Memorandum by the Association of London
Government (ALG) (HOM 60)
SUMMARY
This paper sets out the ALG's evidence to the
Select Committee's Homelessness Inquiry. It addresses the key
issues outlined in the brief, highlighting issues that are of
importance to London and indicating changes suggested by London
boroughs. Key points made include:
— The sharp fall in the supply of permanent
social housing for new tenants has meant that the number of homeless
people in temporary accommodation in London has more than doubled
in the last seven years even though the proportion of net supply
to the homeless has been increased to undesirably high and unsustainable
levels.
— Local authorities were able to deliver
on the well chosen Government objective of ending homeless families
living in B&B accommodation because:
— The funding regime for alternative
(leased) temporary accommodation was sufficiently secure for long
term partnerships with private sector supply.
— With a national framework there
was sufficient discretion locally to enable local market opportunities
to be fully exploited in a range of innovative ways.
— The resultant target was clear
and came with a realistic timescale for achieving it.
— On the average the quality of temporary
accommodation has improved greatly. However most of it, notably
the short-term leased housing is expensive. The huge backlog of
temporary accommodation in London means that there is no operational
benefit and many serious risks in having so much short-term housing.
— Replacing half London's total of
the temporary accommodation with permanent housing would save
£3 billion in present value terms over the long run (APPENDIX
A).
— The output of new social rented housing
in London is lower in the late 1990s.
— It is striking that the proportion
(in numbers of homes) of the Housing Corporation funded social
rented output in London has fallen from over 75% to under 50%
over a period when temporary accommodation numbers have doubled
in London.
— One way of restoring social rented
output levels within the constraints imposed by the emphasis on
key workers would be to incentivise local authorities in "high
demand" areas to provide RSLs with funding to develop affordable
housing (APPENDIX B).
— Better value for money and lower
temporary accommodation numbers could be achieved by properly
supporting schemes eg the LAWN project which help people move
voluntarily from high demand areas to areas of low demand (APPENDIX
C).
— The relatively successful implementation
of the de facto extension of the priority need groups by the Homelessness
Act 2002 would be threatened if Supporting People funding for
housing for vulnerable people were to be significantly reduced.
— London boroughs have worked together
eg on projects such as NOTIFY to improve service delivery to the
homeless persons in temporary accommodation.
— There is scope for more effective
homelessness prevention targeted on local market opportunities.
It can be highly cost effective but it is by no means free.
KEY ISSUES
RAISED BY
THE ODPM SELECT
COMMITTEE
1. The overall level and nature of need for
housing for homeless people
1.1 Since 1996-97 the number of households
placed in temporary accommodation in London has more than doubled
to an all time high. Graph 1 below shows that the rate of acceptances
of homeless applications across London has not changed dramatically
over the last decade despite a significant extension of the priority
needs categories by the Homelessness Act 2002.
1.2 The total supply of new social lettings
available to local authorities including nominations to housing
associations (RSLs) has fallen by a third over the last decade
to close to 30,000 in 2003-04. The proportion of the available
supply going to the homeless has increased since the mid 1990s
in part offsetting the fall in supply. Nonetheless the annual
lettings to the homeless have fallen by almost a quarter.
1.3 The steady rise in temporary accommodation
use in London over the last seven years has therefore been driven
mainly by the fall in the supply of permanent social housing.
Graph 1
2. The success of policies meeting the needs
of homeless households
2.1 Government priority on ending of the
placement of families with children in B&B accommodation by
April 2004 was well aimed at those in the greatest need.
2.2 It was successful largely because:
— there was a broad consensus that
the use of B&B was highly undesirable;
— it was achievable because there was
future certainty in the funding regime for temporary housing alternatives
to B&B hotels to a large extent short-term leasing from private
owners;
— the market was such that private
owners were interested in short-term leasing deals;
— a reasonable time-frame was given
to local authorities, and additional resources were made available
to develop alternatives (although deadline pressure and the constraint
on resources has lead to a certain emphasis on measures with a
quick short term return); and
— whilst there was a national framework
with a clear national target, local authorities had adequate discretion
to find the optimal local delivery solution.
2.3 ODPM's Homelessness Directorate actively
encouraged local authorities not only to identify alternative
sources of temporary accommodation, but also to develop prevention
activity. The provision of additional funding to support this
shift enabled many local authorities to develop new initiatives
aimed at increasing housing options. There have been some very
successful schemes such as rental deposit schemes, which have
helped people on low incomes gain access to the private rented
sector as an elective alternative to applying as homeless.
3. The adequacy of investment in housing
for homeless people and the quality of accommodation available
to them
3.1 The high level of certainty offered
by the present funding system for temporary accommodation made
available by the Department for Works and Pensions (DWP) through
housing benefit, has worked. It has enabled boroughs to use effective
partnerships with housing associations (RSLs) and private landlords
in order to house homeless families in relatively good standard
private rented accommodation typically leased by the local authority
or by an (RSL) for up to five years.
3.2 Whilst this short term leased housing
is highly preferable to B&B accommodation, it is still a short
term solution. With a growing backlog there are severe medium-term
risks if the leasing market becomes more difficult. In the longer
term it provides poor value for money.
3.3 ALG and boroughs have suggested that
replacing the temporary housing with permanent housing would make
economic sense as shown by the analysis in the "Better Value
for Investment" proposal (APPENDIX A).
3.4 The severity of pressures at lower income
levels was indicated by the Barker report finding that 80% of
the national annual shortfall in housing was in "affordable
housing" (ie social housing and intermediate housing including
key worker housing).
3.5 Unfortunately the output of social rented
housing by RSLs in London has declined since the late 1990s when
it exceeded 6,000 per annum. It has now declined to below 5,000
per annum. It is expected to be around 5,000 per annum over the
next two years. There are a number of factors here including:
— Future restrictions on the rate of
rent rises increasing the grant per dwelling.
— A switch away from social rented
homes towards low cost home ownership.
— The ending of the Local Authority
Social Housing Grant programme by ODPM in 2003 which produced
over 1,000 social rented dwellings a year in London.
3.6 Without the Local Authority Social Housing
Grant programme it is much more expensive for local authorities
to fund RSLs to develop more affordable housing. ALG suggests
that a "Revenue Incentive Scheme" to encourage local
authorities to fund RSLs in high demand areas would more than
repay its costs through a reduction in temporary accommodation
costs (APPENDIX B).
4. Factors affecting the successful implementation
of the Homelessness Act 2002
4.1 The Act required councils to produce
homelessness strategies. This has been relatively successful again
because of a reasonable lead-in time and because ODPM made available
some resources.
4.2 Another consequence of the Act has been
more homeless single people accepted as being vulnerable, in priority
need and hence entitled to accommodation. Councils have been assisted
in responding to this trend by a Supporting People regime which
has funded support in their homes and homelessness prevention
services.
4.3 However the recent Supporting People
statement has announced a requirement for local authorities to
make efficiency savings of 5% on average and up to 7.5% (in 2005-06).
If in addition Supporting People resources are shifted away from
areas of high homelessness demand, as seems very possible, it
would jeopardise this success. In London some 25-30% of Supporting
People funding goes to projects with a significant homelessness
dimension.
5. The location of provision for homeless
people relative to where they live
5.1 Most homeless households wish to be
rehoused locally. Investment in housing needs to reflect this
preference, and should not seek to coercively "export"
homeless households to low demand/cheaper areas. Whilst there
are short-run savings here, it would not help create sustainable
communities in the long-run. Housing investment location should
reflect the geographical requirements of Londoners as well as
the size and affordability needs for accommodation.
5.2 Extending housing mobility is welcome
where this is driven by choice. There is considerable scope to
help people move voluntarily from high demand to low demand areas,
ALG hosted a pilot project (the LAWN scheme) which helps homeless
and other priority applicants move from areas of high to low demand.
This initiative—now part of the Housing Employment and Mobility
Scheme (HEMS)—allows homeless households greater mobility
and choice in the location of permanent rehousing and saves considerable
public expenditure.
5.3 Unfortunately there has not been adequate
incentives from ODPM to develop the such moves scheme despite
the large public expenditure benefits of reducing the cost in
high demand areas of providing temporary accommodation for the
backlog of homeless acceptances. The recent Prime Minister's Strategy
Unit London Project report highlighted the benefit s of initiatives
such as the LAWN scheme.
5.4 The attached note "Public Expenditure
Implications of LAWN moves" (APPENDIX C) points to savings
over 30 years with a present value of £1.7 billion from just
1,000 LAWN moves annually from high to low demand areas.
6. Balance of public investment in housing
for key workers and homeless people
6.1 Only 48% of the total output of the
Housing Corporation's scheme approvals for new RSL housing in
2004-05 and 2005-06 is for social housing. Two thirds of the remainder
of the output is for key workers.
6.2 As recently as 2001-02 over three quarters
of the output from the Housing Corporation programme in London
was for social rented housing. Whilst there is clearly a serious
need for key worker housing, there has not been any analysis which
demonstrates why the balance should be shifted so dramatically
away from social rented output.
7. Priority for the homeless within the overall
allocation of social housing
7.1 The pressures to reduce the use of temporary
accommodation in these circumstances has led to around two in
every three of lettings to new tenants in London going to homeless
households as is shown in Graph 2 below.
Graph 2
7.2 Many lettings eg sheltered housing,
one bedroom homes are not suitable for most homeless. The share
of suitable lettings going to the homeless is higher than above.
7.3 With over 60,000 households in temporary
accommodation in London and the numbers and costs growing, it
is entirely understandable that the proportion of new lettings
going to the homeless is so high. Nonetheless it is highly undesirable
on needs grounds alone. There are over 60,000 severely overcrowded
households in London and the number is growing by over 2,000 per
annum.
7.4 Further it is not desirable that such
a high percentage of lettings should be going to a single applicant
group. That group has a large number of young children which if
there are two many will tend to increase the child density above
desirable levels for housing management purposes. Homeless families
tend to be poor. Rehousing mostly homeless families will reduce
the degree of social mix on estates.
7.5 Giving other needs a larger share of
lettings and preserving a reasonable social mix on estates requires
a larger affordable housing supply. Otherwise better meeting other
needs would only result in the numbers in temporary housing rising
more rapidly.
8. Whether the non-housing services provided
for homeless people are adequate and are co-ordinated with housing
provision
8.1 The NOTIFY project is an excellent example
of local authorities working together across departments and in
partnership with the Primary Care Trusts, to ensure that homeless
households receive the support services they need.
8.2 There is scope to do more by way of
facilitating the return or entry to work for homeless persons
whilst they are in temporary accommodation. This would have a
range of personal and social benefits and offer potentially substantial
financial advantages for the public purse.
9. Whether public agencies are effective
in preventing people becoming homeless
9.1 The ODPM's support for homelessness
prevention initiatives has enabled local authorities to increase
their emphasis on homelessness prevention. The funding for new
prevention schemes is invaluable as homelessness prevention activity
can be costly for local authorities.
9.2 Whilst it is not feasible to precisely
quantify the long term effectiveness of various homelessness prevention
schemes, it is generally felt that homelessness prevention schemes
are very cost effective. Furthermore, providing alternative housing
options for people who are homeless or threatened with homelessness
can be beneficial the persons both socially and financially.
9.3 Initial indications from the evidence
available to the ALG is that there are considerable variations
in the effectiveness of different schemes dependent on local market
conditions in different areas.
9.4 It is also possible that the schemes
which work most cost effectively will change over time. For instance
at the moment the slack private rented market demand over the
past year has benefited schemes seeking to offer private rented
accommodation as an alternative housing option.
9.5 It is vital that those responsible for
developing and funding homelessness prevention schemes have an
eye to the wider economic situation and maintain the flexibility
to adapt to changes as they affect different local housing markets
and otherwise.
| 
