House of Commons - Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions

Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Tenth Report

4 Funding

Revenue Funding Allocation

21. The funding for the Supporting People programme grant is grouped under the category of Social Security Benefits and is classed as Annually Managed Expenditure (non cash limited). In the 1998 White Paper, the annual cost of the programme was estimated at between £350m to £700m in Great Britain. Costs however, had risen to the 'golden cut' of £1.4bn in December 2002 and finally rose to the 'platinum cut' of £1.8bn in 2003/4 allocations to Administering Authorities, in England alone.

22. The review highlighted two perspectives concerning the rising costs - the "public purse" and the "allow us to manage". Those who argue the "public purse" perspective claim that the £1.8bn expenditure is unevenly distributed and not related to need, that some of the increased cost should be, and had in the past been, funded from other mainstream programmes, and question the value for money and service quality. Those who argue the "allow us to manage" perspective claim that the legacy provision could never have been wholly in line with rational needs-led commissioning and any change to the existing programme would have to be managed over a three-year period to avoid disabling existing services.[17] Regardless of these perspectives it was generally agreed that the costs had been expected to rise during the transitional period, as confirmed by a Service Provider who submitted information to the review:

"It came as absolutely no surprise to me, nor I am sure to most others involved in the SP programme, that the costs of the SP programme escalated so dramatically….The huge increase in costs was completely predictable and was widely predicted long before 31 March 2003."[18]

Hanover Housing Association supported this statement in evidence to us:

"The transfer of 'the pot' from Housing Benefit to Supporting People was not well controlled and the massive increase in annual cost was widely predicted."[19]

Julia Voller from Derbyshire County Council upheld the point and in addition she offered a reason for the increase:

"I think in terms of the growth, we would expect there would be growth because part of the reasons for the transitional housing benefit was to increase quality and sustainability of services…The other thing is that it did coincide with other strategic developments like Valuing People, Teenage Parents. The Drug and Alcohol National Strategy suggests there should be a 10 per cent growth in accommodation funded through Supporting People. So there are a whole range of other strategies that coincided with the Supporting People development…They would not have been funded otherwise."[20]

23. There was general consensus that the amount of funding the Supporting People Programme required was going to increase well beyond that estimated in 1998 particularly as local authorities realised that there was an apparently bottomless pot on which to draw for a range of desirable programmes.

Other Government Departments

24. The Department, Administering Authorities and Service Providers are all aware that the Supporting People programme is supporting initiatives and services which are primarily the responsibility of other Government Departments. The ODPM are endeavouring to quantify the benefits the Supporting People programme provides for other services. Yvette Cooper MP outlined the ODPM's action on this:

"One of the pieces of research we commissioned as part of the review of the Supporting People programme as a whole is to look at the benefits and to attempt to quantify what the benefits might be, including the actual tangible benefits in terms of savings to other services or to other departments. There are some things which you can identify as benefits but you cannot quantify them as savings necessarily. We have a project underway which I think Matrix is doing for the Department which looks across the board at trying to quantify benefits and secondly trying to quantify savings to the other departments as a result of this sort of investment."[21]

25. The ODPM response to the Robson Rhodes review stated that the department would commission an analysis of savings that other Government Departments gain from the Supporting People programme. This should ideally have been done before the Spending Review 2004. Other Government Departments should be contributing towards non-housing services which the Supporting People programme is funding; we recommend that appropriate transfers be carried through in the 2005-06 Estimates, once the relevant levels of funding are identified.

Home Improvement Agencies

26. The central cost for Home Improvement Agencies is one very small element of the Supporting People integrated budget. The funding arrangements for Home Improvement Agencies are complex. Unlike most of the other Supporting People providers Home Improvement Agencies are only part funded by Supporting People. Other sources are housing authorities, social services, Primary Care Trusts, charities and income from service fees. Home Improvement Agency services currently receive £8.6m from a total SP allocation of £1.8bn (less than 0.5% of the budget). They advise and support over 90,000 clients a year, many of them in client groups covered by Supporting People

27. Foundations (the co-ordinating body for Home Improvement Agencies) believe that the Supporting People programme has enabled many support services to be robustly funded for the first time and has put in place a mechanism whereby services can be strategically planned and co-ordinated, made cost effective and accountable to service users. They believe that it has been a great achievement and provides a sound base to proceed from. However there has been no inflationary increase to funding over the past three years. Jane Rosser-McBane from Foundations said:

"We were certainly hopeful that there would be an inflationary uplift at the beginning of this financial year. One of the concerns for HIAs is that there have been a number of years where there has not been an inflationary uplift for the service. Back in 2001 there was a pay off, I guess, in that up until then HIAs had been living off annual cycles, very short term cycles. In 2001 three years' funding was committed but the trade off was that there was not an inflationary uplift there. One of our concerns within the outcomes of the independent review is that HIA funding was really just lifted and put into the Supporting People pot without any of the inflationary uplift that occurred for the other funders. They certainly had no role in increasing the pot; it has just sat there and gone through. There is an obvious concern that, as authorities look for savings, as they are required to do, that HIAs might suffer from that when in fact they have not contributed in any way to the increasing crisis."[22]

28. The ODPM and Department of Health issued a consultation paper in September 2002 and commissioned research to establish the most appropriate structures and arrangements for a successful Home Improvement Agency sector in the new environment of Supporting People. In May 2003 the Government announced its policy on developing the HIA sector.[23] The amount allocated for implementation of the policy, however, was inadequate to deliver in full the Government's original intention to achieve full geographical coverage across England by April 2005. Instead Government extended geographical coverage. Home Improvement Agencies now cover 85% to 90% of the country. In addition a further £5.2m was to be made available over the next three years to support the running costs of Home Improvement Agencies, and the Department of Health provided £9.5 million over the same period, in relation to older people on discharge from hospital.

29. Home Improvement Agencies are good value for money. We recommend that the ODPM ensure that full geographical coverage of the agencies is achieved by 2006 and that year on year inflation increases are made from 2005-06, ring-fenced if necessary.

Future funding allocations

30. The overall SP budget may now be possibly unjustly seen by the Treasury as overblown, and by the ODPM to be carrying some costs more properly attributable to other departments. Work is underway to disentangle the legacy provision, and to identify where services can be provided at lower cost or more efficiently. In the long run, housing-related services for vulnerable people may well be the better for having been brought together under the Supporting People umbrella. But for the next few years there is a danger that, in an attempt to deal with elements of the legacy provision, valuable services for the vulnerable may suffer from undue financial constraints: curing the disease but killing the patient.

31. We understand that there will be no inflationary increase in the SP budget until 2006-2007. Administering Authorities are expected to make up to 2.5% annual "efficiency savings". Some cuts will be targeted and focussed; a blanket cut in funding could have an effect on many schemes, especially smaller ones. The prospect of cuts has frustrated the Administering Authorities and Service Providers; as Diane Henderson from the National Housing Federation explained:

"…..because it [Supporting People] uniquely identifies the individual, if you cut, you are potentially taking money away from an individual."[24]

32. We endorse the tighter regime of financial control introduced by ODPM for the Supporting People programme: it could hardly have done otherwise in the wake of the Robson Rhodes report. But real terms cuts in annual provision, applied blindly to each authority, could damage services for vulnerable people in an unacceptable way. It is incumbent on the ODPM to ensure that ill-effects are minimised, by targeting reductions in grant on those authorities which the Audit Commission has identified as having excessively high costs, and protecting properly priced and run services for vulnerable people.

Fairer distribution of funding

33. ODPM are continuing to work on a formula intended to ensure fairer distribution of Supporting People grants for the future. Funding is currently allocated on a needs 'legacy' basis, allowing ad hoc rates to be charged by Service Providers, without national consistency or reflecting regional variations. Those Service Providers and Administering Authorities not able to put the facilities and structures in place for drawing down the funding are losing out. Groups of people who need support are just not getting it. Linda Delahay from the Women's Aid Federation endorsed this:

34. We are concerned that despite a long period of preparation for this important programme, involving copious written guidance and centrally allocated expenditure on local administration, it should be necessary some 18 months after it has started to re-address basic realities of how it is to operate in practice. ODPM should as a matter of urgency establish clear criteria as to what money can properly be spent on, and if necessary ring-fence funding for less "popular" groups. We also recommend that the Office undertake a lessons learned exercise on the way in which the Supporting People programme was brought into operation.

Managing Change

35. There are concerns at the prospect of further change to the Supporting People programme. Diane Henderson from the National Housing Federation told us:

"….. any major shift of money from one area to another now is going to be quite difficult, because there are schemes with people in them; this is not a pot of money that is not being used….. I think we need to be very careful about speed. We would love to see more stability in the sector and for things to stop moving and for us to operate this programme, but any quick change or removal of money could be detrimental to the individuals currently receiving support. So I think the pace of change for us is quite important, that we would not want to see yet another major change. This is a huge change program, one that we are fully engaged with and happy to work with, but more change, particularly if that change means a reduction in funds, which is the way everyone is feeling at the moment, we need to take that carefully."[26]

This was supported by Danny Friedman from the National Housing Federation:

"…the downside for our providers at the moment is the lack of stability that the current funding regime is putting up and, although I think as a federation we say it is successful, to some of our members it does not feel very successful because it is difficult to plan support in the future."[27]

36. The Committee acknowledges that the changes to be implemented as a result of the review may unsettle those many organisations and individuals working in the Supporting People sector. The pay-off will come if there can then be a period of long-term stability founded on an assured level of future funding.

Capital Funding Allocation

37. Capital funding for supported housing schemes is allocated by the Housing Corporation through a two-year bidding cycle. The deadline for applications for 2004-2006 funding was set for January 2004, with decisions to be made mid-February.

38. The Housing Corporation decided not to fund projects requiring revenue funding from the Supporting People programme until the review was complete. The review however, was due to be completed after the Housing Corporation bidding round had closed. This meant that projects requiring both revenue and capital funding were put in jeopardy and fewer projects were funded. This was illustrated by Danny Friedman from the National Housing Federation who confirmed that there had been a reduction in new units built for Supporting People:

"…..they are well down on the numbers in previous years. I think our suspicion is, because of the delays in getting the two funding streams lined up, this has discouraged associations going forward with bids that provide them with the new support that they require because there was this uncertainty about whether the revenue support would be available to make those schemes actually work from day one. So I think that is a bit of a disappointment."[28]

39. The Minister acknowledged this:

"We did have problems in terms of timing, we recognised that and I think everybody recognised that. I do not think we had a choice in the matter….. I think there is also a longer term issue about trying to closely link capital and revenue decisions and it may be that the regional boards can play a stronger role in this in the future as well."[29]

40. Social housing capital and revenue programmes need to be more closely linked in future. Regional Housing Boards should take a lead role in ensuring that Administering Authorities and Registered Social Landlords can take a co-ordinated approach to seeking capital and revenue support.

17 RSM Robson Rhodes, Review of the Supporting People Programme: Independent Report, January 2004 (page 5) Back

18 RSM Robson Rhodes, Review of the Supporting People Programme: Independent Report, January 2004 (Annex A) Back

19 EV1 [Hanover Housing Association] Back

20 Q36 [Julie Voller, Supporting People Team Leader, Derbyshire County Council] Back

21 Q69 [Yvette Cooper MP] Back

22 Q57 [Jane Rosser-McBane, Director, Foundations] Back

23 HC Deb, 6 May 2003, col 28WS Back

24 Q17 [Diane Henderson, Head of Care, Support and Diversity, National Housing Federation] Back

25 Q20 [Linda Delahay, Housing Policy and Services Officer, Women's Aid Federations] Back

26 Q11 and Q12 [Diane Henderson, Head of Care, Support and Diversity, National Housing Federation] Back

27 Q42 [Danny Friedman, Director of Policy, National Housing Federation] Back

28 Q11 [Danny Friedman, Director of Policy, National Housing Federation] Back