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Supported Housing Funding Reform: Consultation Response

Forbes Solicitors acts for over 90 registered providers of social housing and local authorities. Supported housing is an umbrella term and brings together a range of different schemes and beneficiaries. The schemes that our clients operate include sheltered accommodation, extra care schemes, supported housing complexes, refuges and hostels.

Operating different forms of supported housing either as a landlord and/or care provider requires consideration of a range of rules and regulations including various funding arrangements. In providing advice to clients operating such schemes we have had dealings with providers of all shapes and sizes and the insight we have gained we have conveyed in written submissions to an Inquiry by Select Committees and a Consultation run by the Department for Work and Pensions and the Department for Communities and Local Government on funding reform. We also held a session attended by a number of our RP clients to discuss supported housing funding reform and have incorporated the views expressed in that forum in the written submissions.

While the two consultations had different questions, there were similarities between them in terms of the issues both covered and this article highlights those key issues and our response to them.

Funding formula: maximising opportunities for collaboration, planning and commissioning and fair access

The DCLG and DWP consultation makes reference to fair access to funding. If beneficiaries are an important consideration and their needs are to be considered it is not clear whether the funding formula is going to be needs-based or property-based. A person remaining in normal social housing in old age might have the same care needs as one in an extra care scheme and the funding pot should be allocated in a way that addresses both.

If this localised approach to funding is adopted some of our RP clients indicate that this has the potential to create additional bureaucracy and cost for little benefit. Similarly, it was pointed out that the new funding formula should not repeat the experience of Supporting People which involved a complex application process and a burden on landlords.

The application of a localised funding formula must avoid a postcode lottery for funding. In depressed areas especially in the North, the LHA capped rent level will be much lower while the cost of additional staffing and services will not be similarly reduced and scope for cross subsidy from affordable or market rent activities is unrealistic where those rates are little different.

A localised approach to funding of supported housing if adequately planned and implemented can be beneficial in terms of delivering value for money for the taxpayer, as well as providing good quality housing and/or care and support to those in need. Due to the wide range of provision that comes under the umbrella term "supported housing", a suitable approach may be to adopt standards of support to be provided for different needs as a minimum to receive funding. In effect this would set baseline standards to receive payments from the top-up fund.

Alongside this local authorities should be encouraged to collaborate with partners in their local area and jointly commission services in responding to local needs. Through collaboration and joint commissioning there could be real opportunities to deal with a number of issues affecting local communities and providing local solutions.

With more local authorities looking to combine efforts when commissioning services there could be real opportunities to assess needs jointly and devise joint strategies in commissioning services. This would be an opportunity to link three different yet related areas: housing, social care and health. In this regard local authorities, NHS trusts and/or CCGs and RPs as contracting authorities by working together would also be able to utilise various exemptions in the public procurement rules to ensure cost effectiveness and value for money, as well as incorporating innovation for the benefit of some of the most vulnerable in our society.

One Greater Manchester landlord mentioned that the enhanced commissioning role is a great opportunity to bring services and agencies together. In the Manchester area initial steps have been taken with RPs having an understanding in place to work together in the future with the Greater Manchester Combined Authority in relation to supported housing and housing in general. These sort of relationships are at early stages but may well be the way forward in ensuring joint commissioning takes places and resources are pooled to deliver value for money and serve local needs.

Local allocation to match local needs: alternatives to the LHA Cap

Most RPs we consulted consider nothing more than general needs housing properties and services can be delivered for LHA rent. That excludes more costly buildings and/or extra landlord services (e.g. sheltered housing and intensive housing management).

A more equitable approach taking into account the different types of services that are provided under the umbrella of supported housing would be to have different bands or caps such as:

• LHA cap where nothing extra is expected from the RP in terms of care services or capital investment;
• Supported housing cap;
• Sheltered accommodation cap; and
• Short term support funded differently.

This approach would focus more on the individual and the landlord support that would be required and pay funds direct to the landlord.

Alongside this greater collaboration and joint commissioning should become the norm. This has the ability to deliver value for money and better target services. Joint strategic needs assessment would need to be conducted to identify the needs within each community. To ensure consistency and that this way of working is adopted across the board a national standards framework may be necessary with an outcomes focused agenda requiring local councils to put together and deliver a locally appropriate and tailored support housing strategy in conjunction with Adult Social Care Services, Children Social Services, Homelessness, RPs and NHS Clinical Commissioning Groups for primary care, hospitals and mental health trusts.

Having a common approach can deliver more targeted services with better outcomes for individual tenants as well as value for money. It will also allow collaboration and more effective planning for the longer term where innovation and technology can be incorporated. In certain areas such as Greater Manchester this is an approach that is being developed to enable greater collaboration and joint commissioning and the benefits that are to be generated through this way of working can easily be replicated across the country.

Separate funding models for short-term supported housing services

In addition to different caps above, based on our experience and discussions with RP clients we think that other funding protections for vulnerable groups are needed in relation to short term supported housing services.

With regard to refuges and short-term supported housing services funding needs to be structured to enable providers to respond to local needs especially where universal credit is not suitable as a funding method. There are a variety of causes resulting in needs for temporary accommodation including; domestic violence, drug use, cared for children reaching 18 and rehabilitation. Funding directly to an approved provider based on the numbers accommodated rather than based on claims by the individuals is preferable. Establishing standards and approval mechanisms would allow for quality control. If funding for this accommodation is to be performance-related or time-limited the consequences for individuals should be appreciated.

Collaboration in planning, commissioning and partnership and monitoring arrangements

Any localised approach, providing sufficient funding is made available and is fairly distributed taking into consideration cost and needs of people would also enable local authorities to take such funding and work with local partners to deliver services and potentially identify savings through collaboration. Alongside new capped formulas being introduced as we are suggesting, local authorities should be encouraged to collaborate with partners in their local area and jointly commission services in responding to local needs. Through collaboration and joint commissioning there could be real opportunities to deal with a number of issues affecting local communities and providing local solutions.

In this regard local authorities and other agencies should be required to conduct joint strategic needs assessments. This would be a good tool to bring all parties around the table, consider needs, expertise and ensure successful collaboration. Using this approach can provide some certainty so that expertise are not lost and parties can build on existing successes as well as focusing on prevention, innovation and use of technology.

Having joint strategic needs assessments at the local level would mean that through greater collaboration and joint commissioning there would be better service delivery. This would enable fairer access and it is likely to result in tenants obtaining joint services such as housing and health or housing and support to seek work or training.

By structuring the capped funding formula in this way, greater collaboration and joint commissioning over time would become the norm. This has the ability to deliver value for money and better target services. To ensure consistency and that this way of working is adopted across the board a national standards framework may be necessary with an outcomes focused agenda requiring local councils to put together and deliver a locally appropriate and tailored support housing strategy in conjunction with Adult Social Care Services, Children Social Services, Homelessness, RPs and NHS Clinical Commissioning Groups for primary care, hospitals and mental health trusts.

Greater collaboration with different commissioning group could also deliver new units providing that it is implemented properly in that there are joint strategic plans at local level.

Where use of ring-fenced supported housing top-up funds produces a saving in a different agency or budget (e.g. CCG, NHS trust or Social Care) a formula to put come of that saving into the top-up fund would encourage collaboration with shared benefits.

With funding form occupational rents at LHA level insufficient to support developments for supported housing, RPs might consider mixed schemes with another commercial tenant such as a GP practice or pharmacy to make proposals viable while achieving more integration with health services.

Providing greater oversight and assurance: value for money, good quality and delivering outcomes for individual tenants

Another aspect of the funding reform seems to be a need for greater transparency to ensure value for money, good quality and delivery of outcomes for individual tenants. In certain circumstances a funding formula that encapsulates transparency can result in delivering value for money, good quality and better outcomes for individual tenants.

Use of appropriate clear assessment models and standards to uphold fairness and value for money will give more assurance. If outcome or performance-related funding is being considered the reality for RPs and tenants should be taken into account. Some supported housing may be for a transitional phase only but much is for longer-term needs.

RPs already have to comply with the Value for Money Standard as required by the Regulating Standards imposed by the Homes and Communities Agency. Similarly, the HCA has reported on this issue and given guidance to RPs to how this is to be considered by management teams and boards. In relation to supported housing to minimise the cost and bureaucracy that is likely to arise as a result of change in funding formula the existing regulatory regime should be used to obtain the additional transparency required. In this regard the HCA has begun this process and could easily contribute further as part of the existing Value for Money Assessments.

Changes in funding and impact on development of supported housing

Our clients indicate that they are already modelling the impact the changes in funding formula will have on their services. If the new formula will focus on property type, this is likely to present problems in areas where property is of low value. If costs of capital expenditure and maintenance cannot be recovered through basic LHA rent levels, some RPs have said they will have to consider reducing the services that they can provide or making no increases in provision or investment in properties for supported living. This is a concern because the need for such services is likely to remain. This is then likely to have knock on effects in other areas with local authorities and potentially the NHS having to bridge the gap where the services provided by an RP are no longer available.

Uncertainty has made any attempts to build new extra care schemes or sheltered housing facilities very problematic for RPs especially given the HCA's requirements in the Governance and Financial Viability Standard for stress testing and avoiding of potentially loss-making commitments. Schemes are being designed with a reversion to general needs housing in mind as a fall-back position in case funding does not work out and operating costs as supported or sheltered housing cannot be covered.

One of the suggestions to deal with the uncertainty creating by these changes was to work closely with local authorities and other agencies and conduct joint strategic needs assessments. On this point the greater collaboration that the government has indicated it wants to see in this area is in our view a good tool to bring all parties around the table, consider needs, expertise and ensure successful collaboration. Using this approach can provide some certainty so that expertise are not lost and parties can build on existing successes as well as focusing on prevention, innovation and use of technology.

If Local Authorities decide to consolidate types of supported housing (especially types requiring specialist care skills or modified buildings) to reduce unit costs then landlords may have to move tenants between them to follow the funding for their type of support.

With regard to development of new units, some RPs are already changing the model of operating on the basis that they are continuously required to assess risk of existing schemes and new developments. Despite need being known for certain schemes at local level (whether supported housing, sheltered accommodation, hostels or refuges) if funding is not workable then development is unlikely to materialise. At present local authorities or their contracted care providers requiring nomination rights over RP properties (i.e. guaranteed access to the accommodation for their waiting list) for supported housing are expected to give some degree of underwriting for under-occupation due to the provision costs incurred by landlords. Will the new funding system allow for that?

Greater collaboration with different commissioning groups could deliver new units providing that it is implemented properly in that there are joint strategic plans at local level. In this regard if the new system is to focus on greater collaboration then this could also be an opportunity to join up social care, housing and health in order to address shortfall in the long term.

If RPs will only receive LHA rental income through Universal Credit then they will have to pass on the increased cost of adapting and managing sheltered and supported housing to care providers or nominating authorities in other ways.

With regard to sheltered housing services for the elderly there is some uncertainty whether costs of new builds or refurbishments will be unjustifiable against LHA-capped income. Despite the changes being introduced in 2019 RPs already are having to model the consequences and make decisions. Due to the higher landlord's cost in maintaining sheltered accommodation the shortfall is greatest here due to limited application of care-based funding.

Additional necessary guidance: national statement of expectations

Despite the approach to funding being a localised one, some guidance would be required from central government. This would assist to ensure that a postcode lottery does not come into existence and that needs are taken into account.

A national statement of expectations would also be useful in enabling greater collaboration by setting responsibilities for different agencies and providing a blueprint as to how collaboration could work in practice. There would need to be inherent flexibility within such a framework to ensure that local authorities and partners could utilise a method that worked best for them. However, a document where the obligations would be set out as to what would be necessary so that statutory agencies would effectively come together and administer funding based on need would be helpful. This would also give central government oversight as to how the funding is working for different local areas and for areas where it was not to intervene whether in terms of providing additional funding or assisting through other means. Part of such a statement should also be used to outline and encourage innovation in supported housing especially in development as that in itself may realise cost savings in the long term.

Our consultation showed some differing views on what comes within supported housing (e.g. sheltered housing) and highlighted the degree of specialisation in different types of supported housing from emergency short-term supported housing to extra care schemes and EMI nursing home care. One concern raised to us was over-medicalisation of supported housing which would limit the focus on promoting independent living with support.

Transitional arrangements

Taking into consideration our experience in advising RPs as landlords and/or care providers in developing and in running existing supported housing and sheltered housing it is of critical importance that a transitional period is put in place prior to introducing a new funding model. This is of critical importance to tenants to ensure that they can be adequately assessed and assisted to access funding in accordance with the new funding formula. Additionally, that considerations that affect those commissioning services, as well as those providing services do not impact negatively on tenants.

From the perspective of RPs and local authorities, many contracts in place have been procured in accordance with the provisions of the Public Contracts Regulations which make contract variations difficult to implement. If the new model is incompatible with current contracts (e.g. where intensive housing management is being funded through additional housing benefit rather than through a local authority care contract) landlords may be faced with unfunded contracts. That will affect charities and commercial providers if funding for the services they are providing cannot be maintained.

For many RPs with charitable objects it is very important that they serve those whom are vulnerable in their communities. They have the skills, knowledge and relationships with their tenants and rather than lose that they want to build on it and are looking to work with local and national government to serve those in need. As such adequate transitional arrangements would be of assistance to all parties involved and in particular would serve tenants' interests.

If some types of supported housing funding might be subject to performance-related payment or time restrictions, modified or graduated application to existing tenants would be a means of protection from change away from accommodation that may have been provided initially without any such limits.

In addition to transitional arrangements, a pilot may be helpful especially in the event that the focus remains on LHA and ring fencing. Pilots might be used to compare models shown to be successful at present and should certainly apply to the shorter-term transitory supported housing which often assists the most vulnerable and cannot support wide-scale failure of an untested system.

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