Two key Commons committees say the government should scrap plans to base rent allowances for supported housing tenants on rates used for claimants in the private rented sector.
In a joint report, the Work and Pensions and Communities and Local Government Committees conclude the use of the Local Housing Allowance (LHA) rate is ‘inappropriate’.
Instead, the reports pitches the case for a new Supported Housing Allowance, banded to reflect the actual cost of provision in the sector.
The committees note concerns that the government’s proposed reform could lead to a serious shortfall in the availability of supported housing.
Ministers, the report says, are right to consider an alternative funding mechanism for emergency accommodation, given the inability of Universal Credit to reflect short-term changes in circumstance.
The committees recommend grants to local authorities, which can commission accommodation and pay providers.
Also recommended is a separate funding system for women’s refuges, with government urged to work with Women’s Aid and providers to devise it.
The committee says it is ‘essential’ refuges are able to operate as a national network, unrestrained by local admissions restrictions.
Richard Graham MP, co-chair of the inquiry and member of the Work and Pensions Committee, said: “Supported housing is deeply valued by those who live in it and contributes enormously to their independence and wellbeing.
“We support the government’s aims to reform funding for this vital sector to ensure quality and value for money, protect and boost supply, and provide greater local control.
“But we are concerned that the proposals, as they stand, are unlikely to achieve these objectives.
“Our recommendations seek to improve the government’s plans and ensure it delivers on our common goal of a sustainable, long-term funding solution for supported housing.
Helen Hayes MP, co-chair of the inquiry and member of the Communities and Local Government Committee, acknowledged the proposals as a cause of “considerable” concern.
She said: Supported housing providers are reconsidering investment plans, shortfalls in the levels of service are expected to get substantially worse and vulnerable tenants are anxious that they may no longer have the guarantee of a home for life.
“Ministers must intervene immediately by scrapping the proposed Local Housing Allowance reform.
“The sector needs a far more suitable funding system that recognises the consistent cost of provision across the country and provides long term reliability.
“Supported housing caters for an incredibly diverse range of people, from long-term sheltered accommodation for older people to short-term emergency housing for those who have recently become homeless or are fleeing domestic abuse.
“The government is right to consider alternative funding for emergency accommodation and we urge ministers to also recognise the unique challenges of refuges with a distinct funding model.”
Under the current proposals for supported housing, core rent and service charges for supported housing tenants would be funded up to the level of the applicable LHA rate.
For costs above this, the government would devolve ring-fenced top-up funding.
But the committee found that the cost of provision is largely consistent across the country, unlike the LHA rate.
Consequently, some areas will rely more on top-up than others.
As this is considered a less secure funding source, the committees are also concerned that providers will be put off investing in particular areas, creating a disparity between the supply of homes and services across the country.
The committees argue that a Support Housing Allowance would ensure tenants only require top-funding in exceptional circumstances, with the Allowance calculated according to a formula made up of a fixed amount for provision, which is consistent between areas, and a smaller variable amount that reflect differences in land costs.
Central funding of the top-up should be guaranteed for at least the duration of the next Parliament to provide greater certainty.
Funding levels should be regularly reviewed to ensure the top-up fund keeps pace with increases in the cost of provision and changes in local demand.
Other findings, recommendations and conclusions include:
- The government should ensure providers are aware that supported housing tenants claiming Universal Credit will not be worse off if they seek employment. A job should be seen as an important milestone towards independence and self-sufficiency
- The government should establish a set of national standards to enable monitoring of the quality of provision in all supported housing in England and Wales, with a specific emphasis on improving the quality of life that tenants experience.
An estimated 700,000 people live in supported housing in the UK, from older people and those with learning and physical difficulties, to survivors of domestic violence.
Government acknowledges that supported housing saves in the region of £3.5bn per year, through lower costs for the NHS, social care and criminal justice systems.
The system is facing considerable demand, with a reported 17,000 shortfall in supported housing places; a figure that could double within the next three years without government intervention.
David Orr, chief executive at the National Housing Federation, said that with such strong cross-party consensus, it is clear that the next Government must change course.
He said: “The joint committee has clearly stated that it is wrong and inappropriate to base the funding of services for vulnerable and old people on the lowest rent levels of the private rented sector.
“We are pleased to see that they have instead recognised the viability and importance of our alternative proposals.
“We strongly urge the next government to take heed of the report’s recommendations and reconsider the proposed changes ahead of the publication of the Green Paper.
“Supported housing provides a vital lifeline for hundreds of thousands of vulnerable people across the country who need extra support to live independently.
This issue must remain a top priority – housing associations will continue to engage constructively with ministers and officials after 8 June.”
In a joint statement, the chief executives of three of the largest specialist providers, welcomed the select committee’s report. Anchor’s Jane Ashcroft CBE, Hanover’s Dame Clare Tickell and Housing & Care 21’s Bruce Moore said: “Sheltered housing plays a vital role in helping reduce pressure on an overstretched NHS.
“Many providers are deeply concerned that the government’s proposals would have a major impact on existing services that help many older people to maintain independent lives.
“We are encouraged that today’s report from the joint select committee recognises the very serious issues raised by the sector around the proposed funding model and hope that the government is listening.
“It’s crucial that sensible solutions are put in place to protect the sheltered housing of today and secure the housing we need for tomorrow.”
John Glenton, Riverside’s executive director of care and support, who gave evidence to the inquiry, said the report recognised the “damaging impact” that introducing Local Housing Allowance caps to supported housing will cause.
He said: “It’s clear that MPs from all parties understand the proposals will create a postcode lottery of funding, affecting elderly and vulnerable people.
“In areas where LHA rates are lower, such as the North, providers will struggle to build much-needed supported housing. In fact, some existing schemes would be at risk of closure.
“Supported housing is a vital and cost-effective alternative to people relying on already stretched social care and health services. The government’s proposal would leave tens of thousands of vulnerable people facing uncertainty about how they are going to meet their basic housing costs.
“Whilst we support the government’s aim to put supported housing on a sustainable long-term footing, this is not the way to do it. We welcome the committees’ practical alternative funding proposal, a Supported Housing Allowance. This wouldn’t cost the government a penny more.
“It’s too important to get this wrong.
The Scottish Federation of Housing Associations (SFHA) also gave evidence and welcomed the report.
Sarah Boyack, SFHA head of public affairs, said: “We warmly welcome this report and its recognition of the huge cost savings that supported housing offers when compared to hospital and institutional care.
“The content and tone of the report reflect the very grave concerns that the SFHA and other witnesses shared during the evidence session.
“The recommendations are both sensible and achievable, and we back the committees’ call on the UK government to take this opportunity to pause, take heed of the expert evidence and rethink its plans for funding supported housing in the future.”