Evidencing the Costs and Savings of Tackling and Preventing Homelessness. August 2012

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1 Evidencing the Costs and Savings of Tackling and Preventing Homelessness August 2012

2 Contents Introduction p3 Summary p4 Evidence p5 Conclusion p10 Evidencing the Costs and Savings of Tackling and Preventing Homelessness 2

3 Introduction The intention of this report is to highlight a range of evidence that has already been published by leading academic institutions, central government, and sector led organisations. This information can help local decision makers when considering: How much of future retained business rates are spent homelessness initiatives What criteria to adopt for the new localised Council Tax benefit Future new rules for a localised Social Fund Evidencing the Costs and Savings of Tackling and Preventing Homelessness 3

4 Summary There is a significant cost to the public purse each time a household becomes homeless. A body of evidence shows preventing homelessness is much more cost effective when compared to the cost incurred when fulfilling statutory duties once someone has become homeless. Research proves that preventing homelessness can achieve direct cashable savings for local government. It is important to note that the minimum savings are just that. Not only will enabling households to remain in their existing accommodation be cheaper than securing alternative accommodation, additional savings can also be achieved in relation to services, which sit outside of housing options/ homelessness prevention and assessment services. This brings wider socio-economic and health-related benefits by avoiding substantial social disruption and knock on re-settlement costs. The cost of helping someone once they are homeless is as least twice, possibly higher, than compared to preventing them from becoming homeless. Evidencing the Costs and Savings of Tackling and Preventing Homelessness 4

5 Evidence Shelter & Acclaim Consulting A report produced by Shelter with Acclaim Consulting in 2010, concluded that the median spend on tackling homelessness per 000 households was 7, A breakdown of this total is summarised below: 6,639 (83%) housing options and homelessness prevention 860 (11%) homelessness assessment 479 (6%) conclusion of duty Spending on housing options/homelessness prevention advice was approximately eight times that of homelessness assessment, this is reflect in the high success rate of prevent casework outcomes (8.7 per 1000 households) and low levels of homelessness acceptances (2.03 per 1000 households). Results show that the minimum unit cost savings per prevention compared to a full duty acceptance are in the range of 1,300 to 7,700. In terms of a full duty acceptance, authorities are required to shoulder a greater burden of costs. The overall unit cost of a full duty acceptance is high compared to prevention: 1. Cost of a successful prevention: 642 ( 826 including overheads)12 2. Cost of an acceptance: o Cost of making a decision on a homelessness application 375 ( 558 including overheads) o Cost of the work attributable to concluding duty 230 ( 339 including overheads) o Cost of temporary accommodation calculated as the average difference between the cost of providing temporary o Accommodation and the amount covered by LHA ( 1,215, calculated at 119% of an average LHA of 139 per week over 46 weeks, the 1 Value for money in housing options and homelessness services, Matthew Cunningham and Mark Awberry, Shelter, October 2010 Evidencing the Costs and Savings of Tackling and Preventing Homelessness 5

6 average stay in temporary accommodation post decision) Total = 2,11 3. Saving = 1,286 ( 2, ) Potential savings are higher if an authority is required to meet the full duty for a household that is not in receipt of LHA. In such situations, the saving could be as high as 7,680 per prevention. Department of Communities and Local Government The Department of Communities and Local Government 2 published a report in 2010 that showed preventing homelessness can save money when compared to the cost of helping someone is already homeless. The savings are based on the assumption that the cost to the public pursue of providing temporary accommodation and the rehousing afterwards amounts to 5,300 per case per year: The costs per person of successful mediation are estimated to be 600, around 9 times less expensive than providing alternate settled accommodation. These savings are based on the running costs of 30,000 per annum for an external service The costs of home visits are estimated to be 3.5 times less expensive than providing alternate settled accommodation. This based on the running costs of around 15,000 per annum, assuming 50% of a case officers time. Advice on housing options (e.g. resolving Housing Benefit problems, rent or service charge arrears, negotiation/legal advocacy) is estimated at around 9 times less expensive than providing alternate settled accommodation. This based on the assumption of operating costs at 71,000 per annum, based on 355 cases in one year. The costs of the rent deposit scheme are estimated to be 8.5 times less than the costs of providing accommodation under the main homelessness duty. This based on the assumption of an average of 800 per case totaling 246 cases with re-payment of 25% of deposits awarded. The costs of the Finders Fee are estimated at 4.5 times less than the costs of providing accommodation under the main homelessness duty. This based on 2 Demonstrating the cost effectiveness of preventing homelessness, Neil Morland, Department of Communities & Local Government, July 2010 Evidencing the Costs and Savings of Tackling and Preventing Homelessness 6

7 the assumption that annual costs of operating a Finders Fee scheme amounts to 102,000, with 400 finders issued per year. The cost of operating a rent bond scheme is 37 times less the average cost of providing accommodation under the main homelessness duty. This based on the assumption that the average claim rate of Bonds at 10% per annum. The sanctuary scheme represents a saving of 5.5 times the costs of providing accommodation under the main homelessness duty. This is based on the assumption of each installation costing an average of 790, with 64 instillations in one year. Capgemini The Department for Communities and Local Government research from Capgemini to financially value housing support services 3. This showed the following costs and estimated net benefits per annum: Homeless families in settled accommodation o 28.7m cost o 1.2 net benefit Homeless families in temporary accommodation o 25.0m cost o 50.2 net benefit Homeless single people in settled accommodation o 147.8m cost o 9.1 net benefit Homeless single people in temporary accommodation o cost o 77.2 net benefit The best overall estimate of net financial benefits from the whole Supporting People Programme is 2.77 billion per annum against an overall investment of 1.55 billion. The removal of Supporting People services would lead to increased costs in the areas of health service, homelessness, tenancy failure, and crime. 3 Research into the financial benefits of the Supporting People programme, Tom Ashton and Dan Turl, Capgemini UK plc, January 2008 Evidencing the Costs and Savings of Tackling and Preventing Homelessness 7

8 Heriot Watt University Heriot-Watt University published research in 2007 on the costs of homelessness 4, concluding that: Costs for a single parent family in temporary accommodation represented 2,756 per year Costs for young people aged may be more due to the need for continuing support once they are re-housed whereas if they had returned or remained at home their family would have fulfilled this role. There are also many benefits to people and private landlords brought about by homelessness prevention measures. Many of the initiatives provide an avenue to semi-permanent housing in the private sector that for at least some households is preferable to the housing available to them in the social housing sector Preventing homelessness also avoids substantial social disruption and resettlement costs To the local authority there are expenses involved in order for them to fulfil its statutory homelessness duties, these include: Conducting homelessness assessments Securing re-housing (including temporary accommodation) under their statutory obligations for those households deemed to be unintentionally homeless and in priority need. Where homeless households are temporarily re-housed local authorities may also incur costs of providing additional services to these households and support on permanent resettlement. These costs encompass; Changing/ bussing children to schools Changing general practitioners and health care providers, Involvement of social services and the police. Social services are often involved when evictions include children or homelessness is associated with domestic violence. 4 Evaluating Homeless Prevention; Hal Pawson, Gina Netto, Colin Jones, Fiona Wager, Cathie Fancy, Delia Lomax; School of the Built Environment, Heriot-Watt University; December 2007 Evidencing the Costs and Savings of Tackling and Preventing Homelessness 8

9 National Audit Office The National Audit Office estimated in 2005 that over 1billon of public money was spent on administration, accommodation and support to the homeless 5. These costs are split about 50% each way between central government and local authorities. It was estimated that as much as million could be saved as a result of ending the use of bed and breakfast accommodation for homeless families. Evictions brought about by anti-social behaviour in social housing can cost over 7,000 per case according to the Herriot-Watt research. Homelessness prevention schemes are specifically targeted at averting such evictions Crisis & New Policy Institute In a report produced in 2003 by the New Policy Institute for Crisis 6, suggested that the cost of single homelessness can be as much as 24,000 per year. Typical costs included; Failed tenancy - 3,000 Temporary accommodation - 10,500 Support Services - 2,000 Health Services - 7,000 Police and Criminal justice 1,500 Potential resettlement Total for 12 months 24,500 This example shows the scale of the overall costs of homelessness and how homelessness costs a range of public bodies. The cost of preventing this case of homelessness could be a cheap as 1700 per annum; this includes securing private sector accommodation and the provision of floating support. 5 More Than a Roof: Progress in Tackling Homelessness; National Audit Office; February How Many, How Much? Single homelessness and the question of numbers and cost, by Peter Kenway and Guy Palmer from the New Policy Institute for Crisis Evidencing the Costs and Savings of Tackling and Preventing Homelessness 9

10 Conclusion Albeit that an exact amount cannot be determined, various experts, including academics, sector led organisations, and central government, and policy think tanks, all agree that the cost of preventing homelessness is cheaper than that of helping someone once they have become homeless. There are some principal arguments that decision makers must consider when agreeing future expenditure for homelessness services: 1. Preventing homelessness is value for money 2. Preventing homelessness achieves outcomes for the local communities 3. If funding for preventing homelessness is reduced then there is a real risk that public purse will incur and increase of expenditure for tackling homelessness. These arguments offer crucial contextual factors that can help influence decisions that are made as to how much of future retained business rates are spent homelessness initiatives. Furthermore this evidence can be used to inform whatever new criteria is adopted for the new localised Council Tax Benefit and just as importantly the future rules for a localised Social Fund. Evidencing the Costs and Savings of Tackling and Preventing Homelessness 10

11 Neil Morland Housing Consultant Ltd Specialist advice on homelessness, housing needs and lettings. We provide: Support to improve outcomes Help to achieve more effective and efficient results Assistance with strategic and operational activities Advice on maximising the use of resources We offer: Knowledge across a variety of housing issues Skills covering a mixture of business management principles Experience of a range of legal topics Contact Phone neil@neilmorland.co.uk Website Registered office 78 Borough Road, Altrincham, Greater Manchester, WA15 9EJ Company number VAT number Evidencing the Costs and Savings of Tackling and Preventing Homelessness 11