Comment: new figures suggest government proposal to reform supported housing funding will not work.

Here, Jonathon Graham, Policy Analyst for The Salvation Army, reviews the National Audit Office’s report on homelessness and finds evidence to suggest that the government's proposed reform of the funding system for supported housing will prove unsustainable.  

Since its release in mid-September, a lot has been said about the National Audit Office’s report into homelessness. Much of the focus has rightly been on the fact that homelessness in all its forms has risen since 2010 and how welfare reform has contributed to this increase. Commentators have also correctly pointed to the independent auditor's conclusion that the government’s “light touch approach” to homelessness cannot be considered good value for money.

Despite these important observations, one area that people have yet to pick up on is what the report’s findings can tell us about the government’s proposed reform of the funding system for supported housing - namely, that the proposed reform is simply unsustainable in the current climate.

As part of the government’s proposed reform, the amount of housing benefit or Universal Credit that can be claimed by people living in supported housing to help meet their rental costs will be limited to the Local Housing Allowance. In the vast majority of cases, this will leave people unable to meet their rental costs in full, as they are able to do under the current funding system. To make up for this, the government plans to introduce a new form of ‘top up’ funding, which local authorities will distribute on a discretionary basis.

Once the Local Housing Allowance and 'top up' funding are taken into account, the government expects that the new funding system will be funded at the same level as the old one, at least for the first year it is in operation (between April 2019 and April 2020). However, the supported housing sector has long argued that this confidence is misplaced and that any discretionary ‘top up’ will end up being spent elsewhere on services other than supported housing. Now the National Audit Office’s report offers proof that this claim is well founded.

According to the report, the number of households living in temporary accommodation has increased by 60 per cent since March 2011. As a result, local authorities have been required to reduce their spending on other housing services by £998m during this period to help meet the increasing costs of temporary accommodation. The majority of this reduction in spending has been taken from the Supporting People programme, which has seen its funding reduced by 59% (from £1.44bn to £588m) since 2010-11.

Since its inception in 2003, the Supporting People programme, alongside housing benefit, has been the supported housing sector’s primary source of revenue; helping providers like The Salvation Army, to support residents towards independence. However, as spending in this area has fallen, so too have the number of bed spaces available to people with experience of homelessness.

Between 2010 and 2016, the sector lost close to 8,000 bed spaces, whilst the number of people sleeping rough during this period increased by 134%. 

Crucially, the transfer of resources from the Supporting People programme to cover the spiralling costs of temporary accommodation was made possible by the removal of its funding ring-fence in 2009. In other words, once funding for the Supporting People programme became discretionary.

In the absence of wider structural reforms to reduce the overall burden of homelessness on local authority budgets, any new discretionary funding for supported housing is likely to suffer a similar fate. This will not be news to anyone working in the supporting housing sector. This time, however, we have proof on a national scale.

Read more about The Salvation Army’s work with people who experience homelessness HERE