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Former soldiers and victims of domestic violence who had been threatened with homelessness have won a reprieve after the Government announced a change of policy.

It follows a campaign by MPs including Newcastle East MP Nick Brown, who earlier this year led a House of Commons debate urging ministers to rethink the plans.

Supported housing schemes will be protected from cuts in Housing Benefit, ministers have announced.

Residents include people leaving care, former members of the armed forces who had difficulties adapting to civilian life and people affected by domestic violence.

They had been threatened by changes to housing benefit designed to prevent landlords ripping off taxpayers by charging extortionate rents.

A system called the Local Housing Allowance already limits how much housing benefit people renting privately can receive and Government is extending this to people in social housing, such as those renting from a housing association.

But it meant that supported accommodation, which provides specialist help to people, was set to be included in the cap for the first time.

Supported accommodation is relatively expensive because it involves more than simply providing a home to live in. For example, there may be the cost of employing security staff and CCTV.

And as they are funded largely from housing benefit, campaigners warned that many schemes would no longer have enough money to operate.

Work and Pensions Secretary Damian Green has now told Parliament that a a new funding formula will be introduced specifically for supported accommodation.

It will be exempt from the Local Housing Allowance cap until 2019 and then the new funding model will provide additional ring-fenced funding.

Mr Brown said: “I haven’t had a chance to master the detail of it yet but on the face of it this looks like a partial victory.

“They have clearly accepted the case that I and others have been making or we wouldn’t have got this concession.

“It is the very least they could have done.”

Mr Brown highlighted the potential impact on armed forces personnel when he spoke in the Commons earlier this year.

Veterans in supported housing at the Byker Community Trust will have a shortfall of £32.50 per week to cover the cost of accommodation if over 35, Mr Brown warned. If they are under 35 they will need to find an extra £63.48 per week in order to cover the cost.

But announcing the change of policy, Mr Green said: “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.

“As we build a Britain that works for everyone, not just the privileged few, our new funding model will help those people who need it the most.”

More than 6,000 women used a refuge nationwide last year and the change of policy was welcomed by Polly Neate, Chief Executive of Women’s Aid. She said: “On behalf of our national membership network of domestic abuse services, we thank the government for this morning confirming that refuges will be exempt from changes to the housing benefit cap until 2019, and from the 1% rent reduction, which will ensure that refuges remain financially sustainable.

“We warmly welcome the news that the government will be working with Women’s Aid to develop a permanent sustainable solution to refuge funding that ensures that refuges do not see a reduction in current levels of funding.

“Refuges rely on housing benefit to cover, on average, 89% of their weekly housing costs –the money needed to fund buildings, maintenance and essential services.

“If the cap went ahead as planned, Women’s Aid warned that two thirds of refuges would be forced to close, and 87% would have not been able to provide the same level of service provision to protect women and children survivors of domestic abuse.”