Council bills for homelessness spiral over budget

Nearly 70% of councils with housing responsibilities overspent their budget for homelessness services last year, pushing them towards breaking point, the Local Government Association (LGA) has said.

It blamed rising levels of homelessness and the increasing cost of bed and breakfast accommodation for adding £140m last year to what should have been a £502.7m bill for homelessness.

3rd LATIF NORTH
March 25th, 2020, Manchester
Council treasury investment & borrowing

Demand for homelessness services was driven by a severe shortage of affordable social housing and large gaps between rent levels and housing benefit, which the LGA said made available housing unaffordable for low-income families and forced councils to resort to temporary accommodation including bed and breakfasts.

Spending on bed and breakfast accommodation alone rose from £93.3m in 2017-18 to £114.9m in 2018-19, with 7,110 homeless households now relying on such housing, the highest level in 15 years.

The LGA said 69.3% of councils responsible for housing – 226 authorities – overspent their homelessness budgets in 2018-19, with the £140m increase taking the total to £642.7m

It said temporary accommodation placements by councils had increased by 80% since December 2010 to 86,000 households, while use of bed and breakfasts rose by 200% over the same period.

Government action is needed in the forthcoming Budget to provide councils with sustainable, long-term funding to prevent homelessness arising in the first place, the LGA said.

Councils should be given the powers and funding needed for a “genuine renaissance in council house-building” funded by allowing them to retain all right-to-buy receipts to reinvest in new homes, with discounts for these sales set locally.

Local housing allowance rates should be set to cover at least the lowest third of market rents.

David Renard, LGA housing spokesman and Conservative leader of Swindon Borough Council, said: “To reverse rising levels of homelessness, which represents huge human consequences and financial costs, the Government needs to invest in homelessness prevention.”

Funding pressures had limited what councils could do but Renard said: “We desperately need to be able to build more social housing to reduce the number of families being placed in temporary accommodation and bed and breakfasts.

“With adequate funding and powers, councils can boost efforts to prevent homelessness and get back to building the affordable homes the country needs.”

Council spending on homelessness services

The Room151 Weekly Newsletter covers local government treasury and pension investment, funding, development, resources and technical finance. Register here. 

The LGPS Quarterly Briefing focuses purely on pension fund investment. Register here.