A response from the Housing Support Enabling Unit
Housing Benefit and Supported Housing consultation, DWP 2011
Introduction
The Housing Support Enabling Unit (HSEU)has worked with providers of housing support in the voluntary and independent sectors across Scotland since 2004. The HSEU has maintained contact with over 900 services and has gathered information about the costs and funding of services, including supported housing, over the last 7 years. There are a wide variety of accommodation based services in Scotland including sheltered housing, foyers, hostels, shared accommodation, refuges and individual tenancies. The Unit has considered the proposals outlined in the DWP’s consultation document relating to the costs of providing housing for people with support needs and has endeavoured to alert stakeholders to it and promote debate around the proposals.
General comments
The need to establish a straightforward system for setting rent levels where a person has support needs and enable best use of public expenditure is understood. Given the wider context of welfare reform and the introduction of the Universal Credit system from 2013, however, the precise impact of the proposals outlined are difficult to assess and consultation once further details have been established eg ways in which any ‘top up’ would be calculated, would be most welcome and in fact essential if we are to be able to assess the impact of any proposed changes.
Additional costs associated with supported housing
Since the Transitional Housing Benefit system was established in the run up to the introduction of the Supporting People programme in 2004 organisations have become used to separating out housing related costs from housing support costs. Over the years services have also had to respond to increased pressure on funding for support services along with increasing demand for those services. It is not surprising, therefore, that the nature of support services in supported housing has undergone change and landlords have had to review the way costs are divided between housing and housing support to ensure they continue to be apportioned appropriately. Local authority housing benefit officers have, of course, had to scrutinise and agree any such revisions.
The sorts of additional housing related costs associated with supported housing include: intense housing management; provision of fire alarm and sprinkler system; provision of emergency lighting; provision of concierge staff; provision of warden call and / or community alarm system; HMO licensing; increased repairs; replacement of furnishings and furniture in communal areas including kitchens; also, cctv systems; laundry facilities; lifts; non- domestic water rate; as well as heating and lighting costs associated with communal areas. It is not surprising that rent and service charge levels have been increasing due to inflationary pressure on legitimate housing related costs associated with supported housing.
Creating categories of ‘conventional supported housing’ and ‘specialist individual housing’
The proposal to categorise supported housing as outlined could result in a more complex system than currently exists and runs the risk of creating uncertainty about recovering the costs associated with providing housing for people with support needs.
Firstly, the category of ‘conventional supported housing’ would bring together a very broad range of accommodation and services in a way which may not seem logical in terms of associated costs. Sheltered housing, for instance, tends to consist of self contained flats whereas hostels typically consist of individual rooms and shared facilities. The types and levels of costs associated with each will vary.
Secondly, the definitions of the two categories overlap in some respects which would make any system based on them confusing and complicated to administer and defeat one of the objectives of the proposals to ‘provide a predictable level of income for providers’. Sheltered housing, for instance, could in some cases fall within both categories as specially designed accommodation.
The entitlement to assistance through housing benefits or Universal Credit (from October 2013) for housing related costs would depend on which category of accommodation a person lived in. In the first category a person would have entitlement for financial assistance but in the second category a person would not.
Funding for assistance in this second category would not be an entitlement but rather subject to local authority funding which could be capped. This does not appear to be equitable treatment of people with higher levels of support needs.
Conventional supported housing
If the Conventional Supported Housing category is to be pursued it is of concern that under the proposals the link between actual costs and benefit levels would be broken and could result in some of the most vulnerable people in society being faced with additional housing costs which they are ill equipped to deal with.
The creation of rates specific to hostels, sheltered housing or refuges would be preferable to one rate across all types and the creation of geographical rates for each type of housing could help to reflect cost pressures associated with diverse geographical areas in Scotland. The difficulty would remain, however, that even within a broadly similar type of supported housing costs may vary. Factors which influence costs include age of property, communal facilities provided, number of units across which to divide costs and level/ type of support need of tenants. An example would be in hostel accommodation where tenants are more chaoticcompared with a hostel where tenants are more stable. There could be higher costs associated with replacing furniture and providing security systems in the first case. Smaller supported housing services would face a particular challenge in covering costs if a flat rate were to be applied. There would be a risk, however, that a system based on many different rates would be overly complicated.
Under the proposals, RSL properties leased by organisations in the independent and voluntary sectors would fall within the category of ‘conventional supported housing’ or ‘specialist individual housing’ and would be subject to the LHA rate and a top up amount or an amount from a new ‘supported housing fund’.There are concerns amongst providers working in these sectors that under these proposals they would be treated differently from RSLs (who would not be subject to the LHA rate) and that the role they play in partnership arrangements with local authorities and RSLs would not be recognised in the funding arrangements.
It is understood by the HSEU that the DWP has recently confirmed that the eligible rent and any ‘top up’ for additional housing related costs will be expected to come within a person or family’s overall Universal Credit limit. This means that the affordability of supported housing will be affected by other elements of benefit entitlement and could be a particular issue in hostel accommodation where people are working. Examples of this will be provided by the HSEU in due course to assist the DWP assess the impact of this aspect of the Universal Credit system.
Specialist individual housing
The suggestion within the proposal that accommodation deemed to be of a more specialist nature be subject to a separate fund administered by local authorities is problematic because it would be ‘fixed’ so may not be sufficientto meet demand and so leave a shortfall in housing assistance and putting a person’s home at risk. A further risk would be that what might start out as a ring fenced fund could lose its ring fence in future (as happened to the Supporting People programme in Scotland in 2008) and become subject to competing demands on local authority finances. This would be extremely serious and would be another reason why these proposals could put the homes of vulnerable people at risk.
The creation of a separate fund to cover housing related costs would create an added complexity to an individual’s financial situation particularly when the Universal Credit system is introduced. As well as having to separate out housing costs within any Universal Credit amount an application for this new Supported Housing allowance would be required. The success of such an application would be uncertain due to the likely ‘fixed’ nature of the fund. The objective of the DWP that the system ‘be easier to understand and administer’ would not be achieved in this way.
Personal budgets
One of the questions posed in the consultation document is whether housing related costs should be subject to personal budgets in the same way as care and support is for some groups of people. This would appear to be a step too far with regard to ‘conventional supported housing’ where individual housing costs are relatively low level and where elements of the costs relate to communal areas. In situations where a person has higher levels of support needs and where associated housing costs may be higher the use of personal budgets becomes more feasible.
Registered social landlords
The proposals would remove an exemption’ from referral to rent officers for supported housing of RSLs and managing agents of RSL properties and would treat RSL supported housing as it does RSL housing more generally. There is concern amongst voluntary organisations that as they may manage RSL, local authority and, on occasion, private sector accommodation they will be subject to different rules about rent levels. This could result in less transparency about rent levels and would not achieve the DWP’s objective that the system be ‘easier to understand and administer’.
The consultation document points to the incidence of rent referrals of general needs RSL properties as evidence that future rent referrals of supported housing would be the exception rather than the rule. However, if the system is to be centralised there is no guarantee that referrals will remain at their current level. It could be argued that under the current system there isa disincentive for local authorities to make referrals and this would be removed if a central body were to take over administration.
In terms of the impact of referrals to rent officers we know that referral to a rent officer and the subsequent use of a local reference rent would not always cover the costs of providing supported housing.
One RSL in Scotland has considered the impact that using a ‘local reference rent’ would have. It found that the local reference rent would not always cover the rent and service charges and in some cases create a very substantial shortfall:
Rent and eligible service charges 2011/12 / Rent and eligible service charges 2011/12 as a percentage of local reference rent 2010Shared property A / £120.98 / 112%
Bedsit B / £77.24 / 73%
1 Bed C / £80.83 / 75%
Shared property D / £206.30 / 180%
1 Bed E / £197.49 / 171%
2 Bed F / £245.85 / 214%
(These calculations are based on the median local reference rents for 2010 as published by the Scottish Government1.)
This example highlights the varied nature of housing related costs in supported housing and the fact that whilst local reference rents would cover costs in some cases there would be other cases where large shortfalls would arise. Such shortfalls would impact on sustainability of the service as well as reduce scope for re-modelling services.
At paragraph 72 the proposals open the way for referral of supported accommodation to rent officers to look ‘across all housing sectors’ when making a valuation. Whilst the acknowledgement that supported housing rent valuation should look beyond general needs housing is welcome, the key factor to making fair valuations would be to ensure comparisons are being made between similar services. The challenge will be to achieve a simple system (one of the objectives of the reforms) but one which is sophisticated enough to distinguish service types and likely housing costs associated with support needs.
Of concern to some RSLs is the possibility that decisions are made in the future to simplify the system further and abandon the local reference rent so that all landlords become subject to the Local Housing Allowance. This would further break the link between actual housing costs and benefit levels. There is particular uncertainty about the future of the local reference rent given that the Universal Credit system is being set up to replace the current benefits system and simplification is one of its objectives.
People of ‘working age’ will be subject to the Universal Credit systembut 47% of people using housing support services in Scotland in 2007/08 were 65 years old and over2. It is to be wondered, therefore, why the introduction of the Universal Credit system should be driving the proposed changes when nearly half of those people affected by the proposals will not be subject to the new system.
A much higher percentage of people applying for assistance to pay their rent in sheltered accommodation will not be subject to the Universal Credit system so at the very least the Unit suggests that the DWP take sheltered housing out of these proposals altogether and continues with the current arrangements for ‘exempt accommodation’.
It is not currently clear that the ‘local reference rent’ system will continue much beyond 2013. With this in mind one large RSL providing sheltered housing throughout much of Scotland has considered the impact that the use of the LHA system would have. If HB levels were set according to LHA levels for rent only (and service charge costs not being eligible – or being subject to an ‘additional amount’) 88% of tenancies would face a monthly shortfall of between £143 and £203. In this case the RSL would face a total shortfall of £9m. If HB were set at LHA rates for rent and service charge 68% of flats would face a monthly shortfall between £36 and £166. In this case the RSL would face a total shortfall of £3m. Clearly the use of LHA to determine eligible rents for the purposes of benefit levels would impact on the viability and availability of sheltered housing in the future.
Transitional arrangements
Whilst the DWP may prefer to move existing claimants across to the new system rather than continue to run two systems resources for administering new claims and reviewing existing claims should be assessed carefully and put in place to avoid long delays and further uncertainty. Tenantsneed enough time and sufficient information to weigh up their options and may need support to decide if they should look for alternative accommodation and support. Landlords need enough time to review services and the likely implications fortenants who require financial help (and consequently the level of income they can expect to generate through rents).
In the case of the additional amounts applicable to Category 1 and the new fund associated with Category 2 an impact assessment would be necessary to ensure that the necessary funding was made available. The experience of the Supporting People programme was that initial funding estimates were very much lower than actual cost.
Impact on wider health and social wellbeing objectives
In Scotlandthe provision of supported housing is regarded to be an important means to help reduce homelessness and repeat homelessness. Local authorities take on responsibilities to assist a wider range of homeless people from 2012 and in effect face increasingly challenging targets. The provision of supported housing across the RSL, voluntary and independent sectors is crucial to help achieve these targets3. Maintaining financial viability across all the sectors is therefore very important.
The housing of older people, particularly those with support needs, has been under review in Scotland. A National Strategy for Housing for Older People is being developed following on from the Wider Planning for an Ageing Population. Key objectives within the national strategy include the prevention of emergency hospital admissions and prevention of early entry to residential care homes. The provision of sustainable supported housing is crucial to pursuing these objectives. One of the stated aims in the strategy is that by 2021, ‘we will have increased the number of older people who live independently in the community and the range of housing and support services which help them to do this.’4 The pursuit of this objective may involve reviewing the use of existing sheltered housing in some situations with a view to re-modelling services. The extent to which services can be re-modelled could be hampered by new restrictions on eligible rent levels across the sectors.
Conclusions
The timescale for the introduction of a new approach to supported housing seems extremely ambitious given the level of detail still to be finalised and the need for further consultation once greater detail is known.
Whilst the proposals appear to be driven by the new Universal Credit system nearly half of those with support needs in Scotland are not likely to fall within its remit. It is not clear from the proposals whether or not RSLs will continue to be dealt with under the ‘local reference rent’ system or whether they will become subject to the LHA system once the Universal Credit system is introduced.