Government receptive to strong case from sector: May update on LHA caps

Wednesday, 25 May 2016 - 9:31am

We’ve been working hard this year to gather evidence from you on the likely impact of LHA caps on the supported accommodation you offer, and to make sure that evidence is seen and understood by Government.

Since the announcement last year of Government proposals to cap social rent levels at Local Housing Allowance (LHA) rates, Homeless Link and Sitra have been working hard to understand the implications for accommodation services for homeless people and to make the case to the Government that supported housing needs protection from this proposal.

Gathering evidence, demonstrating risk

As we reported earlier in the year, the proposed change presents serious risks to the viability of supported housing. Many services project significant shortfalls between their current rent levels and the amount they would receive under LHA.

The evidence you have provided has been absolutely crucial in presenting a convincing case to officials involved in these discussions across Government. At the last count, it has shown that services stand to lose between 20-80% of their annual rental income, at an average loss of 63% per service.

“…if the LHA cap is confirmed, the first schemes will close by the autumn 2016…every one of our residential schemes will become financially unviable.”

Throughout these discussions we have stressed to Government that this risk cannot be overstated.  LHA rates simply won't stack up because of the higher costs associated with supported accommodation - costs which are still outweighed by the benefits supported housing brings to our communities and the tax payer.

Simply put, most providers have said they would have to shut their doors as they would not be able to operate safely.

As one of our members told us: if the LHA cap is confirmed, the first schemes will close by the autumn 2016. Hardest hit, in terms of clients groups, will be young people, homeless, and veterans...every one of our residential schemes will become financially unviable without replacement funding.”

What progress to report?

Officials across Government have been receptive to the strong case we and other organisations have been able to put across about the risks this proposal poses.

Together with other sector bodies representing groups affected by the proposal, we have also briefed over 275 parliamentarians emphasising the collective impact on housing for vulnerable people, and held meetings with MPs, Peers and Ministers to discuss alternatives to the cap.

We were also pleased to raise the issue with the Communities and Local Government Select Committee who are currently running their inquiry into homelessness and we were asked to give oral evidence to the Committee.

We have further meetings with Ministers planned over the next few weeks as the desire to find a solution intensifies.

What next?

We are under no illusion about the challenge this presents, given Government's overall desire to control welfare spending. It is critical the issue of rental income is viewed in the wider context of sustainable future funding for supported housing.

The review into supported housing, commissioned by DWP and DCLG last year, is expected to report in the Summer. This will no doubt raise further questions and will set out Government intentions about what the future system will look like.

We have met with around 50 members so far to discuss our ideas about this, and we'll be holding further sessions with National Housing Federation (NHF) in June and at our Annual Conference in early July.

If you'd like to speak to us directly about your concerns or ideas email our policy team.

In the meantime, please do continue to share evidence of the impact to your service with us. We'd also like to hear if the proposal has delayed any plans you have for future development so we can feed these into discussions with government.

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Helen Mathie

Helen Mathie

Head of policy and communications

Helen job shares her role with Caroline Bernard, jointly overseeing Homeless Link’s policy, research, information and communications team. Helen is currently on maternity leave.