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Cost

Posted06.06.24

There is no way around it: ending homelessness will cost money.

Lots of approaches must be taken to tackle this complex issue, and all of them involve significant investment. This is a daunting prospect for any future government. But while the cost of acting is undeniably high, the cost of doing nothing is greater still.

To see why, let’s first consider what investments are needed to stop homelessness.

Home building is certainly necessary. Prominent voices like Shelter and the National Housing Federation are calling for the construction of 90,000 new homes each year. They estimate the cost will be around £35.4 billion per annum.

However, even when more homes become available people will still face the threat of homelessness. It can arise from family breakdowns, illness, mental health crisis or all manner of other unexpected events. When this happens outreach services must be there to step in, fast. Those services need more staff and greater material resources to meet the level of need they are seeing. This means increased investment from central and local government.

Next comes emergency accommodation and supported housing, which people are referred to by outreach teams and local authorities. There are not enough of these services to meet current demand, meaning that more must be commissioned. If this does not happen then people end up in expensive, unsuitable temporary accommodation (more on this below).

Once people are in supported housing, they often need mental health support or specialised assistance for issues like substance misuse. Local authorities – whose funding ultimately comes from central government – must invest in more of these services in order to help people move on from homelessness for good. Finally, once people move on from supported accommodation they may still need some support. This might be personal support in the form of floating support workers, but it might also mean financial support in the form of housing benefit. For that to work effectively we must unfreeze local housing allowances, creating further expense.

That certainly sounds like a lot of extra spending. However, we must consider the long-term costs incurred by not taking these steps.

London Councils recently found that local authorities in the capital are spending £90 million on temporary accommodation every month in order to house everyone that they need to. This is expensive, and crucially it also fails to provide any of the wider support that supported housing providers do. This means that people take longer to move on from homelessness, incurring the cost for a greater period.

Furthermore, we know that people who have a stable home are also more likely to secure and maintain employment. By not providing the tailored support people need, we are hampering their return to work. This is not good for the person involved. But it also impacts wider economic growth and creates increased expense in terms of government support via universal credit.

Homelessness also has knock-on effects on physical health, in particular for those who experience it for a long time. It falls to the NHS to address this. By stopping homelessness before it becomes entrenched, we can avert some of the health implications that it has for people, and by extension reduce health spending. In the report mentioned above, the NHF and Shelter estimated that more effective responses to homelessness could save the NHS around £5.2 billion.

On top of these considerations, we also have the negative knock-on effects of insecure housing on childhood opportunity, mental health, productivity and a range of other social issues. All of these are not only human tragedies, but significant financial losses when considered in the broader economic context. In fact, although we can try to put figures on them, it is difficult to quantify exactly how much is lost in these areas.

Any new government coming in on the 5th July will need to make difficult choices about where they invest for the future. However, we believe that tackling homelessness is not one of these difficult choices because the answer is obvious: we must make the investments necessary to address this issue. By doing so we not only solve a serious problem, but we deliver long-term financial benefits for wider society. The price of not doing so is simply too high.

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