Costs and Benefits of Homelessness Services

1
Costs and Benefits of Homelessness Services

• Colin Jones
• School of Built Environment
• Heriot-Watt University

2
Policy Background

• Recent emphasis on homeless prevention
• Best value agenda for public services public
  audit
• Evidence based policy
• Cost effectiveness
• Spend to Save
• Additional spending brings increased benefits

3
Not a new idea

• Slum clearance/municipal building in 19C cost
  effective way to resolve insanitary conditions
• Cost effectiveness been used to justify range of
  policies improvement vs demolition
• Right to Buy

4
Content and Structure

• Focus on homelessness prevention
• Based on research undertaken in England for CLG
• Evaluating Homelessness Prevention
• Examine a range of different services
• Balance of costs and benefits

5
Case Studies

• The essential approach is very simple - compare
  the costs of providing services with the benefits
• Benefits housing outcomes.
• Key issue what would have occurred if the
  preventative measures had not been in place.
• Counterfactual is crucial to assessing the cost
  effectiveness of a particular initiative.

6
Benefits and Costs?

• Short term vs long term solutions
• Whose costs? Whose benefits
• Local authority balance sheets
• Costs shifted off balance sheets to private
  sector or other parts of public sector
• Benefits of some policies to individuals are main
  driver of some policies but not always

7
Costs of Homelessness

• Homeless Households financial, psychological,
  disruption, not having a settled home difficult
  to evaluate
• Local authority - assessment of homelessness and
  rehousing (including temporary accommodation)
• Evictions and domestic violence cases may also
  bring extra costs to the police if they are
  called to attend.

8
Rehousing Costs

• Temporary rehousing and additional services to
  these households and support on permanent
  resettlement
• Costs encompass changing schools, changing
  general practitioners and health care providers,
  and the involvement of social services and the
  police
• Social services are often involved when
  evictions include children or homelessness is
  associated with domestic violence

9
Calculating Costs

• Which of the homeless costs beyond the statutory
  obligations should be included in our
  calculations.
• Research problem many of the wider costs are
  very difficult to quantify
• Some incurred anyway, for example those linked to
  anti-social behaviour

10
Evictions

• Some homelessness prevention schemes are
  specifically targeted at preventing evictions
  from social housing
• Legal evictions - very messy process often
  involving a series of court appearances and
  significant sums of money in legal fees, rent
  arrears esp if anti-social behaviour is the
  reason for the eviction the legal process
• The house at the very least will require
  redecoration, plus new locks, reletting costs
  etc.
• Such savings from avoiding evictions from social
  housing are central to the raison detre of
  tenancy sustainment schemes.

11
Research Method

• Examine the costs of individual schemes and to
  consider what would have been the public sector
  costs if these policies had not been in place.
• What would have otherwise happened to the
  households concerned by focusing on individual
  housing outcomes.
• In a few cases where the initiatives had multiple
  goals an aggregate assessment is undertaken.

12
Data

• Provided by the local authorities and agencies
• Interrogation process
• Examining case records
• Analysing costs including overheads
• 2003/04

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Housing Advice

• Bournemouth Housing Advice Service (BHAS) is
  provided by Shelter under a contractual agreement
  with the borough council.
• the provision of a triage service to assess the
  needs of clients with potential referral on to
  other agencies,
• housing advice
• prevention of homelessness through direct
  intervention
• assistance of clients to secure housing
• publicity of the Bournemouth Housing Advice
  Network
• explanation to clients of the local housing
  advice system
• training on housing advice to local agencies

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Problems

• Project multiple objectives are more than simply
  the prevention of homelessness.
• Shelter pays some of the costs
• Other Shelter projects in the same building
• Targets do not discriminate by tenure but
  analysis of the housing aid records reveals cases
  where eviction are prevented are virtually all
  assured shorthold tenancies

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Consequences

• Most of these were single people for whom the
  local authority has no statutory responsibility
  to rehouse
• Similarly all but a very small minority of those
  facing imminent homelessness or at medium term
  risk are also in the private sector.
• 105 households annually are helped to avoid
  homelessness annually although public sector cost
  savings are limited as majority are single
• Major beneficiaries of the service are tenants
  and landlords in the private sector

16
Temporary Rehousing Costs

• A small minority of these households will be
  families or statutorily vulnerable individuals
  in priority need.
• Average length of stay in temporary accommodation
  in Bournemouth was 11.6 weeks in 2003-04 for
  single parent families in priority need.
• Assuming six weeks in bed and breakfast at a cost
  of 378 for one adult and two children and six
  weeks in private sector leased accommodation at a
  net cost of 60 (management fee based on Harrow
  research, see below) gives a total temporary
  accommodation cost of 2600.
• This net cost is derived from the fact that the
  alternative accommodation for homeless households
  is likely to be private rented accommodation.
  Private sector rents are approximately 600 per
  month but whether living in rented or leased
  accommodation the cost for these households is
  likely to be fully paid by housing benefit so
  only the net cost is included.

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Calculations and Assumptions
(

• Numbers in this category are unknown which means
  it is not possible to assess cost effectiveness
  directly and assumptions have to be made.
• If just over a quarter of the 105 cases are
  diverted from the statutory homelessness process
  then this will result in savings of approximately
  72.8k
• Annual cost of 71k of the service to the local
  authority. However, this figure is not the true
  cost as it ignores Shelters financial
  contribution and the services wider remit 15
  of cases.

18
Ex-Offender Housing Advice and Outreach

• The Bristol Prison Homelessness Prevention
  Service is run by the English Churches Housing
  Group and grant funded by Bristol City Council.
• A single post whose responsibility is to work
  with prison based staff and other agencies to
  assess/support the needs of homeless already
  homeless at the point of imprisonment. The
  initiative targets individuals with a known
  history of rough sleeping and or begging
• Aims to secure appropriate accommodation for
  those individuals post release in order to break
  the cycle of rough sleeping, offending and
  incarceration.

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Detail

• Find accommodation upon discharge although some
  subsequently left
• Prisoners tend to have mental health and class A
  drug problems, and need medical support.
• The strategy is to minimise the use of bed and
  breakfast and to escort released prisoners to a
  supported housing/hostel upon their release.

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Financial Appraisal

• A rough sleeper who presents her/himself as
  homeless and is deemed in priority need 6 weeks
  BB at a cost of 948 (158 per week).
• Assessment by a housing officer cost including
  overheads is likely to be 346 plus overheads
  overall cost 1467.
• The project cost is 33k plus hostel and medical
  costs for say 80 ex-prisoners each year although
  some of these will return to sleeping rough. This
  cost is therefore equivalent to 413 per person.
• Not all rough sleepers will present themselves as
  homeless or be assessed as in priority need.
• Need 25 to have been statutorily homeless prior
  to break even.

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Commentary

• The analysis is incomplete
• It demonstrates that the cost effectiveness of
  the scheme cannot adequately be assessed via
  savings on housing costs
• More through the benefits to the ex-offenders
  lives and life expectancy and the consequent
  reduction in re-offending, and also social and
  medical interventions.
• Latter costs are undoubtedly substantial but
  require more detailed longitudinal research.

22
Family Mediation

• The Sheffield City Council mediation service
  offers help to those assessed as potentially
  homeless and in priority need at their initial
  reception in the housing department
• Running cost of 70k with initial set up costs of
  3,650 including training costs.
• Prevented 40 clients over a quarter from having
  to use temporary accommodation. Instead the
  person stayed either permanently or temporarily
  with friends or relatives case was assessed.

23
Counterfactual

• Households applying as homeless take on average
  3.5 weeks to be formally assessed
• At the end of this period if it is decided they
  are intentionally homeless they are
  accommodated for another four weeks. If it is
  deemed that the person is statutory homeless
  there is a duty to rehouse.
• In the case of statutory homeless single people
  they normally spend about a further 5-6 weeks in
  temporary accommodation then moving to settled
  accommodation
• With the cost of bed and breakfast at 190 per
  week this is an average cost of approximately
  1600.

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Cost Effectiveness

• The cost effectiveness analysis is calculated on
  an annual basis assuming 160 participants who
  otherwise would have been in temporary
  accommodation.
• Based on the above analysis there is a total
  saving of 256k compared with annual running
  costs of 70k.
• In individual terms the scheme costs 438 per
  person who returns home following mediation
  compared with 1600 to place them in temporary
  accommodation.
• Scheme is therefore very cost effective over a
  one year period, assuming prevention is
  sustainable

25
Conclusions

• Cost effectiveness sounds good and can justify
  many homeless services but maybe location
  specific
• Dearth of detailed evidence
• Challenges in terms of data availability and
  theoretical issues
• Substantial data problems - In some cases the
  analysis had had to apply very much second-best
  methods.
• Major hurdle state of public accounting systems
  that are not designed for use in this way
• Activity-based costing for social landlords is in
  its infancy and lack of a national protocol for
  recording costs