The cash came with a caveat for councils: they could only spend half of the money on temporary accommodation.
That was a big problem, particularly in London, which accounts for 56% of households in temporary accommodation in England, and where councils are spending around £5m a day, according to London Councils.
Overall, council spending on temporary accommodation in England reached a record £2.8bn for 2024-25 and continues to push council budgets to the limit.
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But what did councils spend the money on?
What we found
Of the top 20 local authorities with the highest number of households in temporary accommodation, 14 have responded to Big Issue’s requests at the time of writing.
All but one are based in London, with Manchester the sole response outside the English capital. Birmingham – which has the second largest number of households in temporary accommodation – and Liverpool – the 20th – have so far not responded.
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Even so, the responses give us an insight into how £162m in government funding is being spent.
In total, eight of those 14 local authorities spent more of their homelessness prevention grant on temporary accommodation than preventing people from becoming homeless in the first place.
In the London borough of Newham – where almost 7,500 households live in temporary accommodation, the most in a single area in the country – more than £22.5m was received through the homelessness prevention grant.
More than £10.8m of that money went on housing families in temporary accommodation. That complies with the terms of the grant, coming out at just over 48% of the funding.
But when £7m in staffing costs are taken into account, just £4.6m went on prevention. That amounted to just over 20% of funding.
It’s a similar story in Westminster and Lambeth, another two local authorities in the top five across England.
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Some London boroughs told us even less was being spent on prevention.
Tower Hamlets said just 8% of its £11.6m grant allocation went on prevention, amounting to £934,801.
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Others such as Southwark, Redbridge, Haringey and Hackney told Big Issue they spent less than 20% of the fund on prevention.
It was outside London where the highest proportion of spending went on prevention, perhaps speaking to a difference in demand by region.
In total, 58% of Manchester’s £10.5m fund went on prevention, the city council said.
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Some London boroughs did manage to spend more than half the allocation on preventing homelessness.
Hackney Council told Big Issue that £6.4m of its £12m allocation went on prevention or homelessness relief duties.
Meanwhile, in Croydon, £7.3m went on prevention, the council said, compared to £6.5m on temporary accommodation.
Commenting on the findings, Big Issue founder Lord John Bird said: “Prevention has become Westminster’s favourite buzzword, a way for this Labour government to distinguish its approach from the one that came before. But it’s clear the government’s ‘record investment in prevention’ is more cash for firefighting.
“Council budgets are clearly creaking under their weight of record homelessness duties, and their decision to prioritise resourcing temporary accommodation is understandable. But we must invest in the long-term solutions alongside the short-term sticking plasters to make serious progress on reducing homelessness in the UK.
“One thing that is encouraging to see is that Manchester leads the pack in actual spending on prevention. Andy Burnham would do well to replicate what’s being done in his former mayoralty at a national level to deliver on his day-one promise of eradicating rough sleeping.”
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The situation in Lambeth
Lambeth sits fourth on the league table of councils with the most households in temporary accommodation, with 4,425 households requiring support. The local authority received £13.6m through the homelessness prevention grant and more than £6.3m of that was listed as “payments to landlords”. A further £2.8m was described as incentives.
Lambeth Council told Big Issue incentives are described as “a generous non-refundable cash incentive” offered to landlords who agree to rent to a household at the local housing allowance rate.
“Well, it’s pretty startling, isn’t it? That basically half the money from the homelessness prevention grant was paid to private landlords,” Councillor Martin Abrams, the leader of Lambeth Council, told Big Issue.
“That is indicative of the housing emergency. I’ve gone beyond calling it a housing crisis in Lambeth. It’s a housing emergency because of the situation that many, many families are living in.”
The Green Party took control of Lambeth Council in May with Streatham Hill East councillor Abrams taking on the role of leader.
He’s been a councillor in the borough for four years, so he was not blind to the scale of the homelessness situation the council is facing.
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The overall bill for people in temporary accommodation in Lambeth totals around £100m per year. That shows the strain on council budgets with local authorities across London and other parts of England drawing on reserves to keep up with the costs.
The Local Government Association (LGA) recently said council expenditure on temporary accommodation increased by 1,077% in real terms between 2011-12 and 2024-25.
Councils struggle to recover what they pay out to landlords for temporary accommodation because local housing allowance rates for reimbursement are locked at 2011 levels despite rising rents since then.
Cllr Eamonn O’Brien, chair of the LGA, said: “Temporary accommodation is a huge leak in council budgets that needs to be patched quickly and, at its heart, transform the lives of families and children across the country.”
Lambeth councillor Abrams told Big Issue that paying money to private landlords, often for former council homes sold through the Right to Buy scheme was trapping local authorities in a “doom loop”.
Last year Big Issue investigated the scale of so-called yo-yo homes, finding more than 100 examples of council homes being sold off then bought back, costing local authorities millions.
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“The temporary housing issue is exacerbating the housing emergency because you are basically creating the demand for more private landlords,” Abrams added.
“Often some of these private landlords – which is bonkers – are renting out former council properties back to the council.
“I mean, what world are we living in where private speculators and landlords are able to snap up former decent council housing at a cut price and then rent it back to the council at exorbitant rent?
“We are living in a kind of a landlord-class world at the moment.”
What can Labour do to solve it?
As he was announced as Labour leader, Burnham made clear that he considered the issue among his top priorities.
“If the sell-off of council homes leaves the country chasing rents in the private rented sector through the benefits system and paying for temporary accommodation for thousands of families as they have to do here in London and across the country, how then will we find the money to invest in prevention and improve people’s lives? The truth is we can’t,” the new prime minister said in his speech.
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Long-term, the answer is undoubtedly building social homes. Burnham has pledged the “biggest council house building programme since the postwar period”.
How he plans to do that – and deliver the state-backed housebuilding that many believe is required to do it – is, so far, unclear.
Abrams would like to see Burnham and housing secretary Rayner – who once bought a home through Right to Buy – finally kill off the Thatcherite scheme.
The Labour government is currently amending the Right to Buy scheme in England. It has already been abolished in Scotland and Wales.
Ministers have announced tenants will have to live in a home for 10 years, up from three, to buy their home and discounts under the scheme are set to be tightened.
There will be a 35-year exemption on newbuild social properties being sold under Right to Buy in a bid to give councils more confidence to build new homes.
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Abrams does not believe it goes far enough and called on Burnham to do more.
“If he was serious about tackling the housing crisis, the first thing he would have said is he’s going to end Margaret Thatcher’s Right to Buy,” he said.
“Because that is the cause, homelessness is the symptom. You need to go to the root cause of the housing emergency and one of the biggest issues over the last four decades has been the Right to Buy. It has decimated local authorities’ council housing stock. They have not been replaced like for like and that has meant there is nowhere near enough supply for the demand that councils are facing.”
The other leak Abrams would like to see Burnham address is on empty homes.
Lambeth Council currently has more than 700 empty council properties on its books which need renovating before they can be let out to homeless families.
“Local authorities often are very keen on redevelopment rather than refurbishment and retrofitting,” said Abrams.
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“There’s been a big policy of estate regeneration across London, not just Lambeth, which has meant many of these estates have just been left in a state of managed decline with increasing numbers of empty properties.
“I’ve instructed officers here to give me a full list of when those properties will be put back into public use and we can start getting people off the temporary accommodation list and actually living in council properties.”
Big Issue has been among those calling for a Westminster government strategy on empty homes.
Lord Bird has been submitting amendments to the government’s Social Housing Bill in a bid to establish a government-backed loan scheme to help councils purchase or lease empty properties and make them fit for habitation.
Abrams said that “radical” policies are needed.
“I think there should be a policy that if you’ve got an overseas owner that’s bought a property and left it empty for more than a year then the state can basically claim it back,” he suggested.
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“We can’t tiptoe around the edges anymore when you’ve got a homelessness crisis, a housing emergency, and local authorities basically spending billions and billions and billions to private landlords every year.
“That money should be being spent on building houses rather than lying in the pockets of individuals.”
Burnham has set out his ambition to move towards prevention and lead a council house revolution.
Big Issue’s research shows he faces a huge task in turning around the current housing emergency to make the prevention of homelessness more than just an ambition.
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