funding for supported housing services to mitigate the impact of a controversial housing benefit cut when it comes into force in 2019.
The government said the move would give councils a greater role in commissioning supported housing and enable them to develop a more coherent approach to commissioning social care, housing and health services across their areas.
The plan to cap housing benefit in the social sector to the equivalent level in the private rented sector caused uproar when it was announced in last year’s autumn statement.
Commentators said it would make much supported housing unviable, including specialist provision for people with learning disabilities or mental health problems, older people or care leavers, and would hit domestic abuse refuges particularly hard.
Housing benefit in the social sector currently covers the additional costs of supported housing compared with general-needs housing. These costs arise from factors including the purpose-built nature of much provision, the need for increased security, greater housing management costs and the impact of high turnover in settings such as refuges.
However, in the private rented sector, the local housing allowance (LHA) caps housing benefit levels for different types of property, meaning these costs would not have been covered.
The policy had been due to come into force in 2018 and applied to tenancies signed after April 2016, though this was subsequently deferred to apply to tenancies signed from 2017 in supported or sheltered housing.
However, following a review into the impact of the policy on supported housing, work and pensions secretary Damian Green announced a number of changes today:
- The capping of social sector rents to the level of the LHA will take place in 2019-20 for supported housing and will apply to all those living in supported accommodation from this date.
- The government intends to maintain funding for supported housing at current levels, taking into account the effects of other policies on social sector rents. These include a policy of reducing rent levels in social sector supported housing by 1% a year from 2017 until 2020, reducing the funding available to providers.
- This will be done by giving local authorities a ring-fenced top-up to meet the higher costs of supported accommodation compared with general needs housing.
- The shared accommodation rate of LHA – which caps housing benefit for single people aged 35 or under to the cost of renting a single room – will not be applied to supported accommodation, with the one-bedroom rate used instead.
- A different funding model will be applied to refuges, hostels and other short-term accommodation to deal with the particular costs they face. This will offer the same level of protection as that provided for supported housing in general.
The top-up will be based on current projections of future need and Green said it would “provide certainty for providers that reductions in funding via the benefits system can be met elsewhere as well as to give greater assurance to developers of new supported housing supply”.
He added: “This will give local authorities an enhanced role in commissioning supported housing in their area. This will also allow local authorities to ensure a more coherent approach to commissioning for needs across housing, health and social care, using local knowledge to drive transparency, quality and value for money from providers in their area.”
He said the policy would be designed to enable other agencies that commissioned supported housing, such as clinical commissioning groups, to access the fund to meet their commissioning needs.
‘Unclear funding model’
The Association of Directors of Adult Social Services welcomed the delay in implementing the cap until 2019, saying this would provide “temporary relief” to those in need of supported housing.
However, it added: “It is unclear, however, how the new funding model for supported housing will work in practice, and we’ll be looking to work with government on this to make sure it can be implemented smoothly, without affecting our most vulnerable residents.
“The number of people who need supported housing is growing all the time, so it is vital that the Government ensures that policies up to 2019 and beyond are fully funded, without forcing councils into a position where they have to ration the service because they simply do not have enough money – especially after the significant cuts that they’ve already had to endure.”
The National Housing Federation (NHF), which represents housing associations, said: “We are pleased that there will be a ring-fence around the devolved funding and that the shared accommodation rate will not apply to people living in supported housing.”
“However, we are still concerned about how the new proposed model is going to work in practice. We want to put supported housing on a secure and sustainable footing for the long term and we are not confident that the new system will guarantee this. There are many unanswered questions – for example the size of the devolved funding, whether it will receive an annual uplift, and how the process will work locally.”
The NHF also said the policy would be particularly problematic for the sheltered housing sector and a better solution would have been to retain the existing system. It also criticised the plan to cut supported housing rents from 2017-20, saying this would mean a loss of £194m for supported housing providers and “will inevitably jeopardise some of the services as some schemes are already operating on very low margins”.
The government had already said that “specialised supported housing”, a small category of supported housing, would be exempt from the rent cuts, and Green said today that this exemption would be extended to refuges, full mutuals/co-operatives, alms houses and community land trusts.