Written evidence submitted by Crisis [EXA 043]

Introduction

Crisis is the national charity for people facing homelessness. We know that homelessness is not inevitable, and we know that together, we can end it. Crisis is dedicated to ending homelessness by delivering life-changing services and campaigning for change.

Every year we work directly with thousands of people experiencing homelessness in 11 areas across England, Scotland and Wales. We provide vital help so people can rebuild their lives and are supported out of homelessness for good. We offer one to one support, advice and courses according to individual needs. We use research to find out how best to improve our services, but also to find wider solutions to end homelessness for good.

Non-commissioned transitional exempt accommodation is playing an increasingly important role in housing people experiencing homelessness, driven by the acute undersupply of affordable homes and reductions in funding for housing-related support. In too many cases, however, people end up living in unsafe, poorly managed homes. It is nothing short of appalling that as a society we don’t have the safeguards in place to prevent this happening. Crisis welcomes the opportunity to contribute to the Committee’s call for evidence on the exempt accommodation sector which we hope will help deliver progress in tackling this source of social injustice.

Summary

Government action is needed to ensure that the interests of all exempt tenants are properly protected, that claims for exempt Housing Benefit provide value for money and that homes and support meet acceptable standards.  Although the Government’s programme of measures to improve the oversight of supported housing is a welcome step in the right direction and the Regulator of Social Housing has increased its focus on this area, we are concerned that progress in addressing problems is too slow. We also want to see the focus of Government reform proposals broadened to include the case for regulatory change.

We ask the Select Committee to consider making the following recommendations to Government:

• As Government prepares to publish the learning from the supported housing pilots, it should commit to working with all relevant stakeholders to evaluate options for regulatory change and bring forward a comprehensive package of reforms and guidance capable of ending the significant harms being experienced in poor quality parts of the sector.
• As well as strengthening guidance to local authorities on the powers they already have, Government should identify ways to close loopholes in the regulatory frameworks that govern oversight of exempt accommodation, while at the same time ensuring that local authorities are resourced and supported to implement a strengthened oversight framework. The National Statement of Expectations for Supported Housing should be developed and strengthened to provide an effective quality assurance framework for all forms of exempt accommodation.
• Government should continue to work with local authorities to strengthen administrative data capture about exempt Housing Benefit claims so that in future publicly available statistics provide a more robust framework for quantifying the scale of provision and trends.
• Government should strengthen and develop the National Statement of Expectations for Supported Housing to ensure that every local authority has in place an assessment of the need for housing related support and a strategy for meeting these needs. Local strategic needs assessments would provide the building blocks for identifying at national level the scale of support needs and the extent of funding gaps in the provision of housing related support.

What is the quality of exempt housing provision?

There is growing body of anecdotal and local research evidence highlighting serious concerns with the quality of some non-commissioned exempt provision which we outline below. The experience of Crisis staff working with clients living in exempt accommodation is that the quality of non-commissioned provision varies considerably with examples of positive as well as poor practice.[1]

We are not aware of any data or evidence providing a representative national picture of the quality of exempt accommodation. It is often assumed that the majority of provision meets acceptable standards, and it is certainly the case that many providers provide good quality transitional accommodation and support for people as they move on from homelessness. Housing associations and charities often use this type of accommodation to address the critical shortage of affordable homes in their areas, and to offset the impact of reductions in spending on housing related support.[2] Much exempt accommodation is commissioned by public sector bodies alongside funding for housing related support and is subject to their oversight. However significant reductions in spending on housing related support following the removal of the Supporting People ring fence and wider reductions in local government funding have reduced local authority financial capacity to commission support services. Non commissioned exempt accommodation has played a part in filling the gap in provision for commissioned support, and even where it not formally commissioned, it can work well if delivered in collaboration with local authorities, with councils playing an active role in ensuring that provision is good quality and meets local needs.

But in some areas, we have seen a worrying growth in the incidence of poorly managed and poor-quality non-commissioned exempt housing. Problems with quality particularly arise in shared accommodation provided in Houses in Multiple Occupation or converted family homes, and may be characterised by poor quality, unsafe buildings, poor management and safeguarding practice and inadequate support. Birmingham City Council has highlighted how this has changed the character of affected neighbourhoods, reducing the availability of mainstream family housing and creating neighbourhoods that are dominated by shared housing targeted at people with housing-related support needs.[3]

There is a growing body of evidence suggesting that the poorest quality provision is associated with investors looking to maximise returns using the higher rents permitted by the exempt Housing Benefit provisions.[4]  It is often delivered by lease-based registered providers which act as an umbrella organisation for a multiplicity of managing agents. In the worst cases, such structures have been associated with examples of serious malpractice, including conflicts of interest and attempts to artificially inflate costs in order to drive up the charges picked up by Housing Benefit.

Even though agencies providing exempt housing must by definition be not for profit, unscrupulous providers place the interests of the business and returns to investors  above the interests of residents. In such cases residents are not being effectively supported to sustain their tenancies/licenses or move on from homelessness into a settled home. Unscrupulous providers are putting people at risk as the financial imperative to fill vacant rooms outweighs consideration of residents’ needs and safety. Non-commissioned exempt provision may also operate outside the referral and safeguarding processes that govern commissioned support, further jeopardising claimants’ well-being and safety. Providers have little incentive to help people move on, and we have seen from the Prospect Housing analysis that almost one in ten residents were judged to be homeless with no identified support need.[5] These are people who could have been living in mainstream housing had such accommodation been available but are instead trapped in high cost exempt provision.

Recent research examining problems with the sector has focussed largely on Birmingham.[6]  But Crisis has been made aware of a number of councils being approached by exempt providers seeking to set up in their areas, and although in absolute or proportionate terms other local authorities may not be seeing problems on the same scale as those experienced by Birmingham City Council, it is clear that problems with non-commissioned exempt provision extend beyond the Midlands into London, the South East, the South West, Merseyside and the North East.

Non commissioned exempt accommodation often houses the most marginalised groups including people experiencing homelessness, prison leavers, people leaving national asylum seeker services, people fleeing domestic abuse and those with substance dependence or mental health needs. People experiencing these forms of disadvantage often feel (or are told) they have no choice but to accept the accommodation on offer, however inappropriate it is to meet their needs. In a letter to the then Secretary of State, Women’ Aid identified a range of concerns for women and children escaping domestic abuse who find themselves with no choice other than accepting exempt accommodation that is inappropriate for their needs.[7] Research reports have documented the experiences of non-commissioned exempt accommodation residents in Birmingham,[8] and include exceptionally poor housing conditions, inadequate safeguarding and referral practices, poor quality and sporadic support services and unaffordable rents and service charges. Charges for housing-related support are ineligible for Housing Benefit, and some providers pass the cost of support on to residents. These have to be funded from residents’ personal income, eating into the already limited provision allowed by the benefit system to meet essential living costs and pushing people further into poverty.

Recommendation: As Government prepares to publish the learning from the supported housing pilots, it should commit to working with all relevant stakeholders to evaluate options for regulatory change and bring forward a comprehensive package of reforms and guidance capable of ending the significant harms being experienced in poor quality parts of the sector. This must address the key question of how to support exempt claimants where providers are deregistered or closed down.

How should exempt accommodation be provided and what should the service cost?

The demand for non-commissioned transitional exempt housing has grown in response to the long-term decline in availability of social rented housing, the gap between Local Housing Allowance rates and private rents and reductions in spending on housing related support. In the absence of funding for housing-related support, transitional exempt accommodation is often the only option available, whereas mainstream housing backed by tailored pages of support, including Housing First, would be a more suitable and sustainable option for many people with support needs. We would like to see Government develop a strategic response to reduce dependence on the non-commissioned transitional exempt sector that addresses the desperate shortage of affordable homes and funding for support, as well as closing regulatory loopholes that have led to the emergence of exploitative, non-commissioned exempt provision.

Government could achieve this by restoring investment in social housing supply and providing local authorities with sustained funding to commission support services that meet local needs. This investment should be shaped in accordance with local strategic assessments of housing needs and housing related support needs. The regulatory reforms proposed elsewhere in our response would help ensure that non-commissioned, transitional exempt provision is targeted at addressing gaps in the supply of mainstream affordable housing and long term supported housing, and its provision aligns with local strategic needs assessments and is subject to effective oversight.

How should the regulatory oversight of exempt accommodation be organized?

Regulatory oversight of the exempt sector is primarily the responsibility of both local authorities and the Regulator of Social Housing (for registered providers), or for other types of not for profit provider not registered with the Regulator of Social Housing, the Charity Commission, the Regulator of Community Interest Companies and the Financial Conduct Authority. There are significant gaps and anomalies in the overlapping regulatory frameworks that apply to exempt accommodation and we have heard examples of non-commissioned providers gaming the system and setting up under whatever organisational structure they perceive will enable them to minimise regulatory scrutiny. These anomalies must be addressed, and the powers and duties of local authorities and the Regulator of Social Housing strengthened and aligned as appropriate to ensure that no part of the exempt sector can evade effective oversight and regulation. The Government should also look at how the role and duties of the Charity Commission, the Regulator of Community Interest Companies and the Financial Services Authority can be effectively aligned with local authorities’ role in the oversight of the exempt sector.

Regulatory oversight should in turn align with a strengthened National Statement of Expectations for Supported Housing, providing an effective quality assurance framework that is applicable to all forms of exempt accommodation.

Crisis has been working with the Chartered Institute of Housing (CIH) to identify ways of closing these regulatory loopholes, and CIH’s detailed thinking on this is set out in their response to the Select Committee. Specific problems and gaps in current regulatory arrangements that need to be addressed include:

• Better enabling local authorities to verify the quality and value for money of exempt provision. This could potentially be achieved by including a condition in the definition of exempt accommodation within the Housing Benefit Regulations that gives local authorities the ability to ensure provision is subject to an appropriate quality assurance framework. We would like to see Government work with local authorities and providers to consider options for this type of change. There might also be potential to link this change to a strengthened National Statement of Expectations for Supported Housing, ensuring that all exempt providers are subject to the same standards and quality assurance arrangements.

• Closing regulatory loopholes that enable unscrupulous Registered Providers of market rent or ‘non-social’ exempt housing to evade consumer regulation. A key concern is that where exempt accommodation is defined as ‘non-social’ housing (broadly speaking homes let at market rents) it falls outside the – albeit limited – consumer protections of the current regulatory regime. So while the regulator can intervene to address governance and viability concerns for this type of provision, the wider protections of the consumer standards do not apply. Some local authorities have also flagged concerns that their efforts to verify exempt benefit claims from new entrants to the market are hampered by limits on data sharing between the regulator and councils. We would like to see Government working with the regulator, providers and local authorities to identify solutions.

• Ensuring councils have powers to enforce quality and management standards in problematic exempt provision where registered provider status exempts provision from HMO licensing. We would like to see Government working with local authorities and providers to consider options enabling local authorities to extend discretionary HMO licensing or selective licensing powers to problematic exempt provision

There is also a question of local authorities’ ability to resource oversight of the exempt sector and deploy the powers that they already have. Significant cuts in council spending over more than a decade have impacted on the availability of specialist local authority staff to deliver key oversight functions including the strategic response to managing local housing markets and Housing Benefit administration, and functions such as environmental health services. These pressures have impacted on many councils’ ability to manage the exempt sector. A survey conducted by Prospect Housing in 2021 found that almost all respondent local authorities reported having no processes in place to assess providers of exempt accommodation or the suitability of accommodation provided (85 local authorities provided usable responses out of 123 surveyed).[9] The Government’s 2016 Supported Accommodation Review identified considerable variability in local authorities’ capacity for monitoring the quality of supported housing and noted that for some this had reduced as a result of ‘budget reductions’.[10]

In August 2018 Government announced that it would work with providers, local authorities and representative bodies to develop a new, robust oversight regime.[11][12] To date, the output of this programme of work has included publication of a National Statement of Expectations for Supported Housing in 2020[13] and pilots examining how to improve quality, enforcement, oversight and value for money in Birmingham, Hull, Blackpool, Bristol and Blackburn.

Informal feedback from some of the councils taking part in the pilots has highlighted the value of investing in multi-disciplinary teams to manage the exempt Housing Benefit claims process. These involve bringing together staff with expertise in housing related support and property standards alongside Housing Benefit staff to assist with the complex process of verifying exempt claims. Indeed, there are examples of councils such as Bristol that had already invested in this type of approach prior to the existence of the pilots, using spend to save funding to manage the impact of Housing Benefit subsidy loss and poor quality provision.[14] The five supported housing pilot areas have received significant levels of Government funding to support their participation in the pilot, and it is essential that in developing its strategic response, Government ensures local authorities are resourced and effectively supported to implement change.

It is understood that the outcome of the pilots has recently been evaluated, and following completion of this work, Government will be publishing evidence on the learning of the pilots and guidance material to support local authorities in implementing best practice. We understand that the output of the pilots will include a focus on how local authorities can better use existing powers. It is also important that Government addresses problems with the regulatory framework and we would like to see Ministers committing to working with providers, local authorities and representative bodies to address gaps in the regulatory regime.

We recognise that reforming the regulatory framework requires caution, and Government is understandably concerned to ensure that any action it takes does not have unforeseen consequences that might undermine the viability of bona fide providers or put exempt claimants at risk of homelessness. It will therefore be critical that in identifying ways to close regulatory loopholes Government works closely with providers and local authorities to test options for reform and minimise the risk of negative impacts.

• Recommendation: We urge the select committee to call on Government to broaden the focus of its work to improve the quality of supported housing provision by examining options to close loopholes in the regulatory frameworks that govern oversight of exempt accommodation, while at the same time ensuring that local authorities are resourced and supported to implement a strengthened oversight framework. The National Statement of Expectations for Supported Housing should also be developed and strengthened to provide an effective quality assurance framework for all forms of exempt accommodation.

Is there sufficient publicly available information about exempt accommodation?

There is not sufficient publicly available information about exempt accommodation. Weaknesses in the evidence base include clarity about the number of exempt claims (and the value of these), the distinction between commissioned and non-commissioned provision, and changes in the size of the sector in recent years. Critically, we also do not have clarity about the number of people affected by problematic provision.

It seems likely that the scale of exempt provision has risen in the last 5 years. Freedom of Information (FOI) data obtained by Crisis from the Department for Work and Pensions (DWP) showed 156,868 households in Great Britain were housed in exempt accommodation as of May 2021, representing a 65% increase relative to May 2016 when just 95,149 households were recorded as being housed in exempt accommodation. DWP have suggested that the FOI data may overstate the scale of growth in the sector however. This is because when new data capture arrangements were introduced in 2015, there may have been variance in the pace at which local authorities implemented the change, resulting in an undercount in the early years of this period. It is therefore important to recognise the limitations of the FOI data. This is reflected in wide variance in the scale of growth recorded at local authority level. While it seems reasonable to assume there has been an increase in the number of exempt claims, it is not possible to quantify the precise scale of change. We fully support DWP continuing to work with local authorities to identify how they can improve data quality to understand more about caseloads and expenditure in exempt accommodation and other categories of supported accommodation.

Recommendations: We recommend that the Select Committee urges Government to:

• Continue to work with local authorities to strengthen administrative data capture about exempt Housing Benefit claims so that in future publicly available statistics provide a more robust framework for quantifying the scale of provision and trends.
• Strengthen and develop the National Statement of Expectations for Supported Housing to ensure that every local authority conducts an assessment of the need for housing related support and develops a strategy for meeting these needs. Local strategic needs assessments would provide the building blocks for identifying at national level the scale of support needs and the extent of funding gaps in the provision of housing related support.

January 2022