Introduction and Background
On 27th October we finally saw the long-awaited Exempt Accommodation Inquiry Report. The purpose of this briefing is to summarise it and the wider context of Exempt Accommodation in general.
My name is commonly associated with Exempt Accommodation as one of a few people who identified it, and Enhanced Housing Benefit, as a means for supported housing providers to offset some of their revenue loss from the retrenchment of the Supporting People initiative from 2005 onwards.
The Exempt Accommodation Inquiry Report states “we would describe the system of Exempt Accommodation as a complete mess”. Those of you who read my blog posts and briefings will know how strongly I feel about people and organisations who use the Exempt Accommodation system for personal gain, some of whom do so on an industrial scale.
Work that I and others have done on Exempt Accommodation and Enhanced Housing Benefit has led to the creation of a revenue stream for supported housing of around £1 billion a year, in the absence of any meaningful alternative revenue stream for supported housing.
The term “Intensive Housing Management”, which is what Enhanced Housing Benefit funds for Exempt Accommodation providers to provide eligible services, exists because I identified and reintroduced that term in 2005 to describe the tasks and functions Enhanced Housing Benefit funds.
The problem is that greedy, unprincipled, money grabbing people have taken it upon themselves to abuse people with additional needs for their own financial gain. In some cases, making millions of pounds every year off the backs of people they’re supposed to be accommodating and supporting.
Since I and others began raising concerns about the situation some years ago, we have seen developments such as the National Statement of Expectations for Supported Housing, the Exempt Accommodation pilots and related things such as the May 2022 DWP Guidance for the Administration of Housing Benefit claims for supported housing as well as the Exempt Accommodation Inquiry itself.
I have strongly advocated a values-based approach to the management of the supported housing ecosystem, including accreditation of supported housing providers at local level and an independent oversight system.
General Observations
I’m pleased to say some of what I advocate in this regard has been acknowledged in the Exempt Accommodation Inquiry Report including the language I have used to describe Exempt Accommodation abuse such as the “wild west gold rush“. This particular soundbite also seems to have been adopted by Bob Blackman MP, a member of the DLUHC Inquiry Committee and the sponsor of the recently published “Supported Housing (Regulatory Oversight) Bill” currently heading for its second reading in Parliament. However, the Exempt Accommodation Inquiry Report, whilst justifiably angry, is a somewhat patchy and in places a disappointingly unhelpful response.
Detail on the Supported Housing (Regulatory Oversight) Bill is currently sparse, but I assume that its content will reflect that of the Exempt Accommodation Inquiry Report. If it does, it will cause me similar concern to that raised by my reading of the Report, which follows below. We have the opportunity to deal with the unfit for purpose Exempt Accommodation Rules and the dubious people who abuse them and the people they’re supposed to accommodate and support. My reading of the Report does not give me confidence that we’re on the right track here.
My own view is that the Exempt Accommodation rules should be abolished. They have been used for the obverse of which they were intended, which was (ironically) to prevent abuse of the Housing Benefit system. For the past 10 years people in supported housing (except private sector supported housing) have had the housing component of their Universal Credit administered as Housing Benefit under the Exempt Accommodation rules, meaning that it is effectively uncapped. Why don’t we formalise that arrangement so the tenants of locally accredited supported housing providers of any legal identity can claim what I have previously referred to as “Supported Housing Rent“?
We need radical, uncomplicated, structural change to rid the supported housing ecosystem of the thieves and abusers that infest it in the guise of supported housing providers, and in some cases registered providers. But the Exempt Accommodation Inquiry Report doesn’t go nearly far enough to achieve this.
I still don’t think that the Exempt Accommodation Inquiry has quite grasped the fact that most (socially managed) supported housing is actually Exempt Accommodation, and that Exempt Accommodation isn’t just a potentially dubious subtype of supported housing. If the Inquiry had taken this wider view of Exempt Accommodation, maybe it would have come up with a more comprehensive prescription for structural change in the funding of supported housing.
The Exempt Accommodation Inquiry Report’s focus on “regulation” is unfortunate. I have been saying for a long time that the issue is not one of regulation, it’s one of accreditation and oversight. I note the Report does now use the term “oversight”, but unfortunately not of the services supported housing providers provide. The emphasis seems to be more on “regulatory oversight” of the supported housing providers themselves.
The Exempt Accommodation Inquiry Report comments on the variable “quality of Exempt Accommodation” and refers to the National Statement of Expectations as a framework to focus on the housing element of Exempt Accommodation. It rightly emphasises the need for there to be recognised referral pathways into Exempt Accommodation.
Any of you involved in Exempt Accommodation on the ground will know that many local authorities already place significant emphasis on referral pathways into Exempt Accommodation as part of their efforts to manage their supported housing ecosystems.
The Exempt Accommodation Inquiry Report also calls for a clear definition of “care, support and supervision” the provision of which on a “more than minimal basis” is a requirement of Exempt Accommodation compliance. It recommends a set of national standards for “referrals, support and accommodation” should be enforced by local authorities. It recommends that the UK Government should, within 12 months, publish national standards on:
- Referrals processes
- Care support and supervision
- Housing quality
- Information supported housing providers should give to residents
And that new funding should be given to local authorities to implement these.
Domestic Violence and Abuse.
On the issue of domestic abuse, the Exempt Accommodation Inquiry Report is more reassuring. I’m very aware of the fact that there is a proliferation of organisations offering housing to victims of domestic violence and abuse whilst having no specialist experience in this area.
This isn’t helped by local authorities routinely referring such people to non-specialist supported housing via their statutory homelessness obligations.
The Exempt Accommodation Inquiry Report rightly recommends that Enhanced Housing Benefit, in this context, should only be paid to supported housing/refuge providers that “meet the standards in Part 4 of the Domestic Abuse Act 2021” and that there should be an increased supply of such “relevant specialist services”.
Regulation and Oversight
My view has always been and remains that supported housing providers should be accredited (or not as the case may be) by local authorities exactly as they were under the Supporting People initiative, and that their services should be overseen by an independent agency using the three Value Generation principles.[1]
Unfortunately, the Exempt Accommodation Inquiry Report’s recommendations in respect to regulation and oversight is something of a dog’s breakfast. The report acknowledges, as I have consistently maintained, there are several regulators in the supported housing ecosystem, none of which has “complete oversight of the different elements of Exempt Accommodation”. It also observes that some supported housing providers are not regulated. It recommends the creation of “National Oversight Committee” to address the oversight of supported housing providers (but not the services they provide.) This committee should apparently be comprised of “existing regulators” (presumably the Regulator for Social Housing, Charity Commission and the CIC Regulator) which the Report describes as being “expert in their own areas”.
To be honest I do not believe that any of these regulators are remotely “expert” in supported housing in general or Exempt Accommodation in particular. My experience of the RSH, for example, is that it has never understood supported housing and that it tends to treat supported housing a “bolt on” to mainstream social housing. Its attempts to try and force rent structures for supported housing into the unviable “low-cost social housing” model as per section 69 of the Housing and Regeneration Act 2008 is an illustration of this.
I reiterate that accreditation at local level would be a much stronger and more effective solution. We already have the Supporting People accreditation frameworks which could be refreshed and reused for this purpose. A “National Oversight Committee” on the terms suggested by the Exempt Accommodation Inquiry Report would add to the “complete mess” the Report identifies. The supported housing sector doesn’t need more regulation: it needs accreditation at local level and oversight on an independent basis.
What is perhaps even more alarming is the recommendation that supported housing providers should have to register as registered providers and its blithe dismissal of the fact that the Regulator for Social Housing has deliberately made it increasingly difficult for supported housing providers to register. The report states that “registration should not be unnecessarily onerous or expensive, and if it is that should change”.
Trying to register supported housing providers with the RSH is akin to trying to stuff a camel through the eye of a needle, and if it were a straightforward process we would end up with a situation where supported housing providers are forced to register with a regulator that doesn’t want them and doesn’t understand them. Furthermore, why should it be the case that, for example, supported housing provider charities and CICs, which are already regulated, are forced into the regulatory purview of another regulator? Private sector supported housing providers, some of which are very good, may simply cease to operate rather than be forced to register with the RSH.
A solution to this problem can be seen in the Exempt Accommodation Project, which brokers relationships between supported housing providers and community-based registered providers wherein the registered providers take leasehold interests in the supported housing providers’ properties, thus becoming the landlord.
This is a far simpler solution than trying to force supported housing providers to register as registered providers, and it does comply with the spirit of the Exempt Accommodation Inquiry Report’s rather misguided approach to this issue without making the mistakes of that approach.
The Exempt Accommodation Project needs more community based registered providers to get involved with us to work with supported housing providers. Please get in touch with me for more information about this.
Lease-Based Models
The Exempt Accommodation Inquiry Report accepts that leased-based models similar to that used by the Exempt Accommodation Project are a necessary part of the supported housing ecosystem. It does, however, object to this model on a “for-profit” basis.
I absolutely understand the need to stamp out excessive profiteering through lease-based supported housing models, but the approach of the Exempt Accommodation Inquiry Report, which wants to “prohibit lease-based profit-making schemes from being set up” is frankly silly.
We definitely need to sort out the lease-based sheep from the goats, but the Exempt Accommodation Inquiry Report recommendations will also throw the baby out with the bathwater. There is a world of difference between the approach taken by excellent lease-based models used by social impact investors that look to establish high quality, transparently costed supported housing with an annual return in the region of 5-6% on the one hand, compared to others that grossly inflate the capital costs involved and then look for excessive percentage returns on their artificially inflated capital sum.
Supported housing absolutely needs private capital investment with acceptable rates of return for social impact investors. Is the UK Government about to announce large-scale public capital investment in supported housing? I doubt it somehow, and I think that the language used in this regard by the Exempt Accommodation Inquiry Report is positively dangerous for essential private capital social impact investment in supported housing that must rely on a reasonable profit-making lease-based model.
Funding
The Exempt Accommodation Inquiry Report recommends that the UK Government, not for the first time, should “conduct a review of Housing Benefit claims to determine how much is being spent on what”.
It also says that “rent should be capped at a reasonable level to meet the higher costs of managing Exempt Accommodation”, a principle that I have proposed as part of my “Supported Housing Rent” proposition.
It is imperative in this context that local authorities resist the temptation to apply a cost control approach when establishing what a “reasonable level” is. A reasonable level is the actual cost of providing good quality supported housing on a transparent, open book basis, that the Exempt Accommodation Inquiry Report wants to see.
The Exempt Accommodation Inquiry Report states that “funding for support should be provided separately”. It doesn’t say how. Since the demise of Supporting People, “support” has hardly been funded at all. Whilst Enhanced Housing Benefit doesn’t fund “support”, the last few years, and especially since the DWP guidance of May this year, have seen an increasing pressure on the part of local authorities to restrict Enhanced Housing Benefit funding to strictly directly property-related tasks and functions. Please see the Supported Housing Blog for a list of routinely eligible Enhanced Housing Benefit tasks and functions.
It’s all very well for the UK Government to say that “funding for support should be provided separately”, but where is this funding?
The Exempt Accommodation Inquiry Report also states that “the Government should also consider how to give councils greater control over rents for Exempt Accommodation to ensure value for money”. The DWP guidance mentioned above does do this to a certain extent, but a much more effective response would be to abolish the Exempt Accommodation Rules, as I’ve previously argued, replace Enhanced Housing Benefit with Supported Housing Rent, which should have reasonable local maxima and have a locally administered accreditation system for supported housing providers without which supported housing rent cannot be paid.
Planning
The Exempt Accommodation Inquiry Report recommends that all supported housing, irrespective of the number of people living in a particular scheme, should be subject to HMO licensing. This includes properties where the landlord is a registered provider.
This will have a detrimental impact on many existing supported housing schemes which may have to be reconfigured in order to comply. Any loss of capacity (i.e. room numbers) as a consequence will lead to a corresponding loss of revenue that may render it unviable. In addition, who is going to pay for the necessary work?
Many local authorities are currently rolling out selective licensing schemes for supported housing within which there should be mechanisms for ensuring health and safety within such supported housing schemes that do not currently require an HMO licence.
Blanket enforcement of HMO regulations is at best a crude instrument. HMO regulations are right and proper within the properties to which they were originally meant to apply. Applying them wholesale to the entirety of our supported housing stock will cause significant expense, potential loss of revenue on a permanent basis, unviability and, in some cases, will create an unnecessarily institutional environment in smaller supported housing schemes.
Conclusions
There is a saying that “hard cases make bad law” and I believe, unfortunately, that this is what we’re seeing here. With some exceptions, notably on domestic violence and abuse services, this Report is a missed opportunity based on an inadequate grasp of the supported housing ecosystem that it wishes to reform.
The preoccupation with “regulation” as opposed to local accreditation of supported housing providers and independent oversight of their services skews the focus and conclusions of the Report. Furthermore, the idea that the Regulator for Social Housing and the Charity Commission, for example, should be responsible for the “regulatory oversight” of supported housing providers and the development of national policy in this regard is akin to suggesting that the Football Association should oversee rugby clubs. Supported housing, in my opinion, does not need more regulation, especially from agencies that don’t fully understand it. It is, however, in desperate need of organisational accreditation and service delivery oversight systems.
The recommendation that no further “for profit leased-based” supported housing should be developed is a crude response to an undoubted problem. It would certainly get shot of dodgy developers after a fast buck, but it would also prevent good quality social impact investors from providing much needed (and inexpensive) private capital for supported housing in circumstances where public capital is scarce indeed and the need for supported housing is increasing, not decreasing.
Similarly, the insistence that all supported housing providers should register with the RSH and also be subject to HMO regulations is an impractical, kneejerk response that will cause huge problems.
We don’t need to reinvent the wheel here. The solution to the abuse of the Exempt Accommodation rules is to abolish those rules, reintroduce the organisational accreditation process to which supported housing providers were subject under Supporting People, introduce an independent (of local authorities and providers) service oversight system based on Value Generation principles, and pay Supported Housing Rent to accredited providers instead of enhanced Housing Benefit, which should be abolished along with the Exempt Accommodation rules.
[1] Outcomes for people (measured qualitatively), cost benefit to the public purse (measured quantitively) wider social and community benefit (measured qualitatively and quantitively).
