Labour used to fund supported housing properly. Can we turn the clock back?

As part of Inside Housing’s Reset Homelessness campaign with charity Homeless Link, which calls for a systemic review of funding, we wanted to look back to a time when this vital support was adequately funded.

Supporting People programme 

It was 1998, one year after the High Court ruled that housing benefit could not be used to pay for service charges to someone maintaining a claimant’s tenancy.

Supporting People: A new policy and funding framework for support services, the Blair government’s consultation document, called funding arrangements at the time “complicated, uncoordinated and overlapping”.

It said no single organisation had responsibility for ensuring adequacy of support, which resulted in a focus on dealing with problems once they emerged. This pushed people into more acute services. 

There was no strategy to co-ordinate the work or spending of the various departments involved in the provision of support services, and providers had to put energy into managing a wide variety of funding streams.

The people Inside Housing speaks to in 2025 say the situation today is uncannily similar.

So what did the New Labour government do last time? In 2003, it launched the Supporting People programme, a £1.8bn ringfenced pot for councils to fund housing support services for people with various needs. This brought several funding streams together and was regulated through the Quality Assessment Framework (QAF), which helped councils monitor services and ensure they were meeting standards.

Lee Buss-Blair, director of operations at Riverside housing association, has worked in homelessness since 1999. He recalls that there was no oversight of the sector before 2003. “You had some really good providers, some providers that needed to improve. The QAF brought in a common understanding of what good looked like. [Supporting People] “did an amazing job at driving up standards” and created dedicated commissioning teams.

Craig McArdle joined Plymouth City Council as a Supporting People lead officer in 2003. “[The programme] taught local authorities to really focus on value for money when assessing services,” he tells Inside Housing, and how to support people with complex needs.

The Audit Commission carried out inspections, which provided advice and shared best practice.

Marie Davis, chief executive of Falcon Support Services, joined the supported housing provider in 2004. She says: “That’s something I would love to still have, to be honest, because it really did make sure that you were delivering a great service.”

Now, on top of other significant financial pressures, Falcon must pay for accreditations to prove that it is a good service, Ms Davis says.

Government research published in 2009 found the net financial benefits from Supporting People was around £3.41bn per year in costs saved elsewhere.

The benefit to individuals was immeasurable, Mr Buss-Blair says. “Supported housing has the potential to be truly transformative for people who have often not been treated fairly.”

“The issue of unscrupulous providers delivering poor-quality provision at profit was not replicated where specific housing support funding was retained”

In 2008, the government announced the Supporting People ringfence would be removed, although the money would still be paid as a separate grant. Baroness Andrews, communities minister at the time, said the change would give councils more flexibility to direct finances to “those people who need it most in their communities”.

From 2009, it was up to councils how to spend their allocation, but then the financial crisis struck. In 2010, the Conservative-Liberal Democrat coalition came to power, and council funding was slashed as part of wider austerity measures.

Supporting People grant was reduced in subsequent years. It fell from £1.64bn in 2010-11 to £1.59bn in 2014-15. Exact funding for supported housing since the ringfence was ended is difficult to pin down. For the past 16 years, Homeless Link has produced an annual review of the available support for single homelessness in England. Its latest data showed that, since 2008, there has been a 1,700% increase in housing benefit as the main funding source for homelessness accommodation providers (35%), and a 71% reduction in local authority-commissioned contracts.

Nicola Greenfield, director of support at Bournemouth Churches Housing Association, says: “At that time, there were lots of social landlords that provided supported housing and those services. Once that ringfence stopped, of course services just fell away. They stopped commissioning those supported housing [services].”

She says those that are left have “huge demands” put on them, with both complex needs and thresholds for statutory services increasing.

In 2023, Leicestershire County Council cut funding for a centre in Loughborough, which provides intensive round-the-clock support and is run by Falcon. To keep it running, the provider moved beds that were funded through other streams into the centre. Now, the service deals with five different contracts, which is “stressful” and takes extra resources. Ms Davis says the centre is “limping on”, but providers are at constant risk.

“It’s taken years for us to build up the centre and to create the amazing service it is right now. But if it does all go out to tender next year and we don’t win, then it’s going to disappear, like so many other good services.”

In April, National Housing Federation (NHF) research found that one in three supported housing providers in England have been forced to close schemes. Three in five said they were planning or expecting to close further services over viability concerns. Ms Davis says councils want [services] to be as “cheap as possible” and “don’t want to pay what [they] cost to run”.

Mr Buss-Blair says: “Riverside’s commitment to care and support is really strong and will continue to be. But what we can’t do, in the same way that any other provider can’t do, is commit to delivering loss-making services. So, if the tender envelope is such that we would have to run it at a loss, we are making the decision not to bid for it. Riverside won’t commit to something we can’t do well or can’t do safely.”

Sophie Boobis, head of policy and research at Homeless Link, says the funding of supported housing has been left to the discretion of councils, which “recognise the value, but are extremely financially stretched” and the Department for Work and Pensions, which “with so many other pressures and priorities, are at arm’s length from the homelessness strategy and don’t see themselves as accountable for targets around preventing and ending homelessness”.

Fragmented funding

Mr Buss-Blair says the pressure on staff, combined with the cost of living, has led to people walking away from the sector. He says it attracts people who “really care” and “all too often, we’ve leaned on that as a substitute for good-quality terms and conditions”.

“But after the pandemic, with the cost of living, we’re beyond being able to rely on people’s sense of vocation if [they] are having to make a choice between putting food on the table or heating their house,” he adds.

After the programme finished, there was an influx of poor-quality exempt providers claiming huge amounts of public money but providing little – if any – support.

Mr Buss-Blair says: “These providers have seen unmet need, which has come around because of the massive cuts in funding in relation to supported housing. They’ve seen an opportunity to step in… and turn a quick buck.”

Supporting People was brought in across the UK, but as homeless policy is devolved, it is difficult to compare the nations. It is still ringfenced in Northern Ireland, with a reduced budget. The ringfence ended in Scotland in 2008, but a Scottish government review of supported housing in March did not find the same issues with rogue providers here, “where housing support is regulated by the Care Inspectorate”.

Wales, which retained the ringfence, is a useful comparison for England, as it has similar legislation. Ms Boobis says: “It is notable that while the challenges caused by increased demand and rising complexity of need are still present across Great Britain, the worst issue that has been seen in England – of unscrupulous providers delivering poor-quality provision at profit – was not replicated where specific housing support funding was retained.”

“Councils want to invest more in supported housing, but they require long-term investment themselves to prevent further decommissioning of services and put the sector on a sustainable footing”

Those issues led to the Supported Housing (Regulatory Oversight) Act 2023. The government is consulting on proposals within the legislation, including a licensing regime for providers.

Ms Greenfield warns that the QAF became “a bit overly bureaucratic” and that monitoring was “often focused on the costs rather than the benefits or the quality of the service”. But she says: “A huge amount of energy goes into the debates with housing benefit departments in local authorities around what’s eligible and what’s not. It is a waste of time, energy and resource that would be so much better directed to providing a really good-quality support service.”

So is it possible to bring back Supporting People funding, or something like it? No extra funding has been announced so far.

The NHF is advocating for at least £1.6bn per year. Homeless Link says the government must first identify what it spends on homelessness. The 2022 Exempt Accommodation Inquiry found the government has been unable to calculate the total expenditure.

Ms Boobis says supported housing is “crucial to preventing and ending homelessness” and “yet its funding and delivery are fragmented from wider homelessness budgets”. It is “impossible” to consider a “re-imagined, sustainable funding model if we don’t consider all aspects of the true cost of delivery”.

The government is developing a homelessness strategy, but Ms Boobis says successive strategies have “not mentioned supported housing properly at all”.

“Even now, the government is talking about housebuilding... but they’re not talking about supported housing. And for a big cohort of people experiencing homelessness, housebuilding alone is not going to
help them, because they need supported housing.”

Ringfencing

For many, support needs led them to become homeless. Providers want a “clear strategy” and a ringfenced, long-term, single pot for supported housing and reform across housing and health. Ms Davis says that if and when a ringfence is created, it should not be removed.

“It’s the fear of, ‘Oh here’s the money’, then it’s ringfenced for a while and then it’s taken away again. We just seem to be going around in circles.”

All acknowledged a more challenging economic climate than 2003. But, aside from the personal benefits, funding supported housing has a positive general impact on employment, welfare, health and criminal justice, Mr Buss-Blair says. “Whichever study you look at, it provides a positive financial impact on the public purse, while transforming people’s lives.”

The government recognises the “vital role” supported housing plays, but did not comment on the lack of ringfenced funding and points to its consultation on the 2023 act.

David Fothergill, chair of the Local Government Association’s community well-being board, says supported housing is at a “critical point due to funding challenges”.

“Councils want to invest more in supported housing, but they require long-term investment themselves to prevent further decommissioning of services and put the sector on a sustainable footing.

“Though the calls to reintroduce ringfenced funding are understandable, councils believe the solution lies in more ambitious, stable and locally led funding arrangements that support flexibility and better join up with housing, health and adult social care.”