National Housing Federation Submission to the Public Accounts Committee inquiry into supported housing

Summary

The National Housing Federation (NHF) is the voice of housing associations in England, representing almost 600 housing association members that provide homes for around six million people. Housing associations provide three quarters of all supported

housing for rent, including retirement and extra care housing, homeless hostels, homes for people with learning or physical disabilities and people with autism, mental health

step-down units and domestic abuse refuges. These homes enable people to live independently and can transforms lives by giving people security to start addressing health or addiction issues.

         Good quality supported housing gives people choice about their lives, provides tailored, person-centred support and gives value for money for the public purse.

         Research shows that supported housing services have positive outcomes for residents and were it not for supported housing, there would be an increase in core homelessness of around 41,000 people, with a further 30,000 people at risk of future homelessness.

         The regulatory regime can be effective in ensuring that social housing providers are financially viable and that social housing is well-managed.

         The regulation and administration of Housing Benefit needs to be fit for purpose to meet the legitimate costs of rents and service charges for people on low incomes who live in supported and retirement housing.

         There is an acute shortage of affordable housing in the country, which has led to increasing numbers of people desperate for a home.

         We have significant concerns about some ‘exempt accommodation’ including property standards, referral routes into schemes and levels of support as well as whether some services provide value for money.

         We welcome the Supported Housing (Regulatory Oversight) Bill and want to see local authorities and the Regulator for Social Housing (RSH) having the resources needed for effective enforcement of the rules.

         Changes to the oversight and regulatory system should be focussed on tackling the problematic providers and low-quality provision.

         Revenue funding for support will help local authorities commission more effective and better quality supported housing as the rogue landlords are driven out of this market. More certainty on revenue funding will help unlock the development of more specialised schemes to meet local needs.

         New powers, rules and better regulation proposed are only part of the solution: the supply of housing, better commissioning, funding for support and long term strategic planning are all needed to ensure we have the supported housing people need.

         Government should ring-fence funding for housing-related support to ensure spending at least matches the £1.6bn per year allocated to local authorities in England in 2010. This would help unlock the development of new schemes needed to meet growing needs and reduce spending on residential care.

         Government should reinstate the £300 million Housing Transformation Fund allocated

to achieve planned reforms and improvements in adult social care.

What is supported housing and who is responsible?

Good quality supported housing gives people choice about their lives, provides tailored, person-centred support and gives value for money for the public purse. It can help people turn their lives around and for many people with support and/or care needs the only viable alternatives to supported housing are residential care, hospital or another secure institution.

Support services help people settle into a new home, maintain their tenancies, ensure their property is safe and secure, learn life skills including cooking or budgeting and work with third parties such as health professionals, jobcentre staff or probation officers.

In looking at ‘what is supported housing’ and answering questions on value for money and funding it is important to consider the outcomes and quality of life for residents alongside the costs and the cost alternatives. New research[1] on the outcomes from supported housing for people of working age shows:

• Good quality supported housing has a significant positive impact on its residents’ health, wellbeing and sense of social connection.
• Supported housing plays a critical role in reducing homelessness and relieving pressures on the social care, health, criminal justice and housing sectors - lessening demands on the public purse.
• Short-term and transitional supported housing is playing a key role in reducing and/or preventing higher-risk forms of homelessness, such as rough sleeping.
• Supported housing residents have complex needs: 9 out of 10 have at least one health condition or disability (including substance misuse, mental ill-health, learning disability/autistic spectrum disorder and physical conditions), and half of them are experiencing more than one of these conditions.
• Were it not for supported housing, there would be an increase in core homelessness of around 41,000 people, with a further 30,000 people at significant risk of future homelessness (the cost to the public purse of long-term homelessness has been estimated at over £40,000 per person per year).

For older people and people with long term care and support needs we need to urgently realise the ambition set out in People at the Heart of Care: adult social care reform to ‘make every decision about care a decision about housing’. The White Paper sets out that demand for supported homes in England is estimated to increase by 125,000 by 2030. Across England, the cost to the NHS as a result of poor and ill-suited housing is estimated to be £1.4bn. Of this, around £513m is spent on first year treatment for those aged 55 and over who occupy the poorest quality dwellings.[2] Supported Housing is vital to a sustainable social care system and also makes a substantial contribution in helping people to access primary care and specialist treatment and diagnosis from partner services to maintain their health and well-being. Good-quality supported housing has been shown to aid its residents in building healthy relationships, higher self-esteem and independence and in developing a greater sense of agency over their lives.

Housing associations provide three quarters of all supported housing for rent, including retirement and extra care housing, homeless hostels, homes for people with learning or physical disabilities and people with autism, mental health, step-down units and domestic abuse refuges. Housing associations must be set up to provide social housing and must invest any surplus back into providing social housing: they are not-for-profit organisations that reinvest income from rents and sales into maintenance, improvements, new homes and services for residents. 

The very great majority of supported homes are let as social housing. This means they are subject to the government’s Consumer Standards including the Rent Standard, enforced by the Regulator of Social Housing, meaning that providers’ rents are controlled. The rules for how rent is calculated are set out in the Department for Levelling Up, Housing and Communities (DLUHC)’s rent-setting policy statement: the rent set may include an upwards tolerance of up to 5% above the level of rents for general needs properties but is still subject to the ‘rent cap’ which restricts how high the rent can be.

While the term ‘exempt accommodation’ is often loosely used to describe housing provision that is in some form problematic, this is not always helpful in either understanding the problem or considering solutions. A recent report from Prospect Housing found that ‘it would more accurately be described as non-commissioned, lease-based, supported housing, funded through exempt Housing Benefit.’[3] Unless stated otherwise, this is the definition used in the rest of this response.

Central and local spending and oversight on supported housing

Key costs involved in providing supported housing are land, build, and running costs including the care and support service per unit. These costs are covered by rents (which are controlled for Registered Providers), service charges (which should be affordable for people on low incomes), capital grant per unit and loan finance (as capital grant covers much less than 100% of the build costs). The cost of the care and/or support service is met through local authority or other commissioning, charitable funding or through individual charges. There is a high level of financial risk involved in developing supported housing given the multiple funding streams and higher cost and specialist nature of the buildings. Costs are higher than general needs rented housing because of for example higher intensity of resident need, space and accessibility requirements affecting the size of the scheme, bespoke specifications for an individual or location, greater wear and tear (maintenance costs), additional design features and fittings for people with complex needs and the need to be close to amenities.

The National Audit Office found that funding for housing-related support services had been cut by more than two-thirds (69%) between 2010 and 2017 from a total of £1.6bn[4]. Huge pressures on budgets and the increasing demand for care services mean that local authorities have sought to make further cuts since then. The removal of support funding from existing schemes makes the ongoing provision of the schemes financially challenging, as it is very difficult for any not-for-profit provider to sustain a scheme where revenue does not meet costs. Central and local government spending on supported housing needs to be seen within the context of actual costs and financial viability for providers. Many housing providers benchmark costs and the Sector Scorecard now includes a specific set of measures for supported housing.[5] Housing associations want to be transparent and accountable on costs but any system of funding must recognise legitimate variations in cost and the need to properly fund the support service.  

Well-managed and adequately funded supported housing provides exemplary value for money in either a common sense or public procurement definition of the term.[6] The government’s National Statement of Expectations for Supported Housing acknowledges this.[7] The National Audit Commission report and much other evidence shows that the lease-based non-commissioned exempt accommodation model of supported housing[8] is being used in a way that extracts large sums in the form of rent paid for by Housing Benefit and unreasonably high returns for property investors. In some cases, there are links between the for-profit landlords and those running the ostensibly not-for-profit housing. Where the standard of accommodation and support is poor or costs are not legitimate, then the public investment in these services through Housing Benefit cannot be justified.

Quality of the data available on supported housing

As the NAO report reported there are gaps in the data on supported housing. These gaps come in different forms and impede both national policy making and local and national monitoring. There has been no national data available on outcomes from services or spending on commissioned housing related support since the dismantling of the Supporting People monitoring systems in the 2010s.

Data from local authorities collated by DWP[9] attempts to determine the overall spend on ‘Specified Accommodation’. However it is not possible to quantify legitimate and illegitimate spend. Tenants on low incomes rely on Housing Benefit to pay for the housing costs of their home and the system needs to be fit for purpose to pay these legitimate costs in a timely, efficient way. It is vital that due consideration is given to this in reform of the system. Data on Housing Benefit should be considered alongside data on rents and properties from regulated providers, on costs and on outcomes for residents. 

There is also a gap in making the best use of data already collected. Data collected from providers (for example by local commissioners or by the Regulator of Social Housing) is not routinely shared with other agencies. Regulation by the RSH gives an assurance of economic viability, governance and not-for-profit status. Better data sharing between the RSH and local authorities could help strengthen the gateway for organisations to access Housing Benefit for supported housing and ensure that only legitimate non-profit providers were able to offer this type of accommodation. The RSH and Housing Benefit authorities should work together to share intelligence including on where not-for-profit providers contract with for profit agents.

Robust data on current services and local housing need is required to enable local authorities to make long-term decisions on commissioning and planning for new or different services.

It should be recognised that the provision of data is a burden and a cost on providers and requests should be proportionate and have a clear purpose. They also need to reflect the confidentiality of tenants: for example tenants should be able to withhold, without penalty, consent to share the detailed contents of individual support agreements.

The regulation of supported housing: the government’s current and proposed actions to improve supported housing.

Our members have significant concerns about some exempt accommodation, including inadequate and inappropriate support services, property standards, antisocial behaviour, referral routes into schemes, and whether some services provide value for money. We support the strengthened regulatory standards that the government is introducing through the Social Housing Regulation Bill. These standards will apply to supported housing alongside general needs social homes. We expect the government to consult this year on Decent Homes Standard, and on minimum energy efficiency standards for social housing. It will be vital that these proposals are ambitious but deliverable, with a clear analysis of the costs involved to meet them, and how these will be paid for.

We strongly support the Supported Housing (Regulatory Oversight) Bill’s intention to drive rogue landlords out of the supported housing market. Given the shortened timeline and limited opportunity for consultation in the Private Members’ Bill process, the use of enabling provisions in this Bill is to be welcomed. This will extend the opportunity for consultation and dialogue with providers. While this legislation rightly seeks to close gaps in regulation and oversight, it is important that any reforms do not have unintended consequences for good providers. Supported housing in the social rented sector operates on very tight margins and inflationary pressures are pushing up the cost of all aspects of managing schemes. The market is so fragile and complex that the risk of unintended consequences is high.

Applying a licensing scheme and checking and then monitoring that schemes meet nationally set standards is a new and very resource-intensive process for local authorities. The new licensing schemes will have a much greater chance of meeting the objective of improving standards and driving out rogue landlords if resources can be concentrated on problematic schemes and providers. 

Many good supported housing providers operate in dozens of local authority areas, so the new licensing framework in this legislation could represent a significant new financial and administrative burden for tenants and not for profit social landlords. This is particularly true of older person’s housing let on a social housing rent, which is subject to consumer regulation by the Regulator of Social Housing. This type of housing is not the primary target of the Bill but is caught in the definition and scope of the measures. The NHF supports a clear exemptions or passporting system for older person’s housing and other types of supported housing where there is already an adequate regulatory framework. Duplicating oversight and adding significant new administrative costs will not improve service quality or value for money.

The new powers, rules and better regulation proposed are only part of the solution: the supply of housing, better commissioning, funding for support and long term strategic planning are all needed to ensure we have the supported housing people need.

Supply of housing

There is an acute shortage of affordable housing in this country, which has led to increasing numbers of people desperate for a home. This can make it feel impossible for people to say no to the offer of a home, even if it does not feel safe or is in an area where the person has no local connections and has contributed to the expansion of lease-based providers of exempt accommodation.

The shortage of suitable affordable housing also means that some people remain in transitional supported housing much longer than is necessary: the ability to move people into independent tenancies is clearly limited by a lack of affordable and suitable housing. This includes generic homelessness services, young people’s services and specialist recovery services for substance misuse, mental health step-down, survivors of domestic abuse, etc. Research[10] found that:

• 56% of those in transitional supported housing were deemed ready to move on at a snapshot date.
• For 53% of those ready to move on (regardless of length of stay and complexity of needs) this was not possible because ‘finding a suitable move-on option is proving difficult’.

This clearly demonstrates the urgent need for greater investment in social housing, which would greatly improve the short-term supported housing sector’s ability to move people on to affordable and suitable independent tenancies. This would further reduce pressure on local authority homelessness functions

Better commissioning and long term funding for support

“Commissioning” is a term that is used to mean that the service is externally funded or in a broader sense to mean the service is part of a local strategic plan and assessment of needs. A service that is not funded by the local authority could still be part of an integrated referral pathway with local checks on quality and standards. Supported housing is part of the local community, with residents dependent on local services, and for transitional housing there should be a clear plan for move on at the end of the stay. If there is no effective commissioning strategy, then this can impact on service quality.

Providers need long-term certainty over revenue funding for support in order to be able attract and retain experienced and skilled staff to work in what can be a very challenging environment. High inflation and staff shortages have driven up costs and impacted on services across the country but providers have not seen inflationary uplifts in contract prices. Some local authorities are looking to withdraw all support funding from homelessness services[11]. Supported housing schemes have closed because of the withdrawal of support funding and some traditional registered providers have moved away from providing supported housing, leaving some unscrupulous providers with problematic governance and financial models to fill the gap in the market. 

Need for a long-term plan to address supply of older persons and supported housing

The Social Care White Paper’s commitment to take a strategic approach to supported housing was warmly welcomed across local authorities, health services and housing providers. Partners must work together with integration underpinned by strong strategic needs assessments so that we make the best use of public resources. The £300m Housing Transformation Fund, announced in December 2021, was an integral part of that commitment. An investment of £300 million to integrate housing into local health and care strategies would have significantly bolstered supported housing’s contribution to the strategic aims and statutory duties of NHS, social care and criminal justice services – boosting outcomes for resident health and wellbeing. We are therefore deeply disappointed by the government’s decision to omit the Housing Transformation Fund from its plan for adult social care system reform up to 2025.

Capital investment in new supported housing developed by housing associations offers long-term value for money for residents and the government because the asset is held as social housing and is let on a regulated rent so at a lower cost to the benefits system. While leasing properties does allow the rapid increase in the supply of supported housing, there are questions over long-term value for money, high rates of return for investors and property owners and the sustainability of this model. The RSH has recently issued a number of very poor regulatory judgements for registered providers solely using the lease-based model and previously raised more general concerns.[12]

Conclusion

New powers, rules and better regulation proposed are only part of the solution: the supply of housing, better commissioning, funding for support and long-term strategic planning are all needed to ensure we have the supported housing people need.

Government should ring-fence funding for housing-related support to ensure spending at least matches the £1.6bn per year allocated to local authorities in England in 2010. This would help unlock the development of new schemes needed to meet growing needs and reduce spending on residential care.

Government should reinstate the £300 million Housing Transformation Fund allocated

to achieve planned reforms and improvements in adult social care.