Funding Supported Housing
What follows is our November 2017 Briefing in response to the UK Government's new Policy Statement & Consultations on Funding Supported Housing. Please also see our Training Events scheduled for January.
Here are the key UK Government Policy Statement and Consultations:
Government Summary Response to the Select Committee Report: Future of supported housing: government response to the Select Committee report
Policy Statement & Consultations: Funding supported housing: policy statement and consultations
As you may well recall, the UK Government originally set out proposals for funding supported housing in September 2016. These are described in detail in our earlier briefing. Put simply, the intention was to apply the Local Housing Allowance Caps to supported housing and then top up the additional costs of support services from a locally administered and ring-fenced fund of £2.12 billion across the UK. These proposals were heavily criticised. Since then the UK Government has performed badly in a General Election in June 2017, has had its room for manoeuvre in policy terms severely restricted and has come under much political pressure, not least from its own MPs
There was a joint DCLG/DWP Inquiry into the UK Government's original proposals on funding supported housing as a consequence of which the UK Government has not only moved the goalposts, it's ploughed up the entire football pitch.
The purpose of this Briefing is to explain and critique the new proposals set out in the UK Government's Policy Statement (here) and to comment on the last two Consultations it has set in train as a consequence, both of which end on 23rd of January 2018. We will be running a series of events in January to guide you through the detail of the new proposals in the consultation documents. You can download a booking form here.
The details of the Policy Statement, and of this Briefing, apply almost entirely to England. The UK Government has committed to devolving an amount of money for funding supported housing in Scotland and Wales that is the equivalent to what they would have received from the welfare system. The UK Government has been less categorical about that principle applying to English local authorities. The UK Government has said that the devolved administrations should devise their own plans for supported housing and that the detail of the Policy Statement applies to England only.
Our view of the proposals contained within the Policy Statement is that there are some positive developments within what is generally an unambitious and disappointing policy direction. This we feel is as a consequence of the UK Government's political weakness.
The UK Government says that it believes a “one-size fits all” approach is not the right approach to take to the funding of supported housing. It proposes to tailor funding to 3 distinct types of supported housing:
- Sheltered and extra care housing
- Short-term supported housing
- Long-term housing
Let's look at the overall expectations of the UK Government for funding supported housing and then take each of the definitions (above) in the UK Government's proposed approach in turn.
As you'll see below English local authorities have only been given direct funding responsibility for what are unfortunately termed “Short-Term Supported Housing”. Such services might be better described as “immediate access supported housing”. More about that below.
Local authorities have however, been given a much wider strategic and coordinating role in the planning and oversight of all supported housing as defined by the bullet points above.
Local authorities will be required to produce Supported Housing Strategic Plans that set out how they intend to meet current and future need for people with additional needs in a range of settings including but not limited to supported housing.
Local authorities will be required to meet the needs of all client groups. Where no local provision exists for certain client groups the expectation is that they'll either create it or refer to provision outside of their geographical area. Such groups might include, for example, people fleeing domestic violence, ex-offenders and offenders and people with substance misuse issues.
Collaborative working with other local agencies is required as are reciprocal arrangements with other local authorities, especially where people have no local connection.
As part of their oversight role, local authorities will be expected to ensure value for money. Hopefully that will not be another term for “minimum cost”. They will also be expected to ensure good standards of accommodation and to have some means of accrediting providers.
They will be expected to identify how services are funded, especially where third party funding is used and to make judgments about how effective providers are in delivering services and managing stock.
They will be required to report on how they deliver against their Supported Housing Strategy Plans on a twice-yearly basis.
In services for older people and those with long-term needs local authorities will be required to prioritise alternatives to registered care and hospital admissions.
They will be expected to reflect the priorities of related frameworks such as the Housing White Paper and the Neighbourhood Planning Act 2017, especially in relation to the needs of older people
Sheltered And Extra Care Housing
The UK Government acknowledges that sheltered housing accommodates some working age people and it doesn't seek to change that. It proposes that this form of housing should “continue to be funded in the welfare system” (page 5) and that a new “Sheltered Rent” will be introduced from 2020 for the housing component of the total charge. This new rent structure will acknowledge the higher cost of this type of housing (but will only allow a 10% variation to Formula Rent applicable to general needs social housing) and will give the social housing regulator the power to regulate the “gross eligible rent” (i.e. rent inclusive of eligible service charge). The amounts are to be established in consultation with the sector but the UK Government has already established a familiar formula for this:
Formula rent +/-10% flexibility for supported housing plus £X for eligible service charge up to a maximum of £Y.
The amount of eligible service charge and the maximum Cap is what will be consulted on with the sector.
We have long been of the view that the +/-10% approach bears no relation to the actual cost of supported & sheltered housing even before the additional needs of residents have been factored in, so the emphasis must be on ensuring that the “eligible service charge” is sufficient.
The fact that the overall amount of Sheltered Rent is capped shows that the UK Government remains wedded to the notion of “cost control”, which is an inadequate way of defining “Value For Money”. The management of cost is not the same as the meeting of need. In fact it is quite often the opposite.
As you may know we have proposed the principle of “Value Generation” to be the guiding principle behind the funding and operation of services for people with additional needs. This includes the management of cost but also enables the meeting of personal and community need, unlike the discredited “cost control” approach, which places the management of budgets over and above the meeting of need.
The UK Government also states that, after the 1% rent reduction applied to English social lettings expires in 2019, it will reintroduce the CPI+1% regime for annual rent increases for 5 years going forward. This will add further cost pressure to social landlords, as RPI is likely to increase quite markedly in coming years, as is the differential between RPI and CPI.
UK Government proposals make no mention of private and nonprofit providers that are not regulated by the social housing regulator. It is important that their position is clarified. The logical position would be to bring them in line with the housing revenue entitlements of social sector providers and to apply the new “oversight arrangements” (see below) equally to both private and social sector providers.
It is important to note that providers' existing levels of enhanced Housing Benefit will be preserved when the new arrangements are implemented in April 2020. New schemes will be subject to the Sheltered Rent Cap. It is very important that providers who have not optimised their revenue via enhanced Housing Benefit do so by contacting us now.
The UK Government says it is seeking views via the Consultation on how sheltered and extra care housing should be defined so it's important that interested parties contribute to this, as we will be. The UK Government has also identified its view that local authorities should each produce a Supported Housing Strategy Plan for all supported housing based on an assessment of local provision and of need.
Whilst reference is made to the need to “work in partnership with other local providers” this falls short of the need for structural change within the statutory sector in England in the form of integrated working, including service commissioning as per the Scottish Government's model. The proposals also fail to make any meaningful link between the role of supported housing and the need for a radical solution to the funding and capacity crisis in health and social care. This is especially disappointing.
Short-Term Supported Housing
The UK Government has defined “Short-Term Supported Housing” as being supported housing that is accessed by people in crisis and with a maximum duration of two years or until a transition to “long term stable accommodation” is possible, whichever occurs first.
Short-Term Supported Housing will not be funded through the welfare system except for a proportion of the housing costs being met through Housing Benefit/Universal Credit, although the Policy Statement appears to be ambiguous on this. The costs will be met through a ring-fenced grant held by local authorities (First Tier authorities in shire counties). This grant will be the equivalent of the Housing Benefit that is currently paid, which we assume is the £2.12 billion across the UK and is intended to meet the needs of local areas. Devolved administrations have been promised a level of funding in 2020/21, which is the equivalent to what they would have received through the welfare benefits system. No such categorical commitment has been given to English local authorities, which is another consequence of the fact that there is no English Government.
According to the Policy Statement people in Short-Term Supported Housing will not pay rent. The full costs will be met by the ring-fenced grants. We assume they'll be entitled to Housing Benefit/Universal Credit, although the proposals as stated are unclear, and that Housing Benefit and the housing component of Universal Credit will contribute to their housing costs. We assume that provision will be made for direct payment of this to supported housing providers in the circumstances.
The UK Government has said, “it is our intention that this ring fence will be retained in the long term”, however, an intention falls far short of a guarantee. The Scottish and Welsh Governments will be entitled to spend the money as they see fit. The problem with most English local authorities as a general rule is that they believe they're underfunded and the temptation will be to get rid of the ring fence as happened with Supporting People funding.
One of the big disappointments with the new funding proposals as a whole is the failure of structural vision. No relationship is made between the preventative capacity and wider scope of all types of supported housing and the funding and capacity crisis in health and social care.
In relation to peoples' fears about local authorities being tempted to use the funding for Short-Term Supported Housing to meet their own costs, if and when the ring fence goes, surely we should be looking at the overhead costs of local authorities and the statutory sector in general. There is a widespread view that local authority services, and the non-statutory services they are meant to fund, do not see sufficient funding going direct to people with additional needs or the salaries of most of the people who support them. However there is no knowledge of how much of the money that should be spent directly on staff and services goes on the overhead costs of local authorities and the NHS. Combined with the outmoded preoccupation with the management of cost over the meeting of need and segmented commissioning with its never-ending argument over who should (or more particularly who shouldn't) fund additional need, we continue on the path of supported housing, social and healthcare being compromised by an unfit for purpose statutory sector infrastructure.
The UK Government doesn't have the political room for manoeuvre since the June General Election to insist on an audit of the costs of this infrastructure so we'll get more of the same in relation to funding Short-Term Supported Housing in relation to the ring fence: in short, we believe this funding will disappear into local authority coffers at the earliest opportunity.
English local authorities will be expected to develop Supported Housing Strategic Plans, including assessments of local need. Funding will not apply to people; it will apply to bed spaces and will be set in each area on the basis of “current projections of future need”.
Local authorities will be expected to “seek value for money”. Under the existing and discredited system of cost management, which will remain unchanged, we fear that this will translate into an expectation over time that providers will be expected to deliver more for less. If the UK Government had the political courage and clout to move to a system of Value Generation rather than cost management we'd have cause to celebrate. The current proposals do no such thing.
Long-Term Supported Housing
The proposals devote a mere five paragraphs to Long-Term Supported Housing and there is no Consultation in relation to it unlike sheltered/extra care and Short-Term Supported Housing.
Long-Term Supported Housing includes people with learning disabilities mental health needs and other groups whose additional needs are permanent.
The proposals make no direct reference to “Specialised Supported Housing”, which may seem odd given that the UK Government went to the trouble of redefining it last year in the Social Housing Rents (Exceptions and Miscellaneous Provisions) Regulations 2016.
The proposals suggest that long-term supported housing will remain within the welfare system and may not be subject to Sheltered Housing Rent.
We believe that there is a strong relationship between Long-Term Supported Housing and Specialised Supported Housing and that the UK Government may well view it as one and the same thing, however, the total lack of focus on this within the Policy Statement is puzzlingly unclear.
The proposals talk of an expectation that local authorities develop an understanding of local Long-Term Supported Housing provision. This reflects the structural failure of the proposals to which we referred above: lack of a structural relationship between local authorities and the NHS in England and the failure to see supported housing of all types as being critical to resolving the funding and capacity crisis in health and social care.
Long-Term Supported Housing and Specialised Supported Housing are the most obvious way of making an impact on the health and social care crisis. The lack of detailed knowledge in these proposals (and the lack of a Consultation on it) is frankly astonishing. The paucity of information gives the impression that the UK Government ran out of time or scope of thinking on this hugely important part the sector.
Not all Long-Term Supported Housing would qualify as Specialised Supported Housing, which is defined (in brief) as follows:
- Developed with the use of private capital
- People who live in it would otherwise require residential care or hospital admission
- It is developed broadly in line with local strategic priorities
We believe that there is huge scope for both Specialised Supported Housing and Long-Term Supported Housing (to the extent to which they remain differently defined) to be presented to the NHS in particular as solutions to the need to reduce the numbers of people going into hospital and also to reduce length of stay in hospital. However, the label “long-term” detracts from this as Specialised Supported Housing can be seen as both long and short-term provision.
We think the UK Government would do well to focus its thinking more on this issue and to reframe its thinking away from the definition “long-term”, which is not fit for purpose.
Where supported housing is meeting high levels of need, a much closer relationship should be made to the needs of the health and social care system, irrespective of whether that need is seen as “short-term” or “long-term”. Both of these definitions relate to the allocation of funding, not the meeting of need. Perhaps Short-Term Supported Housing should be redesignated “Immediate Access Supported Housing” and Long-Term Supported Housing should be redesignated as “Specialised Supported Housing”, which should be redefined to say that its capital funding can either be public or private and that length of stay is not a defining factor. Such provision should be used to reduce dependency on hospital and registered care. In so doing it should remove the expectation that so-called Short-Term Supported Housing, Sheltered or Extracare should act as a cheaper replacement for registered care, which is the clear danger here.
The 2 Consultations on Housing Costs for: “Sheltered & Extra Care Housing” and “Short-Term Supported Housing”
Both Consultations are now open and they both close on 23rd January 2018. We are running a series of inexpensive but high quality Briefing events in the 2nd and early part of the 3rd weeks of January, which we hope will help you to formulate your responses. It takes a minimum of 2 months to organise such events, which takes us into Christmas, so the UK Government's timescale is not exactly ideal. These events will give you the context and detail you need to respond effectively to whichever of the two Consultations are of relevance to you. You can download a booking form here.
It would be inappropriate for us to give a step-by-step response to both Consultations in this Briefing, not least because you'll probably lose the will to live if we did. However, we will be drafting our responses to both Consultations in advance of the events we're organising for January and we'll circulate them to all attendees in advance of the events themselves.
It is significant and puzzling that there is no Consultation on “Long-Term Supported Housing” and we suspect that the UK Government has much more thinking to do on that.
“Supported Housing Allowance/The Banded Approach”
One of the Consultation questions (No 4) in the Sheltered & Extra Care Consultation asks about a “banded approach” to funding, which wouldn't apply to so-called Short-Term Supported Housing”, the funding for which will be locally administered under these proposals. If there were a Consultation on Long-Term Supported Housing this approach would be equally relevant to consult on.
The “banded approach” (otherwise known as “Supported Housing Allowance”) was put forward by Lord Best to Clive Betts MP, Chair of the Communities and Local Government Committee. The detail of this proposal, which was originally meant to apply to all funding for supported housing, can be seen here. It is important to consider in relation to answering question 4 of the first Consultation.
Michael Patterson, November 2017.
 Outcomes for people, cost-benefit to the public purse, wider community benefit.