The number of specialist homes being built for vulnerable people in England has plummeted as a result of Government welfare cuts, new analysis has revealed.

The National Housing Federation, which represents hundreds of housing providers, said the number of specialist supported homes due to be built has fallen from 8,800 to just 1,350 since ministers announced the changes in September 2016 – an 85 per cent reduction.

Charities warned that the loss will have a “vast and devastating” impact on thousands of vulnerable people.

Domestic violence refuges, sheltered accommodation for elderly or disabled people, homelessness shelters, homes for military veterans and properties for young people leaving care are all likely to be affected, leaving residents short of the specialist properties they rely on and costing the taxpayer billions of pounds.

More than 2,185 planned homes in 71 different schemes have already been postponed and a further 803 properties in 19 developments scrapped entirely.

Critics said the loss is a direct consequence of a “damaging and short-sighted” Government decision to impose a cap on the amount of housing benefit that people living in social homes are entitled to receive.

In 2015, George Osborne, the then-Chancellor, announced that housing benefit paid to social housing tenants would be capped at the same level as people renting privately - in effect cutting benefits for millions of people in social homes.

Because a high proportion of people living in supported accommodation are receiving housing benefit, the change meant many vulnerable people would no longer be able to afford their rent and so the homes they live in would become financially unviable, forcing them to close.

Facing mounting pressure from charities and housing providers, the Government announced last year that supported housing would be exempt from the cap until 2019 but that, from then, housing benefit paid to vulnerable people would be restricted.

At the same time, ministers enforced a 1 per cent cut to all social rents, further depriving supported housing providers of the income they need to keep schemes open.

While a “top-up fund” will be introduced to help housing associations, many say it is unlikely to come close to covering the loss of income.

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The on-going uncertainty over funding for supported housing means a number of existing schemes have already shut their doors, in addition to the planned new homes that have been scrapped. Housing providers say they cannot invest in new homes until they are confident they will be funded.

Charities warned of catastrophic consequences for many vulnerable people.

Beatrice Barleon, policy lead for learning disability charity Mencap, said: “These figures show the vast and devastating impact the Government’s proposed policy is already having on a sector depended on by some of the most vulnerable people in society. As a result, thousands of people with a learning disability face being denied access to safe housing and their right to independence.

"The Government must acknowledge the effect this proposed policy is having on the sector and urgently rethink their plans for supported housing; ensuring that people with a learning disability see their right to independent living upheld and avoid a move back towards more institution type settings from previous decades.”

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Katie Ghose, chief executive of Women’s Aid, said: “The uncertainty around funding for supported housing continues to be a serious concern for the future of refuges, which are a vital lifeline for women and children escaping domestic abuse.

“Women’s Aid calls for a long-term funding solution so that refuges can continue running their life-saving services. But we also need to tackle the wider housing crisis so that women have a roof over their head once they leave refuge and are empowered to live independently again.”

That sentiment was echoed by Charlotte Kneer, a refuge manager at Reigate & Banstead Women’s Aid. She said: “We are constantly fighting to keep our services available to the women and children who need them most. We simply could not operate under this new model. I would like the government to consider where these women and children will go if there are no refuges. Many will die, and many will be forced to endure abusive relationships that will affect them for the rest of their lives.”

Mandy Thomas, a survivor of domestic abuse whose life was saved by a refuge, added: “A refuge is a safe haven for survivors on the run from perpetrators. A refuge keeps you alive at the time when it is most dangerous. A refuge saved my life. It saved my children’s lives. We must save refuges, save lives.”

Schemes where new homes have been postponed include a development of 50 new properties for homeless veterans in Colchester, Essex, and 101 new sheltered homes for elderly people in Rochdale, Greater Manchester.

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The majority of the UK’s supported housing is sheltered housing for the elderly.

Caroline Abrahams, charity director at Age UK, said: "Our ageing population means we need a lot more sheltered housing & other forms of accommodation with support so these figures are hugely worrying.

"Undermining sheltered housing will inevitably worsen the overall crisis in social care because of the preventative role it plays.

"We urgently need a much better choice of good housing options for older people. The Government must urgently rethink its proposals to restrict housing benefit and come up with a formula that saves sheltered housing before it's too late.”

People who live in supported homes that are closed would instead fall under the care of the NHS and local authorities, placing an even greater burden on already over-stretched public services. Experts say the police and court system will also face new pressures as services to help homeless people and those struggling with addiction are forced to close.

In June, a study by think-tank Demos found that supported housing for the elderly saves the NHS and social services at least £486m per year, of which £300m comes from reducing the length of time people need to stay in hospital.

It said sheltered housing was a “very effective resource to tackle the primary drivers of health and care costs among older people – namely, poorly insulated houses, falls and loneliness”.

A 2010 study by Frontier Economics found that supported housing saves the taxpayer as much as £640m a year.

David Orr, chief executive of the National Housing Federation, said: “These findings really bring it home: changes to supported housing funding are stopping building for the most vulnerable. Housing associations know first-hand that the proposed funding model will not work – a view backed by a joint select committee – and yet Government has failed to heed warnings.

“The proposed changes in funding bear no relation to the real cost of providing this type of housing. It is time Government put supported housing on a secure and sustainable footing.”

Labour said the new data highlighted the “damaging and short-sighted” approach of government ministers.

John Healey, the Shadow Secretary of State for Housing, said: "For almost two years, Labour has warned the Government that its plan for cuts to supported housing are set to have a terrible impact on accommodation for elderly and vulnerable people. These figures prove that this is already happening with thousands of vital new specialist homes on hold or cancelled.

"This is a damaging and short-sighted policy proposal which Ministers have already been forced to delay and then amend under pressure from Labour and housing organisations.

"Supported housing is vital for elderly and vulnerable people across the country. Before the damage gets any worse, Ministers must halt these crude cuts and work with the housing sector to produce a new plan to put supported housing on a sustainable footing."

A Department for Work and Pensions spokesperson said: “We fully support and appreciate the valuable role supported accommodation plays in providing care in our local communities. Our new funding model will secure the future of supported accommodation and ensure help goes to those who need it the most.