Welsh councils must take action to better evaluate the range of temporary accommodation available, better consider the value of outcomes and take a more preventative approach towards tackling homelessness to deliver improved outcomes for taxpayers and the homeless, says a new report from Audit Wales.

Published on 14 July, Temporary Accommodation, Long-term Crisis? notes that councils are spending “considerable amounts of money” on short-term housing solutions that are often failing to meet people’s needs. It finds that when assessing value for money “councils generally focus on the cost of provision, but not the outcomes or value it provides”. In parallel, local authorities have made only limited progress on improving prevention of homelessness.

Increasing need for support

Research for the report shows that in the past decade, demand for temporary accommodation in Wales has increased almost five-fold.

A significant driver is the Welsh Government’s ‘no one left out’ policy, adopted during the pandemic, which sought to ensure that everyone has access to a safe place to live. Other contributing factors include the Local Housing Allowance rate coming in below market rate and the supply of new housing failing to keep up with demand.

On a macro level, councils are also grappling with growing poverty levels amid the cost-of-living crisis, plus increasing financial pressures on public services.

In 2019, Welsh councils spent around £28m on temporary accommodation. However, in the financial year 2023-24, the figure stood at almost £172m. Indeed, from 2019-20 to 2023-24, councils spent £356m in revenue and £92m in capital on funding the provision of temporary accommodation in Wales.

By March 2025, 10,800 people were housed in Welsh temporary accommodation: a 200% rise since the collection of data began in August 2020. Among those individuals, 24% were children under the age of 16. The figures also show that repeat placement is common.

Alongside the financial burden, the human cost is significant. Audit Wales cites Nowhere to Call Home, a 2024 study from the Bevan Foundation and Shelter Cymru, which concludes that living in temporary accommodation can worsen people’s mental health for a range of reasons – for example, poor quality of the housing provided and placements being too far away from local networks and services. In its own research, Audit Wales found that life in temporary accommodation can derail the progress of recovering drug addicts and expose young children to drug use.

Audit Wales notes that on 19 May, the Welsh Government introduced the Homelessness and Social Housing Allocation (Wales) Bill, which aims to “transform the homelessness system in Wales” via measures such as a focus on prevention and boosting joint work between public services. For the current financial year, the Welsh Government has allocated £219.5m to Homelessness Support and Prevention.

However, the legislation and finance may struggle to make an impact amid multiple shortcomings at a local level. According to Audit Wales, councils:

• do not understand whether they are getting value for money (VFM) from their temporary accommodation,
• find it difficult to predict demand in the medium to long term, and
• do not have in place clear plans to ensure their workforces are equipped with the means to prevent demand.

Councils also find it hard to work effectively with partner organisations in business and the third sector to prevent homelessness. As such, many “are operating in ‘firefighting’ mode” on the issue.

Plan for prevention

Audit Wales stresses that councils should define value for money under a ‘Three Es’ model:

• Economy – getting the right deal Securing necessary inputs to help achieve intended outcomes at the lowest possible cost.
• Efficiency – doing the right thing Making the most of inputs to generate outputs designed to achieve intended outcomes.
• Effectiveness – getting the right results Achieving intended outcomes for the short and longer term.

“VFM is therefore not just about costs, but about the quality and effectiveness of the service delivered for the money spent,” the report says. “People living in temporary accommodation are often in a vulnerable situation and need support to help them move into stable and appropriate accommodation.”

With that in mind, Audit Wales urges councils to take a three-pronged approach.

First, they should consider the full spectrum of approaches and options for temporary accommodation provision from a VFM perspective. That means explaining how they will assess and monitor the overall VFM of the provision, factoring in intended outcomes and which data sources they will use to evaluate the service under the ‘Three Es.’

Second, councils should plan for prevention. Steps would include using relevant data to make the best possible estimate of future demand for homelessness services, including a range of primary, secondary and tertiary approaches in their plans – with an emphasis on primary prevention wherever possible – and modelling the impact of policy changes on skills and capacity requirements.

Third, councils should improve their collaboration with partners. That means working with them to identify existing respective roles and responsibilities, and to agree how to address gaps in – and/or duplication of – services. Councils should also regularly evaluate how effectively their partnerships are working to prevent homelessness.

In a statement, Auditor General for Wales Adrian Crompton said: “Councils are currently in ‘firefighting’ mode, focused on dealing with high costs and levels of demand. I recognise how challenging it may be to make the shift, but councils need to focus more on prevention and assessing the value for money of temporary accommodation options. There’s a risk if this doesn’t happen that short-term solutions will become a long-term crisis both for those experiencing homelessness and for public finances.”

Alison Ring, ICAEW’s Director of Public Sector and Taxation, said: “In February 2024, Crompton called for a bold vision for public services in Wales to move from a spiral of short-term firefighting to future proofing for long-term sustainability. As the latest Audit Wales report shows local councils need to consider more than just the financial cost of implementing homelessness solutions to help prevent future crises.”