If you are the Cabinet Leader, Chief Executive or Mayor of any local council you are so much in the sh*t with central government’s LHA maxima policy.
Read on and have the smelling salts handy …
The LHA maxima was announced out of the blue in Osborne’s Autumn Statement in November and subsequently confirmed in parliamentary written answers by DWP in December 2015. It means no social rented sector provision of any kind can get any more in housing benefit than the equivalent local housing allowance (LHA) rate and so this applies to sheltered housing, homeless hostels, DV refuges and any other sheltered or supported housing provision.
The numbers are truly frightening and for example Mayor Joe Anderson in my home city of Liverpool can see by looking at the local choice based lettings scheme (PropertyPool) that a typical sheltered housing rent now paid for in full by housing benefit is around £140 per week. Yet the 1 bed LHA maxima rate in Liverpool is just £90 per week which means the pensioner will have to find £50 per week out of state pension or savings just to make the rent – or which I will come on to the council finds this money from its DHP budget which i will show it simply can’t do.
The same principle applies for all sheltered (eg extra care) and all supported housing too and so Liverpool which prides itself on supporting the most vulnerable will see that the Homeground hostel which accommodates single homeless persons has a HB eligible rent now of £151 per week and houses those under 30. This means the LHA maxima will be the shared accommodation rate or SAR of just under £58 per week and so lose £93 per week in housing benefit for all its 29 rooms which is a little over £140,000 per year and will inevitable close as it is no longer financially viable.
Many more homeless services in the city (and elsewhere) charge much more than this as Mainstay directory confirms and that means the councils own services will go and so will the large YMCA homeless provision too. The LHA maxima policy means the national names in homeless provision such as YMCA and Salvation Army will all close as will all Foyers as they all become non financially viable due to this policy.
Liverpool makes great store of its homeless provision though the LHA maxima policy means the city council won’t be able to run the blurb below which it now does:
Over 800 bedspaces for homeless Joe? That may soon be 80 if you’re lucky and closer to 8 and the No Second NIGHT Out (NSNO) policy will have to become a No Second MONTH Out – again if you’re lucky!
That is the scale of the LHA maxima issue and this is a huge problem for all local councils outside of London which has freakishly high LHA rates.
There are no publicly available figures for the supported living model services which are for those who need and now receive housing support AND care funding such as tenants with mental health or disability needs but they too will close unless each local council makes up the housing benefit cut with extra care funding or from the magician’s hat called the DHP budget!
In Liverpool the council is on record as wanting to reduce the number of care packages from 15,000 down to 9,000 to cope with the 58% cuts Liverpool has had from central government as stated in the Guardian below yet the LHA maxima policy will see the number and average funding level increase of care packages.
The number of care packages needed will increase as the preventative support services will all close and hasten the need for higher care levels and the existing ones will all need more funding to compensate for the HB reduction else they too will close.
The policy is a massive transfer of additional cost from central to local government and it is local government who have the mandatory duties not central government and local government will have homeless duties to all the pensioners evicted from sheltered housing.
When Anderson became leader of the authority in 2010, two years before he became mayor, it was spending £222m a year on adult social care services. Today, it spends £172m. By 2017, it will be £150m – a further cut that, he says, will mean reducing the number of people receiving care packages from 15,000 now to 9,000.
After 2017, he maintains, the council will not only have no money for any discretionary services beyond what it is legally required to deliver, but “we will also have to cut some statutory services”. Scaremongering? The council’s auditors,Grant Thornton, put it almost as strongly: “It is possible that during 2017/18 the council will no longer have sufficient funds to deliver any discretionary services. A tipping point could be reached in 2018/19 when the council could struggle to fund all its mandatory service provision.”
The Grant Thornton auditors report which says this bankruptcy scenario of course pre-dates the LHA maxima announcement in the Autumn Statement so this makes the situation in Liverpool so so much worse! As it will do in every town and city and yes these cuts all come on top of the huge increased costs of the £500 per month reductions to the overall benefit cap in April that will see homelessness increase by over 30-fold in the city.
All of the above applies to all local councils not just Liverpool (except London councils and that is why no fuss has been made of this!) and puts all regional local councils deeply in the shite as we say in Liverpool.
The DWP is playing a clever political game with this too as the policy is not in any legislation and will be enacted via statutory instrument and that must happen within the next 5 – 6 weeks to take effect from April 2016 which has already been confirmed.
Action needs to be taken now in other words.
The housing benefit cut the LHA maxima gives doesn’t apply until April 2018 and applies to all new tenants from April 2016 – a mere 11 weeks away – but deferred until 2018. That sneaky deferment means that no new sheltered housing or supported housing will ever be built again as a project starting today would see ALL tenants begin their tenure after April this year and so all will be hit in April 2018.
This deferment also means that all short-term provision or homeless hostels and DV refuges will close no later than April 2018 as every one there will be a new tenant from 2017 never mind 2016 as they have an average length of tenure of less than 6 months.
All of this leaves every local council deep in the brown smelly stuff – as well as vulnerable people obviously as if there is homeless hostel or DV refuge provision then that is more street homeless and of course more women being abused by their partner and, without playing the emotive card, more women will die from domestic abuse as a direct result of this policy.
DV refuges also take in a high percentage of single childless women as well as women with children and below is an example of what the LHA maxima cut means using average figures for 17 refuges I advise and based on a £240 per week HB eligible rent level which is on the low side.
As you can see from the figures the DV refuge will suffer an average 62.4% funding cut and that is de facto closure. DV refuges in the capital may – just – be able to survive given the perversely high LHA rates there – and again the London only focus of those who could and should oppose this but have not is there for all to see!
As for sheltered housing see here which details how much of a HB cut the sheltered housing pensioner will get per week in each area of the country with Hull being hit hardest as it has the lowest 1 bed LHA rate.
So local government officers and councillors in all councils – including Tory-run ones which means this is apolitical and nationwide – at the highest levels I ask what ARE you going to do about this?
Do not be fooled by the 2018 financial impact as the impact really begins in April 2016 and the impact is huge. In Liverpool the scale of the housing benefit cut just for homeless services can easily be extrapolated from the official figures in the Mainstay directory at around £3 million per year. A good ballpark estimate to sheltered housing sees a HB cut in the region of £1.2 – £1.5 million per year; then add on the housing benefit cut to all services for mental health, adults with learning disabilities, physical and sensory disabilities, acquired brain injury and every other form of vulnerability and you see the issue.
Then because no new sheltered housing or extra care or supported living service can or will ever be built again due to the non-viability of revenue funding (HB) this means all those holistic plans with social and health care and all strategies are worthless pieces of paper as hospital discharges cannot happen if there is nowhere for them to be discharged to.
All current local government housing strategies are all redundant including older persons ones as well as all adult social care and wellbeing ones (I did say you’d need to get the smelling salts handy!) and any pipeline new housing developments for extra care or any form of sheltered or supported housing are also non-financially viable and will have to be shelved.
Do you really need me to list all of the strategy documents you typically have that are now completely buggered? Have you started to think about the implications of the new Care Act yet? If you are one of the minority local councils still with housing stock then will you have to re-engineer a new form of sheltered housing / older persons homeless accommodation that is financially viable because housing associations will not be able to?
If like Liverpool or even Merseyside which has no council stock (as 90% of North West councils do not) then all those plots you were going to give away to housing associations you may need for your own new build that you know you will have to run at a loss in order for you to have the cheapest way of meeting your mandatory duties.
Now who would have thought that George Osborne announcing out of the blue in the Autumn Statement that social housing cannot get any more HB than the private sector gets would cause such upheaval?
The government think that Discretionary Housing Payments will make up the shortfall and for all services not just adapted properties and have also announced £70 million extra DHP for 2018/19 and 2019/20 (£70m over two year or £35 million per year) yet proportionally this would increase Liverpool’s current £1.7 million DHP allocation to around £2 million or a £300k increase.
This £2 million DHP allocation would need to cope with the £3 million homeless HB cut and around £1.5 million sheltered housing HB cut and whatever HB is cut from the supported living model (oh and the estimated £12 million HB cut in Liverpool from the overall benefit cap reduction which begins in 11 weeks time and the £6.8 million in bedroom tax already cut each year.)
So local government I ask again what ARE you going to do about this?
I ask the same question to every NHS in the country too as you are going to have to put off so many targets and revise all your strategies too as you will be bed-blocked like crazy and have no supported living or sheltered housing to discharge your patients to.
I ask the same to every YMCA and Salvation Army and other national charities like Scope and many others and their umbrella bodies in Erosh and Womens Aid and Homeless Link what the HELL are you doing about it?
I particularly ask the Conservative LGA groups just what you are going to do about this as you are in the brown smelly stuff. Does even 1 of you believe the Osborne 2% precept for adult social care on council tax even come close to the added costs he has just given you? Nope!!
I also ask the Prime Minister who is so keen to see a million new homes built this parliament as is his housing minister Brandon Lewis and Communities Minister Greg Clark what HE is going to do about it as Osborne and IDS are pulling the rug out from beneath the feet of housing with the LHA maxima cut to supported and especially sheltered housing and extra care.
Does IDS have the Bullingdon Club negatives by any chance? It must be something that big if you are willing to have every pensioner not vote Tory at the 2020 election because Tory housing benefit policy is evicting them and they have nowhere whatsoever to live! Oh and every female not voting Tory as you will have closed EVERY domestic violence and abuse refuge well before the next election!
The policy is madness and a disaster and it’s time to act and act decisively. No excuses, no moaning about the policy and its impacts, no oh we made a fuss and government wouldn’t budge. Only time to act and act forcefully and do whatever it takes to stop this policy and I do mean whatever it takes in its widest sense too