Written evidence submitted by the Salvation Army [EXA 074]

The Salvation Army was founded in 1865 by William and Catherine Booth and currently operates in more than 130 countries.  The Salvation Army in the UK is an integrated, yet diverse, organisation that contributes to the betterment of society in the service of God and people.

The Salvation Army Social Work Trust is the charity registration through which we provide single people and families who are experiencing homelessness and people suffering from addictions with high-quality residential accommodation, care and support, encouraging their ability to live independent and positive lives.

What is the quality of exempt housing provision?

The Salvation Army currently provides 2406 units of exempt accommodation, of which 1676 units (70%) are managed by The Salvation Army on behalf of a registered provider of social housing, and  730 units (30%) are directly delivered by the Salvation Army.  Providing care, support or supervision alongside the accommodation means that all of these units qualify as supported exempt accommodation (SEA)[1].

Accommodation that is managed by The Salvation Army on behalf of registered providers of social housing (RPs) falls under the auspices of the relevant regulator of social housing in England or the devolved authorities in Wales, Scotland and Northern Ireland.  The quality of this accommodation is guaranteed by the framework under which these regulators operate.

Accommodation that is directly provided by The Salvation Army (as a charity, not an RP) is maintained to the same standard as that which we manage on behalf of RPs.  At some of these centres, The Salvation Army formally employs the services of the Salvation Army Housing Association (a subsidiary organisation and RP) to provide accredited housing management services, whilst at others, the accommodation is managed by the parent charity.  The relevant charity commission or charity regulator provides redress should any residents raise concerns.

The Salvation Army is therefore confident of the quality of all the exempt accommodation we provide, regardless of landlord status.

Is the current model of exempt accommodation financially viable, and does it represent value for money?

In responding to this question, we consider the viewpoint of the Local Authority, The Salvation Army, and the public purse. There can be two principle income streams for SEA; rental income and housing-related support (HRS) contracts.  Adequate funding of both the accommodation and support and is essential to ensure SEA is financially viable. 

Considering first the position of a local authority, the model of exempt accommodation provided by an RP is more financially agreeable than the model of exempt accommodation provided by other types of landlords e.g. charities. This is due to the way that the Housing Benefit Subsidy Regulations operate. Properties where the landlord is an RP attract 100% subsidy on housing benefit for the local authority, whereas exempt accommodation provided by a charity only attracts partial subsidy on housing benefit, leaving the local authority to meet the remainder of the cost from its own funds. The Salvation Army provides exempt accommodation to the same standard under both the RP and charity model, but the latter model imposes a financial burden on the local authority, making it less value for money for them. Because of this, when putting HRS contracts out to tender, local authorities are increasingly including clauses that require exempt accommodation to be provided by an RP. This can result in charities being unable to bid for HRS contracts, exempt accommodation services closing, wasting the investment previously made in those services.

The Salvation Army retains more financial flexibility to make services viable when directly providing exempt accommodation as a charity, because we have the freedom to set rents at the level required to recover actual costs, rather than being restricted to the Rent Standard (England) or equivalent in the devolved authorities.

When considering a collaboration with an RP to provide exempt accommodation to respond to a HRS tender opportunity, potential RP partners offer properties under a housing management agreement. Sometimes the charge made by the RP for use of the premises, combined with regulatory constraints on core rent levels, make it impossible for a manager to retain sufficient income to make the arrangement financially viable. This can be used as a deliberate tactic on the part of an RP to impair competition, which does not ensure value for money in the provision of exempt accommodation.

On some occasions, where HRS funding is unavailable or limited due to financial constraints within the local authority, The Salvation Army has been able to fund HRS via charitable donations and legacies. In these circumstances the exempt accommodation provides excellent value for money for money for the local authority, but this would be financially unsustainable for The Salvation Army on a large scale.

From the point of view of the public purse, the Supporting People programme was launched in 2003 as a grant to local authorities intended to fund services to help vulnerable people live independently.  Research into the financial benefits of the Supporting People programme published in 2009 revealed the value for money generated when funding support services[2]:

This overall conclusion is based on separate calculations for each of the vulnerable groups considered through this research. In all but three cases, the provision of the Supporting People intervention was estimated to provide a net financial benefit – i.e. the financial benefits of supporting the individual using the most appropriate positive alternative to SP were higher than, and outweighed, the costs of doing so using SP services.

With respect to rental income to meet accommodation costs, Government research in 2016 suggested that supported housing (excluding that provided for older people) has unit costs of £10,800 per year above those of general needs properties[3].  Those at risk of homelessness often have complex needs, such as mental health conditions and addictions to alcohol or other substances, which increases costs for this client group.

The Salvation Army Social Work Trust report and financial statements for the United Kingdom in the year ended 31 March 2021 shows income of £27.1m from rental charges in our Lifehouses.  This is an average unit income of £12,300 per year or £240 per week across the 54 centres serving young people, single adults and families. 

Are there significant geographical and regional differences in the provision and the problems of exempt accommodation?

The Salvation Army is one of the very few national providers of supported housing for those experiencing homelessness, operating throughout England, Northern Ireland, Scotland and Wales.  Independent research commissioned by The Salvation Army into the future of its homelessness services in 2017 found that geography is not a significant systematic driver of unit cost; this is mainly driven by the size of the service (economies of scale) and nature of supported housing provision, rather than by location[4].

There are however different geographical and regional approaches to funding HRS which create problems in the provision of exempt accommodation

• Unavailability of funding for HRS – In some regions there is less or even no funding available to commission HRS services, for example in the North East we have experienced several local authorities ceasing to fund HRS for the homeless client group altogether, or significantly reducing the number of units commissioned, making exempt accommodation financially unviable.
• Frequency of tendering exercises and length of contracts - In some areas (e.g. most of England), HRS contracts are regularly put out to tender creating a potential change of support provider who manages the exempt accommodation. Although it is painful to lose a contract, and causes upheaval for clients, staff and providers, it does force regular and rigorous review of the model offered, and when a longer-term contract is offered, it makes investment in the property to achieve compliance with commissioners’ requirements more worthwhile. Conversely elsewhere (e.g. Northern Ireland and most of Scotland) contracts are routinely renewed on an annual basis, which provides more security for staff and clients, and enables retention of experienced staff teams, but creates less incentive for innovation, and investment in modifying properties.
• Two-tier authorities – where commissioning of HRS sits with the upper tier and responsibility for housing sits with the lower tier, their strategies are not always perfectly aligned. We have had a county council cease funding HRS, but the district council still requiring the continued provision of exempt accommodation.
• Conflict in size of service – as above, HRS commissioners prefer smaller more personalised services, but those funding exempt accommodation want to benefit from economies of scale bringing unit costs down. These opposing views often result in the unit cost of exempt accommodation increasing.
• Local area connections - following the Localism Agenda, some local authorities took control of assessment and referral pathways for homeless individuals and rigidly restrict access to services to those who can demonstrate a local area connection. For the homeless client group, particularly in cities, this can exclude them from exempt accommodation. As a provider of exempt accommodation, this leaves us with void units and loss of rental income, whilst more individuals are rough-sleeping.

What is the proportion of exempt accommodation that is provided by registered compared to non-registered providers, and is an appropriate balance being struck?

Reviewing The Salvation Army’s portfolio of exempt accommodation, registered providers of social housing are the landlord at 74% of centres mentioned in our Annual Report and Financial Statements for the year ended 31 March 2021.  The Salvation Army directly provides accommodation at the remaining 26% of centres as a charity.

What is the proportion of exempt accommodation provided by commissioned compared to non-commissioned providers, and is an appropriate balance being struck?

Reviewing The Salvation Army’s portfolio of exempt accommodation, we are commissioned to provide housing-related support at 96% of the centres mentioned in the Report and Financial Statements for the year ended 31 March 2021.  Only two centres are completely non-commissioned, with one of these accepting spot purchase referrals for housing-related support from relevant public bodies. A few sites provide some non-commissioned exempt accommodation alongside the commissioned units, with The Salvation Army funding the HRS for the non-commissioned units.

How does whether a provider is registered or non-registered, or commissioned or non-commissioned, impact the quality of provision?

In simple terms, whether The Salvation Army is managing a property on behalf of an RP or directly managing our own property as a charity, or whether the service is commissioned or non-commissioned, has very little impact on the quality of provision. There are differences in the operation of housing management if a registered provider is the landlord rather than The Salvation Army.  There is a division of responsibilities within the housing management agreement with regards to repairs, for example, but this does not affect the quality of provision.

Accommodation provided by The Salvation Army directly is maintained to the same standard as centres where a registered provider is the landlord.  The difference lies in the operation of housing management, as this will be undertaken by The Salvation Army directly.

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

Local authorities have duties to formulate homelessness strategies and publish these at least once every five years[5].  This must include measures to prevent homelessness, ensure enough accommodation is available for homeless people and provide support to those affected by homelessness.  Commissioned services providing housing-related support should form a vital component in meeting these challenges, with sufficient funding made available to local authorities to facilitate this.

On its launch in 2003, funding for the Supporting People programme was ring fenced.  The ring fence was removed in 2009 and the allocation fully subsumed into the Formula Grant in 2011.  As a result, Inside Housing reported that by March 2012 funding had been withdrawn entirely from 305 services and reduced for a further 685 services[6].  Significant funding has been invested in the sector once again as a result of the ‘Everyone In’ initiative, partly as a response to the Covid-19 pandemic[7].  It is vital that these levels of funding do not reduce once the current health crisis has eased.

Alongside housing-related support there must be properly funded accommodation able to meet the needs of residents.  Most people occupying SEA are in receipt of housing benefit to help meet their rental costs.  It is important that funding for accommodation costs is based on entitlement, rather than discretion, and continues to be administered through the social security system, as this is more likely to deliver certainty over future funding.  Funding should also be delivered for SEA in a way which reflects the costs of provision for vulnerable groups with complex needs.

The housing benefit regulatory framework provides a source of funding based on the reasonable cost of provision and is an entitlement for the claimant.  This allows flexibility for providers to make accommodation available based on the needs of vulnerable residents and gives an assured funding stream for housing costs.  This was recognised by Government in their response to the consultation on the funding for supported housing in 2018[8]. 

It is suggested that the Housing Benefit Subsidy Regulations applied to exempt accommodation should be reviewed and amended. At present the regulations provide for differing levels of housing benefit subsidy to be received by local authorities dependent on the status of the landlord. Where the landlord is an RP, the local authority receives 100% subsidy, where the landlord is a charity, the subsidy is only partial. Local authorities are financially penalised when commissioning exempt accommodation via a charity, creating a strong bias to prefer RPs. Charities can often bring financial and social added value, which is not taken into account. It is noted that in order to amend the subsidy regime, an alternative method of recognising and accrediting providers of exempt accommodation would be required – more detail is provided on this in the responses below.

How should the regulatory oversight of exempt accommodation be organised?

Government raised concerns about the oversight of quality and value for money and this resulted in a non-statutory National Statement of Expectations being published in 2020[9].  Alongside this, funding was made available for supported housing pilots to improve quality, enforcement, oversight and value for money in SEA[10].  The Salvation Army has been engaging with the pilot projects in relevant areas.

These schemes should provide workable options showing how scrutiny and oversight of supported housing can be improved, particularly non-commissioned providers which operate outside of any housing-related support contract.  This may provide a degree of control over the quality of SEA.

The pilots may reveal three areas that allow enhanced oversight of SEA:

1. Housing benefit regulations
2. HMO licensing
3. Registration of support services

What should be the regulations governing exempt accommodation and how should those regulations be enforced?

Housing benefit regulations define SEA accommodation as being provided by a non-metropolitan county council … a housing association, a registered charity or voluntary organisation where that body or a person acting on its behalf also provides the claimant with care, support or supervision[11].  However, it does not specify the quantity or quality of care, support or supervision that must be provided before a claim qualifies for ‘enhanced housing benefit’.

Caselaw has established that the maxim de minimis non curat lex (the law does not concern itself with trifling matters) applies[12].  If the quantity of care, support and supervision provided is more than minimal, then it satisfies the above condition.  Housing benefit regulations could be amended to quantify what the level of care, support and supervision must be to qualify as SEA.  This should provide a financial incentive for providers to ensure a certain quantity of support provided to claimants, otherwise they won’t be able to access higher rates of housing benefits.

The supported housing pilots have revealed means by which local authorities can currently verify support provision, including client interviews, requests for copies of support plans and spot-inspections.  These all require adequate resources to ensure controls are meaningful.

Amending housing benefit regulations would not do anything to improve the quality of support or the quality of accommodation, so this would have to be achieved by other means.  HMO (house of multiple occupation) licensing is operated by many local authorities and this could be extended to include all SEA.  The landlord must be a fit and proper person to operate an HMO, so scope could be widened to include the quality of accommodation as a condition of the license.

HMO licensing gives local authorities powers to regulate the HMO market in their area.  Extending this to include all SEA may provide measures to prevent the dense proliferation of services that have been observed in some locations.

The quality of support can also be an issue in some SEA and feeds into whether funding enhanced housing benefit provides value for money. At the start of the Supporting People funding regime in 2003 all organisations in receipt of funding were inspected by the local authority against the national Quality Assessment Framework (QAF) and could not be recommissioned unless certain standards were met, but over time the use of this assessment tool fell away. This only covered services that held a HRS contract, but at that time virtually all exempt accommodation did. Now commissioners rely more heavily on assessing responses at tender, describing how the service will be delivered, and then monitoring KPI’s during the contract life.

The regulatory model for care and support services in Scotland seeks to the issue of quality of services.  Care services in Scotland cannot operate unless they are registered with the Care Inspectorate. They inspect, award grades and help services to improve, but also investigate complaints and can take action against poor performance.  All services operated by The Salvation Army in Scotland are registered with the Care Inspectorate and comply with regular inspections and returns. 

Providers elsewhere in the United Kingdom could also be required register with a relevant body in order to operate SEA.  The Regulator of Social Housing could fulfil this role, though they currently do not have any powers with respect to non-registered providers.  The Care Quality Commission could be another potential option or local authorities could be tasked with an inspection regime.  Compliance could also be made a condition of enhanced housing benefit, so providers would not be able to access higher rates unless they held a valid registration.

Is there sufficient publicly available information about exempt accommodation?

The Salvation Army makes information publicly available about all its’ services.  Information is also available from other sources, for example Homeless Link and relevant public bodies. Where a local authority embraces its responsibilities to the homeless client group, it actively coordinates providers and promotes information regarding access into the referral pathway, and progression through services of exempt accommodation to independent living. However, where a local authority has limited funding to commission HRS services, it is not in its interest to publicise existing exempt accommodation, recognise the need for it, and potentially increase demand for exempt accommodation, and therefore increase its financial commitments. Where local authorities require a local connection to access homeless provision, access to exempt accommodation is actively discouraged.

January 2022