The DWP has issued a purported consultation paper on reforming the way rent is paid for in supported housing. This is in reality a nonsultation as the DWP is seeking to impose quite radical change that will severely threaten the financial viability of many supported housing services and especially hostel and refuge.
This paper looks at the DWP claims as to why the current system should change – what DWP calls the ‘need for reform.’
At points 10 and 11 on page 10 under the section entitled ‘The need for reform’ the DWP paper states the current system isn’t working and goes on to give numerous reasons for this. It says:
10. The Government is committed to supporting vulnerable, older and disabled people to exercise choice and control and lead independent lives. We believe that, with the right levels of support, everyone including disabled people can play a full part in society
11. The current Housing Benefit system for people in supported housing no longer works:
It is time to look at the validity of the claims that the current system isn’t working and each of these 5 purported reasons will be looked at below. However, the DWP allude strongly to vulnerable, older and disabled people ‘exercising choice and control’ and this is nonsensical as my previous blogs have stated: see http://wp.me/p1vuvL-k, and http://wp.me/p1vuvL-o and http://wp.me/p1vuvL-q and especially http://wp.me/p1vuvL-i. Choice and control depends upon there being an adequate supply of hostel and refuge provision and doesnt apply to that aspect of supported housing. Choice and control may apply to the supported living schemes set up where care provision and care funding is in place but not in supported housing services that are only funded through HB and SP payments.
The DWP paper focuses exclusively upon the demand side of the equation and assumes the supply side – simply the continued supply of accommodation for all in supported housing need – remains constant or increases. The supply of accommodation will however reduce and reduce markedly with the imposition of the Personalisation Agenda which the DWP wishes to impose in this paper.
I now turn to look at the DWP 5 reasons and why it says the current system isn’t working
Firstly, DWP claim: “The processing of these benefit claims has become too complicated often resulting in time consuming and intrusive investigation of a person’s care and support needs, as well as the provider’s status and how the care and support is delivered.
The process involves the reasonable, realistic and justifiable intensive housing management need of the service. And so it should be transparent, accurate and reflect what is needed for the service itself. The current process does not include any investigation, let alone an intrusive one of an individual’s care and support need. Even if it did in error the individuals personal needs are (a) only looked at after the provider’s status is determined, and (b) after the care and support delivery of the provider is looked at, to determine no care or support cost is sneaked into the housing management claim.
Further it only applies to the supported living model of care and those services in which mandatory care payments are made. As such the DWP wishes to change housing provision to meet the housing needs of those with mandatory care payments and impose this upon the majority of supported housing residents who dont have care needs or get care payments.
The needs of the small minority being imposed on the vast majority is what this paper seeks!
The DWP has simply got it wrong and there is no intrusive personal aspect of the claim and decision-making process. Yes, it is complex and can be time-consuming, but the end result is a justifiable and reasonable cost that is accurate and has been very closely scrutinised. In short, the current system works very well.
Perhaps the best way to emphasise this is by looking at the HB decision-maker. He or she agrees to a rent level that is likely to be higher than normal – to reflect the added costs of furnishing or staffing or whatever – knowing that this will be flagged up when the council is audited. Why is that rent so out of kilter will be the external auditor’s first question? The decision-maker knows in agreeing the rent figure to be reasonable and justifiable that he or she will need to be able to justify this ‘added cost’ to the external auditor. Would any HB decision-maker simply agree a high rent level if he or she wasn’t convinced it was justifiable and accurate? Of course not!
Secondly, the DWP state: “It is incompatible with other government policies as linking housing with care provision in legislation mirrors that for care homes where residents are ineligible for Housing Benefit. It does not fit with the Government’s wider objective of personal budgets, where individuals are enabled to exercise choice in commissioning their own care.”
As explained previously and as the DWP’s own research paper states only 40,000 of the 170,000 resident in exempt and supported accommodation can access a personal budget (PB). Currently, less than 50% of those with assessed care need receive a PB and even if all 40,000 did, this would mean that the current system is incompatible with just 24% of those residing in ESA, which of course means that it is compatible with the other 76%.
Again we see the DWP wishing to impose change on the vast majority for the alleged benefit of the small minority!
Unless the DWP is going to make PBs accessible to all in ESA – and it can’t do that without assessing the care needs of the other 130,000 at a rough cost of £390m (3k each) just for assessment costs!! – Then this DWP rationale for change is truly bizarre and unwarranted.
Thirdly, the DWP states “It can be unfair in that it does not provide extra help to those requiring personal care or support whose landlord is not one of the prescribed types, but who have additional housing costs because of their condition. These claimants currently face the same rent restriction rules as other private sector tenants in mainstream housing.”
Yes, it can be unfair in such circumstances and the specific circumstance is the definition of provider type in exempt HB regulations. In simple terms DWP maintains private landlords cannot deliver ‘exempt accommodation.’ The obvious answer is to do away with what seems to be discriminatory and so allow private landlords to deliver what is now called exempt provision. A simple solution that would also see private landlords delivering support and care services and remove the constraint.
The reality however is different. A private landlord can lease a property to a charity or not-for-profit support provider and the lease costs include many of the ‘intensive housing management” costs such as furnishings. In fact a private landlord could set up his or her own ‘not-for-profit’ company and deliver both the intensive housing management and support – the support costs being met from
elsewhere. So it is not accurate to say that claimants must face the same rules as other private tenants. In summary this could be changed quickly by the simple change of one HB regulation so that PSLs can deliver exempt provision and so the objection and rationale is a false one.
Fourthly, the DWP state “It creates unnecessary risk as specialist housing providers are said to be reluctant to invest in this housing sector due to uncertainty around how help with their rents will be determined. There is the potential for schemes to become financially unviable, which would leave vulnerable people without the specialist provision they need.”
If ‘so-called’ specialist housing providers are not aware of how ESA is treated under HB regulations then that is their fault!! Excuse the harshness of how that reads but it must hold. I would not develop any business model without knowing and finding out all I could as to my income!
I cannot figure out what the DWP means by saying “There is the potential for (existing) schemes to become financially unviable.” It must mean existing schemes and hence my emphasis, yet how can they or will they become financially unviable under the current regulations? That by definition is an oxymoron!
Far greater financial unviability is created by the proposed reforms of this paper which I restate are geared toward the maximum 24% of services to which PBs can apply and are detrimental to the other 76% – who currently comprise 88% (as only half of the 24% have taken up PBs)!!
Fifthly, DWP state: “It is costly to many local authorities who often have to meet some of the Housing Benefit costs for expensive properties themselves”
Read these words carefully!! Currently, local authorities do HAVE to meet some of these costs. Yet this paper proposes that they no longer have to, but can choose whether to!!
I restate my argument of above – the costs are only met once the LA HB decision-maker is happy that the costs are accurate, reasonable and justifiable to the external auditor. So these costs have already been approved and are known to the local authority. This is not a fault or flaw within the existing system it is a very well scrutinised asset of it.
Yet the change of emphasis here is a critical change as this makes a higher proportion of supported housing rents will be discretionary spend for local authorities. That creates massive risk to financial viability and will not just see those curently in the ‘market’ review their position, it would actively discourage those seekign to enter the market from doing so.
In summary, the 5 principal rationales given by the DWP as to why the current system isn’t working don’t hold scrutiny. There is little reason of fault or inadequacies in the existing system that would drive such radical change as the DWP proposes in this paper.
This paper – which only seekd to consult on the design of the new system and not of the decision to impose a LHA based solution – is severely misguided in its rationale and in its direction it wishes to impose upon the sector. I have no issue with radical change at all, but not for its own sake and not when it does throw the baby out with the bathwater as this paper does. The emphasis and huge priority of the supported living model (those with assessed case needs) which accounts at most for 24% of those in all supported housing is ridiculous. Even if it helps them it most definitely penalises and makes it far worse for the 74% of supported housing that isn’t the supported living model.
Or to put that in numbers, it may benefit 40,000 vulnerable people but it will penalise and negatively affect 130,000. In fact it puts all 170,000 at risk of existing providers fleeing the market like crazy due to the uncertainty and massive financial risks it creates. New (social landlord) entrants to the market won’t happen because of this and new PSL entrants are hardly likely to enter a market where their returns as the same as now but for much higher cost and risk.
The DWP simply doesn’t know what it is doing.