Written evidence submitted by St Mungo’s [EXA 111]

St Mungo’s is a leading homelessness charity with national influence. We work in partnership with local authorities, health colleagues and communities, to end homelessness and rebuild lives.

We supported more than 31,600 people who were homeless, or at risk of homelessness last year, through 207 services. We support over 3,200 people every night, and almost double that number during the pandemic.

We were key in delivering “Everyone In”, the Government-led pandemic response. We ran 30 hotels across our areas of operation, supporting more than 4,000 people to isolate in safety.

Summary

It is a lack of regulatory oversight and scrutiny which has allowed ill equipped or unscrupulous providers to enter the supported housing market and charge exempt accommodation rates. Therefore, this inquiry is rightly focused on how these providers can be more consistently prevented from joining the marketplace, or be expelled from it.

St Mungo’s would recommend that what is required to effectively meet this aim is:

         Greater transparency around how housing benefit contributes to service cost. The DWP should provide guidance to Local Authorities on appropriate service costs for different support needs.

         Local Authorities should be responsible for gatekeeping and monitoring exempt accommodation, since the payment of housing benefit comes from their budgets. This work should be supported through the introduction of an accredited Quality Assurance Framework, as recommended by the Kerslake Commission on Homelessness and Rough Sleeping[1]. This accredited framework would act as a baseline for Local Authorities to monitor and uphold standards in housing, support and governance. Where necessary, Local Authorities should be supported by Government to carry out the development of an Exempt Accommodation Strategy.

         All providers of exempt accommodation should be subject to regulation of consumer standards by the Regulator of Social Housing, as set out in the Social Housing White Paper, and to the Housing Ombudsman, given the volume of associated complaints and dissatisfaction.

         The work to regulate and enforce standards must be supported by funding for Local Authorities, the Regulator of Social Housing, and the Housing Ombudsman.

The inquiry should also recognise why poor quality exempt accommodation provision has expanded, and how this reflects on the health of the supported housing market.  Demand for supported accommodation is high. However, services have dwindled due to cuts, and reputable providers are leaving the market as they do have an adequate funding model to deliver it. Poor quality provision has filled the gap, and people who are in desperate need of affordable supported accommodation face little choice in what offers of accommodation they can take up.  

A wider conversation is now needed on the role of supporting housing going forward, whether exempt accommodation should play a part in it, and how it will be paid for. This should give due consideration to the availability of affordable housing; sustainable funding for support services; and the  alignment between capital and revenue funding for supported accommodation.

1. What is the quality of exempt housing provision?

We would agree with Prospect Housing that exempt accommodation can "more accurately be described as non-commissioned, leased based, supported housing, funded through exempt Housing Benefit”,[2] as this is where there is variation in quality, rather than in the commissioned sector.

Quality varies in the non-commissioned sector, as it is delivered by both reputable providers, and those who are unscrupulous or do not have the competency to deliver supported housing. Exempt accommodation does not equate to poor quality accommodation and support. 

From our experience as a charity that operates across the South, we have seen the examples of poor practice in these settings, in terms of what support is being provided, the accommodation itself, and the governance structures that providers have in place.

A 2019 report from Spring Housing Association[3] supported by Commonweal, the social justice charity, suggested that the individuals most often placed in exempt accommodation are those with an urgent need for accommodation; those perceived by housing providers as ‘risky’ or ‘high need’; and those who might struggle to understand the system and practices of housing provision. The report highlighted three key problems with exempt accommodation: the lack of opportunities for residents to have any input or control over their accommodation; the way in which high exempt accommodation rents act as a barrier to residents becoming employed; and the possibility of harm to residents due to inappropriate placements or lack of support provided.

This work built on an earlier 2018 report from Spring Housing Association and the Housing and Communities Research Group at the University of Birmingham.[4] This report found that the experience of exempt accommodation of those interviewed was predominantly negative. This was for reasons including: feeling forced into shared accommodation due to a lack of options; experiencing threatened or actual harm and violence; problems with substance misuse; inappropriate placements of residents with particular histories or needs; the inadequate physical standards of properties; and a lack of support from the housing provider.

Our concern is that the rise in poor quality provision in exempt accommodation is filling the gap left by a decline in commissioned support services and sufficient revenue funding to deliver supported accommodation.

Prior to the pandemic, 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 £1.6 billion.[5] Huge pressures on budgets and the 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 scheme financially challenging, as it is very difficult for any not-for-profit provider to sustain a scheme where revenue does not meet costs.

As highlighted by Prospect Housing, “the exempt housing sector came in to being to solve a genuine problem caused by a number of factors, including: a lack of new affordable homes, the end of Supported People funding, inadequate care services and a rise in homelessness) leading to at least 50,000 people requiring a different type of supported accommodation”.[6]

Reputable providers are now leaving the market as they face significant risk in their business model and increasing regulatory expectations, but without an inadequate funding model to deliver it.

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

Analysis conducted by the Homes and Communities Agency[7] has demonstrated that average unit costs in supported housing tend to be significantly higher than those in general needs housing. This is due to high turnover, the specialist nature of buildings and the housing management costs of such scheme. Well-managed and adequately funded supported housing provides exemplary value for money, which the Government’s National Statement of Expectations for Supported Housing acknowledges.[8]

It depends on the support provider and, and the regulatory oversight of the Local Authority, as to whether or not exempt accommodation represents value for money. For example, St Mungo’s delivers a small number of non-commissioned supported accommodation services, where the commissioning of the support element of the service has ceased but the support element has continued to be funded through St Mungo’s own resourcing, until a more permanent funding solution can be found.

St Mungo’s makes no distinction between these properties and the other supported accommodation it delivers.

Where high quality support is being delivered, exempt accommodation can also act as value for money to both the provider and the Local Authority, because it is possible for the rents to be paid directly to the landlord through Housing Benefit, which can prevent the accrual of rent arrears. This also makes it much easier to manage and can increase capacity for the actual support focus.

Exempt accommodation can also offer value for money in local authorities which face high affordability pressure, as exempt accommodation is not restricted by the benefit cap. This can open up routes into affordable housing, facilitating move on and reducing pressure on expensive temporary accommodation. 

When used appropriately, exempt accommodation does provide value for money. St Mungo’s would recommend that aspects of its model should be applied more widely, specifically: increasing the benefit cap in areas of high affordability pressure, and giving landlords greater access to direct payments of rent.

Where exempt accommodation is not financially viable, and does not represent value for money, is when it is used by providers to maximise rents but provide minimal support, or by those who do not have the competency to deliver supported housing. As the expectations of the current regulatory regime is that only ‘more than minimal support’ is provided, it is easy for these providers to be compliant and provide something which is not value for money. The current regulatory regime is not consistently gatekeeping against these providers.

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

We would not be able to comment on geographical and regional trends in the provision and problems of exempt accommodation, as St Mungo’s does not have data that would adequately capture this. We would advise though that there is a lack of consistency with local authorities in how exempt accommodation is managed and monitored.

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

We would not be able to comment nationally on the balance of registered and non-registered providers, as St Mungo’s does not have data that would adequately capture this.

There is no nationally available data on the balance between commissioned and non-commissioned providers.

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

We would not be able to comment nationally on the balance of commissioned and non-commissioned providers, as St Mungo’s does not have data that would adequately capture this.

There is no nationally available data on the balance between commissioned and non-commissioned providers.

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

There is greater risk among non-commissioned and non-registered providers, who from our experience are less likely to be committed to the charitable aims of supported housing. A typical example of a poor quality provider of exempt accommodation would be a property developer, or organisation new to housing provision, who may have good intentions but lacks competency, or whose intentions are unscrupulous. Within these settings, we have found that exploitation of the exempt accommodation rate is more likely to take place in the private rented sector.

It is more likely that exempt accommodation delivered by registered and commissioned providers would be of a sufficient standard, as there is more oversight and accountability over what should be delivered.

Commissioning brings with it oversight and accountability of the support being delivered, and is more likely to sit within a multi-agency setting, and operate within a referral and safeguarding processes. Although the process of being a registered provider does bring with it standards, however, St Mungo’s has still witnessed examples of poor quality provision delivered by registered providers. The Regulator of Social Housing (RSH) has found a number of registered providers working in the exempt market[9] non-compliant with finance and governance regulation including the Rent Standard, which determines how regulated providers should set rents. Therefore, Registered Provider status should not be the sole indicator of quality.   

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

There needs to be rationales behind the rents being charged and the level of support provided for people, and for what reasons.

We would recommend that there should be greater transparency around how the housing benefit contributes to service cost, and that the government should provide guidance on what should be appropriate service costs for different support needs. This could be set at a local, regional or national level and would allow providers to be held to account on the rents they are charging. This guidance would therefore provide a tangible definition of exempt accommodation that can be costed in terms of hours of support provided, as the current definition is vague. This can inform the development of a Quality Assurance Framework, which is discussed further in question 8.

7. How should the regulatory oversight of exempt accommodation be organised?

It is Local Authorities who will need to be responsible for gatekeeping and monitoring exempt accommodation, since the payment of housing benefit comes from their budgets. Some Local Authorities have a high level of scrutiny over the exempt accommodation sector, and St Mungo’s has seen examples of Local Authorities who will not sign off exempt accommodation without the providers making the case for why their provision comes under this definition, or are not willing to sign off exempt accommodation which they have not commissioned.

The Supporting People Programme can be used as a model for local authority oversight in supported housing, which is where local teams are responsible for ensuring the care and quality of accommodation.

The findings from the DLUHC pilots will also play a crucial role in determining how Local Authority oversight of supported housing can be improved. The purpose of the five pilots, launched in October 2020, is to test new approaches to drive up standards, including strengthening enforcement in the sector, such as accommodation inspections, and gather findings to inform future national policy. Four of them – in Birmingham, Hull, Blackpool and Blackburn – have been extended and will run until September 2021.

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

The regulations governing exempt accommodation should monitor and uphold standards in housing, support and governance. These regulations should provide a clear sense of what enhanced housing management looks like, and should be used as the basis for Local Authority inspection and enforcement.

St Mungo’s supports the Kerslake Commission for Homelessness and Rough Sleeping, in its recommendation that these regulations should take the form of an accredited Quality Assurance Framework.[10] Against this framework, service providers would need to demonstrate that they are meeting the minimum standards set as a condition of registration. This is to ensure that accommodation is safe, decent and appropriate, and creates a better definition of the standard of care, support and supervision required, not just in exempt accommodation but across supported housing.

The framework should reflect the lessons from Prospect Housing, ensuring there is a clear line of accountability where third parties are involved, that residents are supported into independent living and employment, and that Boards are clear on the obligations they have.[11]

All providers of exempt accommodation should also be subject to regulation of consumer standards by the Regulator of Social Housing, as set out in the Social Housing White Paper, and to the Housing Ombudsman, given the volume of associated complaints and dissatisfaction. The inquiry should also look to further strengthening the powers of the Regulator of Social Housing to proactively act in this area where Registered Providers are involved. The work to regulate and enforce standards must be supported by funding for Local Authorities, the Regulator of Social Housing, and the Housing Ombudsman. Research from the National Residential Landlords Association[12] has suggested that local authorities lack resources to effectively enforce the requirements on private sector landlords, with minimal use of criminal prosecutions. Equally, Prospect Housing concluded that “most local authorities are not resourced to support the exempt accommodation sector”.

Where necessary, the Government should empower Local Authorities to carry out the development of an Exempt Accommodation Strategy so that local authorities can be actively engaged in oversight of this sector.

9. Is there sufficient publicly available information about exempt accommodation?

The purpose of providing more public information about exempt accommodation should be to ensure that tenants or future tenants are aware of what support they should be receiving in these settings and who they should contact if this commitment is not being met. This information is provided in all St Mungo’s supported housing services, and should be accessible in all exempt accommodation provision.

February 2022