Under the current funding system, our residents are guaranteed to receive the help they need to meet their full rental costs. This offers a vital foundation from which they can begin to rebuild their lives after periods of significant instability. It also ensures that The Salvation Army is able meet the additional costs required to provide accommodation to vulnerable people, which is both safe and effective.
So what’s the issue? The Government’s proposed reform – if implemented as planned in April 2019 – removes this guaranteed access to funding, meaning that our residents may not be able to meet their full rental costs, placing them on a less secure financial footing. This in turn would threaten the future sustainability of many of the supported housing services we currently provide to thousands of vulnerable people across the UK.
Such has been the level of The Salvation Army’s concern over the forthcoming changes that we commissioned an independent consultant, Frontier Economics, to assess the full extent of the risks posed by the Government’s proposal to our residents and supported housing services.
This detailed analysis, based on information from the 2015/16 financial year, established an array of important findings that reveal an uncertain future. You can learn more about these findings below, and see how you can support us as we call on the Government to reconsider its current funding proposals. You can read the report by clicking here.
WHAT WE FOUND:
1.Basing a new funding system on Local Housing Allowance rates is not appropriate:
- The cost of a Salvation Army Lifehouse (supported housing for people experiencing homelessness) is dictated by the nature of the service it provides, including the additional features required to safely house vulnerable residents. The nature of our services is similar regardless of their location - their costs do not vary significantly based on where they are in the UK. Our average costs per unit per week range from £201 per week in the North West to £153 per week in the South West and Wales; a difference of just £48.
- Local Housing Allowance rates are determined by the value of local private rented sector properties – in Central London they can be as high £260 per week for a one bedroom property. However, in areas where property values are lower, Local Housing Allowance rates are unlikely to meet the costs of our supported housing services. In Grimsby, the Local Housing Allowance rate is £75 per week. Our average costs in that region are £173 per week – close to £100 more than is available under the Local Housing Allowance.
What does this mean?
Residents in areas where property values are lower are likely to lose out. In every area of UK where The Salvation Army operates, except London, Local Housing Allowance rates are below what is required to provide a safe and effective service to residents. As a result, without significant levels of additional funding, our residents will be unable to pay their rent in full, as they are able to do now under the current funding system.
2.The risks posed to our residents and services if the new funding system is based on Local Housing Allowance rates worsen over time.
- Frontier’s analysis considers a range of illustrative scenarios to see how things might change over time.
- As Local Housing Allowance rates are frozen until April 2020, they do not account for any natural rises in the costs of running a supported housing service. This means that residents and The Salvation Army’s financial position worsens over time.
What does this mean?
If the change had been implemented in 2015/16, 84 per cent of our residents would have been unable to meet their rental costs. This increases to 91 per cent by 2020/21. (These scenarios from Frontier should be considered as indicative of what might happen, rather than what will happen.)
3.The proposed introduction of discretionary ‘top up’ funding does not provide the stability we need.
- In all areas except London, our residents will be unable to pay for their rent unless they are granted access to additional funding.
- To offset the losses created by a change to a system based on Local Housing Allowance rates, on average our residents would require an additional £78 per person per week. However, this level varies from area to area, with the average level of additional funding required in the North West reaching £128 per person per week.
- Although the Government’s proposed funding model contains provision for ‘top up’ funding, there is no guarantee that our residents will receive access to it in every case. Instead, ‘top up’ funding will be administered by local authorities on a discretionary basis via a limited form of grant funding.
What does this mean?
The inclusion of a large discretionary element in the Government’s proposed funding model creates significant financial risks for our residents and services. If our residents miss out, they will be unable to pay their rent. If our residents are unable to pay their rent, The Salvation Army will be unable to offer our services to the required standard.
At the same time, local authorities are continually being asked to do more with less. This creates the very real possibility that ‘top up’ funding may be spent elsewhere to address other pressing and underfunded needs, or that it could even run out part way through the financial year. Without access to ‘top up’ funding, 84 per cent of our residents would have been unable to afford their rental costs in 2015/16.
In light of what we found, The Salvation Army is calling on the Government to consider:
- Delaying the implementation of a new funding model until April 2022.
- Using this time to develop an alternative funding mechanism – rather than base any new system on Local Housing Allowance rates, it should instead reflect the true cost of supported housing, preventing residents from having to rely on insecure and locally administered ‘top up’ funding.
- Ensuring that the vast majority of vulnerable residents living in supported housing - including ‘short term’, transitional supported housing - are able to access any new funding mechanism through a benefits-based system.
- Subjecting the new funding mechanism to an extensive trial period, allowing key stakeholders to develop a thorough understanding of its strengths and weaknesses.
- Guaranteeing transitional protection to those living in supported housing once the new funding system is introduced, so that their current claims can be maintained until they move on to independent accommodation.
HOW CAN YOU HELP US?
Representations are being made to government ministers and shadow ministers but there is an opportunity for you to add your voice by writing to your MP.
Here is a suggested letter:
I am getting in touch as a concerned supporter of The Salvation Army.
I understand that the Government is proposing to change the way in which supported housing is funded. This will affect the people living in The Salvation Army’s Lifehouses because they are homeless. It seems that the proposals could mean that their entitlement to have their rent paid will suffer.
I would be grateful if you could ask a question about this when you return to Parliament on 5 September.
To contact your MP by email, go to www.parliament.uk/mps-lords-and-offices/mps/ and put in your postcode. It will then tell you who your MP is and give you their email address. If you would prefer to write then address it to them by name at: House of Commons, London SW1A 0AA
It will be helpful if they are contacted before 7 September. You can contact our Public Affairs Unit if you have any questions or need support: email@example.com.