The future funding of supported housing. end homelessness together Paul Anderson Homeless Link

Since 2003: Background Supported housing has been funded by two main sources: 1.Housing benefit (HB); and 2.Supporting people/SP legacy arrangements. end homelessness together

HB covers: Housing benefit (HB) 1.Core rent; and 2.Eligible service charges – i.e. the costs incurred via the cleaning of communal areas and exterior windows. end homelessness together

Supported housing: HB continued… Currently, HB charged for supported housing is usually paid above the Local Housing Allowance (HB for those who rent in the private sector). There are, however, different rules depending on whether the provider is a Registered Social Landlord or not. HB can be used to pay for short stays – i.e. a week long stay in emergency accommodation. It is paid directly to the landlord, unless the claimant explicitly states otherwise. end homelessness together

Support costs: Supporting People (SP) Supporting People (or a local successor) is used to cover a person housing- related support costs. These include:  Development of particular skills, such as money management or tenancy sustainment;  Providing advice around permeant housing options; and  General counselling and emotional support. end homelessness together

In 2009: SP continued… The government removed the ring-fence from the Supporting People fund. As a result, local authorities were no longer obliged to spend it on housing- related support and could instead allocate it according to their local priorities. The removal of the ring-fence has seen spending on housing-related support fall by an average of 45% across England. Some local areas have gone further, cutting their spend on housing-related support by 80% - 90%, as compared to previous financial years. end homelessness together

In 2009: SP continued… The government removed the ring-fence from the Supporting People fund. As a result, local authorities were no longer obliged to spend it on housing- related support and could instead allocate it according to their local priorities. The removal of the ring-fence has seen spending on housing-related support fall by an average of 45% across England. Some local areas have gone further, cutting their spend on housing-related support by 80% - 90%, as compared to previous financial years. end homelessness together

What’s the distinction? HB v. SP The line between what constitutes a housing management cost (a cost that is HB eligible) and a support cost (a cost that is SP eligible) is often difficult to define. For example, what’s the difference between advising someone on money management (a support cost); and chasing someone up for rental arrears (a housing management cost)? At present, there is a suspicion amongst some government departments that providers have tried to offset wider cuts to SP by increasing the number of activities they class as housing management costs (-i.e. costs that are HB eligible). The current annual HB Bill stands at £26bn, and is projected to rise further. end homelessness together

A new model: Universal Credit (UC) Under UC, claimants will be paid monthly. Rental costs will be paid to the tenant directly, rather than the landlord, unless an alternative payment arrangement is granted. Rental costs will be agreed with the Department for Work & Pensions (DWP) and not the local authority. Once someone has a live UC claim, the amount of money they receive will be assessed (and potentially altered) on a monthly basis. end homelessness together

Concerns: UC continued The UC model has provoked a number of concerns amongst providers, including:  Direct payments to claimants increase the likelihood of rent arrears;  As payments are made on a monthly basis, it may jeopardised the financial viability of short-stay services;  People who are not used to receiving substantial sums of money in one go may struggle to budget effectively;  The DWP has a limited understanding of local factors and are, therefore, not best placed to make decisions on local rent levels. end homelessness together

Adapting to the new system: People with support needs & UC People with support needs will be one of the last cohorts to be incorporated into UC. People with support needs may also be entitled to alternative payment arrangements. If so, they will be able to receive payments more frequently. DWP guidance states that people with experience of homelessness should be considered for alternative payment arrangements. In order to receive and alternative payment arrangement, people will have to self declare. end homelessness together

Specified accommodation: Supported housing & UC At present, there are four kinds of supported housing (Specified Accommodation) that are excluded from UC. These include: 1.Accommodation which already meets the definition of exempt accommodation; 2.Accommodation where the claimant has a) been admitted to receive care, support or supervision; and b) does indeed receive care, support or supervision; 3.Refugees for people fleeing domestic violence; and 4.Homeless hostels managed by unitary or lower-tier local authorities where care, support or supervision is provided. end homelessness together

An interim solution: Supported housing & UC continued… In practice, all specified accommodation should continue to have its rent covered by HB, even if the claimant has an active UC claim. This will allow them to continue to receive the higher rates of HB associated with supported housing. However, this arrangement is only intended as an interim solution, while the government works out what to do next. As yet, no definite decisions have been made as to how supported housing should be funded in the future. end homelessness together

1% annual rent reduction: The current context As part of the Summer Budget it was announced plans “to reduce rents paid by tenants in social housing in England by 1% a year for 4 years from 2016.” There has been a lot of lobbying work to try and get supported housing exempted from this policy. As a result:  Service charges have been removed, meaning the reduction will only apply to core rent. This applies to all social rents, not just those charged for supported housing.  Supported housing has been given a year-long exemption from the policy, meaning it will apply from April 2017, rather than April end homelessness together

LHA as a maxima for social rents: The current context continued… As part of the Spending Review/Autumn Statement 2015, the government announced plans to “cap the amount of rent that Housing Benefit will cover in the social sector to the relevant Local Housing Allowance”, including “the Shared Accommodation Rate (SAR) for single claimants under 35” from April Again, as with the 1% annual rent reduction, a great deal of lobbying work has gone in to trying to gain an exemption from the policy for supported housing. On 01 March 2016, it was announced that supported housing would enjoy a year-long exemption from the policy, meaning it will apply from April 2017, rather than April end homelessness together

Some figures: The current context continued… So far, HL has received information from 52 services on 13,621 bed spaces. Of those bed spaces, 9283 can be used to calculate the relevant shortfalls against the LHA one bed room rate, and 10,995 against the SAR. Our figures suggest that services’ rental incomes would decrease:  by an average of 50% annually (a loss of approx. £21m) if rents for the applicable 9283 bed spaces were capped at the LHA one bed room rate; and  By an average of 68% annually (a loss of approx. £59m) if rents for the applicable 10,995 bed spaces were capped at the SAR. end homelessness together

By the end of 2016: What happens next? All geographical areas will have some people claiming UC. The full online portal will be open. There will be no new claims for JSA or ESA. end homelessness together

Post 2016: What happens next continued? From 2017, existing JSA and ESA claimants will begin migrating across to UC. At some point after 2018, HB is due to be phased out. This leaves important questions as to how supported housing will be funded in the future. end homelessness together

Post 2016: What happens next continued? From 2017, existing JSA and ESA claimants will begin migrating across to UC. At some point after 2018, HB is due to be phased out. This leaves important questions as to how supported housing will be funded in the future. end homelessness together

Research: Making a decision The DCLG & DWP are currently funding a piece of research to assess:  The size of the supported housing sector – whether or not it has shrunk or expanded in the last few years;  How much HB is spent on supported housing – whether this amount has shrunk or expanded in the last few years. A survey has been sent to all unitary and lower-tier local authorities, as well as providers of supported accommodation. A final report is due in November end homelessness together

Options: What system might they choose? Based on the findings from the DCLG & DWP’s evidence review, the government is likely to select one of the following options: 1.A small scale version of the current system – supported housing continues to have its rental costs met through a paired down version of HB. 2.A localised ring-fenced rental fund for supported housing. 3.A localised rental fund without the ring-fence. 4.A localised rental fund, combined with some form of statutory obligation – i.e. a right-to-support 5.Rent for supported housing is reincorporated into UC. 6.An entirely new option. end homelessness together

Pros and cons: Option one A paired down version of HB: Pros:  It works currently.  It covers short stay services and allows people to move mid-way through the month.  It retains the connection with people’s individual rent entitlements. Cons:  It runs contra to government policy.  Is it realistic to keep HB for just one kind of accommodation?  The DWP are concerned that the current HB systems lowers work incentives for claimants – i.e. the taper rate is too severe. end homelessness together

Pros and cons: Option two Localised rental fund with a ring-fence: Pros:  It’s simple – taking HB out of the benefits system altogether.  Maintains the link between the local authority and local services.  Improved work incentives – i.e. tenants pay no rent.  Ensures quality by precluding rogue services not approved by the local authority.  The ring-fence protects the money from being spent elsewhere. Cons:  It removes the connection to the individuals rent entitlement.  The funding could be eroded year-on-year, depending on wider deficit reduction strategies.  The ring-fence undermines localism. end homelessness together

Pros and cons: Option three Localised rental fund without ring-fence: Pros:  Similar to option two. Cons:  Again, similar to option two.  Without a ring-fence, local authorities might well choose to spend it on more to spend it on other priorities.  Given the vagaries of local politics, divisions could open up between popular and unpopular groups. end homelessness together

Pros and cons: Option four A localised rental fund, combined with some form of statutory obligation: Pros:  Money could not be spent on other statutory priorities.  Funding would be explicitly linked to the individual.  It would fit with localism. Cons:  It involves the creation of an entirely new duty.  It involves a threshold – you’re either in or you’re out.  It could degenerate into a postcode lottery. end homelessness together

Pros and cons: Option five Rent for supported housing is reincorporated into UC: Pros:  It’s consistent with the world outside of supported housing.  It has better work incentives than HB – the taper isn’t quite so severe.  It maintains the connection to the individual’s rent entitlement. Cons:  All of the problems that led to HB for supported housing being removed from UC in the first place. end homelessness together

Pros and cons: Option six An entirely new option: Pros:  It could avoid all of the above problems. Cons:  It’s probably not possible. end homelessness together

Your thoughts: Discussion points Of the following options, which (or which combination) is the most important and why?  Working with your local authority, rather than the DWP, to set local rent levels.  Keeping some form of link between the individual and their rental entitlement – i.e. rent per person vs. a block grant.  Better work incentives than those that are currently offered by HB.  The flexibility to secure rental payments for short-term services. end homelessness together

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