Scottish and UK-wide housing organisations have welcomed a major UK government U-turn on funding for temporary supported housing.

Following consultation with providers, stakeholders and councils, the government has decided housing benefit will remain in place to fund this accommodation.

Housing Minister Kit Malthouse said:” Protection of the most vulnerable has always been our primary concern, and following our consultation, the case for keeping supported housing in the welfare system became clear.

“The sector also recognised that our aim of improving the quality of homes must be addressed, and we look forward to now working with partners to make sure we have strong measures in place.”

The decision to drop the plans concludes a controversy initiated in 2015 when then Chancellor George Osborne announced that rent support for social housing tenants was to be capped at Local Housing Allowance (LHA) rates, which in turn had been frozen as part of the government’s austerity measures.

This prompted an outcry from social housing providers across the country, especially in respect of supported housing where, due to the level of service provided, rents were considerably above LHA limits.

In 2016 then Secretary of State Damian Green announced that supported housing would be removed from the LHA cap, but instead a new form of funding would be developed whereby supported housing would be funded from a ring-fenced grant.

Following consultation this approach was further amended in 2017 when the Prime Minister announced that social housing would not after all be subject to the benefit cap, sheltered and supported housing would continue to be funded from the benefits system and only short-term supported accommodation would come under the proposed grant funding regime.

The latest decision has reassured social housing providers that the rental stream can be relied upon.

The Scottish Federation of Housing Associations (SFHA), which campaigned against the measures, has welcomed the U-turn.

Sarah Boyack, SFHA’s head of public affairs, said: “We are delighted with the Government’s decision which has been achieved through a combination of lobbying and engagement. I am particularly grateful to those members that were able to provide us with the information and the case studies to make the case for action.

“By making common cause with other stakeholders we have helped the Government come to the right conclusion.

“That is not to say that the system is perfect. Answers need to be found to valid criticisms that the existing benefits system does little to support women who are fleeing domestic violence who have no recourse to public funds, or the fact that the removal of housing benefit for someone in supported housing is a barrier to them taking a job.

“These exceptions can be addressed if there is the will to do so. We look forward to working with the Government and other stakeholders and partners to find the solutions.”

Greg Beales, director of campaigns at Shelter, added: “We’re delighted that the government has chosen to keep housing benefit in place for those in supported housing, including people fleeing domestic violence or living in a homeless hostel.

“Housing benefit is a crucial stepping stone to securing a safe home for so many people, so this decision is absolutely the right one.”