Funding for supported housing: update

Going on a week’s holiday on 23rd October was not great timing for following the proposed new funding framework for supported housing, but I did raise a glass to the demise of Local Housing Allowance (LHA) caps for social housing and the LHA being applied to supported housing, while sunning myself.

At last someone has listened and heard why this approach was not a good idea. But with all the quiet celebration of the demise of LHA for supported housing, there must be a note of caution for the new proposals.

In summary the proposals split supported housing into three strands.

Strand 1: sheltered housing, including extra care, will be given its own gross eligible rent level (inclusive of service charges) with an annual cap. Providers’ application of this sheltered rent will be regulated by the HCA. All eligible housing costs will be covered by the welfare system, so no need for support allowances or ‘top-ups’.

The intention is to find value for money for the tax payer while bearing down on service charge costs and allowing a rent formula +/- 10% plus eligible service charges.

The proposed definition of sheltered housing includes 24-hour emergency alarms, warden presence, communal areas and accessible buildings as key features. It is to be available for over-55s with an acknowledgement that sheltered housing includes working age adults. Support is defined as either physical or emotional.

All well and good but there are a couple of niggly issues.

The position with sheltered schemes not developed or managed by HCA registered providers is unclear, for example local authority, private sector, and charity schemes. Where will these sit in terms of rent levels, funding through the welfare system and regulation?

Housing costs, including service charges, vary by scheme based on numerous factors including property age, number of units, communal areas/facilities. Setting a sheltered rent that will work equally well across the country will not be easy.

Government has said it is interested in a banded approach for sheltered rent levels. Realistically this is the way to go, ensuring rent levels are realistic for providers and affordable for tenants.

The consultation paper sets out more detail on the proposals and asks 13 questions on the proposed definition, funding model, service charges, planning and oversight, implementation, commissioning and other matters.

Overall it’s good that the government is now in listening mode and that there is a recognition of the need for a system that protects future supply of new sheltered and extra care housing to meet the needs of an ageing population, which will have increasingly higher needs before entering sheltered or extra care housing, given the support available to sustain people in general needs housing for longer.

Strand 2: short-term supported accommodation, including hostels and refuges, with short-term defined as up to two years. These proposals have taken many by surprise and raised concerns.

These services are being taken out of the welfare system altogether so all funding for housing management and support will now come from councils, presumably as a whole service contract. This will be challenging in terms of service tendering and the impact on agency/registered provider relationships: could we see a reconfiguration of management agreements and service-level agreements?

This makes providers of short-term supported housing more dependent on council funding than for many years. I remember when hostel funding was split into rent and support, with rent transferred to Housing Benefit departments in the late 80s: a back to the future moment!

In addition to the concerns from providers, I would add one more: how are people in short-term accommodation supposed to be trained to sustain tenancies if they lose the responsibility for paying rent and service charges?

This approach may enable people to secure employment without the burden of a high supported housing rent (‘gig economy’ here we come!), but how does this enable people to retain jobs once they move on and to budget around a low salary and housing costs.

These proposals remove the rationale for Universal Credit being about teaching people about the world of work and the value of budgeting monthly. Rather, they infantilise people in short-term supported housing services.

There is also emphasis on needs-assessment and supported housing strategic plans for councils and collaboration with relevant partners, but this may concentrate partners’ minds and force greater collaboration.

While the ringfence for this funding is lauded, supported housing providers are naturally cautious, given the pressures on council, health and criminal justice budgets. Non-statutory responsibilities will not be protected from cuts as we all know well.

The proposals tell councils they must take notice and do something about people without a local connection. But we all know that telling LAs to do this will not actually lead to them doing it: always an issue for homelessness services.

The second consultation paper on housing costs in short-term supported housing poses 11 questions on the definition of short-term supported housing, the proposal to require councils to put in place strategic plans and needs assessments, local connection, commissioning, implementation and other matters.

What will happen post-2020 to housing management staff currently engaged in rent collection, arrears monitoring etc.? Will they be redeployed or even made redundant?

The critical aspect of a rent payment transaction between tenant and supported housing worker is that it gives both sides a way to discuss support needs. Any supported housing worker will confirm that the first indicator that things may be going wrong for someone is a failure to pay their rent. Arrears conversations have long been part of the supported housing worker’s toolkit.

Strand 3: long-term supported housing interestingly merits only a half-page policy statement and no consultation paper or questions. This is long-term housing – independent living for working age adults, usually with learning disabilities and/or mental health issue. It includes exempt and specialist housing.

The government’s wish to protect this part of the sector has an underpinning imperative: the Transforming Care for People with Learning Disabilities policy and drivers to move people with complex needs out of assessment and treatment centres after the Winterbourne Review.

Moreover, there is the dominance of this part of the market by private sector providers and the growth in use of exempt accommodation rules to fund rents and service charges in schemes receiving significant private sector capital investment and let to RPs under lease arrangements. Supported housing for working age adults is now becoming an investment asset class and therefore it would be seen as important to protect this burgeoning market.

The nearest the Government comes to showing concern about cost control in this market is a statement that it will work with the sector to achieve greater cost control while driving up outcomes. Local authorities are asked to develop a greater understanding of this market. A softly-softly approach then, in what is a higher cost end of supported housing.

Welcome news and some information

The push back to 2020 for new arrangements, the consultation papers and willingness now to listen to those who know about supported housing and can help shape a workable system are welcome. I anticipate movement on some issues between now and implementation: fingers crossed we have a viable revenue funding system to address the needs of a complex and diverse sector, the people who benefit from the provision, the Government and all taxpayers.

It is interesting to see the findings of the Ipsos Mori and other reports as well as move-on mentioned. Perhaps more can be advanced during the consultation. It is really heartening to see Government quoting the £3.5bn net fiscal benefit of capital investment in the sector.

The National Statement of Expectations for supported housing funding is also welcome, as are the exhortations for local planning and commissioning and transparency. Whether these expectations are realised depends on us all: providers, funders, commissioners, and partners.

To note: the consultation period for the consultations closes on 23 January 2018 at 11.45pm. Find out more:

Liz Zacharias is a Senior Consultant at Campbell Tickell and leads for the consultancy on care and support. To discuss any issues arising from the article, contact Liz on: or 020 3434 0985.

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