Future funding of supported housing

Department for Communities and Local Government written statement – made on 31st October 2017.

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Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary of State (Department for Communities and Local Government) (Local Government)

Supported housing is a lifeline for vulnerable older people, for individuals with learning and physical disabilities, for those at risk of domestic abuse, and for many others. It is an investment in our society and our economy, with the savings it brings to other parts of the public sector, such as health and social care. The Government has been clear that it is committed to protecting these homes and the people who live in them. Reforming the funding model for supported housing costs and putting it on a sustainable and stable footing is therefore vital.

In the Autumn Statement 2015, we announced our intention to apply the Local Housing Allowance rates to social rents, including supported housing, with effect from 2018. The implementation date was subsequently deferred to April 2019.

Since then, we have listened carefully to the concerns raised by the supported housing sector and other key stakeholders about the issues that this measure would present, because supporting the most vulnerable people in our society is a priority for the government. We value the important role that supported housing plays and we are committed to protecting and boosting the supply of supported housing, and ensuring tenants are able to enjoy the best quality of life.

In response to those concerns the Prime Minister announced last week that the Government will not apply the Local Housing Allowance rates to tenants in supported housing, nor to the wider social rented sector.

Last year we also committed to reform the funding model for supported housing costs, in order to ensure it provides good outcomes for tenants, better oversight and cost control, and compatibility with the modernised welfare system. This covers the funding for housing costs only, as the support costs are funded separately; there will be no change to how these are provided. We have worked with the sector since then to develop a workable funding model, and we have heard their views and concerns. We are therefore bringing forward a flexible funding model that works for this very diverse sector, as set out in more detail in our policy statement published today.

All long term supported housing will be retained in the welfare system. We heard calls for a separate model for older people’s housing to ensure we are building more of these vital homes. We will therefore be introducing a ‘Sheltered Rent’ for sheltered and extra care housing, a type of social rent that will see the social housing regulator use existing powers to control rent inclusive of eligible service charges. This approach means that we will set an overall limit on the amount that providers can charge in sheltered rent (rent inclusive of eligible service charges) on each unit of sheltered or extra care provision. It will also, as we currently do for net rents, limit annual increases. We will work closely with the sector to set these limits at an appropriate level.

The rest of long term supported housing, such as housing for people with learning or physical disabilities or mental ill health, will remain in the welfare system as it currently is. We will be working with the sector in England to develop and deliver an approach that will ensure greater cost control across the sector while driving up outcomes for vulnerable people.

We recognise the need for a distinct model for short-term supported housing. Funding for this part of the sector will be provided through locally administered ring-fenced grants. This means that all the funding that was previously provided by Housing Benefit will instead be allocated to local authorities to fund and commission services at a local level. An individual’s entitlement for help with their housing costs (though Housing Benefit or the housing cost element of Universal Credit) will be unchanged. In Wales and Scotland, an equivalent amount will be provided for short term supported housing, and it will be for those administrations to decide how best to allocate funding. We intend to retain this ring-fence in the long term to protect this important provision and the vulnerable people it supports. The amount of short term supported housing grant funding will continue to take account of the costs of provision and also our current understanding of future need.

We are also seeking to improve local planning for supported housing and commissioning across service areas. Our policy announcement sets out proposals for a National Statement of Expectation and local level strategic planning to underpin the new funding regime.

These important and necessary changes will take time to implement and it is crucial that the support provided to people is not interrupted or put in doubt, which is why these changes will now commence from April 2020 rather than April 2019.

Alongside our policy statement, we are launching two consultations on specific elements of the model, and a draft National Statement of Expectation. We have today published the independent reports of our Task and Finish Groups, which were instrumental in helping us design a new model that will work for the sector. We have also published our response to the November 2016 consultation ‘Funding for Supported Housing’, and our response to the joint Select Committee report ‘Future of supported housing’.

We have also considered the important role of refuges and calls from some of the sector to nationalise the funding and commissioning of this. The Government was clear in its Violence Against Women and Girls (VAWG) Strategy that refuges provide a vital service. We believe that local authorities are best placed to deliver the better outcomes for vulnerable renters in crisis and emergency supported housing as they understand local needs and can take a holistic view on both housing and support provision. They will be funded as set out in the model above, on a local basis, protected by a ring-fence on the grant funding. The supporting oversight regime will also set out our expectations, including on supporting those without a local connection. The Government has already committed (in the 2016/20 Violence Against Woman and Girls Strategy) to review the current approach to refuge provision in England by November 2018. We will need to pay particular attention to the funding of care and support costs as we do this, and will continue to work closely with this sector to make good our commitment to the victims of these terrible crimes.

It is our aim through making these changes to provide funding security to the sector, allowing them to make long term investment and therefore secure future supply. It will also ensure value for money for the taxpayer, and enable councils to have a stronger role in providing appropriately for their local areas. Most importantly, it will support positive outcomes for some of the most vulnerable people in this country.

I am placing copies of our policy announcement made today (comprising a policy statement, two consultations, and a draft National Statement of Expectation), and the government response to the joint Select Committee inquiry in the library of both Houses.

This statement has also been made in the House of Lords: HLWS208