LHA cap plan prevented ‘good and useful work’

Speaking to Inside Housing today, Mr Orr, chief executive of the National Housing Federation (NHF), said the Treasury had not initially appreciated this impact, but refused to back down when it was made clear.

“I am entirely clear in my mind that when the LHA cap was introduced and supported housing was included in that, the Treasury did not know what they were doing and did not mean to do it,” he said.

“Given the opportunity to clarify and say ‘this was an error, it doesn’t apply to supported housing’, they chose not to and I am deeply frustrated that as a result good and useful things that could have happened didn’t happen. But we are where we are, and I am glad that the government has now listened.”

The NHF revealed in August that housing associations had reduced their plans to build supported housing by 85% as a result of this uncertainty.

Following the U-turn, Home Group said it would release £50m to build out three paused schemes and many other sector figures welcomed the change in policy.

Mr Orr said the U-turn was the result of “two years of work” by the sector to try and explain the impact of the policy to the government. He praised Ms May for listening to the arguments and taking action.

Meanwhile, Labour responded to the policy cautiously, warning that the “devil will be in the detail – and the funding”.

In a costings document published in June, the government anticipated a £520m saving from the LHA cap. A Labour Party source said it did not expect the government to U-turn fully on the cap as it would have to meet this cost.

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

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