Written evidence submitted by Leeds City Council [EXA 113]

1.0               What is the quality of exempt housing provision?

There are two aspects to quality; the condition of buildings and the quality of support offered to individuals. Both need measuring to establish the quality of provision.

The Council do not have available resource to offer an adequate review of the quality of non-commissioned exempt housing provision in Leeds.  An effective review would need to be undertaken periodically during the duration of a tenancy as circumstances may change.

Anecdotally, the council have received reports of inadequate support from tenants living in supported accommodation, however it is often difficult to establish the level of support being provided or indeed the level of support required on an ongoing basis.

Commissioned supported housing provision is under contract from Local Authorities, with most services scrutinised through contract management and as such there is a greater degree of assurance in terms of quality.

A mechanism to filter out poor quality providers of supported accommodation may be required to prevent them applying in the first place, possibly involving a network which allows Local Authorities to share data. 

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

The table below shows the cost to the Council has been rising year on year and there are no current indications that this trend is likely to reduce:

In 2021/22 the current forecasted cost to the Council for these cases is £4,773,790.40, which is a £1M increase on 2020/21. 

This continued increase in expenditure is not sustainable and impacts the Council’s ability to provide other services.

It is worth noting that a provider who meets the criteria for Exempt Accommodation will receive direct payments of Housing Benefit at higher levels than Housing Costs paid via Universal Credit, which is generally paid direct to the tenant.  This creates an incentive for increased supported housing provision. 

Concerns also exist over the move-on rates (how long a tenant remains in supported accommodation) as it is potentially in a provider’s interests to keep a tenant in supported accommodation where possible to retain the higher rent levels and direct Housing Benefit payments.

The financial cost to the Council can be directly attributed to the following:

• Supported Housing is more expensive than general needs housing as it includes the service charges.  The service charges often cover higher maintenance costs, repairs, renewals, security and safety measures. 
• Supported housing provision is increasing in Leeds.
• The amount of HB subsidy the Council receive in relation to tenants of non-registered providers is restricted to the decision of a rent officer.  The problem here is that the rent officer’s determination of a fair rental charge does not consider the fact that the property is used for supported housing and so takes no account of the additional costs associated with such provision. Supported housing delivered by non-registered providers therefore result in an additional cost to the Council.  
• Several experienced supported  housing providers are not registered providers and therefore do not attract full HB subsidy. The current market for delivery of supported housing locally is mainly with non-Registered Providers and they have the experience and interest in delivering services. We have seen a move away from provision of supported accommodation by registered providers over recent years due to other pressures and priorities. There is not a viable market of registered providers to deliver supported accommodation.
• If a tenant is classified as vulnerable according the HB regulations the Council will receive an additional 60% subsidy over the rent officer decision.  Whilst many supported housing tenants in general terms may be vulnerable and require support to maintain their tenancy, significant numbers do not meet the vulnerable criteria within the Housing Benefit regulations which results in further subsidy loss to the Council.
• In Leeds we are also seeing an increase in the amount of ‘core rent’ charged because of registered and non-registered providers leasing properties from private sector investors. Although there is provision in the regulations to ‘restrict’ rents, we are currently unable to do this as there is no suitable alternative accommodation readily available at the time that is cheaper, leading to increasing costs to the Council. 

The Council are trying to support and encourage providers to become registered providers. This is a huge investment of time for providers and may not be in line with the organisation’s overall strategy. Also, some providers are raising that part of their portfolio of supported housing is provided in partnership with private landlords and so it will be difficult to meet the social housing definition requirements for that element. It’s not an option for providers to seek to replace this stock with properties from Registered Providers as the Registered Providers don’t have the properties available.

Non-commissioned exempt accommodation providers are subject to a degree of scrutiny when schemes are first considered for Housing Benefit but there is no ongoing assessment in terms of value for money.  Essentially, if a provider meets the Exempt Accommodation classification in terms of the HB regulations, the Council has no option but to award HB regardless of whether the scheme provides value for money.

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

We expect that similar problems and challenges exist in all areas.  These being:

• The expansion of non-commissioned exempt accommodation and finding an adequate ‘fit’ alongside commissioned services.
• Meeting demand for certain client groups and ensuring a planned pathway into supported accommodation.
• Ensuring support provision and quality of accommodation is adequate.
• Ensuring support provision is still needed.
• Encouraging providers to move tenants who no longer require support into general needs housing.
• Financial challenges in terms of Housing Benefit subsidy loss

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

In Leeds we have a total number of 56 providers of Supported Housing in the city who receive Housing Benefit for tenants.  Of these 33 are Registered providers and 23 are non-registered.  The growing number of non-registered providers is becoming an increasing burden on the Council budget as stated above in point 2.

We have no control over this balance.  If a provider meets the qualifying criteria for exempt accommodation the council has no choice but to award Housing Benefit regardless of whether they are registered or not.

The Council are encouraging providers to become registered, but this is purely because of the current funding model which allows LA’s to reclaim full subsidy for HB paid to registered providers. 

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

In Leeds we have 17 exempt accommodation schemes that are commissioned and 39 that are non-commissioned.

We have no control over this balance because Housing Benefit regulations rules are the same regardless of whether a provider is commissioned or not. If the provider meets the qualifying criteria for exempt accommodation the council has no choice but to award Housing Benefit.  This lack of control impacts the Council’s ability to develop a strategic plan which takes account of need and demand.

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

Commissioned providers are contract managed by the local authority, as part of a formal contract agreement. Quality, cost, performance, safeguarding are all regularly monitored.

Non-commissioned services have none of this scrutiny and as such it is difficult to establish the standard and appropriateness of a non-commissioned service.

There is no evidence to suggest that accommodation and support provided by registered providers is of a better quality/better value for money than that of non-registered providers. Registered providers are exempt from HMO licensing rules and management, which may offer a more attractive option for unscrupulous providers.

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

• Ideally through formal commissioning (to ensure proper management and scrutiny) but also to manage demand, avoid duplication, ensure local needs are met. Service costs will vary a lot depending on the type of service, if 24 hour staffing, complex needs and the client group.
• It could be argued a devolved commissioning pot of funding could be passed to local authorities from which exempt rents and support combined should be paid. The big challenge is benchmarking costs – both rent cost and support / staffing costs of services. These will vary across different regions, but it could be attempted, similar to the old Supporting People regional benchmarking which took place 2003 – 2012. Any move to this type of model would require additional resources for the Council in terms of managing the scheme. A regulated model may pay for itself in the medium/ longer term. The Council would need the authority to be able to say no to applicants.
• There should be no cost to the council and full subsidy should be payable as with other HB claims. Councils should be trusted to scrutinise rents and establish that they are reasonable. Audits could take place to ensure this happens.
• If subsidy isn’t going to be overhauled, the rent officer decisions should be more generous. Determinations should reflect the fact that the property is used for supported accommodation.
• Core rents and services should be reasonable and clearer guidance provided on how these should be set.
• Clearer, more prescriptive guidance needs to be given to LA’s about eligible service charges and it should be clear to providers how much they can charge in rent to remove this pressure from LA’s.
• Mainstream Housing Associations should be encouraged to deliver supported housing.
• There should be clear pathways in terms of how tenants are referred into schemes as well as clear expectation in terms of moving tenants on into general needs accommodation when support requirements subside.

8.0               How should the regulatory oversight of exempt accommodation be organised?

• An agreed national framework of expected quality standards should be developed taking into account intelligence sharing between local authorities in addition to some form of scrutiny at national level.   Such a framework should allow for discretion to be applied depending on local needs and demands and should demand greater transparency in terms of charges for services at a national level. 
• Property inspections to ensure health and safety and quality accommodation is being provided for the needs of the tenant and support is more than minimal and of a high standard.
• Licenses could be applied for through the Council before setting up a supported housing scheme with stronger enforcement powers granted to Councils to act against unscrupulous providers.

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

• Current Housing Benefit regulations are outdated and contain loopholes which can be exploited by unscrupulous exempt accommodation providers to increase profit.  This can impact communities and individuals as well as Council finances and should therefore be remedied with revised legislation. 

• The definition of exempt accommodation in the Housing Benefit regulations should be amended to allow Council’s the power to approve or refuse a provider’s exempt accommodation status based on local need, existing supply, quality of accommodation and value for money.

• The Housing Benefit regulations should be amended so that Councils can claim full subsidy in respect of HB paid to all categories of Supported Accommodation provider.  This could include a cap on core rent levels in a similar way to Local Housing Allowance, which might prevent developers from making excessive profits.
• Support: more detailed and in-depth criteria of what support should look like in legislation.
• Intensive Housing Management should be treated as support and not funded by Housing Benefit.
• Government funding to build new social housing that includes properties for vulnerable groups/ disabilities.
• There are current complex regulations about what type of organisation can be the landlord, and what type of organisation can the support provider plus the requirements to qualify as a Registered Provider.
• The requirement to be a not-for-profit organisation or charity is a good one to prevent business modelling for profit being attracted to supported accommodation for vulnerable people and should remain under a precise definition.
• A revisit of the requirements about support tasks, the type of service model and how this qualifies for exempt (higher) rents is needed.
• A way of modelling rent levels, different bandings and a ceiling amount may be possible to ensure costs are capped.
• A distinction between what are housing benefit costs and what other costs should be covered by support contracts would be helpful. The split between housing management and support activities / costs is not clear enough.

10.0           Is there sufficient publicly available information about exempt accommodation?

Our view is that there is insufficient publicly available information about exempt accommodation. It is a complex system that pre-dates Universal Credit.  It is known by some commissioners, support providers and some landlords. Most people will not realise there is a two-tier benefits system for mainstream housing costs and supported housing costs.  Not many are aware of the variance in exempt accommodation rent costs and the variance in the weekly support costs between services.

Ideally every LA could have a customer charter similar to the one introduced by Birmingham Council, so that tenants know what standard of accommodation and support to expect and what to do if standards are not met.

Housing Benefit practitioners feel that guidance from the DWP could be improved and that limited regulatory requirements increase a reliance on complex case-law to guide decision making.

February 2022