Housing support services in crisis: the consequences of a real terms budget cut

Growing numbers of people experiencing, or at risk of, homelessness could be facing lengthy waiting lists for vital support services after a real terms cut to the Housing Support Grant (HSG).

This comes after the grant remained at £166.7 million in the Welsh Government’s final budget for 2023/24, despite the cost of delivering these services rising by an estimated 10%.

Providers are now facing impossible decisions about the viability of these vital services at a time when more people than ever need this support. The consequences could be devastating and we are incredibly concerned.

Cumulative impact of funding cuts

We have seen Welsh homelessness and housing support services hugely impacted by the reduction in public spending over the last 15 years. These services, which are primarily delivered by third sector support providers and housing associations, have been absorbing budget cuts for such a long time there is almost nothing left to cut.

Over the past decade we have seen the HSG (formerly the Supporting People Programme Grant) reduced significantly in real terms. In 2011/12 the budget was £139 million, which equates to £186.5 million in March 2023, according to the Bank of England’s inflation calculator. This year’s budget settlement therefore represents a real terms cut of £20 million.

Worryingly, the strain on funding has been reflected in support worker wages, which do not reflect the expertise required to provide high quality support and help people to navigate housing, mental health and welfare systems.

The Welsh Government told us that housing support workers would be part of their commitment to pay social care staff the Real Living Wage, but data collected at the start of 2023 indicated that 29% of HSG-funded staff were being paid below the forthcoming National Living Wage.

Impact on current and future services

We have analysed data from across the sector, and we believe it will cost 10% more to deliver services in 2023/24 compared to last year due to increases in wages, rent and utilities.

Our research also shows that 93% of support services are extremely or very concerned about their ability to continue delivering services without a HSG increase.

Devastatingly, their concerns are now becoming a reality.

We recently heard from support providers that are being forced to reduce or remodel services, because it is impossible for them to continue delivering the same level with no additional funding. In some areas, this means people will be put on waiting lists for support they need immediately.

Some support providers have also told us they will struggle to bid for new or re-tendered contracts, potentially leaving local authorities without a support provider to deliver these essential services.

Not only are we extremely worried by this, but it is incredibly upsetting for service providers and their staff, who are dedicated to making a positive difference to people’s lives.

Local authority commissioners have also voiced their concerns about the lack of funding and the need to reduce service provision during a cost of living crisis that is pushing people closer to homelessness.

Services under more pressure than ever

All of this comes at a time when services are under significant pressure, with over 10,000 people in temporary accommodation and an increase in the complexity of the challenges and trauma facing people experiencing homelessness.

An increase in service provision is urgently needed - not a decrease.

We know that getting the right support as quickly as possible is essential to helping people deal with the trauma of homelessness, and to prevent them from becoming homeless in the future.

Welsh Government has set out its ambition to end homelessness in Wales, but words must be followed by action, and properly funded support services will be key to achieving this aim.

As Welsh ministers enter budget discussions this summer, it is clear that the Housing Support Grant must be prioritised.