Homelessness is rising
Against all measures, there has been a steep and sustained rise in homelessness in recent years.
Key facts - figure 1:
One of the key drivers in recent years behind increases in statutory homelessness has been evictions from the private rented sector. Across England, the ending of private rented sector tenancies accounted for 74 per cent of the growth in households qualifying for temporary accommodation between 2009/10 to 2016/17. Over this period, other immediate triggers for statutory homelessness, including parental exclusion and relationship breakdown, have remained relatively stable.
This phenomenon can be explained by two key factors:
- An increase in private sector rents
Government’s housing policy in recent years has focused on support to the private sector to increase the delivery of new homes for home ownership. The 2020 UK Housing Review found that government investment in affordable housing and low-cost homeownership will account for only 25 per cent of the total planned investment between 2015/16 and 2023/24.
Within that, the most recent data from the Government’s Shared Ownership and Affordable Homes Programme 2016-2021 showed that only 4 per cent of the funding up to September 2019 has been allocated to the delivery of social rented homes.
At the same time, the amount of available social housing has seen a long-term decline, and is currently the smallest tenure in England, comprising 17 per cent of households in 2018/19. Only 7 per cent of households in 2018/19 were renting from councils, compared to 9 per cent in 2008/09.
This has contributed to the rapid growth of the private rented sector, which has doubled in size since 2002 to comprise 19 per cent of all households in England in 2018/19.
To meet the decline in the availability of social housing for low-income housing, government investment in housing benefit has risen, with the aim of improving access for households to the private rented sector. However, levels of supply in the private rented sector have not risen to meet increases in demand, resulting in rents increasing three times faster than earnings across England since 2010.
As a result, financial pressures on
households have increased, with a subsequent impact on evictions from the private rented sector. Evidence from the National Audit Office suggests that in areas where rents have increased the most since 2012/13, levels of homelessness have been higher.
2. A decrease in households’ ability to pay higher rents
The reduced focus on affordable supply has seen a significant increase in housing benefit expenditure, which almost doubled in the decade up to 2012 to an estimated £21.6 billion.
In response, successive governments have introduced sweeping changes to the welfare benefits system. The Welfare Reform Act, passed in 2012, aimed to save £18 billion from the annual welfare bill through a series of measures, including the introduction of Universal Credit, an overall cap on household benefits, and the introduction of Local Housing Allowance rates. These measures were updated by the Welfare Reform and Work Act 2016 to reduce the household benefit cap and introduce a four-year freeze on rises in welfare benefits, with a forecast additional saving of £13 billion per year by 2020/21.
These measures have impacted low-income households’ ability to pay their rent. While impacts have been uneven across household and region, research suggests that reforms have reduced average household income by £300 per head, per year across England, between 2010 and 2018.
Within this, caps on Local Housing Allowance (LHA) rates have been a core factor, and LGA analysis has found that, for every 1000 households experiencing a rent shortfall as a result of LHA caps, 44 require temporary accommodation. This has created average gross temporary accommodation costs between £1.4 million to £3 million for every council with homelessness responsibilities.
Conclusion
Overall, the assessment of the cost of national policy change in relation to housing and welfare benefits has not taken account of impacts on the wider public purse.
Reduced investment in truly affordable social housing has led to the rise in demand-side subsidies in the form of housing benefit, subsequently limited by welfare reform. This has increased the cost of housing, while reducing low-income households’ ability to cover these costs, resulting in a rise in homelessness as a result of evictions from the private rented sector and increased cost to councils.
Homelessness policy is predominantly crisis-oriented
Recent academic analysis suggests that the primary focus on government funding in recent years has been rough sleeping, with the Rough Sleeping Strategy, published in 2018, introducing several additional funding streams to support the government’s commitment to end rough sleeping within this parliament.
The Homelessness Reduction Act, introduced in 2018, also introduced new statutory responsibilities on councils with the aim of preventing homelessness. This included – for the first time – a specific homelessness prevention duty, which gave legislative underpinning to councils’ work to prevent homelessness, and a duty to refer, which requires a range of public authorities to highlight people at risk of homelessness to local housing authorities. It was supported by a new data recording system, and short-term new burdens funding.
Prior to this, in 2016, the government introduced the Homelessness Prevention Trailblazer programme, allocating £20 million to a total of 30 councils in order to promote and support “targeted” prevention work. This marked a commitment to, and investment in, more upstream forms of homelessness prevention, and led to many successful local initiatives.
Collectively, these initiatives represent progress in homelessness prevention – particularly, as defined in the Homelessness Reduction Act, where a person is threatened with homelessness within 56 days.
However, this progress has not been sustained or supported. The Trailblazers programme, whilst a promising first step, was a short-term measure which did not embed upstream homelessness prevention in national policy for the longer-term.
Governments’ homelessness policy has not yet focused on preventing homelessness upstream by addressing the key drivers of homelessness, including a lack of affordable housing, income-based unaffordability, and a lack of an integrated prevention approach.
As a result, councils continue to see high numbers of households presenting as homeless, accommodated in temporary accommodation, and sleeping rough.
Councils are financially strained
Even prior to the COVID-19 pandemic, councils had seen dramatic reductions in their core funding over the last decade, and had lost 60 pence out of every pound in government funding since 2010. As a result, councils were facing a funding gap of £6.4 billion by 2024/25 just to keep services running at 2019/20 levels of provision.
Homelessness services are a particular cost pressure for councils, with these services alone facing a pre-COVID funding gap of £432 million by 2024/25.
A primary factor has been increases in the cost of temporary accommodation, driven both by increased numbers of households in accommodation, and by higher costs of the accommodation itself as decreases in available social housing has increased the use of private accommodation providers. A recent Shelter and Panorama investigation found that the amount paid to private providers has almost doubled between 2013/14 and 2018/19, and now comprises 86 per cent of councils’ £1.1 billion gross spend on temporary accommodation. Recent LGA analysis found that councils’ net expenditure on temporary accommodation was over budget by £140 million per year in 2018/19.
As a result, councils have experienced significant pressure to reduce spending on homelessness services, and particularly non-statutory services: while overall spend on accommodating households has increased by 372 per cent between 2009/10 and 2018/19, overall expenditure by councils on housing services (excluding housing benefits) saw a reduction of £1.3 billion in real terms between 2009/10 and 2018/19. This has been driven by decreases in Supporting People funding, and private sector housing renewal.
Since 2009/10, councils have delivered £3 million worth of efficiencies in the administration of homelessness duties, against a 23 per cent increase in the number of homelessness decisions. Despite this, councils have been forced to increasingly focus on the statutory provision of temporary accommodation, dedicating more and more resource to a crisis response for households already experiencing homelessness at the expense of vital non-statutory services, including upstream homelessness prevention.
New homelessness funding is not fit for purpose
The Government has recognised and responded to homelessness funding challenges, primarily through the introduction of new funding programmes in its 2018 Rough Sleeping Strategy. However, whilst welcome, this funding is highly fragmented.
LGA analysis shows that at least 12 small, short-term funding programmes relating to homelessness were issued between 2015/16 and 2018/19. In most cases – with the exception of the Homelessness Prevention Trailblazers - these programmes are specifically focused on the emergency response to existing rough sleeping.
As with other service areas, funding for homelessness is issued on a short-term basis. As a result, staff may be hired on short-term contracts, strategies may be reduced in scope, and resources are diverted towards applying for funding on a regular, annual basis. Joint commissioning is also severely affected, as councils are unable to guarantee certainty to partners.
Nearly 50 per cent of [the homelessness team] are on fixed-term contracts that are linked to short-term funding so that's a real challenge for us in getting the right type of culture that we want within the team. People are constantly just thinking about well, two years is going to be up soon, or my fixed-term contract is coming to an end. So it's actually really difficult for us to get some stability within the team"
Quotation from Homelessness Prevention research - Wychavon and Malvern Hills district councils
Often, funding comes with highly specific conditions – in some cases, asking councils to demonstrate that outcomes from funded services will be sustained beyond the lifetime of the grant. However, the scale of the challenge means that councils can’t achieve the long-term savings envisioned with the small and limited grants available. Instead, services are refocused rapidly and often to align with the requirements of newly available funding.
It is very difficult to strategically set up services when you're having unexpected, short term funding come in that needs to be spent against very specific parameters. It doesn't give you much chance for being flexible or give capacity for long-term thinking… It's frustrating because actually emergency prevention and crisis prevention can be planned on a more short-term basis… [but] when you're trying to think longer term and more targeted and universal services in line with the ethos of the Act, you need longer run in time for that kind of work and we don't have any guarantees around the long-term funding…”
Quotation from Homelessness Prevention research - Reading Council
Councils are also increasingly asked to bid for this funding through a competitive process, with half of the new homelessness grants allocated in this way. This is placing extra stress on an over-stretched homelessness system, as officers are often required to scope and complete an extensive application within limited timeframes – sometimes as short as one month.
If it's one-year funding it can take a couple of months to get set up, by the time we get everything set up it's nine months, it's not just that, you've got limited months on the service which can stop abruptly”
Quotation from Homelessness Prevention research - South Norfolk District Council
The prevalence of a targeted, competitive homelessness funding landscape risks shifting the focus of services towards a crisis-oriented approach, funded via an effective postcode lottery and delivered as transformational projects additional to and distinct from councils’ core offer. Instead, tackling homelessness must be seen as a joint effort by a range of public services to delay the onset of need with a broad, upstream, and person-focused preventative offer.
New funding from Government does not close the gap left by other cuts, leading to new cost pressures that councils must manage. Local authorities are left with no choice but to direct limited resources to acute and crisis services, curtailing our ability to deliver the full extent of preventative interventions that we want to deliver. We believe that funding models are too fragmented, too short-term and too uncertain – such as the Flexible Homelessness Grant. Councils cannot plan stable services for the long term but in addition, this fragmentation can have a negative impact for individuals who need stable, consistent and responsive services."
Quotation from Homelessness Prevention research - London borough
Case study: Next Steps Accommodation Programme
The £266 million Next Steps Accommodation Programme (NSAP) was launched by MHCLG on 18 July 2020, with the aim of making resources available to councils to help ensure that people accommodated in emergency housing during the COVID-19 crisis could continue to have a safe place to stay.
Whilst this funding was welcomed by councils, its competitive nature meant that councils needed to engage in an intensive bidding process, diverting resources away from service delivery at a time of intense pressure.
There were also significant restrictions on delivery: councils were asked to ensure that any new capital schemes were delivered by March 2020/21 and to ensure that any grant funding was match funded by the council; however, they were not able to use right to buy receipts towards programme delivery, and were subject to a 10 per cent limit on the amount of funding which could be used to convert or re-utilise existing units.
Councils were locked by the funding into providing specialist housing with a maximum limit on tenancies of only three years, but were asked to commit to maintaining any units created for 30 years. This locks councils into diverting resources into a stock of short-term housing with short-term support, rather than the stable, long-term support they feel is needed to support people with complex needs out of homelessness.
Finally, the programme restricts councils to tying support provided to particular tenancies, rather than individuals – this excludes evidence-based approaches such as Housing First from funding, as well as any approaches where individuals are supported by the same worker and specialist agencies throughout the housing pathway. Requiring councils to attach different support to different interventions is less efficient, and also risks poorer outcomes for individuals.
Councils seek a set of long-term funding arrangements that allow them to both plan and invest in homelessness prevention and minimise the need for emergency responses. Currently, funding for homelessness services does not meet this need.
The COVID-19 crisis is increasing pressures
The COVID-19 crisis has prompted a large-scale emergency response from councils’ homelessness services and their partners. A key driver of this has been the government’s “Everyone In” policy, which asked councils to ensure that people sleeping rough and in high-risk accommodation were safely accommodated to protect them, and the wider public, from the risks of COVID-19.
When the crisis began, it was estimated that just under 4,300 people were sleeping rough. Since March, Ministry for Housing, Communities and Local Government (MHCLG) figures suggest that councils have accommodated over 29,000 people under the Everyone In initiative. In addition, councils have worked effectively with a wide range of local partners to coordinate support for people brought into emergency accommodation, many of whom are experiencing the multiple disadvantages associated with rough sleeping. As a result of this effort, people have been able to access support for drug and alcohol issues, mental health needs, food poverty, transport, and support with claiming welfare benefits.
This work has performed a vital role in reducing the risks of COVID-19 to people experiencing homelessness, whom evidence suggests are particularly medically vulnerable to the effects of the illness. There is also increasing evidence of the wider impact that this response has had on the broader wellbeing and health outcomes of people in emergency accommodation. Research by University College London has found that the measures might have avoided over 21,000 infections and 266 deaths among people experiencing homelessness.
The work has also had impacts on local health policy. Health and Wellbeing Boards (HWBs), where political, clinical, professional and community leaders from across the care and health system come together to improve the health and wellbeing of their local population and reduce health inequalities, are sharpening their focus on issues such as homelessness and the underlying causes including mental health, domestic violence and poverty. An increasing number of HWBs are adopting a ‘health in all policies approach’ in recognitions that all aspects of councils’ functions, services and strategies have an impact – either positive or negative – on the health and wellbeing of their communities. Many will, therefore, be working across the council and their partners to ensure that health improvement and addressing health inequalities is proactively considered in all housing and homelessness prevention policy.
However, the COVID-19 response has also created a significant strain on councils’ resources. MHCLG data on councils’ finances from July 2020 indicates that councils forecast an additional expenditure of £110.7 million on homelessness services, and £139.9 million on rough sleeping, as a result of COVID-19 in 2020/21. Overall, as a result of increased demand, loss of income, and cash flow pressures, councils will need at least £2 billion more to meet the full financial impact of the pandemic in 2020/21. This is placing serious and ongoing pressures on local services.
There is a high risk that these pressures will increase, as the economic impact of COVID-19 has increased financial insecurity for many households. Recent UK labour market statistics show that the economic impact of the COVID-19 crisis has resulted in at least 782,000 fewer people in work since March. In April, research from Shelter showed that one in four renters had already seen their income fall.
The ability to pay rent will become particularly constrained for low-income households. The Resolution Foundation has argued that furloughing, job losses and hours reductions are more common experiences for these households. As a result, economic pressures threaten to lead to much greater homelessness pressures.
The Government has recognised and responded to these challenges. On 27 March 2020, it introduced a stay on possession proceedings in courts for renters of all tenures. This stay was subsequently extended twice before ending in 20 September, with the notice period for some evictions extended for six months up to March 2021. A further extension up to January 2021 was announced with the second period of national restrictions beginning in November.
The Government also responded to long-running campaigns to increase Local Housing Allowance rates by raising these to the 30th percentile of market rents up to March 2021, improving the ability of low-income households to cover the costs of their rents.
However, the key drivers of homelessness – a lack of affordable housing, income-based unaffordability, and a lack of an integrated prevention approach – still remain. Research from Generation Rent, based on YouGov statistics, estimates that 55,000 eviction claims may be heard in the courts from September.
Support for renters who have built up rent arrears remains limited. Between February and May 2020, the number of households hitting the benefit cap increased by 93 per cent to 154,000 households, driven by an “unprecedented” increase of 665 per cent in the number of newly Universal Credit capped households. Each household, on average, has lost £57 per week in income, with consequences for their ability to pay their rent.
The risk is particularly high for migrant households. The No Recourse to Public Funds condition, which limits some migrant households’ ability to claim welfare benefits, has remained in place throughout the COVID-19 crisis, with implications both for households who are facing reduced employment or unemployment, and for councils rehousing people currently in emergency accommodation.
Key message
The added pressure for low-income households, set against the context of existing need, creates an impetus to stem the flow of all forms of homelessness. The key policy objectives must be to:
- ensure effective rehousing and support for the 29,000 people who have been accommodated under Everyone In
- improve the preventative response for households at risk of homelessness, including those at risk of street homelessness, to enable them to sustain their housing
- ensure the move-on of the households in temporary accommodation into settled housing.
This requires a funding and policy settlement that addresses affordable housing, welfare-related poverty, and integrated prevention.