Government urged by LGA to reform housing benefit subsidy rules that leave councils “millions of pounds out of pocket”

The association warned that current housing benefit subsidy rules leave councils “millions of pounds out of pocket” and “limit their ability to commission high-quality supported housing”. 

Supported housing provides a safety net for individuals with complex needs, including people experiencing or at risk of homelessness, care leavers, people with disabilities, and those with mental health needs.

The LGA observed that a shortage of supported housing in 2023-24 cost the NHS £71 million through delayed mental health hospital discharges.

It noted: “Expanding provision has the potential to save up to £50 million a year for the NHS and a total annual saving of £6 billion for the wider public purse.”

Alongside the call to reform housing benefit subsidy rules, the LGA urged the Government to:

• Consider the full scale of new burdens funding required for councils to adequately implement licensing schemes, enforce new standards, and support well intentioned providers. 
• Sustainably fund the commissioning of supported housing to prevent homelessness, ease hospital discharge, and reduce care placements. 

The call to government coincides with new guidance for councils published by the LGA this week (26 August), highlighting the growing demand for supported housing provision.

Drawing on the Supported Housing Improvement Programme (SHIP) pilots, the guidance provides councils with resources and checklists to help prepare for the implementation of the Supported Housing (Regulatory Oversight) Act by improving oversight, strengthening provider relationships and ensuring better outcomes for residents.

Cllr Dr Wendy Taylor, Chair of the LGA Health and Wellbeing Committee, said: “Councils are committed to providing high-quality supported housing for residents and want to invest more to continue enabling people who draw on care to lead independent and fulfilling lives. 

“Groundwork is being laid by councils across the country, through innovative working ahead of the implementation of the Supported Housing Act. But, without much-needed long-term investment in this essential preventative care service, many older people and those with physical and learning disabilities will continue to be in hospital and residential care longer than necessary. Young care leavers, people fleeing domestic abuse, and those experiencing homelessness will be without stable housing.”

She continued: “We urge the Government to work with councils to invest in supported housing, to enable councils to meet their duties under the Care Act, deliver licensing schemes, enforce new standards and support providers with building a supported housing system that is fit for the future. 

“This new guidance will support councils to identify the most effective tools to deliver high-quality supported housing schemes within the context of their local priorities, challenges and capacities.”

The Ministry of Housing, Communities and Local Government has been approached for comment.

Lottie Winson