Housing

Council spending on homelessness triples in eight years

Homelessness spending now accounts for 60% of councils’ housing budgets, reducing their ability to build social housing, warns the Local Government Association

silhouette of person looking out of the window

The number of households living in temporary accommodation in England has grown by 12% in the last year alone and it is leaving some councils on the brink of bankruptcy. Image: Jorge Salvador / Unsplash

Councils in England are spending three times as much of their housing budgets on homelessness and temporary accommodation than they did in 2015 – and it’s preventing them from building the social housing needed to end the housing crisis.

New analysis from the Local Government Association found council spending on homelessness has increased by 42% since 2015/16, up £733m.

Spending topped £1bn in 2023/24 and is stretching councils’ budgets much further than a decade ago when local authorities paid £315m to support people experiencing homelessness.

The issue now swallows up 60% of councils’ total housing budgets compared to 18% in 2015.

Meanwhile, a record-high 113,000 households in temporary accommodation means councils are spending £1.75bn annually – and both of those figures are due to rise in the future, the LGA warned.

The financial toll is limiting council spending on homelessness prevention and the ability to build social housing long-term, according to LGA housing spokesperson councillor Claire Holland.

“Homelessness pressures on councils are spiralling as a larger proportion of their budgets is put towards costly temporary accommodation due to a lack of social housing,” said Holland, who is the leader of Lambeth Council.

“The way to properly resolve the issue is to address the shortage of suitable housing across the country and build up councils’ stock of social housing.  

“Councils need to be given the powers and resources to build affordable homes their communities need so they can resume their historic role as a major builder of affordable homes.”

The Big Issue’s Blueprint for Change has called on the next government to commit to building more affordable and social housing to lift people out of poverty.

But a number of councils have warned that they are facing bankruptcy due to the rising costs of homelessness and temporary accommodation.

The District Councils Network held a summit in November last year to sound the alarm.

The council that hosted the summit, Eastbourne Borough Council, said it was spending 49p from £1 of its existing budget on temporary accommodation. Council leader Stephen Holt described the situation as a “national crisis”.

Research from Generation Rent found that just under a quarter of the 249 local councils in England the group analysed was spending £1 in every £20 of its budget on temporary accommodation in 2022 and 2023.

Hastings, Crawley, Arun, Swale and Rother were among the local councils with the biggest proportion of spending to support households in temporary accommodation.

The leaders of 16 Labour, Conservative and Liberal Democrats local authorities which make up some of the biggest council house landlords in England said in March that the issue was leaving the future of council housing under threat.

Councillor Kieron Williams, leader of Southwark Council, said: “Council homes provide affordable and decent homes to our communities and are a critical foundation for a good life. This cross-party strength of feeling must send a warning to the government that we have now reached a critical point and the future of council housing in England is under threat.”

The LGA has called on the next government to reform Right to Buy to allow all homes sold to be directly replaced as well as exemptions for newly built homes.

The council group also wants the abolition of permitted development rights, which allow commercial buildings to be converted to residential without planning permission, and an increase in affordable housing programme grants to keep up with inflation.

Like the Big Issue, the LGA is also calling for no-fault evictions to be banned to protect renters as well as a commitment from the new government that local housing allowance (LHA) will be uprated to cover the bottom 30% of private rented properties.

LHA was unfrozen in April for the first time since 2020 with the government spending £1.3bn to uprate housing benefits but they are set to be frozen once again next year. 

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