Coming in to land

George Osborne has not held back in swinging his axe at the housing sector since becoming chancellor. Just two months into office his deficit reduction measures have seen £450 million hacked away from the Homes and Communities Agency’s budget and £4.2 billion wiped off the housing benefit bill. The message seems to be nothing is sacred. And now social housing providers are, understandably, afraid Mr Osborne’s axe will fall on the programme providing help for the most vulnerable people in society.

The £1.67 billion Supporting People programme funds services ranging from tenancy support through to one-on-one sessions to help tackle drug and alcohol abuse, domestic violence and debt management advice. Often the recipients are those otherwise excluded from society, including disabled people and criminals. For those receiving the services, the intervention and support is invaluable, and for the housing organisations which provide services they are an important source of revenue.

But the argument for protecting investment in Supporting People is equally compelling. SP is a preventative programme. According to research from consultant Cap Gemini, the £1.67 billion spent annually in the name of SP generates to a £3.41 billion saving for the public purse. Just to spell this out for Mr Osborne, every penny spent on housing related-support saves more than twice as much on the cost of hospitalisation, prison and other complex and costly interventions.

There was initial relief across the sector following the emergency Budget last month, when the £1.67 billion SP was left unscathed and the coalition government pledged to protect frontline services. It appeared that the programme could continue to provide a safe landing for the vulnerable. But while the government giveth with the one hand, it taketh with the other: Mr Osborne quietly removed Supporting People’s separate £30 million administration budget, leaving cash-strapped local authorities to shoulder the costs. The move drove fear back into the heart of the service providers.

Amid the uncertainty, Inside Housing has teamed up with Capita Software Services to find out exactly what the sector thinks the future holds for Supporting People. Between 27 May and 25 June we polled 103 social housing providers on the subject. Their answers reveal widespread pessimism and confusion. Can SP continue to improve the lives of its users?

In limbo

The results show that 87 per cent of respondents do not expect the new government togive SP more attention or funding. At the same time, 91 per cent of providers say that Supporting People services are ‘integral to and complement other key social agendas’. Despite this backdrop, it found that almost half of providers are planning to cut SP services in the next 12 months to make savings as they await ministers’ autumn spending review for further news.

‘We are in limbo-land,’ says Helen Razdan, chief executive at Self Help Community Housing Association. ‘We don’t have a clue what is going on. We know there will be cuts, but we don’t know how much or when. There are so many different messages out there; some say we will be hit with 20 per cent to 25 per cent cuts, and others argue that the services are just too important to undergo that kind of reduction. We just want to be told what is happening so that we can do something and try and get fundraising. It’s very difficult.’

Vic Rayner, chief executive of supported housing umbrella body Sitra, agrees there are mixed messages emerging from the market. ‘We have been asking members about their concerns and reactions to the emergency Budget, and the result has not been at all definitive. There is talk about new cuts, but none have happened yet - they are all anticipated.’

This state of confusion and concern should come as no surprise. Aside from the economic pressure exerted on the services now, Supporting People funding has already suffered at the hands of the previous government. When first launched in 2003, SP grant totalled £1.81 billion a year. Today it has dropped to £1.67 billion, following steady falls in the intervening years.

Then in April last year the ring fence that had separated Supporting People grant from the rest of the larger ‘area-based grant’ was removed. This left the once-protected funds open to internal plunder by local authorities to pay for other statutory services. An Inside Housing survey in March 2009 revealed widespread anxiety about the longer term impact of the move (Inside Housing, 13 March 2009).

It has proven well-founded. Today’s survey reveals that since the ring fence went in April 2009, 36 per cent of respondents have already experienced a ‘significant reduction’ in their Supporting People budget. This confirms fears that while central government has not yet moved to cut the grant funding, local authorities are perceiving the loss of protection for the funds as a green light to divert the cash elsewhere.

‘That surprises me,’ says Ms Razdan. ‘It suggests the statutory services are already trying to get their hands on the money. It is quite high early on. A lot of small organisations will disappear off the face of the planet.’

Jake Eliot, policy officer at the National Housing Federation, says the biggest implied threat from this finding is that local authorities are making ‘in-year cuts’, meaning that they are removing previously committed funds. ‘We have heard of a number of local authorities that are considering doing this. The providers are already delivering these services, so that would be very concerning.’

Until now, Isle of Wight Council was thought to be the only local authority to have decided to spend some of its £5.5 million grant on non-SP services in an attempt to cut an £11 million deficit from its overall 2010/11 budget. As a result of the decision - which sparked controversy in February - there were fears that contracts would not be renewed and 1,100 of the 2,000 vulnerable people receiving services would be left without support. However, Paul Bakewell, supporting people manager at Isle of Wight Council says that it has cut the SP budget by £1.5 million - or 25 per cent - rather that the reported 50 per cent. As of two weeks ago, the existing contracts have been extended for the first quarter at current rates and then extended until next March at a rate around 25 per cent lower. He says 43 out of 44 providers agreed to this and, as a result, only around 230 people overall will be affected.

Job insecurity

This cut tallies with the survey findings. Of the 36 per cent of respondents whose budgets have shrunk since the ring fence went, the average cut was a sobering 24 per cent. Several SP providers contacted by Inside Housing claim to have been asked to reduce their costs by 25 per cent if they are to win future contracts. As staff are the main cost overhead, this is where savings are likely to be made first.

For example, Ms Razdan says that she has already lost £60,000-£70,000 of a £330,000 contract for support services, mainly one-on-one support. Self Help Community Housing Association has reduced its hourly rate from £25.71 to £19.95 - but there is little remaining scope to reduce it further.
‘It is already a very lean machine,’ she says. ‘It is dreadful at the moment; people are stressed out and very negative. We did a job survey in the office and job security is the biggest concern right now. Staff morale is very low. It is desperate here because we are so small [10 staff] - just imagine what it must be like at bigger departments.’

Another point to consider is that the contracts themselves are subject to change. While providers such as Self Help Community Housing Association are on yearly contracts, others have much longer agreed service contracts.

Michael Patterson, director at consultancy Support Solutions, warns that these are ‘not worth the paper they are written on’. ‘They are mythological positions,’ he says. ‘No local authority is going to allow contracts to continue for three to seven years. All the contracts have break clauses, so if you are sitting comfortably then it’s time to get uncomfortable.’

Peter Francis, board member for York Housing Association says he bid on three or four SP contracts and was unsuccessful despite having already dropped prices. He pays housing support staff £8 per hour, but says that other providers will be paying minimum wage - £5.80 an hour - in order to make the maths work. ‘I thought we were being competitive, so if we weren’t in the running, what were the others offering? It is as though providers are getting the contracts and working out how to make the costs work later. If you play down the line you will struggle. The service will be reduced and become third rate.’

Service quality

Fears that service quality will suffer are widespread. The ‘closure of services’ ismost strongly feared with 74 per cent of respondents ranking it their number one concern, followed by a ‘reduction in service offering’, and loss of contracts - with 74 per cent and 59 per cent respectively. Furthermore, 47 per cent of providers say that they plan to cut certain service provisions in the next 12 months in order to make savings. Of these, 30 per cent say that older people services are most likely to be hacked back, and 47 per cent cite ‘other’ service types.

Mr Francis reckons that this could be because older people tend to complain less than younger people about lack of intervention, while Ms Razdan mentions a perception that older people need less face-to-face time. According to Ms Rayner, out of 1 million people receiving Supporting People services, around 800,000 are older people, so this figure could be misleading and it is dangerous to assume that older people sit back and don’t make a fuss.

Ms Rayner also maintains that cuts will not necessarily affect standards as ‘quality has been strongly embedded into the sector, and is an integral part of how it is delivered’. Roger Birkenshaw, housing director at Capital Software Services, agrees: ‘We can’t escape the fact that the housing sector will have to tighten it’s purse strings, but we can work together to ensure certain functions are prioritised and citizens feel they are receiving the service they deserve.’

Another surprising finding of the survey is the lack of impact the personalisation agenda is having on the market. A significant 55 per cent of people say the drive to give individuals more choice and control over the services they receive has made ‘no difference’ to Supporting People services. Just 24 per cent say it has improved services, while 21 per cent believe that the personalisation agenda has made services worse.

Mr Patterson argues this could soon change: ‘The new government wants to progress this agenda quicker than the last one did. This is because the [personalisation] pilots are saying that you get better support for less money. For those that haven’t noticed an impact, then they soon will do.’

Another trend that the survey picks up on is councils now sharing Supporting People work between housing and adult care, rather than it remaining a purely housing function. Almost half - 45 per cent - of respondents say that the service will make this move during the next 18 months. Just 32 per cent think that it will be retained by housing, while 23 per cent expect SP to remain a stand-alone unit.

‘It should come under social services really,’ argues Mr Francis. ‘Some of these clients have serious mental health issues - support officers are not equipped to deal with that.’

But according to Mr Patterson, much more fundamental change is afoot. He claims the writing has been on the wall for the programme for some years. ‘Supporting People is finished,’ he predicts. ‘Our view has always been that it would be abolished by 2011. The lifting of the ring-fence is stark evidence of this; what value is there if it can’t control its own budget? Most local authorities will be looking to abolish their Supporting People teams.’

Instead, he argues that it is time providers adapt and expand their service offerings to appeal to the larger, but more competitive, £5 billion pool of cash that makes up the area based grant. Providers, he says, should check their local area agreements to see which boxes they can tick and what funding they could be eligible for.

‘Most Supporting People teams will see themselves as having a future, but should be manoeuvring themselves into a new strategic position to take advantage of area based grant. They need to change; to remodel and diversify.’

This plan of adapting to the forces of change is supported by Mr Eliot. He argues that there is opportunity for providers if they appeal to the health sector. ‘The outlook is profoundly uncertain,’ he says. ‘On the one hand there is a big threatening cloud out there, but on the other there is the long-term health and well-being agenda that providers should be looking at. Providers have to pitch themselves as being part of an early health intervention. They need to better communicate the value of what they do and how they are a means of reaching otherwise excluded groups.’

It looks like this message will need to be delivered not just to Mr Osborne, but to cash-strapped local authorities across the UK. Otherwise, the government’s pledge to protect frontline services from cuts will be rendered largely irrelevant, and it will be society’s most vulnerable who suffer as services decline.

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