May confirms Local Housing Allowance cap ‘will not apply’ to supported housing

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PM Theresa May has announced that the Local Housing Allowance (LHA) cap will not apply to supported housing

May has said the LHA cap will not apply to supported housing or the social housing sector.

The PM made the announcement at PMQs, saying the full response would be detailed next week on 31 October.

May said: “This is something we have been looking at for the past year. It will look at a wide range of issues. It needs to make sure the funding model is right to ensure providers of supported housing are able to access funding effectively.

“We will not apply the Local Housing Allowance cap to supported housing.

“Indeed we will not be implementing it in the wider social rented sector, and the full details will be made available when we publish our response to the consultation.”

The announcement comes ahead of a planned opposition day debate on supported housing later this afternoon.

Housing associations have been calling for a “sustainable solution” for months, with uncertainty said to have negatively affected the sector.

Figures produced by the National Housing Federation show a fall from 8,800 units to 1,350 over months of concern generated by government funding review plans.

Supported housing services are thought to save the taxpayer some £3.5bn in NHS costs.

The government’s indecision has left residents and housing associations with little certainty about their future income, leaving boards to take tough decisions including:

  • 71 new schemes, representing 2,185 homes, postponed
  • 19 new developments, totalling 803 homes, cancelled
  • 22 existing supported schemes and three sheltered schemes, amounting to 132 homes, facing closure.

The main factors for these closures and delays relate to the uncertainty about the government’s proposed funding model and the withdrawal of funding for support services.

David Orr, chief executive of the National Housing Federation, said: “We are absolutely delighted that the prime minister has heard the sector’s concerns and that the Local Housing Allowance cap will not apply to supported housing – and indeed the wider social housing sector.

“Housing associations have been vocal and clear that the LHA cap bore no relation to the real cost of providing supported housing, a view which had gained cross-party consensus.

“I know all social housing tenants will be relieved with the news. Things are really starting to change and it is great to see social housing getting the right kind of attention it deserves.

“We look forward to seeing the detail of the government’s new proposed funding model for supported housing, hoping it will truly put in on a sustainable and secure footing.”

Chartered Institute of Housing chief executive, Terrie Alafat CBE, said: “This is great news. CIH has consistently called on the government to rethink its plans to cap housing benefit for people living in supported housing at Local Housing Allowance rates, because it would have put homes for some of the most vulnerable people in our society at risk.

“We have also pointed out that applying the cap to the wider social housing sector risked putting social housing out of reach for younger people in particular in many areas.

“The government has clearly listened to the concerns of housing professionals across the UK – we await further details of the new funding proposals with interest.”

Brian Dow, director of external affairs at Rethink Mental Illness, said: “We’re pleased to see that the government has listened to our campaigning, and the wider sector, and dropped the potentially disastrous plan to cap funding for supported housing.

“We look forward to seeing more detail on the new funding plan and working with the government to find a solution that ensures everyone can afford the support they need.”

Wera Hobhouse MP, Liberal Democrat spokesperson for communities and local government, added: “This cap would have hit the most vulnerable in our society, including the homeless and victims of domestic violence living in shelters.

“It is right that the government has U-turned on this cruel and heartless policy.

“Ministers must now reverse their damaging decision to scrap housing benefit for 18-21s, that risks pushing more young people into homelessness.

“This would show that today’s decision was not a one-off and that the government has started to rediscover its moral conscience.”

John Healey MP, Labour’s shadow secretary of state for housing, said: “Once again, Labour is winning the arguments and making the running on government policy.

“Ahead of our opposition day debate later today, the government has given ground, but the devil will be in the detail – and the funding.

“Labour will continue to press the government to protect the long-term future and funding of supported housing.”

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