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January 12, 2022

Smarter investments to end homelessness: what works?

Dr Lígia Teixeira

The  Spending Review in October last year saw a welcome return to multi-year budgets for total homelessness spending. So, what needs to happen to maximise their impact and ensure smart investments in homelessness?

Homelessness is systemic and stubborn. It is often the end product of many different factors – prompted by debt, family breakdown, mental illness or leaving institutional settings as varied as the armed forces and hospitals.

So to be effective, policy has to work on three dimensions at once. It has to work upstream stemming the flow of people into homelessness. It has to address immediate needs of individuals for food and shelter. And, it has to work downstream to ensure people have sustainable pathways back to a stable home and life.

I say this because it has a bearing on value for money considerations. To consider this, we should take the bird's eye view, counting what matters, and think hard on what to bear in mind when trying to make smarter investments in homelessness.

First, trying to derive maximum value for every pound spent in homelessness is not just a good idea; it’s absolutely the right thing to do. We owe it to the people affected by homelessness.

But it is important to acknowledge that there are dangers in taking what appears to be an uncontroversial set of concepts from management theory and trying to apply them to homelessness expenditure. Take, for example, the three ‘Es’ framework used to assess the value for money of government and local authority spending – Economy (spending less), Efficiency (spending well), and Effectiveness (spending wisely).

The biggest danger is that these concepts place insufficient emphasis on the need to see homelessness as a systemic problem. Focusing on any one part of the system, without understanding the other components and the interaction between them, can lead to undesirable outcomes. So reducing spend on prevention might be more economic or efficient but would increase the numbers experiencing  homelessness. Similarly, placing households in the wrong type of accommodation (to close the case) might well lead to those households returning in the near future to the system via the revolving door.

Second, the gaps in the system are significant and need addressing. For example, currently we lack clear definitions for some very important interventions, such as temporary accommodation. This acts as a barrier to collecting useful financial information and offering clear guidance for commissioners. And the problem is compounded by the level of different features within some common interventions. Hostels might, for instance, have many characteristics that impact on their costs and the outcomes they achieve.

We also don’t know how much is spent on different interventions. For example, the financial reporting for different models of temporary accommodation is inaccurate, meaning  there are substantial misallocations between types of TA. There are other areas where we don’t have breakdowns: we don’t have information on the different models of prevention.

The good news is that challenges like this can be addressed. We just need to look at other fields. So, what needs to be done?

We should aim to avoid expenditure altogether, for example, through preventive work. Spending on homelessness is twice as high as 10 years ago. For the last financial year with complete data available (March 2020), local authorities had a gross expenditure of £1.76.bn in homelessness services, with roughly 70% going to TA (£1.2bn). In contrast, only around 10% (£170m) of the expenditure is classed as focusing on ‘prevention activities’.

We should meet requirements more economically by reducing use of expensive categories of temporary accommodation. This would mean working with landlords to reduce use of NPPMA and increase longer-term tenancies for temporary accommodation and the supply of housing stock for long-term occupancy would also reduce the use of TA.

And we should get more value from existing expenditure. The central focus of getting more value from a given amount of expenditure is to identify interventions with proven effectiveness, such as Housing First, individual placement and support, and direct cash transfers. It’s also important not to neglect opportunities for efficiency: increasing  outputs from a given level of inputs, such as through better utilisation of assets, like case-worker productivity.

I believe there’s an urgent need to work collectively on this agenda – no one party or interest group has all the answers. Debates and discussions around value for money must be conducted in a spirit of mutual respect, seeking to advance the shared understanding of how to deploy resources better. As soon as value for money becomes a brick in the battle between government and LAs, or between those LAs that are deemed to be performing well as those that are not, its power as a means of bringing about change is diminished. For the Centre for Homelessness Impact, work on this agenda – as on all other agendas – is best conducted in the mindset of ‘with, not to’.

It’s my view that value for money analysis can be a helpful means of generating insights that can then be trialled at scale using rigorous methods.

In this moment of great change, if we are to achieve our shared ambition to end homelessness for good, we must use this opportunity to understand how to end it effectively and sustainably. In short, we must end it with evidence.

Dr Lígia Teixeira is Chief Executive at the Centre for Homelessness Impact

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