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Inappropriate to use the Local Housing Allowance rate, says Committee

1 May 2017

The Government should scrap plans to base rent allowances for supported housing tenants on rates used for claimants in the private rented sector, the Work and Pensions and Communities and Local Government Committees conclude in a joint report on the future of supported housing.

Scrap plan to base supported housing allowances on private sector rates

The Committees say it is inappropriate to use the Local Housing Allowance (LHA) rate and argue that a new Supported Housing Allowance, banded to reflect the actual cost of provision in the sector, should be introduced instead. The Committees note concerns that the Government's proposed reform could lead to a serious shortfall in the availability of supported housing.

Ministers are right to consider an alternative funding mechanism for emergency accommodation, given the inability of Universal Credit to reflect short-term changes in circumstance. The Committees recommend grants to local authorities, which can commission accommodation and pay providers.
The report also calls a separate funding system for women's refuges and urges the Government to work with Women's Aid and providers to devise it. The Committee says it is essential that refuges are able to operate as a national network, unrestrained by local admissions restrictions.

Chair's Comments

Richard Graham MP, Co-Chair of the inquiry and member of the Work and Pensions Committee, said:

"Supported housing is deeply valued by those who live in it and contributes enormously to their independence and wellbeing. We support the Government's aims to reform funding for this vital sector to ensure quality and value for money, protect and boost supply, and provide greater local control.

But we are concerned that the proposals, as they stand, are unlikely to achieve these objectives. Our recommendations seek to improve the Government's plans and ensure it delivers on our common goal of a sustainable, long-term funding solution for supported housing."

Helen Hayes MP, Co-Chair of the inquiry and member of the Communities and Local Government Committee, said:

"The proposals have caused considerable concern. Supported housing providers are reconsidering investment plans, shortfalls in the levels of service are expected to get substantially worse and vulnerable tenants are anxious that they may no longer have the guarantee of a home for life.

Ministers must intervene immediately by scrapping the proposed Local Housing Allowance reform. The sector needs a far more suitable funding system that recognises the consistent cost of provision across the country and provides long term reliability.

Supported housing caters for an incredibly diverse range of people, from long-term sheltered accommodation for older people to short-term emergency housing for those who have recently become homeless or are fleeing domestic abuse. The Government is right to consider alternative funding for emergency accommodation and we urge Ministers to also recognise the unique challenges of refuges with a distinct funding model."

Inquiry examined

Under the current proposals for supported housing, core rent and service charges for supported housing tenants would be funded up to the level of the applicable LHA rate. For costs above this, the Government would devolve ring-fenced top-up funding.

But the Committee found that the cost of provision is largely consistent across the country, unlike the LHA rate. Consequently, some areas will rely more on top-up than others. As this is considered a less secure funding source, the Committees are also concerned that providers will be put off investing in particular areas, creating a disparity between the supply of homes and services across the country.

The Committees argue that a Support Housing Allowance would ensure tenants only require top-funding in exceptional circumstances. The Allowance would be calculated according to a formula made up of a fixed amount for provision, which is consistent between areas, and a smaller variable amount that reflect differences in land costs.

Central funding of the top-up should be guaranteed for at least the duration of the next Parliament to provide greater certainty. Funding levels should be regularly reviewed to ensure the top-up fund keeps pace with increases in the cost of provision and changes in local demand.

Other findings

Recommendations and conclusions include:

  • The Government should ensure providers are aware that supported housing tenants claiming Universal Credit will not be worse off if they seek employment. A job should be seen as an important milestone towards independence and self-sufficiency.
  • The Government should establish a set of national standards to enable monitoring of the quality of provision in all supported housing in England and Wales, with a specific emphasis on improving the quality of life that tenants experience

Further information

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