The future funding of sheltered housing continues to be uncertain following the Government’s decision to defer a decision to restrict housing benefit payments for supported housing.
The failure to reach a long term financial settlement means that schemes could still eventually be forced to close and the development of new schemes jeopardised.
Capping housing benefit
In 2015, the Chancellor announced that from April 2018, housing benefit paid in the social sector would be capped at the same rate as the private rented sector. This rate is based on local rent charges for the private rented market – as well as the number of bedrooms. From April 2018 the capped rates will also affect new older tenants in general needs housing, whose tenancies started in April 2016. For supported housing it will now apply to both new and existing tenants from April 2019.
This policy creates particular problems for tenants living in supported housing (which includes sheltered and extra care housing) because their housing benefit includes some additional management and service costs. Providers argue that the cost of a supported flat is higher than a private rented flat, so a similar rate of housing benefit doesn’t make sense.
As a result, the Government has delayed the change for supported housing by an extra year. In a ministerial statement, the Work and Pensions Secretary Damian Green said that from 2019\20 the additional costs of supported housing will be paid via ring fenced funding allocated to individual local authorities. This means there is no immediate threat to funding, but a final financial settlement has yet to be agreed. However, the new funding arrangement from April 2019 may only be ‘transitional’, implying on-going uncertainty.
Although a delay on implementing the cap is welcome, housing associations are worried that when it is finally introduced in 2019/20, the new funding system may not cover the additional running costs of specialist housing. Many are concerned that unless there is a fair financial settlement, schemes will have to close and further investment will be curbed.
Some housing associations say that delivering this additional funding via local authorities is a bad idea. They believe it will create administrative complexity and perpetuate financial uncertainty, particularly if funding allocations are regularly reviewed, say every two or three years. This may also act as a disincentive for further investment. Some housing associations think funding the additional cost of schemes through the benefit system, without the cap, is a more reliable, tried and tested approach.
What does it pay for?
It can be argued that it is reasonable for the Government to seek greater accountability on how money is spent in this sector, by splitting out the management costs and treating any additional costs separately. However, this approach needs to be viewed in the context of previous cuts to housing support and especially the loss of sheltered scheme wardens (onsite scheme managers).
Investing to save
A key principle of sheltered housing is to provide low level preventative housing support for small communities of older people. For older people living on their own, sheltered housing often alleviates loneliness and keeps them active and independent within a supportive friendly environment. In the long term this kind of approach reduces pressure on residential care and the NHS.
The National Housing Federation say that supported housing delivers an average net saving of £940 per resident per year, compared to institutional forms of care such as hospital and residential care. To close the gap in demand for specialist housing for older and vulnerable people, the NHF estimate the need for 16,000 more specialist homes a year up to 2030.
Older residents have limited housing options, so are relying on providers and the Government to agree a fair long term settlement. In our view it is unacceptable to continually leave older residents in limbo over how things will turn out – regardless of the pros and cons of different approaches to the funding.
Age UK want to see a long term financial settlement that offers older people certainty about the future of their schemes and delivers a good level of housing support, including onsite scheme managers. That certainty and consistency over basic housing support services is the only way to secure a long-term future for sheltered schemes.