Supported housing is on a financial knife-edge and needs emergency funding in the upcoming Budget, says Sarah Finnegan, head of policy at the National Housing Federation.

By 2040, we’ll need 700,000 supported homes to meet demand and ensure that everyone who needs a home with specialist support has one – this is almost 170,000 more than we have today. But the supply of supported homes in England is falling against this rising demand. In fact, we have fewer supported homes today than we did in 2007 and many more are at risk of disappearing in the near future.

Supported housing provides support, supervision and care to people with a range of needs, offering many a chance to rebuild and allowing people to live independently in their own homes. Residents include survivors of domestic abuse, people who are homeless, young people leaving care, veterans, older people, and people with learning disabilities and complex mental health needs. It’s a lifeline for more than half a million people across England. However, this vital provision is in financial crisis due to a combination of severe cuts over many years and rising costs, with one in three providers having to close schemes in recent years.

Since supported housing provision is typically commissioned by councils, based on local need, severe cuts to council budgets over the last decade have meant funding for supported services has plummeted. This has led to lower value contracts, pushing the operating margins of not-for-profit supported housing providers to the brink, and in the worst cases many councils have had no choice but to decommission supported housing services altogether.

The National Audit Office estimates that between 2010 and 2020, central government funding for supported housing was cut by 75%. This means councils have had much less flexibility to fund services and providers have been trying to provide the same support services with £1bn less every year. Alongside these cuts, supported housing providers have faced increased cost pressures from rocketing inflation and energy prices and most recently rises to National Insurance contributions.

All of this has put the future of the supported housing sector in jeopardy. Providers have told us that without urgent Government funding, more than 50,000 supported homes – one in 10 – are at imminent risk of closure. And while they’re doing everything they can to keep these services running, many are already running them at a loss. Without funding, some providers have said they will be forced to stop providing supported housing altogether in future.

The picture across specific types of schemes is stark. Nearly two in five supported accommodation services for single homeless people have closed since 2010 and figures from Women’s Aid suggests that 4,000 women referred to refuge services have been turned away because of a lack of capacity.

When these schemes close, residents are put at risk and may find themselves homeless, sleeping rough or in temporary housing with no support. Someone with learning disabilities might be moved into residential or psychiatric care, while women fleeing domestic abuse could be forced to live in a hotel, in mixed temporary accommodation, or forced to return to an abusive relationship. In every case, they lose more than just a home – they lose stability, community, a lifeline, and the vital support that allows them to live with dignity.

Cutting this funding is a false economy and the consequences are being felt by already overstretched public services, as local councils and health services are forced to make crisis interventions at a higher cost and with poorer outcomes, including providing temporary accommodation and more admissions to residential care. Our research found that patients spent over 100,000 additional days in mental health hospitals last year due to a severe shortage of supported housing, costing the NHS £71m.

Overall, supported housing saves the taxpayer £3.5bn each year by relieving pressure across multiple public services. Without it, an additional 71,000 people would be homeless or at risk of homelessness, we would need 14,000 more inpatient psychiatric places, 2,500 additional places in residential care and 2,000 more prison places.

Earlier this year, over 170 organisations – including Age UK, the Royal British Legion, the Church of England, St Mungo’s and Refuge – wrote to the Prime Minister and the Chancellor, urging the Government to take action and stop this crisis from worsening.

At the Autumn Budget, the Government has another opportunity to do so. With so many supported housing providers on a financial knife-edge, the Government must use the Budget as an opportunity to save our supported housing by committing to an emergency injection of funding for support services to prevent further scheme closures.

Without this intervention, we risk losing even more of the vital homes that hundreds of thousands of people rely on, while local government, health and social care services bear the costs. This is an imminent risk. The Government must act now to save our supported housing.

Discover all the latest analysis in our Autumn Budget Insights series.