Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
The future funding of supported housing has been a question for a number of years but the proposed Local Housing Allowance (LHA) changes threaten the financial viability of many of these schemes. It has been questioned because of:
- the removal of ring-fenced Supporting People budgets and financial cuts by local authorities;
- the general trend to increase service charges and subsequent claims via housing benefit and universal credit; and
- the Government’s proposals, announced in September 2016, to limit core rent and service charges funded through housing benefit or universal credit payments to the applicable LHA rate from April 2019.
The proposed LHA changes threaten the financial viability of many supported housing schemes.
On 1 May 2017, just before purdah and amongst a flurry of other publications, the Joint Report of the Department for Local Communities and Government (DLCG) and Department for Work and Pensions (DWP) Select Committee was finally published. A full copy of the Report is available here.
What does the Report say?
After hearing evidence from many different organisations and individuals, the Committee agreed with the Government’s overriding objective in relation to the proposed changes, i.e. to create a sustainable, long-term funding mechanism that ensures quality, provides value for money, and protects and boosts the supply of supported housing. However, it concludes that the Government’s current proposals do not achieve that objective, with LHA not being a suitable starting point because of the unfair comparison to private accommodation and the disparity of rates across regions
Instead, the Committee recommends:
- a banded Supported Housing Allowance system should be introduced (in place of the LHA cap), with top-up payments in exceptional circumstances;
- funding of emergency short-term accommodation through a locally administered system;
- a separate funding mechanism for refuges within a national framework; and
- a new national framework set by the Government to ensure more consistent quality of services monitored and regulated by local authorities, together with an adequate redress system.
Our comments on the Report
The Report very much emphasises the value (not just financial) that supported housing provides to society as a whole, as well as to the individuals housed. The recognition that the current proposals would lead to an unsustainable system is crucial and reflects what we, and many of our clients who provide supported accommodation, have been saying since the LHA announcement in particular. Whilst a simple point and not a solution in itself, it is a crucial starting point.
We also think it is important that the Committee recognised the range of accommodation that the term ‘supported housing’ covers, acknowledging that different funding mechanisms are needed to cover different types of accommodation without creating an overly complicated system. There is definitely not a ‘one size fits all’ approach.
The real question we have relates to regulation and monitoring by local authorities: how will this be funded and resourced, particularly given the pressures on local government budgets? We frequently see variations in approaches by local authorities so it will be important that there is consistency at this level, to ensure consistency at provider level.
The Report does however just set out recommendations, so the ‘proof of the pudding’ will, of course, be in implementation and the detail. We think it is crucial that the solution is part of a wider review of the social care system as a whole, recognising the importance of joint working between housing and the health and social care system.
Whilst the recommendations of the Report are quite clear and provide some welcome relief for providers of supported housing, with a new Government it remains to be seen how the recommendations are taken forward and where the issue will ‘rank’ on the Government’s agenda. Any changes to the proposed funding will also sit alongside the expected Green Paper on funding following Government consultation in 2016/2017. We will issue further updates/articles when further changes are proposed.
In the meantime providers must continue to establish any new schemes and operate current schemes, being fully aware that changes are impending and the uncertainty: business plans must include flexibility to account for these changes.
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