What could the imminent supported housing funding system mean for the future?

Tuesday 31st October will reveal a plan for a new funding system for supported housing. But what could this mean for the future? Policy Officer, Will Atkinson, shares his thoughts.

The housing sector is still absorbing the huge announcement, made during Prime Minister’s Questions on Wednesday, that the LHA cap will not apply to supported accommodation, or general needs social housing.

In Wales the sighs were particularly strong, particularly as, the day before, we’d released our analysis of the potential impact of the LHA and subsequent call for the policy to be scrapped. If the LHA cap had been implemented, Welsh housing association tenants would have been hit hard, with shortfalls of £15 per week in some areas. Any other choice than scrapping the policy would have spelled disaster.

Has the good news ended? The answer to that will lie in Tuesday’s announcement on future funding for supported accommodation.

Now that we know LHA will not form the basis of any new funding model, speculation is rife on how housing for vulnerable people will be funded. The proposed policy of funding through LHA plus a top-up fund cannot  go ahead.

So what are the likely alternatives?

Sources have claimed that a tripartite funding model will be announced, separating older persons’ housing, short term supported accommodation such as hostels, and the rest of supported accommodation such as homes for those with disabilities.

The speculated model rightly maintains the status quo for older persons’ accommodation such as sheltered housing, albeit proposing to deliver housing costs through pension credit or tax credits, rather than housing benefit. This chimes with the DWP plan to transition away from housing benefit as early as 2022. The suggestion that tax credits will be employed along with pension credit also suggests that older persons’ housing will not be defined by age of the tenants, rather than  elements of the building, such as communal spaces, which make sheltered housing and extra care what they are.

It has been suggested that short term and emergency supported accommodation, such as hostels and refuges, will be funded through a full grant, removed from the benefits system and delivered, most likely, by local authorities or devolved administrations. This would be a bold and clear policy to solve potential issues caused by Universal Credit in short term housing, mainly because housing costs can only be calculated on a monthly basis, rather than daily under housing benefit. This means tenants moving from short term accommodation before the end of their assessment period may be not liable to pay housing costs. One thing to watch out for will be the definition used to decide exactly what short term supported accommodation is.

So far, so good. However, good things tend to come in threes, and in this context, these include the LHA cap scrap, fair funding for older persons supported accommodation and a sensible policy solution to Universal Credit in hostels. The third proposal mooted in Inside Housing could be unlucky number 4.

The suggestion that working age long term supported accommodation should be funded through a supported housing allowance (SHA) will not come as a shock. It was called for in the joint work and pensions/communities and local government committee inquiry into future funding for supported accommodation. We also called for its implementation, as a compromise between the proposed LHA plus top-up and the status quo.

In a nutshell, SHA would still deliver core funding through housing benefit/universal credit, but create housing cost caps for sub-sections of supported accommodation, based on the true cost of delivering that accommodation. It would vary regionally across Great Britain and still require a top-up fund, albeit a much smaller one than proposed under the LHA + top-up proposal announced in 2016. The devil of SHA will lie in its detail. How will the caps be decided? What will the regional variances be? How will the top-up be administered? Undoubtedly a fairer model than LHA + top-up but arguably considerably more complicated.

Sounds good? Well, yes, on paper. The problem is that, once older persons’ supported housing and short term supported accommodation are accounted for, there is not a great deal of supported housing left to apply a supported housing allowance cap to.

Across Great Britain, according to the Supported Accommodation Review, 71% of supported accommodation comes under the older persons remit. A further 10% counts for hostel and refuge accommodation, so likely to be defined as short term supported accommodation. This only leaves 19% to be funded under a supported housing allowance, and in reality some of that 19% will also be defined as short term.

In Wales, this section is even smaller. Only 15% of supported accommodation is left over once older persons’ and short term supported accommodation is removed. This amounts to less than 6000 units.

Why go to the lengths of designing a supported housing allowance system, including the administrative arrangements for an attached top-up system, just to cater for less than 20% of supported accommodation units across Great Britain? The meagre cost controls would be far outweighed by the cost and risk of delivering the funding. Working age long-term supported accommodation should be afforded the same protections as older persons’. It should be fully funded through the benefits system, with no caps or allowances.