MPs urge government to drop LHA cap plan for supported housing

A joint report by the Communities and Local Government (CLG) and Department for Work and Pensions Committees on the future of supported housing finds the LHA rates – used for the private rented sector – are an “inappropriate starting point” for a new funding model. It argues instead for the introduction of a new supported housing allowance, banded to reflect the actual cost of different types of provision.

Approximately 716,000 people live in supported housing in the UK. The government plans to cap housing benefit for supported housing at the LHA rate from April 2019, with local authorities providing top-ups for costs above this rate through devolved ringfenced funding.

But the committees found that, unlike the LHA rate, the cost of provision is largely consistent across the country so some areas will rely on top-ups more than others. They are concerned providers will be deterred from investing in particular areas, leading to disparity in supply and services.

The committees suggest the government should guarantee a ringfence around the council top-up funding – and central funding of the top-up – for the duration of the next parliament. Inside Housing has previously reported that developments have been put on hold because of uncertainty over funding.

The MPs’ report suggests a supported housing allowance – calculated using a formula made up of a fixed amount for provision and a smaller, variable amount that reflects differences in land costs – would mean tenants only need top-ups in “exceptional circumstances”. A capital grant scheme for new developments could mean rent and service charges for new accommodation remain largely consistent with existing stock.

In a joint statement from the three largest sheltered housing providers in the UK, Jane Ashcroft, chief executive of Anchor, Clare Tickell, chief executive of Hanover and Bruce Moore, chief executive Housing & Care 21, said: “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.”

David Orr, chief executive at the National Housing Federation, said: “With such strong cross-party consensus, it is clear that the next government must change course. 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.”

He urged the government to consider the proposed changes ahead of the publication of a Green Paper setting out future plans for supported housing.

John Glenton, executive director of care and support at 52,000-home Riverside, who gave evidence to the CLG Committee, said the government’s proposals would create a “postcode lottery of funding”.

“In areas where LHA rates are lower, such as the North, providers will struggle to build much-needed supported housing,” he said. “In fact, some existing schemes would be at risk of closure.”

Melanie Rees, head of policy at the Chartered Institute of Housing, agreed the proposed allowance might be “more responsive to the hugely varied nature of supported housing across the UK”.

“If adopted by government, it will be crucial to involve the sector in any modelling so that any drawbacks can be identified and addressed,” she added.

The committees’ report recommends the government establish national standards for supported housing in England and Wales, with an emphasis on improving tenants’ quality of life.

It also calls on the government to work with Women’s Aid and providers to develop a separate funding system for women’s refuges and, separately, suggests that 18 to 21-year-olds leaving supported housing should be eligible for housing benefit – unless the provider decides it is appropriate for them to return home.