Supported Housing Funding Reform Consultation

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23 January, 2017

The future of supported housing is far from clear. Changes to funding without a formula that works for all parties may result in a shortage of schemes, with fewer housing units and potentially a reduction in suitable places for the most vulnerable. The Department for Communities and Local Government (DCLG) and the Department for Work & Pensions (DWP), as well as the respective Commons Select Committees in Parliament are running separate consultations with a view to adopting a new funding mechanism. In response to this our Think Tank session is an opportunity for RPs to provide their crucial input regarding the future of supported housing.

Supported housing is an umbrella term for any housing scheme where housing, support and at times care services are provided to enable people to live independently in the community. This may include hostels, refuges, supported living complexes, extra care schemes and sheltered housing.

Beneficiaries of supported housing vary from elderly people, those at risk of homelessness, domestic abuse victims, people with mental, physical and learning disabilities, as well as offenders and substance abusers. Without these types of schemes many of the beneficiaries would be living in long term care or hospital setting or in unsuitable accommodation and without the support needed.

Research indicates that up to 716, 000 people were using supported housing at the end of 2015. Accommodation is predominately provided by social landlords including; housing associations, local authorities, and charitable and voluntary organisations. Housing associations alone provide over 70% of supported housing units in Great Britain. In 2015 there were approximately 651, 000 supported housing units with the majority (85%) in England. Analysis by DCLG in 2010 estimates that the net fiscal benefit of providing supported housing is £3.53 billion per year.

Funding for supported housing comes from a variety of sources with Housing Benefit playing a significant role. It is used to meet housing-related costs including core rent and eligible service charges (such as cost of repairs, renewing communal furnishings and fittings and intensive housing management costs). Other sources of separate care and support funding are local authority adult social care services, housing and homelessness funding. During the course of 2016, the government has already made some announcements relating to funding of supported housing in particular:

  • Deferring the application of the Local Housing Allowance (LHA) for supported housing up to and including 2019/20,
  • Applying the social rent reduction to supported housing with rents in these properties decreasing by 1% a year for 3 years, up to and including 2019/20.

As a result of on-going welfare reforms the government has launched the Funding for Supported Housing Consultation. The rationale for reform is the introduction of Universal Credit which the government has indicated will meet core housing costs up to the level of the relevant LHA. However, a new funding mechanism it has said is required to deal with additional costs. It is also indicated that in planning for, commissioning, delivering a managing a growing demand for supported housing within a tighter public spending climate there should a local focus on outcomes, oversight and cost control.

There are five issues that the government is exploring through the consultation including:

  • Fair access to funding - the detailed design of the ring-fence and whether other protections are needed for particular client groups;
  • Clarifying expectations for local roles and responsibilities including planning, commissioning and partnership arrangements;
  • Confirming further arrangements in relation to oversight and assurance to ensure value for money and quality outcomes and focussed services;
  • Exploring appropriate balance between local flexibility and provider certainty including assurances beyond ring-fence; and
  • Developing options for workable funding model(s) for short term accommodation, including hostels and refuges.

The approach taken by the Commons Select Committees is wider in that it considers:

  • Whether separate funding models are needed for different types of services;
  • How localised funding will work in relation to ring-fencing and allocation;
  • How existing tenants will be protected;
  • The effects of uncertainty about the new funding model on tenants and development in the supported housing sector;
  • Whether the new system will be piloted;
  • The impact of the varied LHA cap and the effect on tenants and providers in low value parts of the country;
  • Alternatives to LHA caps in relation to supported housing and sheltered housing;
  • Effects of different funding models options on tenants;
  • Steps to mitigate the effect on the 1% rent cut;
  • How the LHS cap will affect pensioners; and
  • Whether housing benefit acts as a disincentive to work.

One of the issues picked up by the DCLG Consultation is greater collaboration through local commissioning areas. Research by DWP at the end of last year indicates that commissioning is done differently in different local authorities, localised commissioning has meant that public health has become more involved and there are a number of innovative approaches. In particular, the examples it provides include:

  • a 'facilitated approach' to commissioning with providers and developers - with strong relationships between providers and developers and a collaborative approach has enabled  them to attract investment from different sources;
  • a clinical commissioning group working with a national mental health charity and a national specialist housing RP to provide supported housing for people with mental health problems. This reduced delayed discharges and close long-ward stays, as well as removing the need to rely on out of area placements which tend to cost more than local supported housing.
  • an RP has a contract with the National Health Service for the provision of supported housing for people with mental health problems. The RP can provide support and housing to this group at a lower cost than the NHS and with better outcomes.

The use of collaboration and innovation has the potential to deliver in supported housing development especially through the effective use of procurement and joint commissioning between different commissioning groups. However, this is only one of the issues to be considered as part of the ongoing consultation. If the funding allocated is insufficient or does not cover the necessary services, this is likely to affect the number of providers that are operating on the market thus limiting any opportunity to collaborate or innovate. A number of RPs have already cited concerns regarding a funding formula applying the LHA caps which in some areas will cause real difficulties in enabling a supported housing provider to cover costs and offer it sufficient certainty and stability to continue developing in line with demand.

If you would like to take part in our Think Tank session please sign up here. Further details of our response and developments in this area, will be provided through our blog.

Forbes Solicitors regularly advise RPs of social housing in relation to governance matters and procurement of various schemes including supported housing. If you have any questions, please contact Daniel Milnes.

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