The Government has announced an “unexpected” cut to funding for disability supported housing and homeless accommodation – arguing that the services need to make “efficiency savings”.
The supported accommodation services and others like them are mostly funded by housing benefit payments, administered through the welfare system.
Work and Pensions Secretary Damian Green confirmed on Thursday that the DWP would cut the rent that supported housing providers – mostly charities – can claim back from the benefits system.
The changes, which will see an annual, rolling 1 per cent reduction in the rent payments for three years, will cost providers millions, with budgets already under pressure from years of sharp cuts to local councils.
Though some “specialist” providers, such as women’s refuges, are exempt, other charities have said the changes threaten the future viability of their services for vulnerable people.
“The Government’s proposals will compromise the right for people with a learning disability to live independently, and must be reconsidered urgently,” Dan Scorer, head of policy at the learning disabilities charity Mencap, warned after the announcement.
Meanwhile Howard Sinclair, the chief executive of the homelessness charity St Mungo’s, said the cut would leave the homeless charity with £3 million a year less to spend on services.
“The rent reduction will threaten the financial viability of some of our hostels and other supported housing schemes and offers no direct benefit to vulnerable tenants who mostly rely on housing benefit to cover their housing costs,” he said.
Separately, the Government has suspended a plan for another cut, which would have capped such housing benefit payments at the same rate as is paid out for council housing – despite the higher costs involved in supported accommodation.
Though the cap will still come in the year 2019/20, the Government says it will give local councils extra money to give to the charities to make up any extra costs. This money will be ring fenced, the DWP said.
That change has received a mixed response from providers, with some saying it will be unlikely to cover costs and lead to a “postcode lottery”, and others welcoming the change.
Decisions on this cut have been deferred for nearly a year since they were initially announced by the former chancellor George Osborne in the 2015 Autumn Statement – with Mencap’s figures suggesting 80 per cent of housing projects having been put on hold since the initial announcement.
Mr Scorer of Mencap said the funding settlement would charities providing supported housing put under “huge strain”.
“Whilst we welcome the further exemption of supported housing from the LHA cap until 2019/20, it was widely expected the Government would today secure a sustainable future for the sector. Instead the proposal risks adding to a growing housing crisis for people with a learning disability who need the safety and security that supported housing offers,” he continued.
“The system is currently under huge strain, with local authorities struggling to add the minimum of 1,000 new supported housing units required every year for people with a learning disability to keep up with demand.
“It’s unclear how this proposal of funding for supported housing via a localised pot will be able to keep up with this demand, and we fear it will create a postcode lottery causing anxiety and uncertainty for those desperately in need of the safety and security supported housing offers. It will further undermine the right of people with a learning disability to have their reasonable housing needs met.
“We are also deeply concerned to learn that the 1 per cent rent reduction will now apply to supported housing going forward. This is adding an unexpected and additional strain on a sector struggling to provide much needed housing for people with a learning disability.”
The DWP says it is "confirming" the 1 per cent cuts will apply to supported housing "as planned".
St Mungo’s Mr Sinclair continued: “We have been exceptionally worried about the future of supported housing services since the government announced plans last year to reduce rents and cap housing benefit for tenants.
“It is good news the government has listened carefully and will not impose the LHA cap on supported housing tenants before the new funding regime is introduced. This takes a lot of the pressure off providers and helps to ensure vulnerable tenants continue to receive enough housing benefit to cover the costs of their specialist accommodation.
“However, the Government’s decision to push ahead with a reduction in rents for three years from April 2017 remains a serious concern. When we take into account the rental income we had anticipated over the three year period, this measure will cost St Mungo’s over £3 million.
“We urge ministers to honour their commitments to ensure the sustainability of supported housing provision and protect services for vulnerable individuals by taking the rent reduction off the table. There should be no rent cuts imposed for supported housing services in the run up to the new funding regime.”
Tim Cooper, the chief executive of the disability charity United Response, said the plans were "deeply worrying" and warned of a lack of detail about how the local top-up system would work.
Work and Pensions Secretary Damian Green said the charities had to make “efficiency savings”.
“It is important that providers can continue to provide high-quality and cost-effective supported housing to meet the needs of their tenants. However, it is also important that supported housing should make efficiency savings in the same way as the rest of the social sector,” he said in a written ministerial statement.
The effect of the settlement will vary across the supported housing sector. The charity Refuge, which runs women’s refuges, said it was pleased that refuges had been exempted from the rises.
“Refuge is delighted to learn that the Government will exempt refuges from new Local Housing Allowance rates and the 1 per cent reduction in rent charges,” Sandra Horley CBE, the charity’s chief executive said.
“Both of these developments will help to safeguard the future of specialist refuges. We welcome the Prime Minister’s continued leadership on violence against women and girls and are delighted that her new Government is prioritising the needs of women and children fleeing domestic violence.”
Denise Hatton, chief executive of YMCA England, said in a statement released by the DWP that the YMCA welcomed the new plans.
“We will be looking to work further with Government on any new arrangement to ensure the money ultimately ends up supporting young people to have a safe and secure place to live,” she said.
Debbie Abrahams, Labour’s shadow work and pensions secretary said the cuts were “cowardly” and that the decision “has left tens of thousands of the most vulnerable people in limbo”.
The DWP secretary Mr Green added that the new model of funding supported housing would “build a Britain that works for everyone”.
“We know the valuable role that these organisations play in communities across Britain. Women’s refuges or housing for young people with learning disabilities are important parts of the support system for vulnerable people,” he said.
“As we build a Britain that works for everyone, not just the privileged few, our new funding model will help those people who need it the most.”
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