Supported housing: Vulnerable people left unprotected from unscrupulous providers, say MPs

- Government hampered in efforts to improve challenge-riddled sector by lack of data

- Demand outstrips supply leaving people without needed homes or support   

Vulnerable people are being increasingly provided with poor-quality supported housing. In a report published today, the Public Accounts Committee (PAC) warns of a lack of protections for vulnerable people being housed in poor-quality accommodation, with unsuitable or no additional support provided. The report finds a sector riddled with long-standing challenges, with Government’s actions to improve matters falling woefully short.

Supported housing is provided to people with additional needs, including care leavers, and people with disabilities, mental health issues or addiction. Exempt accommodation – an expanding sub-sector of short-term supported housing that can be of poor quality – has little regulation or oversight, leaving it open to unscrupulous providers. The PAC’s inquiry was told of an increase in vulnerable people being housed in poor-quality accommodation, and the significant, detrimental impact of unsuitable or non-existent additional support.

The report finds that the Government has no reliable data about the sector, making it unable to assess or resolve problems with it. Government’s future understanding relies on new duties imposed on councils to provide with annual data, but some of this new work has no timetable for completion, and other parts are non-mandatory. This means there is a risk that government’s picture of supported housing will remain inconsistent and incomplete.

The supply of supported housing is not meeting demand, meaning vulnerable people do not always get the homes or support that they need. But the lack of data means government does not know the size of the gap between supply and demand which stopping it effectively acting to improve supply. The Government’s progress is poor on developing more supported housing, with only half of its target of 10% within the new affordable homes programme currently forecast to be achieved by 2026. While recent legislation aims to bring in important reforms, the report warns that councils under severe financial pressure may struggle to take on these new duties under the law.

The PAC is also disappointed to see that fraud is going largely unaddressed in supported housing. Many councils do not have the resources to check individual housing benefit claims for fraud, meaning the Government is unable to identify how many housing benefit claims for supported housing are fraudulent.

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said: “Well-run supported housing could not be a more essential resource for some of the most vulnerable in our society. The sector is in desperate need of root-and-branch reform – wide open to fraud and the predations of unscrupulous landlords, and badly letting down the people who need it most. But our report finds a Government unprepared to even assess the problem, let alone address it.

“Without firm data on the problems with supported housing, the Government will be able only to continue to agree with our Committee that the sector is not working as it should. It is welcome to see legislation now passed aimed at tackling part of the issue relating to exempt accommodation, but we are concerned that Whitehall will be leaning on an under-resourced local government to achieve change. We hope the recommendations in our report help support these long-overdue reforms.”

PAC report conclusions and recommendations 

Demand for supported housing outstrips supply so vulnerable people do not always get the homes or support that they need. DLUHC acknowledges that supply for supported housing does not meet demand. While it uses the Affordable Homes Programme to support development of more supported housing, progress is poor, and the 2021-2026 iteration of the Programme is currently only forecast to achieve half of its target that 10% would be supported housing units (10% would be between 15,700 and 16,500 new supported housing units by 2026). DLUHC points to other programmes and funding aimed at increasing the number of homes for specific groups of vulnerable people such as victims of domestic abuse and rough sleepers. DLUHC accepts that a lack of data means it does not know the size of the gap between supply and demand which also prevents it from properly targeting its actions to improve supply. DWP and DLUHC are working to improve their data and have commissioned researchers to produce a ‘snapshot’ of the sector, including a picture of demand and supply, which at the time we took evidence was due to be available later in 2023.   

Recommendation 1: Within six months of publishing the new snapshot of data on supporting housing, DLUHC should write to the Committee setting out how central government is maximising efforts to get supply of supported housing to meet demand, for example, through the Affordable Homes Programme.

Exempt accommodation – an expanding sub-sector of short-term supported housing that can be of poor quality – has little regulation or oversight so leaving vulnerable people unprotected from unscrupulous providers.  We echo the strength of feeling and view of the Levelling Up, Housing and Communities Committee in their report on exempt accommodation (mostly short-term supported housing that is exempt from locally set Housing Benefit caps), which described this part of the supported housing sector as a “complete mess”, and a “goldrush” for unscrupulous landlords. The Local Government Association has told us of an increase in vulnerable people being housed in poor-quality houses of multiple occupancy, with unsuitable or no additional support provided. It feels that this has had a significant, detrimental impact on vulnerable people. DLUHC recognised that the sector “is not working as well as it should” and that the Supported Housing (Regulatory Oversight) Bill (which has since received Royal Assent) would bring in important reforms. The Act focuses on exempt accommodation and includes a range of measures that aim to drive out rogue providers and improve the quality of supported housing. But we are concerned about local authorities’ capacity to deal with the new responsibilities under the Act bring. We understand that DLUHC will assess whether local authorities will need new burdens funding to help with costs. However, local authorities continue to be under severe financial pressure and, as a result, may struggle to take on new duties.

Recommendation 2: Alongside its Treasury Minute response, DLUHC should write to the Committee outlining progress with its consultation with local authorities and set out its early thinking on how it intends to support them to implement the Act effectively, improve short-term supported housing and protect vulnerable residents.

DLUHC and DWP cannot assess and therefore resolve the problems with supported housing as they have no reliable data about the sector. The data on the sector held by DLUHC and DWP is incomplete and out of date despite the department and its predecessor departments being aware of the issues for many years. They intend to improve their understanding of the sector through the snapshot which will include data on the size and composition of the sector, costs, current and future supply and demand. This will update the last snapshot which was done in 2016. To keep its understanding relevant in the future, DLUHC is relying on the new duties that the Bill imposes to get local authorities to provide it with annual data. These duties include local authorities’ strategic reviews of supported housing which DLUHC expects will help local authorities assess demand and supply. It also expects that local authorities will extract information through the new licensing schemes they can set up for providers of supported housing. There is currently no timetable for the local housing strategies to be completed and as the licensing schemes are not mandatory, there is a risk that DLUHC’s data will remain inconsistent and incomplete. DWP is also working with local authorities to get a better picture of housing benefit claims for specified housing (a type of supported housing which is paid for with housing benefit). It has given local authorities £4.79 million to review all their existing Housing Benefit claims to identify and record if claims are for specified accommodation and, if so, what type.

Recommendation 3:  In the Treasury Minute response to this report, DLUHC and DWP should summarise what they are currently doing, along with plans for future work, to radically improve and keep up to date, their data on demand, supply, and costs of supported housing while minimising the burden on local authorities. 

The Supported Housing (Regulatory Oversight) Act 2023 gives local authorities more powers over providers of supported housing but there is a risk of unintended consequences, including discouraging good quality providers. The Act gives powers to local authorities to set up licensing schemes for supported housing providers to join and adhere to the framework of standards locally. DLUHC intends to assess if new burdens funding is needed to help local authorities set up licensing schemes but expects local authorities will then cover ongoing running costs by charging fees to housing providers to join the scheme. Local authorities will need to achieve a difficult balance of charging fees to housing providers that are enough to cover local authorities’ costs, but not so much that they deter good quality landlords. DLUHC stresses that it is mindful of unintended consequences, in particular, the potential to create uncertainty and anxiety among providers which in turn, risks some people’s needs not being met. It acknowledges the need for a licensing regime that is robust enough to ensures that standards are being upheld, while not pushing good providers out of the market unnecessarily. However, DLUHC has not convinced us that it is on top of this problem as it has not assessed the potential costs to landlords.

Recommendation 4: DLUHC should assess how local authorities can set up licensing schemes with appropriate levels of fees that will deter poor providers and encourage good quality supported housing.

Local authorities have limited capacity to deal with fraud in Housing Benefit claims for supported housing. In other recent reports we have highlighted the limited capacity of local authorities to tackle fraud and stressed the need for central government to provide better support. We are disappointed to see that the problem of fraud is going largely unaddressed in supported housing. DWP acknowledges that there is unscrupulous behaviour in the sector and there are gaps in how it is dealt with. However, it is unable to identify how many of Housing Benefit claims for supported housing are fraudulent. Local authorities are responsible for managing Housing Benefit claims in their areas and while some have the resources to check individual claims for fraud, many do not. Furthermore, DWP samples just 60 housing benefit claims per local authority for fraud and supported housing benefit claims will only be a small portion of this sample. DWP tells us that it is working closely with DLUHC to help all local authorities to act on fraud.

Recommendation 5: Within six months, DWP should inform the Committee about how it intends to identify the level of fraud in Housing Benefit for supported housing and how it will better support local authorities, including funding, to tackle this fraud.

Some local authorities face increasing gaps in their budgets because of the way DWP Housing Benefit regulations work. Local authorities pay housing benefit directly to providers and ‘subsidy loss’ is the gap between how much rent a housing provider charges to a local authority and how much of it the local authority can claim back from DWP under Housing Benefit rules. In some cases, local authorities cannot claim the full amount of rent back and must cover the remaining costs from their own budgets. Subsidy loss varies across different local authorities, but overall, the problem is increasing, while local authorities already face financial pressures. Local authorities in England experienced a subsidy loss of £108 million (cash terms) in 2021-22 compared with £53.8 million in 2017-18. Successful bids from local authorities for the Supported Housing Improvement Programme have included work to reduce subsidy loss in local areas. DWP says that local authorities can reduce subsidy loss by more scrutiny of Housing Benefit claims, but this alone is very unlikely to bridge the gap in funding that local authorities are experiencing. The Supported Housing (Regulatory Oversight) Act 2023 does not have any measures to deal with subsidy loss, so we are pleased that DWP has told us it will look at other solutions. 

Recommendation 6: As part of the consultation with local authorities on the Supported Housing (Regulatory Oversight) Act 2023, DWP should consider how to reduce subsidy loss, and then implement solutions.