RSLs/Non-Profit landlords & Intensive Housing Management: Securing the Future?
Michael Patterson tells us about Intensive Housing Management, why Non-Profit landlords should think about it & the implications of the DWP Consultation on Housing Benefit for Supported & Sheltered Housing
Since this article was first written in October 2010 the notion of "Intensive Housing Management" has shot further up the agendas of providers of housing support & social care, and also of Supporting People teams needing to retrench their budgets without impacting negatively on services. We have also seen (and responded to) a Consultation from the DWP on the future of Housing Benefit for supported and sheltered housing. We therefore feel that it's time to add to this article, which has become extremely widely read and utilised within the sector.
How many of you reading this Briefing remember the term "Intensive Housing Management" and the significance it played in revenue for supported housing before Supporting People arrived in 2003?
For those of you who don't remember it, Intensive Housing Management was a term used to describe the types of housing management tasks that RSLs or their agency partners performed for vulnerable tenants in addition to general needs housing management tasks. It is a term that has very much come back to life! There is a working definition of Intensive Housing Management within the now defunct Housing Corporation's "Guide to Supported Housing" which we have copies of. We have developed our own definitions, which we continue to successfully use in submitting enhanced Housing Benefit claims on behalf of providers.
Rather longer ago than I care to remember supported housing schemes were funded through Housing Benefit. There was no such thing as Supporting People. If the scheme was projected to make a deficit then it was topped up by something called Hostel Deficit Grant (HDG), which was an open-ended subsidy paid by the Housing Corporation. The Government of the time became wary of open-ended subsidies like this and abolished HDG. It replaced it with a fixed subsidy called Special Needs Management Allowance (SNMA) or "sorry no money available" as some witty person at the Housing Corporation termed it at the time. This then became Supported Housing Management Grant (SHMG) and the idea and definition of Intensive Housing Management was born and defined by the accompanying "Guide to Supported Housing". In 2003, SHMG, which was a revenue subsidy payable to RSLs and their agency partners, was absorbed into the Supporting People budget never to be seen again. With it went Intensive Housing Management. Now let me remove my anorak, put down my "trainspotter's guide to housing revenue subsidies" and move on.
Discussion about Intensive Housing Management has reappeared with a vengeance in the past few years. This is primarily as a consequence of the work that Support Solutions has been doing with providers of accommodation and support that have lost revenue as a result of the retrenchment of the Supporting People budget. Supporting People, whilst it still exists, funds support not housing management of any kind - even though SHMG went into the Supporting People budget.
There is no definitive list of Intensive Housing Management tasks as our Revenue article in Briefing 10 points out. We have developed one based on the notion that Housing Benefit will fund tasks which are part and parcel of adequate accommodation, bearing in mind the needs of the residents and provided these tasks are not funded elsewhere. Many of these tasks routinely constitute much of a Support Worker or a Scheme Manager's job description. Things like repetitive housing management functions such as letting and assistance with claiming Housing Benefit and other welfare benefits due to high turnover, controlling, access and facilitating and monitoring site visits from contractors and other visitors/professionals, arranging aids and adaptations, health and safety and risk assessments of property, management, administration, delivery and facilitation of housing services provided......I could go on.
If you are a non-profit provider of accommodation and support and the Intensive Housing Management tasks you perform aren't funded by another revenue stream then it can be funded by Housing Benefit. Even better, if you're an RSL and you charge Intensive Housing Management tasks to the Housing Benefit budget and as a consequence your rents go above the local reference rent level (as they almost certainly will) then the local authority receives full reimbursement from the DWP of the difference between what you charge and the local reference rent so you're actually bringing in money to the local area. This subsidy top-up doesn't fully apply where non-RSLs go down this route, 40% of the difference between what you claim and the local reference rent goes onto the Council Tax bill or is picked up within another local authority budget, such as Adult Social Care but that's still a cost-effective way of a community funding a preventative, enabling service.
It's also a very attractive proposition for RSLs and other non-profit accommodation based support providers for a variety of reasons.
You get full cost recovery on your housing costs which have been historically underfunded for years. OK, RSLs have an issue with Rent Restructuring but that isn't a problem: the great bulk of Intensive Housing Management costs are service charge items. You can re-allocate costs and budget headings from core rent to housing services where feasible. More particularly, it is extremely likely that you can re-allocate costs from some of what Supporting People used to fund into the housing services charge. This enables you to invest in the properties in which vulnerable people live: the physical environment, services and staff. With the Personalisation Agenda underway wouldn't you want to invest in your accommodation so that your tenants are sufficiently impressed with your housing to make the assumption that your support must be pretty good too? Your support can certainly be cheaper because you've taken costs out and allocated them to Intensive Housing Management, funded through Housing Benefit. This matters to personal budget holders and it matters when you bid for support contracts because your unit cost for support will be lower without actually reducing your revenue - you've just spread the cost.
Worried about whether self-funders and tenants looking to gain employment would be able to afford what are essentially full cost recovery rents? Don't! Judicious use of a Relief Fund arrangement should cater for that. It's something we advise on a lot these days!
The Separation of Intensive Housing Management from Support
Where a non-profit landlord works with a separate support provider agency, the support provider usually performs the Intensive Housing Management tasks. Providers may actually refer to these tasks as "support", or they might not get done at all, or they might get done but not funded.
Increasingly it seems sensible to split off Intensive Housing Management from support. The non-profit landlord, RSL or otherwise, can claim from Housing Benefit for Intensive Housing Management tasks and either perform those tasks themselves or sub-contract them to an agency partner separately from support. Support, as distinct from Intensive Housing Management, is thus contractually separate. Either the landlord is the support provider and has a contract with, for example, the Supporting People Team (but it's separate from Intensive Housing Management) or the landlord has a Management Agreement with the support provider (or has a support provider imposed on them as a consequence of a competitive tender). Where a third party is involved it's safer to have separate Agreements for Intensive Housing Management on one hand and support on the other. The landlord can retain the Intensive Housing Management function or sub-contract it. If the support provider loses the support contract the landlord still has a viable role in the form of Intensive Housing Management.
Insulation from Risk
As well as having a viable interest in the property financially, the landlord retains a viable relationship with the tenants irrespective of who does or doesn't provide support. Intensive Housing Management often picks up much of what was deemed to be support and funded as such (although there should never be any suggestion of double funding).
The landlord is thus insulated financially and operationally from the insecurities of support funding and contracts. Of course, if you have a good relationship with a support provider then you may well want to sub-contract the Intensive Housing Management back to them. Alternatively, the landlord can manage, maintain and staff its supported accommodation as it sees fit.
Fulfilment of Contractual Obligations
Another important factor is the ability of the landlord to fulfil their contractual obligations to their vulnerable tenants, especially where "support" is referred to as an obligation of the landlord within the tenancy agreement. If the landlord or a third party support provider acting on behalf of the landlord loses funding for support that does not relieve the landlord of the contractual obligation to continue to provide support as per the terms of the tenancy agreement.
For RSLs this is potentially very problematic as it has recently been established that RSLs are public bodies and therefore potentially subject to Judicial Review. A failure to comply with the terms of your own agreements would not look good and would be very expensive if you fell foul of a Judicial Review brought by a tenant. It is important to look at this on the basis of each tenancy agreement but both RSLs and non-profit non-RSL landlords can probably fulfil the terms of their contractual obligations to provide support through the provision of an Intensive Housing Management service.
We believe that it is also increasingly important for landlords of supported and sheltered housing to contractually separate their tenancy obligations from their support services; i.e. the tenancy agreement should not mention support which should be covered by a separate support agreement with the tenant.
Recently established case law regarding the classification of exempt accommodation gave some RSLs concern that their services may fall foul of the recent interpretation of exempt accommodation, i.e. where the landlord does not provide some form of care, support and supervision along with the provision of the accommodation the property may not be exempt. The most recent cases heard by Judge Turnbull, however, significantly confirm that the provision of housing management tasks over and above ‘ordinary property management functions', i.e. intensive housing management, can and should be regarded as support. This not only secures exempt accommodation status for agency managed services it also enables landlords to fulfil their contractual obligations to continue to provide support if funding is lost and it potentially enables the service to continue to exist in its current, albeit slightly less intensive format with regard to the provision of housing related support.
The DWP Review of Housing Benefit for Supported & Sheltered Housing
As part of the Coalition's Comprehensive Spending Review (CSR) commitments the Government is committed to slashing 20% off the Housing Benefit budget. Furthermore, and before the CSR, there was pressure from Housing Benefit Departments on the DWP to review Housing Benefit payments to supported and sheltered housing providers. Housing Benefit Departments are rightly expected to scrutinize "exempt accommodation" claims (which is another label for what I have described above whilst talking about Intensive Housing Management) but they aren't resourced to do so, so it is perhaps unsurprising that they should ask for the system to be reviewed.
To cut a long story short the DWP set up a Working Party to look into this which belatedly reported in July 2011 with a consultation document that you can see here. The responses to this Consultation had to be submitted by 9th October 2011 and, after organising a series of nationwide briefing events, Support Solutions provided a detailed response which can be found here. At time of writing (January 2012) we are still awaiting the DWP's response. We believe that the volume of responses to the Consultation was very high.
The Consultation asked respondents to answer 16 questions; however, it was at least as important to question the assumptions behind the DWP Consultation. The consultation, in our view and in the view of many others, was not well-researched and misunderstands the contribution made by sheltered and supported housing services.
If you read the Consultation and our response you will see the questions themselves and our answers to them. However it is perhaps more valuable to explore the assumptions behind the Consultation and what it actually proposes.
So what does it propose? Put simply, it makes a distinction between Registered Providers (or RSLs) on the one hand and unregistered providers on the other (e.g. voluntary agencies, charities, social enterprises and the private sector).
Unregistered providers are sub-divided into 2 groups:
Unregistered providers providing short-term services (e.g. hostels, foyers, women's refuges, short-term mental health schemes etc.) and those providing sheltered housing. There seems to us to be no logic at all in grouping sheltered housing services with short-term services but perhaps the DWP can explain why? For these short-term services (plus sheltered housing) provided by unregistered providers the proposal is that they should be paid Local Housing Allowance rates plus a fixed top-up to be administered by an agency acting on behalf of central government. No information is given about the amount of the fixed top-up or how it will be administered. One is tempted to believe that the DWP might assume that the formula used by local authorities to fund statutory homelessness referrals would be expedient (i.e. Local Housing Allowance minus 10% plus £60). Clearly, this would be insufficient and it begs the question as to how a centralised administration system could possibly be responsive to the multiplicity of needs of vulnerable people in short-term services who are typically in crisis at the point at which a provider engages with them. Perhaps the DWP assumes that short-term services are cheaper (hence the inclusion of sheltered housing)? The annualised cost may appear cheaper because the length of stay is typically 6 months or less, but the weekly cost of such services isn't cheap because people typically need quite intensive support when they are first engaged with.
The second group of unregistered providers is those providing longer-term services (e.g. projects for people with long-term mental health needs, learning disability services, services for people with physical disabilities). In the case of these services the DWP Consultation proposes to pay Local Housing Allowance rates plus a fixed top-up to be decided and administered at local level, presumably by local Adult Social Care departments. Again, it is hard to imagine this being an adequate level of funding and it is tempting to believe that local authorities will prioritise statutory obligations over discretionary funding. If they do decide to fund these services the Local Housing Allowance minus 10% plus £60 arrangement comes to mind again.
It is important to emphasise that these are proposals within a Consultation at this stage. We note that the DWP has been especially quiet on this since the Consultation period ended on 9th October. It is also important for unregistered providers to consider what I say further on in this article after describing the proposed arrangements for Registered Providers (RSLs in old money).
Talking of the proposed arrangements for Registered Providers, these are that essentially the arrangements stay very much as they are now. Registered Providers may continue to submit Housing Benefit claims for sheltered and supported housing as they do now and will only have their rents referred to the Rent Officer if they are deemed to be excessively high. You may recall from paragraph 7 of this article that, where Registered providers are concerned, local authorities recover the full costs of the Housing Benefit claims they pay over and above the local reference rent from the DWP. Whilst this remains the case there is no incentive for local authorities to refer rents as being "excessive". Indeed, I will go into some detail on the cost-benefit to everyone: provider, local authorities, the Government and vulnerable people, of funding elements of preventative and enabling services through Housing Benefit a bit later in this article.
Under the Consultation proposals, if a local authority does refer rents on the grounds that they are "excessive", the Rent Officer will have to make a comparison with a genuinely comparable scheme. The danger is that the comparison may be made with a similar scheme run by an unregistered provider persisting on Local Housing Allowance plus a fixed top-up. In which case Registered Provider rents will be gradually "managed down"; however, whilst the subsidy rules remain in place there is no incentive to the local authority to do this because it recoups the payments from the DWP and therefore brings additional revenue in. We are not aware of any threat to the subsidy rules.
So for Registered Providers it will continue to be possible to charge intensive housing management costs to the Housing Benefit service charge much as it is now. But what of unregistered providers?
According to the Consultation proposals, and assuming they're implemented as they stand, you'll be stuck on Local Housing Allowance plus a fixed top-up. But there are ways round this. It's important that preventative, enabling services for vulnerable people are properly funded. Firstly, if you're an unregistered provider managing property owned by a Registered Provider then actually you count as a Registered Provider anyway. If you manage your own property or property owned by a 3rd party then you may wish to talk to a local Registered Provider about taking a legal interest in that property because that would also count you as a Registered Provider as well. We can help with these arrangements, and crucially, with the revised Housing Benefit claims that may follow. Another route is to apply for registration with the Tenant Services Authority (TSA) as a Registered Provider. In recent months we have managed a significant number of TSA registrations: it's a much less onerous process than it used to be.
Service Charge Review
The Consultation also suggests, almost in passing, that there is a case for a review of service charges based on the hilariously misguided view that there are 400 separate service charges claimed by providers. The truth is that there are far fewer but there are several different labels for the same service charge. The intention would presumably be to produce a finite list of service charges. This would be fine provided that such a list was reflective of the activity undertaken within sheltered and supported housing. If such a review does take place it is essential that it is informed from the bottom up by providers rather than being left to the DWP and DCLG along with sector representative organisations that may not fully understand the minutiae of sheltered and supported housing services.
Comments on the Consultation Proposals
So that's the essence of the DWP's proposals but we think they've missed the point for a variety of reasons.
We mentioned earlier that the Government has a target of reducing the annual Housing Benefit budget of £21bn pa by 20%. The amount of Housing Benefit spent on sheltered and supported housing is estimated to be between £70m-£130m pa, which is between 3.3%-6% of the total budget. Not much in the great scheme of things really. Of crucial importance is the fact that, unlike Housing Benefit expenditure on general needs housing (the majority of which goes to private landlords) the Government gets a social return on investment when it comes to Housing Benefit for vulnerable tenants. Why? Because providers of accommodation and support to vulnerable tenants provide preventative enabling services which relieve pressure on statutory services and save them huge amounts of money. For example, if you provide sheltered housing you significantly reduce pressure on the NHS. Sheltered housing providers reduce slips, trips and falls and the broken limbs (or worse) which would otherwise result in untold misery, admissions to hospital, an operation for a broken hip, for example, (which costs £30k incidentally) and possibly death. There are plenty of other examples of prevention and enablement which providers are responsible for which takes pressure off the NHS. With year on year reductions in Supporting People funding an appropriate reallocation of costs into Housing Benefit is not just prudent it is often essential.
If you support and accommodate people with substance misuse needs you will be aware of the pressure you take off the NHS, Social Services, the criminal justice system, statutory homeless interventions to mention but four. It is important that providers of preventative services, irrespective of the client groups they support, should calculate the financial cost benefit of their preventative services. For every £1 spent on your services, what is the financial saving (or social return on investment) to other services? Cap Gemini data calculated an average saving of £3.41 for every £1.60 spent. For older people, people with substance misuse needs, women fleeing domestic violence and many other needs groups the social return on investment is much higher than that.
Why then is the DWP focusing on a small proportion of the total Housing Benefit budget with actually provides a social return on investment? Would you reduce an investment in something that gives you a proven return? The focus of these proposals is on cost, not value. If the focus were on value then money would be saved as a consequence of the fact that there is a social return on investment (i.e. financial value) in respect to the service charge element of Housing Benefit payable to supported housing. Unfortunately most local authorities tend to focus on cost not value and the challenge to providers is to prove the economic and social case for investment in preventative services which give an economic and social return.
To the extent that these proposals have a relationship with the proposed Universal Credit (remember that Housing Benefit is meant to become Housing Credit, part of the centrally administered Universal Credit system), then we feel that the time is right to suggest to the DWP and the Government in general that they should make a distinction between people who are vulnerable and people who are not within the arrangements for the administration of Universal Credit. Administering Universal Credit centrally will not work for vulnerable people. This is likely to increase pressure and cost on statutory services as a consequence. Welfare payments for vulnerable people should be properly targeted towards prevention and enablement (and thus provide a social return on investment) and will need to be administered locally, not centrally. There should be a clearer and wider definition of "vulnerability" than currently exists under the Housing Benefit Regulations (i.e. presently you are vulnerable if you are over 60; have a dependent under 16 or are sick for social security purposes).
I made the point earlier when talking about the top-up payable to unregistered providers of long-term services, those that local authorities are likely to discriminate in favour of funding services which they have a statutory obligation to provide. Local authorities are under huge pressure to cut costs. This is a consequence of public sector funding retrenchment. This will impact significantly on the non-Local Housing Allowance component payable to unregistered providers of longer-term services.
The Consultation proposals affect England, Scotland and Wales. Whilst Northern Ireland wasn't subject to the Consultation, it will be expected to toe the line. It is not really clear what thought has been given to the exercise of devolved powers within Scotland and Wales within these Consultation Proposals. Whilst the DWP has a UK wide remit the implementation of any regulations that stem from it will be conditioned in part by devolved Governments which have different approaches to the planning and funding of services for vulnerable people at local level. Parliaments in Scotland, Wales and Northern Ireland are inclined to be more supportive of local authority infrastructure and the role of the public sector. England doesn't have a Parliament and so English local authorities are subject to the policy direction of the UK Government which, currently, is in favour of reducing the infrastructure and role of the public sector at local level.
Thus we await a response from the DWP to the large number of Consultation responses submitted by providers and others within the sector. You can see Support Solutions' response here. We also await an announcement on whether or not there will be a service charge review. We will brief the sector as soon as we hear anything. In the interim it is important for providers to think about a prudent reallocation of costs into Housing Benefit if they haven't already done so. We are in the midst of a paradigm shift in the funding arrangements for sheltered and supported housing. Given the continued decline of Supporting People and the absence of other funding for Intensive Housing Management, a reallocation of costs into Housing Benefit provides at the very least a breathing space for providers whilst they take stock of additional funding options such as those described in our "Future Funding for Housing Support & Social Care Services" article here. It is also important for unregistered providers to think about relationships with Registered Providers. This is especially in relation to the latter taking a legal interest in their properties, or to think about registering with the TSA as a Registered Provider. In any event you should feel free to talk to us as Support Solutions has done an immense amount of work in this area to the benefit of vulnerable tenants, providers and local authorities alike.
(Added to site Wednesday, October 20th, 2010)
Other Articles In This Issue
Responding to the DWP Consultation: Housing Benefit Reform - Supported Housing "I found the event informative and timely it helped me to complete our response to DWP without which I would have struggled." S.S. - Safe House