A local problem?

Damian Green, the new work and pensions secretary, last Thursday revealed the government’s plans for the future funding of supported housing.

It followed a tense summer full of fierce lobbying from housing organisations against the proposed ‘Local Housing Allowance (LHA) cap’. Mr Green’s announcement - rushed out just before parliament rose again for party conference season - was not the response that the sector had hoped for. The minister said he would press ahead with the LHA cap and transfer the extra funding to a pot shared by local authorities. This pot will be ringfenced, however it is unclear for how long. More than one housing figure has called the result “disappointing”.

Likely effects

So how might the government’s plans affect supported housing and what is the sector going to do in response?

Because supported housing is more expensive to build and maintain, capping rents at current LHA levels do not reflect the true costs of supported housing.

Ministers did, however, make a number of important concessions on Thursday for supported housing. The LHA cap will not be implemented until 2019/20. The shared accommodation rate - which limits under-35s to a room in a shared house - will not apply. Short-term accommodation, such as hostels and refuges, may have a different funding mechanism entirely. Refuges and almshouses - but not hostels - were exempted from the 1% rent reduction.

Originally the government intended to use Discretionary Housing Payments (DHPs) to top up the shortfall in supported housing. But Mr Green said the government instead intends to devolve a pot of money “for disbursement locally” to English councils, with the Welsh and Scottish governments getting an equivalent amount.

This will mean that supported housing tenants will no longer be automatically entitled to claim additional housing benefit on top of their LHA. Instead, providers will have to count on local authorities to agree to fund their schemes and could face competing with other local providers for the cash.

Jane Ashcroft, chief executive of Anchor, says: “We are still back to a lack of certainty and our ability to plan for the future… I’ve no problem at all with working with councils to do what’s needed locally but our experience is when things don’t have a central remit and consistency that you get a postcode lottery and you get different treatment across the country.”

Providers are only too aware they would be appealing for funding from financially stretched local authorities. One housing figure, who does not wish to be named, says local authorities are more likely to give funding to help higher-needs tenants, such as extra care housing, to avoid leaving older people in comparatively more expensive care homes or hospitals. Consequently, he says sheltered housing schemes, which cater for lower-needs tenants, may struggle to compete for funding. “Commissioners could let those people stew in a general-needs home for longer and provide a bit of support here and there, but they might not go to the expense of paying an extra £80 a week on sheltered housing,” he says.

Bruce Moore, chief executive of Housing & Care 21, agrees: “In terms of sheltered housing, I really can’t see it being commissioned by local authorities.”

The consequences for specialist housing for older people could be bleak. Michael Voges, executive director of the Associated Retirement Community Operators, says providers will think “long and hard” about their future schemes. Ms Ashcroft says the decision to localise housing benefit in supported accommodation will make it less likely for Anchor to build sub-market rent housing for older people. “It might mean we can’t build the full range of tenures we want to… [and] we are going to have to look across our stock at the viability of schemes.”

Tony Stacey, chief executive of South Yorkshire Housing Association, adds: “This will materially affect our ability to build new homes… It means that our business has a far more risky future than we thought it would.”

So where next for the sector’s lobbying as the government prepares to publish a consultation on its proposals? No doubt housing chiefs were discussing future tactics at the National Housing Federation conference this week. Mr Moore still has hope that the government could make significant changes to the proposals. “We are going to lobby quite hard for a better structured response.” And he says he is determined to keep building new supported housing while the possibility of changing the government’s mind is still alive.

Ringfence tactics

Speaking anonymously, other housing figures are pessimistic about the prospect of changing the policy and say that their efforts would be better directed at obtaining a robust ringfence around the devolved funding. Ministers have not yet given any guarantees that it will continue beyond the “transition” period. Housing professionals have miserable memories of the old Supporting People fund, which was decimated by cash-poor councils after its ringfence was removed. Mr Stacey suggests the government could introduce a ringfence in which minsters would have to go before parliament before they were able to remove it.

The supported housing sector appears to have avoided a short, sharp catastrophe, however it remains to be seen whether the government’s proposals spell a steady decline in the provision of specialised accommodation. Housing bodies will be readying to make their case again: round two.