Government drops LHA cap plans in huge climbdown

“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.”

The sector had been anxiously awaiting an update from government on their future plans for supported housing after a green paper was promised in the spring but had yet to materialise.

Housing associations and charities had warned the plans would force them to shelve developments, and a recent survey by the National Housing Federation found 85% of supported housing developments had been put on hold because of the uncertainty over future funding.

CIH Scotland recently said around 12,000 under 35-year-olds would struggle to pay their rent in general needs social housing because the LHA cap would leave them with a shortfall between housing benefit and the rent they would have to pay.

David Orr, chief executive at the National Housing Federation, said: “We are absolutely delighted that the Prime Minister has heard the sector’s concerns and that the LHA cap will not apply to supported housing – and indeed the wider social housing sector.
“Housing associations have been vocal and clear that the LHA cap bore no relation to the real cost of providing supported housing, a view which had gained cross-party consensus. I know all social housing tenants will be relieved with the news. Things are really starting to change and it is great to see social housing getting the right kind of attention it deserves."

Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “This is great news.

"CIH has consistently called on the government to rethink its plans to cap housing benefit for people living in supported housing at Local Housing Allowance rates, because it would have put homes for some of the most vulnerable people in our society at risk.

"We have also pointed out that applying the cap to the wider social housing sector risked putting social housing out of reach for younger people in particular in many areas. The government has clearly listened to the concerns of housing professionals across the UK – we await further details of the new funding proposals with interest.”

John Healey MP, shadow secretary of state for housing for Labour, said: “Once again, Labour is winning the arguments and making the running on government policy.

“Ahead of our opposition day debate later today, the government has given ground, but the devil will be in the detail – and the funding.

“Labour will continue to press the government to protect the long-term future and funding of supported housing.”