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LHA cap scrapped for supported and social housing

There were sighs of relief across Wales and the UK after the Westminster government decided it will not go ahead with plans to impose a local housing allowance (LHA) cap on supported and social housing.

Theresa May revealed the decision at prime minister’s questions on Tuesday and announced that the government’s response to the consultation on future funding of supported housing will be published next Tuesday. The prime minister said:

‘We will not apply the Local Housing Allowance cap to supported housing – indeed we will not be implementing it in the wider social housing sector, and the full details will be made available when we publish our response to the consultation. This is something we have been looking at very closely over the past year… and I can confirm that we will be publishing our response to that on Tuesday 31 October.

‘It will look at a range of issues: we need to ensure the funding model is right so that all providers of supported housing can access funding effectively. We need to look at issues such as significant increases in service charges that have taken place recently, making sure that we are looking at cost control in the sector. But I can also say that we will not apply the Local Housing Allowance cap to supported housing – indeed we will not implementing it in the wider social housing sector, and the full details will be made available when we publish our response to the consultation.’

While full judgement will await the fine print of the consultation and the UK Budget on November 22, the announcement was widely welcomed in Wales and beyond. (It was also predicted by Paul Langley in a blog here on Monday).

Ministers had been expected to u-turn on the supported housing plans in the face of overwhelming evidence about the impact on development plans and knock-on costs for health and social care.

Wales was set to be worst hit by the plans to use the LHA cap for social housing because of its low LHA rates. Only yesterday, Community Housing Cymru had published analysis showing the devastating impact of the LHA on social housing.

Stuart Ropke, chief executive of CHC, said:

‘We are delighted that the Prime Minister has announced today that the LHA cap will not be applied to the social housing sector. The report we published yesterday demonstrated that the policy was flawed and completely unworkable, and would have made social housing unaffordable for those who need it most. We now await further details, particularly the further announcement on supported housing on 31st October.’

Matt Dicks, director of the Chartered Institute of Housing Cymru, said:

‘The plan to cap social rents at Local Housing Allowance rates is something our members have been gravely concerned about. These plans threatened the affordability and viability of social housing in some of the most deprived areas of Wales. Today’s announcement by the Prime Minister that the cap will not apply in supported housing or the broader social housing sector is strongly welcomed. The Government has clearly listened to the wide collection of expert voices within the housing profession who have for some time highlighted the short-comings of this policy direction.

‘Whilst we await further detail, we hope that today’s decision is the starting point through which the UK government also takes a step-back to consider how the negative impacts of the current roll-out of Universal Credit can be eased and mitigated fully.’

However, the good news from Westminster followed some worrying news from Cardiff Bay on Tuesday as the Welsh Government’s draft budget showed that Supporting People will disappear as a separate budget line from 2019/20. Instead it will be merged with other grant schemes including Flying Start, Families First, Communities First and an employability scheme and the figures appeared to indicate a cut in 2019/20.

Cymorth Cymru director Katie Dalton said:

‘I am furious that the Supporting People budget line has disappeared from the 2019/20 Welsh Government budget just three weeks after we were told that this funding would be protected for the next two years. We are extremely concerned that this budget, which specifically focuses on homelessness and housing-related support has merged with several programmes that have no direct relation to housing or homelessness prevention.

‘This decision is both baffling and dangerous at a time when Welsh Government and third sector statistics show that homelessness and rough sleeping is rapidly increasing across Wales. Politicians should be making sure that Programmes like Supporting People remain ring-fenced and focused on housing-related support that alleviates homelessness, rather than risking the dilution or even disappearance of these funds in future.’

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