Nowhere to turn

It is a shocking thought that people with learning disabilities are losing their homes because of one badly written paragraph in the housing benefit rules. But that is exactly what happened in a case ruled on by the High Court in September.

Sam*, 28, has a learning disability and cannot live independently without a care worker. He moved into a shared house with two other men with learning difficulties in October 2004. Walsall Council’s social services department hired Lifeways, a care organisation, to support the men.

At first the council paid £195.27 per week in housing benefit which covered Sam’s rent - including the cost of adaptations to his accommodation.

But a year and a half later it cut the benefit back to £65 per week, following a tribunal judgement in a similar case in Sheffield in June 2006.

As a result the landlord, an unregistered housing association called Rivendell Lake, told its bank it would be unable to keep up mortgage payments and the house was repossessed. Sam was rehoused by social services in a property where the rent was fully covered by housing benefit. After several appeals against the decision to cut the benefit, his bid to get a judicial review was turned down by the High Court.

Desmond Rutledge, a barrister on Sam’s legal team, says: ‘It is the tenants with learning disabilities who are the victims in all of this. They were settled and had made a life for themselves for a couple of years but the judgement [in the Sheffield case] came out and they got booted out.’

The impact of the cuts on Sam and his landlord - which was almost put out of business - has been severe. It will also be felt more widely by providers across the UK.

Councils have begun to scrutinise their caseloads since the first judgement in Sheffield and benefits have been cut or capped at several schemes.

The upshot is that some housing associations have stopped developing these schemes in some areas. As a result some tenants have been unable to move into suitable accommodation. Others, like Sam, have lost their homes.

The National Housing Federation, Mencap, Housing Options, the Association for Real Change and the Association for Supported Living, are conducting a survey of housing providers to assess the extent of the benefit reductions and their impact on tenants and providers. It has uncovered a number of examples of people being made homeless as a result of benefit cuts and several other appeals against the cuts have been made around the country.

Mark McGoogan, national development manager at Golden Lane Housing, the housing arm of charity Mencap, says the Sheffield and Walsall cases have far-reaching implications. ‘We think there are many thousands of people who will be affected or potentially affected by the judgements and their consequences,’ he says.

All in the definition

The reason for the benefit cuts in the Sheffield and Walsall cases hinged on the definition of supported housing used in the benefit regulations. Councils will pay people in supported housing above the normal rate of housing benefit if the support is provided ‘on behalf of’ the landlord. In both cases, support was provided by an organisation other than the landlord, which was paid by social services.

In a series of tribunals, the social security commissioner, backed by the High Court, ruled the relationship was between the support provider and the council, so the care was not provided on ‘behalf of’ the landlord. As a result, claimants could only receive a lower rate of housing benefit.

The rules are slightly different for registered social landlords, but they can still cause benefit cuts. Housing benefit will pay all of the rent in RSL-run supported housing as long as it is deemed reasonable. But if the Rent Service - which assesses rents and decides if they are in line with the local norm - rules the rent is too high or the property is too large, then housing benefit will not cover the full amount.

The rents tend to be higher than the benefit rates normally paid for unsupported housing because the schemes provide a higher level of housing management, such as additional repairs, adaptations, or monitoring of the care provider. The housing management costs are part of the service charge, which is paid through housing benefit along with the rent. The costs of the care company are usually paid by social services or the government’s £1.7 billion Supporting People fund.

Housing benefit for this type of supported housing is problematic for councils because they end up footing some of the bill when the full rent is subsidised. Under the housing benefit rules, the Department for Work and Pensions will only subsidise 60 per cent above the normal benefit level and councils pay the remaining 40 per cent from their own funds. They have to justify the payments to district auditors. Walsall, for example, paid out £222,590 from its general fund.

The situation is made more complicated because some people claim that landlords have tried to profiteer from the higher rates of housing benefit. The rules were partly intended to stop this but they have caught out guilty and innocent parties alike.

Devastating

Tony Leatherbarrow, former director of Rivendell Lake Housing Association, says the organisation was almost put out of business by the cost of fighting the rent tribunals and by the shortfalls in housing benefit.

The association went into arrears on its mortgage on Sam’s house and the property was eventually repossessed by the bank.

Mr Leatherbarrow says the organisation was transparent about how its rent was spent and had 25 to 30-year mortgages. ‘There may have been others looking for 10-year mortgages to make a quick buck but we weren’t one of them. Every penny was seen in the budget,’ he says. ‘We weren’t looking to fleece them [the council], but work with them.’ Now Rivendell has almost ceased to exist and is part of an umbrella company.

The tribunals devastated us,’ he says.

A spokesperson for Walsall Council says it reviewed all housing benefit claims it had for supported housing of this type following the Sheffield case and found the accommodation provided by Rivendell did not qualify for enhanced levels of benefit. She adds that the council had not rejected the claim for additional benefit in order to save money.

Some social landlords have stopped developing schemes in parts of the country where housing benefit will not cover the full rent. Alan Johnson, managing director of Progress Care Housing Association, says he has turned down 20 per cent of requests for new developments - about £2 million worth of schemes which would have housed at least 24 people - because housing benefit will not pay the full rent. On top of that, the association is subsidising the rents of tenants in 10 to 12 schemes around the country where housing benefit leaves them in arrears, at a cost of nearly £21,000 a year in one scheme alone. ‘We cannot run schemes at a loss of that amount,’ says Mr Johnson.

A spokesperson for the DWP says: ‘We recognise that the way care is provided has changed over the years and are committed to a review of the housing benefit rules on supported accommodation. We are currently gathering information and commissioning research to support this review.’

But unless a proper solution is found to this legislative mess people with learning disabilities, like Sam, will continue to risk homelessness through no fault of their own.

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