It’s difficult to express the air of trepidation across the sector in the run up to last Thursday’s Autumn Statement. There was hope that it may offer a life raft to individuals and services across the country in the face of the cost of living crisis. But after months of political and economic turmoil it was difficult to feel optimistic. As the Chancellor warned of ‘difficult decisions ahead’, the homelessness sector held its breath for a return to 2010-style austerity cuts.
But this is not what we have received. The statement offers a mixed bag of results and a genuine focus on supporting the most vulnerable through the cost of living crisis. There is a lot to welcome, with benefit uprating providing insulation from the worst of the storm to come for those on the lowest incomes. But as local authority budgets face restrictions across the next three years, there is still much more that the sector requires to stay afloat.
As inflation rose, our members were clear this was just the most recent in a string of crises they have faced in recent years. Tight budgets, workforce problems and post-COVID increases in the quantity and intensity of support required for those experiencing homelessness meant the sector was already under pressure. This led us to launch our Keep Our Doors Open campaign, with six key asks of Government to protect both those experiencing homelessness and the sector designed to support them.
Ahead of the budget our members were clear that, when it comes to homelessness, prevention is better than cure. We needed to see Government uprate benefits in line with inflation to protect those at risk of homelessness. There had been mixed messages from ministers in the months prior, with rumblings that these may instead be raised in line with earnings – which would have acted as a biggest real-terms cut to benefits in a single year. We are therefore relieved to hear that the commitment to raising benefits in line with inflation has been honoured and hope that this will insulate many from the worst economic pressures, including homelessness.
However, the decision not to uplift Local Housing Allowance has dampened the otherwise positive benefit decisions. Analysis from Crisis and Zoopla show rents have increased sharply since LHA rates were frozen in 2020, meaning an increasing shortfall between housing benefit and private rents. Not only does this trap people in homelessness by limiting move-on options, but as Section 21 evictions increase and social housing waiting lists grow longer and longer, the failure to safeguard private tenants will push more people into debt and homelessness at the cost of living crisis continues.
One significant positive for the homelessness sector is the decision to exempt supported accommodation from the 7% social housing rent cap. In the days prior to the Autumn Statement, Secretary of State Michael Gove had recognised the balancing act between controlling rents for those on low incomes and the need for funding in the social housing sector. We are glad to see the Government listen to experts across the sector and recognise that reduced rents in supported accommodation, which are overwhelmingly paid through housing benefit, would largely benefit the Treasury rather than tenants. The exemption safeguards funding for supported housing which acts as an essential route out of homelessness for thousands.
What the Autumn Statement does not address is the gulf in funding for commissioned homelessness services. As outlined in our Keep Our Doors Open policy report, the sector is facing spiralling costs and requires an urgent inflationary uplift in commissioned contracts. Instead, the Chancellor explained that Departmental budgets would increase ‘at a slower rate’ than inflation, set at 3.7% a year on average. We are yet to see details as to how this will be distributed, but Government is already clear that departments will need to ‘identify savings to manage pressures from higher inflation’.
In real terms, this will function as a cut to budgets. For a sector which suffered some of the most severe cuts during austerity, the idea of further reductions is nerve-wracking. The increase to the National Living Wage, the 25% rise in building and maintenance costs and energy price increases must be paid from somewhere, but budgets remain set at pre-inflation levels. In the run up to the Statement, members told us clearly that there was ‘no more fat to trim’ – balance sheetsbooks were already ‘a bloodbath, with red everywhere’. Many services are in deficit for the first time and relying on reserves to get by. One in four of our members are at risk of service closure without additional funding.
The statement also offers little reassurance around any specialised utility support for charities. With the Energy Bill Relief Scheme due to end in Spring, providers face sharp increases in the cost of energy used to heat residential accommodation. Classified as business consumption, some members report increases into the millions. The Government has committed to review the Energy Bill Relief Scheme to target support where it is most needed. In the coming months we will work hard to make the case for continued support for homelessness providers, recognising our crucial function and the unique patterns of consumption and funding that make it unviable to absorb or pass on additional costs.
While there has been a sigh of relief across the sector regarding some parts of the Autumn Statement, there is still a lot of work to be done. Homelessness services are under immense financial pressure and despite benefit uplifts, living standards are set to drop making increased levels of homelessness almost inevitable. As the crisis develops, Homeless Link will continue to work closely with our members to ensure Government hear our concerns and push for the changes necessary to protect the sector.
Keep an eye out for more detailed analysis of the statement and what policy changes will mean for the sector in coming weeks. If you’re interested in how your organisation can get involved, take a look at our Keep Our Doors Open campaign page.
