New Arrangements for Funding Supported Housing
The UK Government document “Funding for Supported Housing: Government Response To 2 Consultations” has been well received within the sector, with good reason. However, it is only as good as far as it goes, which is some way but by no means the full distance.
The key points are these:
- All supported housing will have its core rent and additional housing needs costs (service charges) funded through the welfare system, including so-called “Short-Term Supported Housing”. No funding will be devolved to English local authorities and national governments outside England for this purpose.
- “Sheltered Rent” will not become a reality.
- The UK Government wishes to consult on and implement “a robust oversight regime” for supported housing going forward.
- The UK Government wishes to undertake a review of “Housing Related Support” including the relationship between Housing Benefit eligible service charges and “support”.
Support Solutions identified the technical/regulatory basis for enhanced Housing Benefit (which funds Intensive Housing Management) and is responsible for securing a considerable proportion of the £2.1bn annual enhanced Housing Benefit sum on behalf of provider clients. The UK Government has said that funding for the housing costs of all supported housing will be kept within the welfare benefits system, which is exactly where Support Solutions has been putting it since 2005.
This is good news for English supported housing providers. There may be a different view in Scotland and Wales. The UK Government had intended to devolve a share of the enhanced Housing Benefit pot to the Scottish Government and Welsh Assembly Government, in theory in 2020, which would have formed part of the increasingly devolved welfare systems in both of those nations.
“Sheltered Rent” will not come into being. The UK Government has accepted that such a mechanism is too rigid to be able to reflect the variable costs of buildings and of peoples’ additional housing needs.
It is important that there is an established oversight regime for supported housing as the UK Government’s recent announcement states there will be. There’s now a lot of money in the welfare system (Housing Benefit) that funds the additional housing costs of supported housing: around £2bn pa, which is more than the original £1.8bn that went into the now drastically shrunken Supporting People pot. The UK Government says the focus should be on “quality and value for money”. That’s good provided it’s not code for crude “cost control”, which has been disastrous. The UK Government further states that this oversight regime will “build on the draft National Statement of Expectation“(see p.44 of the hyperlinked document), which defines the roles of local authorities in relation to supported housing. Please note that the word “national” in this context refers to England only.
The UK Government intends to conduct a Review of Housing Related Support to see where Housing Benefit eligible service charges fit with support and how “housing and support fit together”. The increase in the amount of Housing Benefit eligible service charge is largely as a consequence of our reaction to the “cost control” inspired retrenchment of Supporting People funding. If it hadn’t been reallocated into Housing Benefit, it would have been lost to the system.
The UK Government appears to want to retain the 3 definitions of supported housing set out in the Consultations. With the exception of “Sheltered and Extracare Housing” we think this is a mistake. The term “Short-Term Supported Housing” seems to us to be more about the management of a budget than the meeting of need. “Long-Term Supported Housing” has still to be consulted on and, in any event, we should be describing types of supported housing according to the levels of need they meet, not an artificial “one size fits all” timeframe.
Supported Housing to Be Funded Via the Welfare System
The UK Government has conceded that the proposed devolution of a ring-fenced pot of money to English local authorities in order to fund so-called “Short-Term Supported Housing” will not now happen. We assume that the intended devolution of money to the Scottish and Welsh Governments will also not now happen. These devolved sums were to have equated to the total amount of enhanced Housing Benefit in payment at the point of devolution.
Instead all forms of supported, Sheltered and Extracare Housing will have their rent and service charge costs met through the welfare system as they do now; i.e. (enhanced) Housing Benefit (and for most people in Sheltered and Extracare, the housing component of Pension Credit). What the UK Government hasn’t done is to clarify what will happen when Housing Benefit is finally abolished in favour of Universal Credit, presumably in 2022. This is important
We proposed in our last Briefing that when Housing Benefit is abolished by Universal Credit the UK Government simply maintains the existing arrangements whereby people in supported housing have the housing component of their Universal Credit administered differently by (what is currently) the local Housing Benefit team. This is as a reflection of the fact that the additional costs of all forms of supported housing don’t fit within the parameters of Universal Credit service charges as currently defined. Thus, in all forms of supported housing the Universal Credit housing component would include Intensive Housing Management. The same applies to the cost of Sheltered and Extracare Housing within Pension Credit.
What this would mean, post Universal Credit implementation, is that enhanced rents, which reflect higher costs, are built into the Universal Credit system. We refer to this as “Supported Housing Rent”, which should be banded to reflect the variable costs of buildings and the additional housing needs, for all types of supported forward/sheltered housing.
The UK Government has said it intends to keep the additional housing costs of all types of supported housing within the welfare system; our “Supported Housing Rent” proposal would do this.
In our last briefing in April this year we argued the need for bandings to apply to both the core rent and the additional housing needs components of Sheltered and Extracare Housing rents (and we made the same point about supported housing rents too). Buildings have different costs depending on where the capital funding came from, the cost of the land and the development, design and purpose of the building. People have different levels of need and these should be reflected in different levels of resource, so the service charge/additional housing needs component of the rent should be banded accordingly. We suggest a maximum of three bands (low, medium, and high needs).
The UK Government also wanted Homes England to regulate “Sheltered Rent”. We made the point in our Consultation response that Homes England only regulates 70% of sheltered and extra care providers and furthermore, that the proposed regulatory approach, which was similar to that applicable to social rents, would not be fit for purpose as can be seen from the fact that it really doesn’t apply appropriately to supported housing either, even though it was intended to.
UK Government states within its new paper that there should be a “robust oversight regime” to focus on quality and value for money. We very much agree with this as we said in our last Briefing. However, the nature of this oversight regime really matters, and the UK Government says it wishes to consult on it.
Those of you who are familiar with what Support Solutions does or are familiar with our published briefings will recognise what we mean by “Value Generation”, which is three things:
- Outcomes for people
- Cost benefit to the public purse
- Wider community benefit
The concern we have about any potential new oversight regime is the UK Government’s fixation with “cost control”, which is reflected in equal measure by local authorities. It’s certainly very important to ensure that public money isn’t spent on poor services or expensive services with outcomes that don’t justify the investment being made in them. However, it is just as important to avoid funding services simply because they’re apparently cheap. It is essential to maintain the relationship between levels of investment and levels of need. Cost control alone is a crude mechanism that ruins the ability of services to achieve outcomes for people, cost benefit to the public purse and wider community benefit.
So, we urge the UK Government and the wider sector to consider using Value Generation principles as a means of underpinning this proposed “robust oversight regime”. “Cost control” has let us down badly for too long.
Future commissioning should ideally be undertaken by integrated teams: no separation between health social care and Housing Related Support, unless funding for the latter remains within the welfare benefits system. We support arrangements whereby oversight of services is undertaken by people who do not fund the services and where there is a clear relationship between levels of need and levels of resource and where judgements are made on the basis of Value Generation principles.
Review of Housing Related Support
The UK Government states that it wants to review how support is funded. In addition, the UK Government wants to understand the relationship between eligible service charges and support and to review Housing Related Support to understand how housing and support fit together. It seems to us that, increasingly, support, as distinct from Intensive Housing Management, isn’t funded.
Leading on from this, the relationship between eligible service charges and support has history to it. The 1997 Judicial Review that brought “Supporting People” into being did so because it concluded that Housing Benefit does not fund support. However, Supporting People also absorbed the old revenue funding source for Intensive Housing Management: “Supported Housing Management Grant’, or SHMG, as it was known then. So, Supporting People didn’t just fund “support”, it also funded Intensive Housing Management. As Supporting People retrenched over time Support Solutions identified the technical basis upon which to reallocate some of the lost funding into Housing Benefit and is responsible for having secured a good proportion of the enhanced Housing Benefit (which funds Intensive Housing Management) that has been accrued since 2005 and would otherwise have been lost to the system. £2 billion is what the UK Government had intended to devolve to English local authorities and devolved Governments outside England as the ring-fenced fund that they’ve now decided not to proceed with.
“Housing Related Support” includes both Intensive Housing Management, as reinstated by Support Solutions from 2005 onwards, and support tasks funded by Supporting People, to the extent that the latter still exists.
Without seeing a document that sets out terms of reference it’s hard to know the UK Government’s intentions when it says it intends to review Housing Related Support in order to “see how housing and support fit together”. Of course, the intention could be to try and “save money” through the exercise of the discredited “cost control” approach, which does the very opposite of saving money. On a more positive note the intention might be to look at integrating the rather segmented approach we have to commissioning and funding services to people with additional needs. We have Intensive Housing Management and support (which together equate to Housing Related Support) and social care and health care.
“Cost control” is one of the weaknesses of our current funding and commissioning arrangements for services for people with additional needs. Its partner in crime is segmented commissioning. Put the two together and we have negative competition to not fund services.
The UK Government wants to know how housing and support “fit together” by understanding what Housing Related Support is. Housing Related Support is Intensive Housing Management, as defined by enhanced Housing Benefit eligibility criteria (and our briefing here) plus “support”, which used to be locally defined by Supporting People teams. These local definitions have shrunk over time with the reduction and often removal of funding for support by local authorities.
Had it not been for the work that Support Solutions did in identifying the technical/regulatory basis for Intensive Housing Management back in 2005 and acting for providers to make Intensive Housing Management claims since then, there wouldn’t be a pot of enhanced Housing Benefit, which is what funds the Intensive Housing Management component of Housing Related Support. That money would have been lost to the system. Instead, what we did was to offset some of the reduction in the UK Government (DCLG/MHCLG) funding stream (Supporting People) by transferring it into the welfare system (Housing Benefit) and we are pleased that the UK Government has decided to keep it there by saying that Housing Benefit will continue to fund the housing costs and additional housing costs of supported housing.
As previously mentioned Housing Benefit will only last until 2022 and we need to know whether and how Universal Credit will fund what enhanced Housing Benefit funds. We have already suggested how it might do so (above) and in our April 2018 briefing.
Definitions of Supported Housing
An important issue that the UK Government response does not address is how “supported housing” should be defined. As you may well recall the Government identified three types of supported housing:
- Short-Term Supported Housing
- Long-Term Supported Housing
- Sheltered and Extracare Housing
We don’t have a problem with the Sheltered and Extracare Housing label although practitioner experts in this area will doubtless have better definitions. We absolutely do have a problem with so-called Short-Term Supported Housing and Long-Term Supported Housing as labels. This is primarily because when a publicly funded service is defined by a limited timescale it’s about the management of money, not about the meeting of need. So, this is a major problem for so-called “Short-Term Supported Housing” as we set out in our previous briefing. Forgive us for reiterating what we say in our Introduction, but we should be describing types of supported housing according to the levels of need they meet, not an artificial “one size fits all” timeframe.
Peoples’ responses to the UK Government’s consultations focused around the inadequacy of the “Short-Term Supported Housing” definition and its arbitrary two-year time limit.
Support Solutions devised revised definitions that aren’t based on timescales. These are as follows:
Immediate Access Accommodation: the sort of accommodation where people go in an emergency. This might include hostels and women’s refuges. The NHF suggested (in the context of the UK Government’s proposal to devolve funding to local authorities to fund what they referred to as Short-Term Supported Housing) that Immediate Access Accommodation should be restricted to a period of 12 weeks occupancy. We agree with this although we wouldn’t be prescriptive about a “hard and fast” 12-week limit. However, Immediate Access Accommodation is for temporary emergency shelter, safety and the assessment of need.
Immediate Access Accommodation should be funded by “Supported Housing Rent”, our proposed enhanced housing component of Universal Credit that’s payable only to supported housing. In the case of Immediate Access Accommodation, it should be paid directly to the provider organisations. In this case “Supported Housing Rent” should be paid at a flat rate (unbanded) on a full cost recovery basis.
Intermediate Needs Supported Housing: this is supported housing for people with an intermediate level of need. In other words, they need accommodation and support for the duration of that need, but the likelihood is their situation and needs will change: the aim being resettlement into ordinary housing, education and employment.
Time limits are inappropriate: as the UK Government says “one size doesn’t fit all” but the outcomes expected of Intermediate Needs Supported Housing are increased levels of independence or “managed interdependence” as we prefer to say.
People in Intermediate Needs Supported Housing would be in receipt of Housing Related Support funding not (typically) statutory funding packages. The current lack of the support component of Housing Related Support funding, as distinct from the Intensive Housing Management component, as a consequence retrenchment in the Supporting People budget by local authorities is an obvious problem. But it is a problem with funding, not a problem with this model and it will be interesting to see the UK Government’s approach to its review of Housing Related Support in this regard.
In the case of Intermediate Needs Supported Housing, the same funding approach should apply with the exception of the direct payment to provider arrangement, although that might be the default position until both provider and person with additional needs agree that the rent component is paid to the person not the provider.
It is in this form of supported housing that the funding gap created by the retrenchment of “support” funding (as distinct from Intensive Housing management) will be most obvious. People in this form of supported housing would typically not qualify for statutory care packages so the whole of their additional needs would need to be met through “Supported Housing Rent”, which therefore needs to be sufficient in scope and extent to meet the cost of meeting those needs. It might be appropriate to have a banded additional housing needs component (low, medium and high) dependent on peoples’ levels of need as the relationship between resources and needs is important to maintain. This is simply an investment in prevention and a failure to do this will lead to very bad outcomes for people and the need to invest much more money in otherwise avoidable emergency interventions as a consequence. We believe the UK Government should consider this seriously in the context of its review of Housing Related Support.
Intensive Needs Supported Housing: this would replace the UK Government’s proposed “Long-Term Supported Housing” definition. It should be noted the UK Government didn’t consult on Long-Term Supported Housing and devoted a mere five paragraphs of 54 pages in the October 2017 Consultation document. Intensive Needs Supported Housing would accommodate people with intensive/high levels of need. This might include severe learning disabilities severe physical disabilities, “chronic” mental health needs and other needs that don’t get “better” over time. It might also include people with severe addiction problems, acute psychotic episodes and other intensive needs that will improve over time such that they might move to Intermediate Needs Supported Housing, Sheltered and Extracare Housing or independent housing. The point is the intensity of need, not its duration.
With Intensive Needs Supported Housing it is likely that people living in this form of supported housing will be entitled to both “Supported Housing Rent” for their additional housing needs and also statutory care funding packages for their care needs. Banding of the additional housing needs component would not be necessary, and the full cost recovery principle should apply.
The UK Government will need to revisit what it describes as “Long-Term Supported Housing” and we hope it does so soon. “Specialised Supported Housing” is one form of Intensive Needs Supported Housing.
Sheltered and Extracare Housing: we don’t see the need to challenge this particular definition of this type of supported housing by the UK Government. There are legitimate questions about what should sit behind such a definition, as identified by the sector’s responses the UK Government Consultation, but this is subject matter for a separate briefing.
For Sheltered and Extracare Housing, where there is a wide variation in need within this definition, the funding model should include a banded additional housing needs component of Pension Credit (or Universal Credit where the person is under 65, or where one partner in a couple is under 65) as per Intermediate Needs Supported Housing. In addition, some people will have statutory care packages as well, depending on their level of need.
As we said in our Introduction: it’s good as far as it goes but there is much work to be done. This work will presumably be undertaken in the context of consultation on new oversight arrangements, the review of Housing Related Support, the shape of funding for supported housing post Universal Credit and the further development of the draft National Statement of Expectation. Most of this is applicable to England and we’d like to see clarity on the implications of retaining supported housing funding within the welfare system for Scotland and Wales going forward. Housing Benefit and Universal Credit, for the time being, remains a UK Government concern.
We think that the housing component of the Universal Credit and Pension Credit systems should be adapted for supported housing of all types to accommodate “Supported Housing Rent”. In other words, it should include Intensive Housing Management. It isn’t clear how the UK Government will reinstate lost funding for “support” to the extent that it’s different from Intensive Housing Management. They could argue, with some justification, that some funding for Housing Related Support now sits within the welfare system in the form of enhanced Housing Benefit. However, there’s still a funding gap between that and the social and healthcare budgets. Perhaps the solution lies, as we’ve often said, with integrated statutory commissioning with a bias towards funding preventative services that generate value. It would also be necessary to ensure that the “Supported Housing Rent” component of Universal Credit, which we propose, has sufficient scope to fund what people require to meet their additional housing needs.
Any new approach to funding all types of supported housing needs to be accompanied by a change in values. We need to see the crude and discredited “cost control” approach to funding and commissioning dumped in the dustbin of history. It should be replaced by a Value Generation approach.
We’d also like to see a separation between the oversight of services and the funding of services, so people can be reassured that judgements are based on what value a service generates, rather than what it costs in isolation from its outcomes and cost-benefit.
We think that the UK Government needs to revisit its definitions of supported housing as we’ve identified in the final substantive section of this Briefing (above). In so doing they might also find a solution not only to how supported housing is defined, but also how it is funded.
It seems that the 3-year period of uncertainty around the broad mechanism for funding supported housing has come to an end. This is obviously a good thing, although we must be mindful of the detail of new UK Government reviews and proposals going forward.
In the interim, providers who have held back from looking at enhanced Housing Benefit/Intensive Housing Management should really consider doing so now. The principle of full cost recovery is not a new one to the sector and it will be important for providers to be able to prove their real cost base with the advent of any new arrangement such as our proposed Supported Housing Rent within Universal Credit or for that matter, any other funding mechanism the UK Government settles on.
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 Because no-one is actually “independent”. All of us exist in a state of managed interdependence which varies with our levels of additional need.
 Outcomes for people, cost-benefit to the public purse & wider community benefit.