Agenda item

Report of the Assistant Director of Adults, Health and Communities. To be presented by the Cabinet Member for Housing and Planning, and Deputy Leader of the Council

The Cabinet Member for Cabinet Member for Housing and Planning, and Deputy Leader of the Council introduced the report. She explained that the Council had a duty to deliver high-quality mental health services for the borough to promote well-being, reduce crises and diminish health inequalities.

It was explained that the number of people in Haringey who experienced serious mental illness was increasing and that in 2023/24 there was 1.37% an increase from 1.28% in 2022/23 and was significantly higher than the London average of 1.1%. 10.5% of Haringey residents were suffering from depression in 2023/24, an increase from 7.7% in 2018/19.

It was noted that the Council was seeking approval to extend contracts for housing-related support to ensure the continuity of care of those that rely on these services. It was explained that under the Mental Health Act, the Council was obligated to provide aftercare services that would help address complex mental health needs, reduce deterioration risk and prevent costly readmissions. The extension would also provide the necessary time to evaluate and co-design improvements to the current services as well as harmonise with Adult Social Care pathways.

Following questions from Cllrs Hakata and Emery, the following information was shared:

• Officers explained that benchmarking with comparable London authorities had been undertaken, and that costs for these services were comparable.
  
  
• Officers explained that there had been a reported increase in need for mental health pathway services, and that the Council was seeking to extend the scope of contract to meet this need. It was explained that the Council would undertake a full review to understand need and requirements to meet any future demand and review potential different models of delivery. Officers explained that they had begun engaging with the market for the future procurement of this service, and that this contract was to ensure current stability while the service considers future models of delivery.
  
  

RESOLVED:

That Cabinet:

1.    Approved, in accordance with Contract Standing Order 10.02.1(b):

a.    a variation to the extension period allowed within the terms of the six (6) contracts for Housing Related Support Mental Health Pathway Services, from two (2) years to three (3) years, with the implementation of the three (3) years extension commencing on 1 April 2025; and

b.    vary the contract term of the two additional contracts let to Metropolitan Housing Trust Limited (trading as Metropolitan Thames Valley Housing Association), to extend the Mental Health Flexible Support Service for a period of three (3) years commencing on 1st April 2025, and the Mental Health Intensive Support Service for a further period of nineteen (19) months commencing on 1 July 2025. 

2.    Delegated authority to the appropriate portfolio 2nd tier officer, to consider financial impact of changes to rates of employer’s National Insurance contribution and approve any further contract variation(s) on case by case.

3.    Noted that these contracts provided 100 units of supported accommodation and 88 units of community floating support for individuals with mental health needs. The estimated total cost of the proposed extension will be £4,054,779, aligned with London Living Wage and Employee National Insurance contribution increases. 

4.    Noted that the aggregated cost of delivering these services until 31st March 2028 is £7,844,449, representing an investment in stability, recovery, and wellbeing for individuals with complex mental health and housing needs. After accounting for the Rough Sleeping Initiative (RSI) funding, the total cost to the General Fund is £7,485,068. Further financial information detail included in Appendix 2 - Part B (exempt information) of this report.

Reasons for decision

Mental ill health in Haringey was increasing. The percentage of people with a serious mental illness in 2022/23 was 1.28%, which had increased from the previous year. Additionally, the percentage of people suffering from depression in Haringey rose to 10.5% in 2022/23, which had also risen from the previous year. However, suicide rates had decreased over the last 10 years within Haringey, and the borough had been in line with the London average. Therefore, with an increase in the number of people experiencing mental ill health overall, it was likely to lead to continued demand for the pathway services.

Under Section 117 of the Mental Health Act 1983, health and local authorities were required to provide aftercare services for individuals discharged under specific provisions of the Act. These services addressed mental health needs, reduced the risk of deterioration, and prevented costly readmissions. Investing in supported housing fulfilled statutory obligations, reduced long-term costs, and improved resident outcomes.

Supported housing and community intervention were also cost-effective, reducing reliance on high-cost social care services. In 2024, the cost of keeping a patient in a mental health hospital was an average of £650 per night, compared to £25 per night for supported housing. The annual value of contracts supporting 100 residents was £902,707, making it a financially prudent alternative. It also ensured timely moves for individuals no longer needing hospital care, helping to free up resources and reduce unnecessary expenditure.

All Housing-Related Support (HRS) commissioned services were located within Haringey, providing accessible support to residents within the borough. However, Temporary Accommodation, Adult Social Care placements, and hospital stays could occur outside the borough, which introduced several risks. These included reduced oversight and coordination of support, potential delays in accessing essential services, and challenges for service users in maintaining connections to local networks and resources. Out-of-borough placements could also result in higher costs and logistical complexities.

The current contracts had provided long-term financial and social benefits through early intervention and support. By providing stable housing and tailored assistance, the service had significantly reduced costs associated with Adult Social Care, inpatient mental health care, and temporary accommodation. Effective prevention and support not only improved outcomes for individuals but also alleviated pressure on these high-cost services. This proactive model demonstrated that targeted investment in preventative measures led to measurable savings and better resource allocation across the wider system.

Extending the contract for three years instead of two offered strategic benefits, including alignment with the commissioning timeline for the single homeless pathway. This alignment allowed for a more cohesive approach to service delivery, reducing duplication and streamlining procurement processes. This approach supported long-term planning and ensured continuity of service for vulnerable individuals.

Additionally, extending the contracts also allowed for the redesign of the mental health pathway in collaboration with the Mental Health Trust and Adult Social Care (ASC), presenting an opportunity to create a more integrated and effective service model. This partnership would have allowed for a holistic approach to addressing the complex needs of individuals, ensuring that mental health, social care, and housing support were aligned. Additionally, working together opened up potential joint funding opportunities, enabling the pooling of resources to enhance service delivery while reducing financial pressure on individual agencies. This collaborative approach supported sustainability, improved outcomes for service users, and strengthened the overall pathway.

A benchmarking exercise with another borough had shown comparative costs.

Since the contracts had begun in 2022, the London Living Wage had risen significantly, from £11.05 in 2021/22 to £13.85 in 2024/25, representing a 25% increase overall. This sharp rise in wages had placed substantial financial pressure on providers, particularly charitable organisations, impacting their long-term sustainability. Additionally, inflationary rises had further driven up the cost of delivering services, including essential operational expenses such as utilities and supplies.

Projected increases in National Insurance contributions had compounded these challenges, further eroding the financial viability of providers as they worked to meet rising costs while maintaining the quality and reach of their services. These combined financial pressures underscored the urgent need to ensure that contracts reflected these economic realities to safeguard the future of these vital services.

Alternative options considered

Do Nothing – The Council could have chosen not to extend the Mental Health Pathway contracts. However, this decision would have left Haringey without essential housing and support services for vulnerable households. The absence of these services would have likely led to a significant increase in the number of people placed into temporary accommodation and a rise in acute hospital admissions. This scenario would have had severe detrimental impacts on the affected residents, exacerbating their instability and health issues.

Moreover, the Council and its partners would have faced substantial operational and financial burdens. Increased reliance on temporary accommodation and hospital services would have strained already limited resources, leading to higher costs and inefficiencies. The social and economic repercussions would have been far-reaching, affecting community wellbeing and cohesion.

The option to do nothing had been considered and rejected due to these significant risks. Ensuring the continuation of the Mental Health Pathway contracts had been crucial for maintaining stability, reducing health disparities, and providing cost-effective support for Haringey's most vulnerable residents.

Deliver the services in-house – This had been considered when the services were originally going out for recommissioning. However, the investment required to develop and manage the properties, services, and teams required had been found to be significantly greater than the resources that were available to the Council at the time. Suitable accommodation for the delivery of key contracts within the Pathway would have been a challenge to source and manage; some of the existing properties would not have been available to the Council, and an exploration of the Council’s own assets did not generate any suitable and available buildings. The successful tenderers had an extensive track record in delivering these services and had committed the properties required to do so, which ensured quality services for residents and best value for the Council.

Undertake competitive procurement – The Council had decided to extend the current contracts rather than go out to competitive tender. The process for retendering the pathway had taken a significant amount of time and resources and was unlikely to have achieved value for money. At the last retendering process, there had been a shortfall with tender bids, leading to a reduction in service provision, which could possibly have occurred again. Also, properties were a valuable resource, and the registered social landlord who owned most properties was not willing to enable other providers to use the properties. Therefore, obtaining alternative properties was likely to have taken a significant length of time.