Funding Cuts To Supported Housing On The Way

It is believed that if the freeze on Local Housing Allowance (LHA) rates continues into 2020/21 and there is no top-up funding available, 91% of The Salvation Army’s homes would cost more to run than there is funding to cover them.

Analysis by Frontier Economics found that supported housing residents in its units would require an average top-up of around £78 per person per week to allow the charity to continue running its service at the current level. However this varies across regions: £128 per week is required in the North West, while London residents would require little or no top-up.

Consequently, The Salvation Army, along with others in the sector, is calling on the government to delay applying LHA rates to supported housing until April 2022 to allow time for a new solution to be found that “accurately reflects the true costs of safe and secure supported housing”. This follows a National Housing Federation survey published last week which found that 85% of supported housing had been pulled by housing providers because of uncertainty over the LHA cap. 

The charity conceded that the government plans to include top-up funding in its new policy but has concerns about it being administered by councils on a discretionary basis. The charity said supported housing does not operate in isolation and it is concerned about the reform’s knock-on impact on other services such as the NHS.

Mitch Menagh, territorial director of homelessness services at The Salvation Army, said: “Sadly we cannot operate our service on the basis of discretionary ‘top-up’ funding, which offers our residents very little financial security. This change in funding would mean that we cannot effectively budget for the future and it also means that our service users would not be guaranteed the support they need for what are often extremely complex needs.”

Housing consultant Joe Halewood said: “The LHA Maxima Cap policy is to begin its one year lead-in time in April 2018, ahead of its national implementation in April 2019. The policy is the most significant policy change to the funding of supported housing / living since the THBS system of 2000 was the lead-in for Supporting People (SP) in 2003. The Housing Benefit that providers now receive is cut and capped to the maximum local housing allowance or LHA equivalent for private sector general needs housing.”

“All supported housing / living providers need to prepare for the April 2019 start date as a matter of urgency. Future-proofing existing services may require significant remodelling and the urgency is heightened with the 1 year only lead-in time. Current business plans not considering the LHA Maxima Cap policy have to be started all over again.”