Local Authorities Seek Increased Government Funding for Homelessness Costs

English councils, grappling with escalating homelessness expenditures, are urging the government to contribute a larger share of the financial burden, the BBC has disclosed. Local authorities, which provide temporary housing, typically cover the initial costs and then claim reimbursement from the central government. However, the cross-party Local Government Association (LGA), representing councils across England, asserts that a 2011 decision to freeze the amount they can reclaim has cost them nearly £740m over the past five years. The LGA indicates that these funds would otherwise have been allocated to areas such as adult social care, children’s services, and homelessness prevention initiatives. The association is calling on the Labour government to update the current system to reflect 2024 costs. The LGA states that the growing number of individuals requiring temporary accommodation, coupled with rising per-person costs, has led to a funding deficit of £737.3m over the last five years. “You’ve seen the dramatic increase in the cost of rents since 2011,” Adam Hug, the LGA’s housing spokesperson, told the BBC. “So it’s getting increasingly expensive in a constrained market to find places that are suitable for people to live at costs that councils can afford.” The scarcity of available accommodation options has compelled many councils to utilize more expensive alternatives, such as hotels and bed and breakfasts, to house those in need. Official government data released last week revealed a record 123,100 households were in temporary accommodation at the end of June, representing a 16% increase from the previous year. Matt Downie, chief executive of homelessness charity Crisis, told the BBC: “As more and more people are pushed into homelessness due to rising living costs and sky-high rents, they have nowhere else to go but to their local council, who too often have nowhere to put them but into expensive temporary accommodation that is often unfit for their needs.” If an individual meets the criteria for receiving temporary accommodation, it is frequently the responsibility of their local council to secure them a place to stay. The council is then typically reimbursed by the Department for Work and Pensions, using the individual’s benefits. Historically, the maximum amount a council could reclaim was capped at 90% of the Local Housing Allowance, which is used to calculate benefit entitlements. However, the coalition government froze that cap based on 2011 rates, and no subsequent government has unfrozen it. “[Then-Chancellor] George Osborne and his gang decided to pass the buck to local authorities, and try and bear down on the benefits bill at the cost of many other things,” said Hug, who is also the Labour leader of Westminster City Council. The LGA reports that the funding gap, defined as the difference between what councils have paid out in housing benefit to households in temporary accommodation and the amount reimbursed by central government, has doubled from £104.5m in 2018/19 to £204.5m in 2022/23. London and other major cities have generally been most affected, with Manchester, Newham, and Westminster councils recording the largest funding shortfalls. “We absolutely recognise the pressures in the government’s finances,” said Hug, but he urged ministers to ensure “fair burden-sharing between local authorities and national government” when it came to funding temporary accommodation. Labour’s general election manifesto pledged “a new cross-government strategy, working with mayors and councils across the country, to put Britain back on track to ending homelessness”. While the chancellor did commit an extra £230m to combat homelessness in the Budget, no such strategy has yet been launched. The LGA has called on the government to “urgently” introduce that plan, which it states must address the “lack of genuinely affordable homes”. Labour has committed to building an additional 1.5m homes over the next five years to tackle the housing crisis, but a BBC investigation earlier this week revealed that the vast majority of councils have expressed doubts about the achievability of that goal. The total cost for councils funding temporary accommodation in 2022/23 was £1.75bn. This figure is in addition to the millions of pounds spent daily by central government on housing other groups, such as asylum seekers. A spokesperson for the Department for Work and Pensions said: “We have inherited a housing system which is broken, which is why we are committed to the biggest increase in affordable housing in a generation, and to ensuring our social security system is fair and sustainable.”