The Government has announced an “unexpected” cut to funding for disability supported housing and homeless accommodation – arguing that the services need to make “efficiency savings”.

The supported accommodation services and others like them are mostly funded by housing benefit payments, administered through the welfare system.

Work and Pensions Secretary Damian Green confirmed on Thursday that the DWP would cut the rent that supported housing providers – mostly charities – can claim back from the benefits system.

The changes, which will see an annual, rolling 1 per cent reduction in the rent payments for three years, will cost providers millions, with budgets already under pressure from years of sharp cuts to local councils.

Though some “specialist” providers, such as women’s refuges, are exempt, other charities have said the changes threaten the future viability of their services for vulnerable people.

“The Government’s proposals will compromise the right for people with a learning disability to live independently, and must be reconsidered urgently,” Dan Scorer, head of policy at the learning disabilities charity Mencap, warned after the announcement.

Meanwhile Howard Sinclair, the chief executive of the homelessness charity St Mungo’s, said the cut would leave the homeless charity with £3 million a year less to spend on services.

“The rent reduction will threaten the financial viability of some of our hostels and other supported housing schemes and offers no direct benefit to vulnerable tenants who mostly rely on housing benefit to cover their housing costs,” he said.

Separately, the Government has suspended a plan for another cut, which would have capped such housing benefit payments at the same rate as is paid out for council housing – despite the higher costs involved in supported accommodation.

Though the cap will still come in the year 2019/20, the Government says it will give local councils extra money to give to the charities to make up any extra costs. This money will be ring fenced, the DWP said.

That change has received a mixed response from providers, with some saying it will be unlikely to cover costs and lead to a “postcode lottery”, and others welcoming the change.

Decisions on this cut have been deferred for nearly a year since they were initially announced by the former chancellor George Osborne in the 2015 Autumn Statement – with Mencap’s figures suggesting 80 per cent of housing projects having been put on hold since the initial announcement.

Mr Scorer of Mencap said the funding settlement would charities providing supported housing put under “huge strain”.

“Whilst we welcome the further exemption of supported housing from the LHA cap until 2019/20, it was widely expected the Government would today secure a sustainable future for the sector. Instead the proposal risks adding to a growing housing crisis for people with a learning disability who need the safety and security that supported housing offers,” he continued.

“The system is currently under huge strain, with local authorities struggling to add the minimum of 1,000 new supported housing units required every year for people with a learning disability to keep up with demand.

“It’s unclear how this proposal of funding for supported housing via a localised pot will be able to keep up with this demand, and we fear it will create a postcode lottery causing anxiety and uncertainty for those desperately in need of the safety and security supported housing offers. It will further undermine the right of people with a learning disability to have their reasonable housing needs met.

“We are also deeply concerned to learn that the 1 per cent rent reduction will now apply to supported housing going forward. This is adding an unexpected and additional strain on a sector struggling to provide much needed housing for people with a learning disability.”

The viability of some homeless hostel projects is expected to be threatened (Getty)

The DWP says it is "confirming" the 1 per cent cuts will apply to supported housing "as planned".

St Mungo’s Mr Sinclair continued: “We have been exceptionally worried about the future of supported housing services since the government announced plans last year to reduce rents and cap housing benefit for tenants.

“It is good news the government has listened carefully and will not impose the LHA cap on supported housing tenants before the new funding regime is introduced. This takes a lot of the pressure off providers and helps to ensure vulnerable tenants continue to receive enough housing benefit to cover the costs of their specialist accommodation.

“However, the Government’s decision to push ahead with a reduction in rents for three years from April 2017 remains a serious concern. When we take into account the rental income we had anticipated over the three year period, this measure will cost St Mungo’s over £3 million.

“We urge ministers to honour their commitments to ensure the sustainability of supported housing provision and protect services for vulnerable individuals by taking the rent reduction off the table. There should be no rent cuts imposed for supported housing services in the run up to the new funding regime.”

Tim Cooper, the chief executive of the disability charity United Response, said the plans were "deeply worrying" and warned of a lack of detail about how the local top-up system would work.

Work and Pensions Secretary Damian Green said the charities had to make “efficiency savings”.

7 ways the Tories have ‘helped’ disabled people Show all 7 1 /7 7 ways the Tories have ‘helped’ disabled people 7 ways the Tories have ‘helped’ disabled people Closing Remploy factories The Work and Pensions Secretary called time on Britain’s system of Remploy factories, which provided subsidised and sheltered employment to disabled people. People employed at the factories protested against their closure and said they provided gainful work. “Is it a kindness to stick people in some factory where they are not doing any work at all? Just making cups of coffee?” Mr Duncan Smith said at the time, defending the decision. “I promise you this is better.” The Remploy organisation was privatised and sold to American workfare provider Maximus, with the majority of the organisation’s factories closed. The future of the remaining sites is unclear 7 ways the Tories have ‘helped’ disabled people Scrapping the Independent Living Fund The £320m Independent Living Fund was established in 1988 to give financial support to people with disabilities. It was scrapped on July 1 2015, with 18,000 often severely disabled people losing out by an average of £300 a week. The money was generally used to help pay for carers so people could live in communities rather than institutions. Councils will get a boost in funding to compensate but it will not cover the whole cost of the fund. This new cash also doesn’t have to be spent on the disabled 7 ways the Tories have ‘helped’ disabled people Cut payments for the disabled Access To Work scheme Iain Duncan Smith is bringing forward a policy that will reduce payments to some disabled people from a scheme designed to help them into work. The £108m scheme, which helps 35,540 people, will be capped on a per-used basis, potentially hitting those with the more serious disabilities who currently receive the most help. The single biggest users of the fund are people who have difficulty seeing and hearing. The cut will come in from October 2015. The charity Disability UK says the scheme actually makes the Government money because the people who gain access to work tend pay tax that more than covers its cost. The DWP does not describe the reduction as a “cut” and says it will be able to spread the money more thinly and cover more people 7 ways the Tories have ‘helped’ disabled people Cut Employment and Support Allowance The latest Budget included a £30 a week cut in disability benefits for some new claimants of Employment and Support Allowance (ESA). The Government says it is equalising the rate of disability benefits with Jobseekers Allowance because giving disabled people more help is a “perverse incentive”. The people affected by this cut are those assessed as having a limited capability for work but as being capable of some “work-related activity”. A group of prominent Catholics wrote to Mr Duncan Smith to say there was “no justification” for this cut. Mental health charity Mind, said the cut was “insulting and misguided” 7 ways the Tories have ‘helped’ disabled people Risk homelessness with a sharp increase disability benefit sanctions Official figures in the first quarter of 2014 found a huge increase in sanctions against people reliant on ESA sickness benefit. The 15,955 sanctions were handed out in that period compared to 3,574 in the same period the year before, 2013 – a 4.5 times increase. The homelessness charity Crisis warned at the time that the sharp rise in temporary benefit cuts was “cruel and can leave people utterly destitute – without money even for food and at severe risk of homelessness”. “It is difficult to see how they are meant to help people prepare for work,” Matt Downie, director of policy at the charity added 7 ways the Tories have ‘helped’ disabled people Sending sick people to work because of broken fitness to work tests In 2012 a government advisor appointed to review the Government’s Work Capability Assessment said the tests causing suffering by sending sick people back to work inappropriately. “There are certainly areas where it's still not working and I am sorry there are people going through a system which I think still needs improvement,” Professor Malcolm Harrington concluded. The tests are said to have improved since then, but as recently as this summer they are still coming in for criticism. In June the British Psychological Society said there was “now significant body of evidence that the WCA is failing to assess people’s fitness for work accurately and appropriately”. It called for a full overhaul of the way the tests are carried out. The WCA appeals system has also been fraught with controversy with a very high rate of overturns and delays lasting months and blamed for hardship 7 ways the Tories have ‘helped’ disabled people The bedroom tax The Government’s benefit cut for people who it says are “under-occupying” their homes disproportionately affects disabled people. Statistics released last year show that around two-thirds of those affected by the under-occupancy penalty, widely known as the ‘bedroom tax’, are disabled. There have been a number of high profile cases of disabled people being moved out of specially adapted homes by the policy. In one case publicised by the Sunday People last week, a 48 year old man with cerebral palsy was forced to bathe in a paddling pool after the tax moved him out of his home with a walk-in shower. The Government says it has provided councils with a discretionary fund to help reduce the policy’s impact on disabled people, but cases continue to arise

“It is important that providers can continue to provide high-quality and cost-effective supported housing to meet the needs of their tenants. However, it is also important that supported housing should make efficiency savings in the same way as the rest of the social sector,” he said in a written ministerial statement.

The effect of the settlement will vary across the supported housing sector. The charity Refuge, which runs women’s refuges, said it was pleased that refuges had been exempted from the rises.

“Refuge is delighted to learn that the Government will exempt refuges from new Local Housing Allowance rates and the 1 per cent reduction in rent charges,” Sandra Horley CBE, the charity’s chief executive said.

“Both of these developments will help to safeguard the future of specialist refuges. We welcome the Prime Minister’s continued leadership on violence against women and girls and are delighted that her new Government is prioritising the needs of women and children fleeing domestic violence.”

Denise Hatton, chief executive of YMCA England, said in a statement released by the DWP that the YMCA welcomed the new plans.

Supported housing projects have been stalled while the decision took place (Rex)

“We will be looking to work further with Government on any new arrangement to ensure the money ultimately ends up supporting young people to have a safe and secure place to live,” she said.

Debbie Abrahams, Labour’s shadow work and pensions secretary said the cuts were “cowardly” and that the decision “has left tens of thousands of the most vulnerable people in limbo”.

The DWP secretary Mr Green added that the new model of funding supported housing would “build a Britain that works for everyone”.

“We know the valuable role that these organisations play in communities across Britain. Women’s refuges or housing for young people with learning disabilities are important parts of the support system for vulnerable people,” he said.