People living in hostels and supported housing will be exempt from a planned cap on housing benefit payments, the government has announced, following a campaign against the changes by MPs and charities.
Groups working with homeless people and those with mental illnesses, among others, had warned that the local housing allowance (LHA) cap could mean widespread closures of hostels and shelters, forcing thousands of people on to the streets.
Last year, George Osborne, as chancellor, proposed limits to housing benefit payments, coupled with a planned 1% reduction in social housing rents.
In response, the St Mungo’s charity told an inquiry by MPs that the combined plans would make most of its shelters and supported housing financially unviable.
In a parliamentary written statement on Thursday, the work and pensions secretary, Damian Green, said that after “extensive input” the government was deferring the imposition of the LHA cap on supported housing until 2019-20, after which a new system would keep funding at current levels.
“While we are confident that this model will meet the needs of the majority of the sector, we recognise some particular challenges may remain for very short-term accommodation, including hostels and refuges,” the statement said. “We will work with the sector to develop further options to ensure that providers of shorter-term accommodation continue to receive appropriate funding for their important work.”
The news was welcomed by charities and Labour MPs, who had campaigned against the cap plan. However, they expressed concern at the decision to go ahead with the 1% annual reduction in social housing rent, saying this could cause hardship.
Labour said the decision on the cap had merely been delayed, causing unnecessary anxiety for those concerned.
The charity Mencap said the proposed cap had caused 80% of plans for new supported housing to be put on hold, and 40% of existing schemes to be threatened with closure. Dan Scorer, Mencap’s head of policy, said matters remained uncertain. “It was widely expected [that] the government would secure a sustainable future for the sector. Instead, the proposal risks adding to a growing housing crisis for people with a learning disability, who need the safety and security that supported housing offers.”
Howard Sinclair, chief executive of St Mungo’s, said the deferral of the cap was welcome, but warned that the rent reduction threatened the viability of some of its hostels and supported housing schemes.
The shadow work and pensions secretary, Debbie Abrahams, said the move still “left tens of thousands of the most vulnerable people in limbo”. She said: “Kicking this decision into the long grass will only extend the anxiety of the tens of thousands of vulnerable people whose secure, supported accommodation faces closure, unless a full exemption from Tory cuts is put in place.”
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