Housing’s unseen £4.94 billion HB cut this parliament

The current Conservative Government wish to limit housing benefit paid to those who are vulnerable to the maximum paid to (non-vulnerable) private tenants called the LHA maxima.

This LHA maxima will affect and will close sheltered housing, supported housing facilities such as hostels and refuges and all supported living services which is the name given to housing and support for those who for example have mental health or learning, physical and sensory disabilities.  The umbrella name for all this is specified accommodation.

The amount of the housing benefit cut by this LHA maxima policy is hard to estimate but a best guess from this specialist area I work in is £4.944 billion this Parliament.

This comprises £1.314 billion in 2018/19, £1.648 billion in 2019/20 and £1.982 billion in 2020/21. Note well this parliament ends in May 2020 and the benefit levels are thus set for the April 2020 to March 2021 financial year before the election.

Those estimates are based on no provider operational or strategic changes to specified accommodation  and on the inadequate Government estimate of 130k in supported housing / living and 400,000 in sheltered housing making up the total numbers of specified accommodation.

The estimate factors in the key issues of the average lengths of stay and ‘churn’ of new tenants or residents in each of the main service types affected using figures from actual services I know and advise upon although they could differ widely across the country.  They also include researching gross rent levels in supported and sheltered housing and numbers of units in a number of different regional locales and such figures are not all that easy to find and require much interrogation of numerous official sources.

In short and despite its complexity the £4.944 billion over this Parliament is a good ballpark figure at best though nonetheless a valid one and as you can see it means increases in HB cuts year and year. What this means is that all such housing provision would inevitably have to close and quickly close as they ALL become non financially viable.  When this idea was first mooted in 2011 I said hostels and refuges would lose between 24% and 65% of their overall funding based on actual figures of services I advise and they all fall because of the LHA maxima policy of LHA alone in the higher 65% category not the 24% lower category.

Can the policy work?

No! This policy is ideological nonsense and the suggested Government replacement is the use of DHPs to cover the LHA maxima cuts of £4.944 billion.  Yet let’s also expose that crock as the Government is only allocating a total of £0.535 billion of DHP over these three years as they confirmed in a written answer last week (below):

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This £0.535 billion or £535 million is the sum of the three figures above plus the additional £70 million [£170m + £155m + £140m + £70m] and that DHP total allocation still has to also pay for:

  • (a) bedroom tax cut of £1.08 billion over these 3 years and
  • (b) for benefit cap cuts that will run into the billions over the same period with the reductions to £23k and £20k; and
  • (c) for LHA cap and
  • (d) for the SAR cap cuts in general needs housing and
  • (e) all other uses such as rent deposits and so on.

In short, there is not a hope in hell’s chance of DHP covering any of its current uses let alone covering these LHA maxima cuts. Further, as we must suspect, when local councils who administer DHP have the choice of paying that for a sheltered housing tenant or a working-age bedroom tax tenant, then it will be the former who gets this which means the chance of a bedroom tax DHP from 2018 are in effect zero!  That is just one knock-on impact and effect.

To all housing people this £4.944 billion cut this parliament is much higher than the £3.7 billion cut from the 1% social rent cut (of which about £2.5 billion is the HB cut) that sees social landlords seeking 15% housing staff cuts and 25% cuts to all social housing operations.  The social housing world is in a panic over the 1% rent cut of £3.7 billion over this pParliamant of which around £2.5 bn will come from housing benefit yet my estimate of the LHA maxima cut is double the 1% rent cut at £4.94bn and it is about time social landlords started taking this LHA maxima cut seriously.

Look at my comments on response of David Orr and the NHF to this issue I discussed in my post called “Tories kill sheltered housing and landlord don’t even notice!” which limited this to extra care sheltered and was the sole focus of David Orr and the NHF and you see just how apathetic that response was and is.

Some perspective and context

This last week saw outrage that Tendring Council is proposing to charge pensioners £26 if they have a fall and the council comes out and that outrage is right and the national awareness of this proposal will surely see it does not happen.

YET as I stated here this LHA maxima policy sees the pensioner in Liverpool have to find £50 each and every week just to pay their rent shortfall the LHA maxima creates.  The Tendring proposal is £260 per year which assumes 10 falls when the Liverpool and other low rent area pensioner will be deducted £2600 per year in housing benefit at £50 per week or TEN TIMES THAT AMOUNT!!

Knock on effects

Some social landlords have a high percentage of their total business reliant on supported and/or sheltered housing with Home Group and Riverside (ECHG) perhaps the two most at risk given their very high supported housing elements that will have a huge domino effect in their mainstream general needs housing.

Yet all mainstream social housing will be affected as every social landlord has at least some supported and especially sheltered housing and so the very apathetic response to the LHA maxima from social housing is very worrying indeed.

My comments that sheltered housing in the capital will not be affected much or my London, London, Bloody London posit which tends to see housing trade bodies and especially the NHF only look at housing issues in the capital and not in the other 83% of the UK perhaps explains this; yet even if not this apathy is truly disturbing.  Perhaps it is the hundreds of managing agents in supported housing not being aware of this is another issue and managing agents to explain are mainly small charities that actually run the hostels and refuges and supported living group homes and work in partnership with social landlords who provide the bricks and mortar.

For example of managing agents every Womens Aid service in the UK tends to be a local charity and they could all lose 65% or more of their income and of course dissolve yet has anyone heard a whisper of challenge from their umbrella body in WAFE? The answer to that is not a dickie bird which of course means the Womens Aid Federation of England or WAFE itself will dissolve due to having no members.

You begin to understand the seriousness of this now and why my passion for supported housing makes me a tad angry at times reader?!

Yet whatever the reason the lack of response and challenge to the LHA maxima is alarming and it really is time to wake up and smell the coffee and then work together to consign this offensive policy to history.

I have been putting my mind to alternate business models for specified housing that will drastically remodel over 200 services I have advised in this area yet these necessary contingency plans mean tearing up every known supported housing business model and starting again and still produce very little that can be sustainable financially or services with massively reduced staffing and support that make them unrecognisable and frankly not worthwhile.

For all the many individual crises that make up the larger generic “housing crisis” none is as big as the LHA maxima policy that, left unchallenged, will destroy all supported and sheltered housing services in the UK.

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