Rent cuts of 24% – 65% for hostels and refuges

The proposed changes to rent payments in supported housing are a real concern.  I have detailed 5 examples below and these reveal that even on a generous interpretation of the proposals that cuts range between 24% and 65% and all services become non-financially viable and will close.

All of these services currently receive less than the national average ‘exempt and supported accommodation’ rent or ESA rent of £184 per week and so those that are on average or above the national average ESA rent will lose even more.

I give worked examples below of five real services comparing their rental income now and what is proposed by these imposed DWP changes.  The scale of these reductions is stark and these huge cuts are additional to reductions in support income, the only other funding stream in all these cases, through SP cuts.

Existing payments are based on a transparent and highly scrutinised look at the costs of running hostels and refuges such as the furnished accommodation and other expenditure costs not lest being staffed on a 24/7 basis for emergency admissions and resident safety.

Proposed changes the DWP wants to implement are a flat-rate payment based on local housing allowance (LHA) to take away the complexity and ease of understanding they claim the current system has.  The options include LHA alone or LHA and a percentage on top and I have used 20% and 40% enhancements in the table below.

Table 1 – Worked examples

Service A

Service B

Service C

Service D

Service E

Current £

£158,000

£281,000

£179,000

£552,000

£124,000

LHA only

£68,000

£153,000

£73,000

£252,000

£43,000

LHA + 20%

£82,000

£183,000

£88,000

£303,000

£51,000

LHA + 40%

£95,000

£214,000

£102,000

£353,000

£64,000

Min cut

£63,000 (40%)

£67,000 (24%)

£77,000 (40%)

£199,000
(36%)

£60,000 (52%)

Max cut

£90k (57%)

£128k
(59%)

£106k
(59%)

£300k
(54%)

£81k (65%)

All of the above services are either homeless hostels or refuges for women fleeing violence and are necessarily furnished and have staff on duty 24/7 as they are all emergency or direct access services.

The DWP paper on ESA rent changes states that overall the impact will be cost neutral and this must mean that DWP wish to sweep money away from what it calls ‘conventional’ supported housing, which the above are, to what it labels ‘specialist’ supported housing such as provision for those with disabilities.

Yet that is perverse.  According to DWP these ‘conventional’ supported  housing services have higher (intensive) housing need than the ‘specialist’  services which have higher support and care needs.  So DWP is intent on paying higher housing funding to those services with lower intensive housing management need!

Intensive housing management (IHM) is the term used to describe the higher housing management services and its higher expenditure cost and temporary provision such as hostels and refuge provide a simple explanation.  These need:

  • To be furnished – you don’t flee violence with the kitchen sink strapped to your back,
  • To have each room furnished and communal areas including kitchen and laundry,
  • Often open 24/7 to admit on an emergency access basis and hence need staff 24/7,
  • To have shorter repair response times due to health and safety and according to HCorp guidelines
  • To have higher decoration and wear and tear budgets due to turnover of residents
  • To have higher all-round housing management input due to turnover of residents.

So what the DWP labels as ‘conventional’ supported housing has much higher intensive housing management costs than ‘specialist’ supported housing such as disability services (Supported Living) which doesn’t need such furnishings and are a long-term provision.  Note that under Housing Benefit Regulations (HBR) anything that becomes  the property of the resident is not claimable and only furnishings that don’t  become the residents property (such as in a hostel and refuge) are claimable and paid for.

Why will (‘conventional’) hostel and refuge provision close – It’s not just the severity of the financial reductions to rental income, or even the  added cuts such services face in its only other funding which is SP for support.  It’s the fact that even if they remodel drastically and scale back staffing they can’t fulfil their purpose.

Hostels and refuges can’t meet their purpose if they are unfurnished, if they are not open 24/7 and if they don’t have staff attendance it’s that simple.  Cuts of 24% – 65% in their housing income mean they can’t operate and  function as they need to do.  Some refuges do operate without 24/7 staffing using on-call systems out of hours I hear you say.  Yes they do but these 24% – 65% cuts to such services definitively mean savage cuts to Monday to Friday ‘office hours’ and so such refuges become non-functional.  Residents would spend longer there and so bed-block those wanting and needing to go there.  How many more would be forced to continue to be abused due to non-availability?

The DWP proposals to replace ESA rent with LHA simply can’t work for hostels and refuges (and a refuge is a hostel under HB regulations.)

The DWP’s own LHA website www.direct.gov.uk/en/Diol1/DoItOnline/DG_196239) even says that LHA is not suitable for hostels when it says “LHA direct is not suitable for everyone” and goes on to mention in a bullet point “someone living in a hostel.”

While the DWP paper on ESA rent says that a percentage may be needed on top of LHA to ensure that such services have the income they need to function reasonably the table above shows this would need to be LHA+84% in Service B right up to LHA+188% in Service E – not the figures that DWP care to admit or will pay, and remember all these services are currently BELOW the national average ESA rent of £184pw so higher levels would be needed than these!

Unless hostel and refuge providers rally together and fight this perverse and offensive and ill-thought through set of proposals from DWP they will close.

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2 thoughts on “Rent cuts of 24% – 65% for hostels and refuges

  1. Clare Julia Fernyhough March 12, 2012 at 10:36 am Reply

    Hi Joe,

    I see your comments often on the Guardian. I’m especially interested in your posts as I’m a social housing tenant, and you replied to me a week or two ago on the Guardian Housing Network concerning benefit uprating. I thought this applied to Housing Benefit, and apparently it doesn’t (Clarebelz on CiF).

    The post above concerns me greatly. I have a close relative who lives in a mental health hostel; I’m not sure if the LHA rate will apply, but in Newcastle-under-Lyme the room rate was reduced to just £44 a week, and it’s impossible to obtain a room for that anywhere in the area, let alone a specialist hostel.

    The severity of this person’s illness is such that it is impossible for family to provide accommodation. Goodness only knows what will happen to people all around the country if hostels like these are shut.

    The whole housing policy is a real mess.

    Clarebelz

    • joehalewood March 12, 2012 at 12:43 pm Reply

      Clare, I am unsure from your comment above whether your relative is in a ‘hostel’ now or is looking to move into hostel-type accommodation. If in a ‘hostel’ – and that term has a very specific meaning under HB regulations – then s/he needs to reside there for 3 months+ as then they will be exempt from the shared accommodation rate (SAR) when they move-on.

      If s/he is looking to move into a ‘hostel’ due to the nature of support needs such as MH or LD then if the accommodation (what you term a hostel) is ‘exempt accommodation’ under HB regulations again the LHA SAR does not apply.

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