The government will transfer money to councils to top up the cost of supported housing, as part of its plan to cap housing benefit at Local Housing Allowance (LHA) rates.
Damian Green, the work and pensions secretary, also said the cap would be deferred until 2019/20 for supported housing providers.
Inside HousingÂ revealed the governmentâ€™s plans earlier today ahead of the announcement, as ministers prepared to reveal their crucial plans for the future funding of supported housing.
In a written statement, Mr Green said that supported housing would be included in the governmentâ€™s cap on housing benefit and Universal Credit in social housing to LHA (private sector) rates from 2019/20.
For costs above the LHA rate, the government will devolve in England â€œan amount of funding for disbursement locallyâ€. The Welsh and Scottish governments will be transferred an equivalent amount of money.
He said: â€œIn England, we will devolve funding to local authorities to provide additional â€˜top upâ€™ funding to providers where necessary, reflecting the higher average costs of offering supported accommodation, compared to general needs.â€
The shared accommodation rate – which limits housing benefit for under 35s to cover one bedroom in a shared house – will not apply to tenants in the supported housing sector.
He said the fund to be transferred to councils would be ring-fenced, however it was unclear whether this would continue indefinitely.
Top-up funding will be set on the basis of current projections of future need, he said.
He added: â€œWe will also consult on appropriate safeguards to ensure that this funding continues to support vulnerable people and promotes supply of supported housing.â€
He said the government would work on additional protections for shorter term accommodation such as refuges and hostels, and suggested they might have a different funding mechanism.
He added that the 1% rent reduction would continue to apply to supported housing for the three years up to 2019/20. However, he said that an exemption would continue throughout this period for refuges, mutuals/co-operatives, alms houses and Community Land Trusts.
Mr Green said a consultation would be published shortly.
Nearest tube: Elephant & Castle underground station (Northern and Bakerloo lines).
Nearest Railway Station: Elephant & Castle
Buses from Elephant and Castle: ask bus driver for Burgess Park. Bus numbers: 12, 171, 148, 176, 68, 484, 42, 40, 45