Categories
Finance & Funding Policy

Enhanced Housing Benefit, the Exempt Accommodation Project and the Oversight of Supported Housing

Introduction

Some months ago, I wrote a briefing on the oversight of supported housing. Since then, much has happened in the supported housing space, including the National Statement of Expectations for Supported Housing and consequential structural changes at local authority level. These changes include more integrated “commissioning” of supported housing, often in conjunction with Revenues and Benefits departments, as local authorities consider how to manage the supported housing “market”.

Enhanced Housing Benefit and the Exempt Accommodation Rules

We have seen additional restrictions on, and greater scrutiny of enhanced Housing Benefit claims made by supported housing providers under the Exempt Accommodation rules.

Back in October 2020 I wrote a briefing on the National Statement of Expectations for Supported Housing in which I expressed concern that it would be used as an exercise in cost control. Unfortunately, those fears seem to be justified in many instances. Some local authorities are trying to insist on supported housing providers becoming registered providers to qualify for framework agreements and tenders in circumstances where, in England at least, this is a very difficult thing to do.

Other local authorities are restricting enhanced Housing Benefit payments to non-registered supported housing providers to artificial local maxima of less than they need and are entitled to. They do this to avoid the subsidy loss they incur when they pay enhanced Housing Benefit to non-registered supported housing providers. This is understandable in a way, but it further reinforces the three-tier system in which a tenant’s entitlement to enhanced Housing Benefit is dependent on the legal identity of their landlord, which is patently bonkers as well as discriminatory:

  • Private supported housing landlord: Local Housing Allowance levels only
  • Nonregistered supported housing provider landlord: reduced levels of enhanced Housing Benefit
  • Registered provider supported housing landlord: full enhanced Housing Benefit

We actually need to get rid of the Exempt Accommodation rules and move to a supported housing rent based on an unrestricted Universal Credit housing component. This should be irrespective of the legal identity of the supported housing provider.

The Exempt Accommodation Project

Whilst we are stuck with the Exempt Accommodation rules, we’ve developed the exempt accommodation project in order to:

  • Stop financial discrimination based on the legal identity of a supported housing landlord
  • Enable local authorities to fully recover the enhanced Housing Benefit they pay
  • Ensure full regulatory compliance through the optional use of the ClouDigs cloud-based supported housing management system (it’s effectively free, so why not?)
  • Ensure that supported housing providers are of good quality and only operate with the consent of local statutory sector partners

The Exempt Accommodation Project works by connecting non-registered supported housing providers that own or lease their properties with smaller, community-based registered providers that then take a legal interest in the properties concerned. This enables the payment of enhanced Housing Benefit, which the local authority can fully recover. We provide all the necessary documentary infrastructure and regulatory compliance systems, and we calculate and secure the enhanced Housing Benefit. It effectively costs nothing as the small costs involved are Housing Benefit eligible.

Exempt Accommodation Project Flowchart

Exempt Accommodation Project Flowchart
Exempt Accommodation Project Flowchart

Please get in touch if you want to be part of the Exempt Accommodation Project, if you’re:

  • a supported housing provider, irrespective of legal identity, looking for enhanced Housing Benefit
  • a registered provider needing an additional revenue stream within a risk-managed structure
  • a local authority wanting a strategic approach to full subsidy recovery on enhanced Housing Benefit payments, and the effective management of the local supported housing market.

The Exempt Accommodation Project will not accommodate supported housing providers that are not welcome by the local authority within which they seek to operate. We conduct extensive due diligence on ALL supported housing providers (and registered providers) asking to be involved in the Exempt Accommodation Project. The first consideration the due diligence process is whether the supported housing provider in particular is “approved” by the local authority.

The Accreditation and Oversight of Supported Housing

It would be much simpler if supported housing providers were accredited by local authorities (not regulated or overseen, more on that in a minute). Why not simply refresh the old Supporting People accreditation framework? This would prevent the ill motivated people who set up poor quality supported housing providers and dubious registered providers as a moneymaking exercise from being able to claim enhanced Housing Benefit. Unaccredited providers should not be eligible to claim enhanced Housing Benefit. Thea Raisebeck’s “Exempt from Responsibility?” Report is an insight into the dangers of unaccredited providers.

The National Statement of Expectations requires local authorities to manage their local supported housing “market”, including supported housing services that they don’t fund, so-called non-commissioned services.

I think we need to clarify what we mean when we talk about “commissioned” and “non-commissioned” services. Both the National Statement of Expectation for Supported Housing and the abuse of the enhanced Housing Benefit system require us to do so.

In my view supported housing services should not be eligible for enhanced Housing Benefit or other funding unless they operate at the behest or with the approval of the local authority and its strategic partners.

Local authorities should actually accredit supported housing providers, whether or not they do so in a formal way. In this sense all enhanced Housing Benefit eligible supported housing services would effectively be “commissioned”. Commissioned with a capital C if they are recipients of local authority or other statutory funding aside from enhanced Housing Benefit and commissioned with a small c if they receive enhanced Housing Benefit only. The point is that the latter, which are erroneously referred to as “non-commissioned services”, should only be paid enhanced Housing Benefit if they operate at the behest of or with the approval of local authorities and are accredited by them. If they do this they should be regarded as commissioned services, albeit commissioned with a small c, as they do not receive local authority funding aside from enhanced Housing Benefit.

Accreditation is not regulation or oversight. It’s acceptance by a local authority that a provider operates strategically relevant supported housing that generates value[1].

As I have mentioned before, there is a multiplicity of regulators in the supported housing space: various national housing association/registered provider regulators, the Charity Commission, the CIC Regulator, the FCA none of which are specialists in supported housing.

For the most part supported housing is not overseen. The National Statement of Expectations doesn’t require local authorities to oversee supported housing, which is just as well as they are neither resourced and consequently skilled to do so.

I continue to argue for an independently developed and implemented supported housing oversight system with national scope and based on Value Generation principles. It should be developed by a university or think tank in consultation with the local authorities and providers but implemented independently. The outcomes it generates through formal oversight of supported housing should be fed back to local authorities and providers to inform funding and commissioning decisions and service improvement strategies.

The supported housing quality assessment system I propose (SHQAS) should be a Value Generation-based system. I defined the three value generation principles before and it’s important also to identify how these principles should be measured:

  1. Outcomes for people: qualitatively measured
  2. Cost benefit: quantitatively measured
  3. Wider social and community benefit: both qualitatively and quantitatively measured

The SHQAS should be funded by the UK and national governments. It shouldn’t cost providers and local authorities anything.

Conclusions

So, if you’re thinking about claiming enhanced Housing Benefit, be mindful of the fact that many local authorities are placing restrictions on the amounts they will pay and to whom.

Blanket approaches at restriction are exercises in cost control, not necessarily strategies to invest in supported housing providers that generate value and to restrict resources to those who don’t.

This means that there are many good supported housing providers, that don’t work with registered providers, that will have their revenue restricted. There are some not so good supported housing providers that work with registered providers (some of which are also questionable) which won’t have their revenue restricted.

The Exempt Accommodation Project is a means of rectifying this problem by matching good supported housing providers, which are “approved” by their local authorities, with good community-based registered providers.

In terms of how a local authority “approves” a supported housing provider I believe it should do so via a local accreditation process. No need to reinvent the wheel here: this is what local authorities used to do in the days of “Supporting People”. Bring out the old Supporting People accreditation framework, dust it down and update it for use today.

I don’t believe that local authorities are resourced or skilled to oversee supported housing, and in any event, we need to separate oversight on the one hand from commissioning and funding on the other. Hence, I have argued that a system for the oversight of supported housing, with national scope, should be developed by an independent agency such as a university or think tank and then implemented by that agency independently of both local authorities and supported housing providers. Clearly, the outcomes of the oversight process, which must be based on Value Generation principles, should be shared with both local authorities and providers to inform commissioning/funding decisions and service outcomes.

Michael Patterson

August 2021


[1] Value Generation is: outcomes for people (who live in supported housing); cost benefit to the public purse & wider social and community benefit.

Categories
Finance & Funding

Funding Supported Housing

Context

This blog post is the third in the “What is Supported Housing?” Series. To summarise so far I have suggested that supported housing:

  • Be defined other than by timescale
  • Is where someone with an additional needs lives, for the duration of that need, irrespective of who the landlord is
  • Should be regulated and overseen (see my next blog post)
  • Should be commissioned, funded and “measured” according to Value Generation principles

The UK Government is working on draft social care legislation for England and devolved governments have yet to integrate supported housing into the health and social care mainstream. Supported housing, not least its funding, should be part of the health and social care mainstream.

Revenue

Supported housing revenue includes local authority and NHS administered funding for social and health care needs, and people’s own personal budgets.

Supporting People funding is now the exception not the rule. A significant amount of the value of the Supporting People budget (originally £1.8 billion) has been reallocated into (enhanced) Housing Benefit as Intensive Housing Management funding. It’s moved from the instability of local authority finances to the relative stability of the welfare benefits system.

The key question when it comes to recurring revenue for supported housing, however is “where will it sit in relation to the welfare benefits system?”. The UK Government gave a “Future of Supported Housing” policy commitment in 2018 to keep the funding of supported housing within the welfare system.

Lord Freud acknowledged in 2012 that people in exempt or specified accommodation would have the housing component of their Universal Credit administered by the local Housing Benefit team under the Exempt Accommodation rules. So effectively, enhanced Housing Benefit for Intensive Housing Management is paid as the housing component of Universal Credit on an uncapped basis.

I believe that this supported housing component of Universal Credit should be redesignated “Supported Housing Rent”, which should be payable to all supported housing providers regardless of legal identity, provided they are properly regulated/accredited and overseen (see my next blog post “The Regulation of Supported Housing”).

Whoever the landlord is, be it social, private, statutory, voluntary charitable; would it not be better for there to be a simple system whereby the costs of the building are met through a banded system to take account of different cost variables? In England these bandings would probably be regionally based. (See the “Lord Best letter” of 2017). The additional (non bricks and mortar) housing needs components can also be banded according to level of assessed need (low, medium or high).

This system has the advantages of reflecting variable levels of additional need and building/property costs whilst at the same time applying sufficient maxima to each band. It dispenses with the need for basing rent levels on wildly inconsistent Local Housing Allowance levels.

Within a Universal Credit claim Supported Housing Rent components would be therefore be awarded based on a banded regional basis to reflect the variable costs of the development and management of property in every and any given region of England, and whilst Universal Credit remains a non-devolved issue this model may also be of interest to NI, Scotland & Wales.

The housing based additional needs component of Supported Housing Rent could be paid at three levels: low medium and high. These are simple principles that allow for variable costs in both buildings and the needs of the people who live in them.

Recipients of Supported Housing Rent (landlords) will have to generate value:

  • outcomes for people
  • cost benefit to the public purse
  • wider community benefit.

They will have to comply with regulatory and oversight standards (see my next blog post). We really should dispense with the absurd and discriminatory notion that peoples’ entitlements to enhanced revenue (in this case Supported Housing Rent) as a consequence of their additional needs should be dependent on the legal identity of their landlord, which is the case now.

Capital

The capital funding of supported housing is a blog post in its own right. However, having given a view on supported housing revenue it seems sensible to make some summary comments on the capital position.

We are moving increasingly in the direction of private capital funded supported housing. This has been especially so in the case of Specialised Supported Housing (what I would refer to as “Intensive Supported Housing”).

There is a need to get the balance right between social motivation and profit. Put a different way, there is a need to be realistic about what percentage return on capital public revenue should be expected to return. Investors should generate value in what they do just as much as providers of supported housing are expected to do.

REITs (Real Estate Investment Trusts), which facilitate much of the investment in supported housing, need to evolve their structures in the light of the English social housing regulator’s judgements against some REIT-based housing associations and the associated trade press reporting.

Conversely, we should consider how well-placed social housing regulators across the UK are to oversee supported housing, a significant amount of which sits outside their sectors. I think there are strong arguments to make for the independent oversight of supported housing, arguments I shall attempt to make in my next blog.

Investment in supported housing is based on a viable revenue stream. This viable revenue stream, with its consequent impetus to investors, should be built into universal credit on a Supported Housing Rent basis.

The UK Government will also continue to deploy public capital (and revenue) in the form of targeted funding for specific outcomes. For example, it has recently announced that it is bringing forward £160m of its Rough Sleeping Services budget to provide 6000 homes with support for street homeless people in England. This is ambitious enough to be a game changer for street homelessness, provided the revenue for support is sufficient and stays in place.

Conclusion

We need to think about the funding of supported housing in the context of its outcomes (see my blog post on defining supported housing) and its regulation/oversight (watch this space!).

Supported housing needs revenue funding certainty for its day to day operation and in order to give investors confidence to invest and providers confidence to provide.

Supported Housing Rent builds revenue and confidence into the system and makes the relationship between needs and resources. It retains revenue for supported housing within the welfare benefits system.

Supported housing providers, “social” or not, should generate value and comply with regulatory/oversight frameworks in order to qualify for Supported Housing Rent.