The National Insurance increase
Advance Chief Executive Julie Layton explains why a lack of National Insurance exemption will cause a loss of supported services and increase costs to the public purse:
Recent announcements and commitments in the Budget have provided some positive news for social housing providers, supported housing has seemingly been overlooked in terms of funding or support. Without intervention, this could leave the sector in a perilous place.
The supported housing sector is already under significant financial pressure. For organisations like Advance, which provide housing and support services, the increase in National Insurance contributions and the change in thresholds will bring further challenges.
Kate Henderson, Chief Executive of the National Housing Federation (NHF) outlined that one in three providers of supported housing were forced to close schemes last year. The increase in National Insurance contributions, with no exemption for social care, is likely to exacerbate the problem and add to the number of schemes closing.
Combined with the increase in the National Living Wage, it’s unlikely that support contracts that are already under financial strain will continue to be viable.
Organisations like Advance save the public purse significant amounts. The decision not to offer an exemption for supported housing providers therefore is a short-sighted one.
The 2022 inquiry into long-term funding of adult social care by the House of Commons Levelling Up, Housing and Communities Committee (now called the Housing, Communities and Local Government Committee) showed that specialist housing for people with learning disabilities and mental health needs saves the public purse £12,000 to £15,000 per person per year. That’s approximately £45m per year across Advance’s services alone.
Supported accommodation has also been shown to reduce the likelihood that residents will go into hospital or residential care and reduces re-admission, providing further savings to public finances and freeing up much-needed patient space for the NHS.
Since ring-fenced funding for supported housing ended in 2011, we’ve seen a continual reduction in spending on supported housing and a decline in standards across the sector, due to an increase in non-commissioned providers – something we can’t afford to see more of.
Supported housing providers recently raised concerns about higher spending on energy, insurance, maintenance and staffing. This latest hike in outgoings is likely to tip the scales past a manageable point for many, not only affecting the lives of the recipients of support services, but potentially causing a gaping hole which needs to be filled by government funds.
In 2023, a report for the NHF found that “good-quality supported housing is shown to aid its residents in building healthy relationships, higher esteem and independence, and in developing a greater sense of agency over their lives”.
Providers are already considering withdrawing from the delivery of supported housing. This financial pressure will force further reductions in support services, impacting customers across the country.
People with disabilities should have choice in relation to their support and care providers, and should be treated with dignity and respect, but this additional financial pressure is likely to force good-quality providers out of the market.
If support contracts are not financially viable, providers like Advance and other not-for-profit organisations will have to give notice on contracts. Without those contracts and the good-quality, regulated care and support they provide, many customers simply wouldn’t be able to sustain their tenancies. They could potentially become homeless or stuck in long-stay hospitals or other institutional settings – the exact opposite of everything Advance has been working for over the past 50 years.
Advance is providing much-needed housing and support services to people with disabilities and mental health conditions at a much lower cost than if those people stayed in hospitals or care homes. It is also achieving much better outcomes, supporting people to achieve more independence and to accomplish their goals.
To continue this, we need financial support. We would urge the government to carry out an impact assessment in relation to how the change in employer National Insurance contributions will affect the supported housing sector, and to rethink an exemption for providers of social care.