For the better part of a year I have been blogging on a regular basis about the threat to specialist supported housing services posed by the government’s announcement to cap rents to the maximum paid through the Local Housing Allowance (LHA). See here, here and here, for some examples.
BHT featured in a special report on Channel 4 News highlighting our concerns. Almost every other provider of specialist supported housing has also expressed their concern. The National Housing Federation launched a campaign in the summer to save supported housing.
The scale of the problem was recognised recently by Theresa May in response to a question from Jeremy Corbyn relating to the risk that the cap poses to women’s refuge services.
Last week the government announced its plans for the future funding of supported housing services. While there is some temporary relief, the risk remains of serious concern.
Rather than imposing the cap from April 2018, it is now scheduled to be imposed from April 2019.
Rt Hon Damian Green MP
This, according to the Cabinet Minister, Damian Green MP, is to allow time for the details of the new future funding regime to be worked out and arrangements to be put in place.
Yet the government still intends to proceed with a 1% rent reduction for three years from April 2017.
There seems to be a certain lack of logic here. On the one hand the government is not implementing the LHA cap because it has heard concerns about the risk to the financial viability of specialist supported housing yet at the same time it is cutting income.
(It is worth remembering that the 1% reduction was a U-turn on a previous commitment by government made as recently as 2014 to allow increases in rents by CPI +1%).
It appears that the government intends that rent and service charges in specialist supported housing will be funded through housing benefit or universal credit up to the LHA rate.
To make up the shortfall, top up funding will be made available to local authorities and this will be ring fenced for support housing. Ring fencing is to be welcomed although there used to be ring fenced funding for supported housing as part of the old Supporting People regime but the government removed it a few years ago (2013 I think). As a consequence, warnings over the loss of funding for supported housing came true.
The government provides an assurance that there will be no loss of overall funding compared to current expenditure, But my serious concern is that the value of funding being made available to local authorities will be eroded in future years. Will it, for example, be indexed linked? And if LHA is frozen in the future, will the local pots be increased correspondingly or will there be an overall contraction in the amounts being committed by government?
Then there is the administrative costs associated with creating two systems from one. Currently it is all administered through housing benefit. From 2019 local authorities will have to have additional staff in place to administer the local pots. Where is the efficiency in that? And who will pay for this additional, unnecessary cost?
Currently the funding is made available on a national basis. However, in the future, with the funding going to local authorities, will more mobile groups such as rough sleepers, ex-offenders and victims of domestic violence lose out if local connection rules become tighter, as I am sure they will?
One positive feature is the announcement that the Shared Accommodation Rate will not apply to people living in the supported housing sector which (if I understand it correctly) means that some of our specialist supported accommodation that would have been unaffordable for those under 35 will no longer be out of their reach. Unfortunately, the same exemption will not apply to our non-supported housing, resulting in many of our homes being beyond the reach of those under 35 who will remain eligible for rooms in shared houses only.
The devil will be in the detail. I’m not completely disheartened at this stage, but there are inherent risks in the limited detail that has been made available so far.
While there are some things to welcome in the announcement, there are many things that still cause me concern. At least, I think, the government has heard the concerns BHT and others have expressed.