Background: Overspending plagues project

The programme – an umbrella fund designed to bring together the seven supported housing funding streams – was expected to cost £700m when it was thought up in 1998. However, the cost rose to £1.4bn by February 2003 and finally reached £1.8bn for 2004/5.

The Treasury was unimpressed.

In the wake of the February announcement it demanded councils save £29m. The £1.8bn for 2004/5 was the final straw. The government handed over the money but it came with a huge caveat: savings of 2.5% had to be made across the board. This cash would go back to the ODPM to pay for services that did not get full operational funding in 2003/4.

The basic problem, however, lay in the Supporting People concept. The fund was designed to bring together myriad funding streams. Simultaneously, it separated out basic rent costs from the cost of support services. Previously they had both been largely covered by housing benefit, but now rent would be paid by housing benefit and support costs would come from Supporting People.

In the transition to the new scheme, organisations were allowed to transfer new and existing supported housing schemes from the old funding system to the new one. This, say critics, led to a free-for-all in some areas with schemes being developed that might not have been needed. In addition, some care schemes that should have been paid for by social services were transferred to the new pot.

After an investigation into the spiralling budgets, the ODPM called on the Audit Commission to conduct early inspections of 19 authorities deemed to have particularly high costs. One, Manchester, was vindicated by becoming the first authority to get three stars for its Supporting People performance.