£90m monthly spending on homelessness accommodation ‘threatens to bankrupt boroughs’
New research from London Councils has found that boroughs’ monthly spending on temporary accommodation for homeless households increased by almost 40% in 2023.
Since the start of the cost-of-living crisis, homelessness rates have skyrocketed across the capital city. As a result of a shortage of affordable accommodation, severe strain has been cast on boroughs’ budgets, with London Councils labelling this a ‘critical danger’ to their financial stability.
Ahead of the Spring Budget being delivered next week, the cross-party group is calling for more government support to help councils meet these monthly costs and reduce the risk of requiring a Section 114 notice – effectively declaring bankruptcy.
Ever since inflation rates started to climb, five councils have officially issued a Section 114 and there was several warnings throughout 2023.
A top priority is for ministers to lift the ‘unfair’ cap on the money boroughs can receive from the government to subsidise their temporary accommodation spending, which is currently tied to 2011 benefit rates no longer reflecting temporary accommodation costs.
Cllr Darren Rodwell, London Councils’ Executive Member for Regeneration, Housing & Planning, said: ‘Homelessness has a devastating impact on individuals and families, while also bringing massive and unsustainable costs to boroughs’ budgets.
‘Boroughs work hard to house homeless Londoners. However, London’s ballooning temporary accommodation bill is a critical danger to boroughs’ financial stability. If things go on the way they are, it’s no exaggeration to say these enormous costs pose a bankruptcy risk.’
‘We’re urging ministers to boost funding support for boroughs grappling with a worsening homelessness crisis,’ Cllr Rodwell said. ‘Ending the unfair cap on housing benefit subsidy rates for temporary accommodation would relieve much of the pressure on boroughs’ resources, helping us balance the books while providing homelessness support to everyone who needs it.’
In addition to calling on the government to help councils with temporary accommodations costs, London Councils’ analysis also found that:
- The number of Londoners seeking homelessness support (from their local borough increased 14.5% between September 2022 and September 2023
- The number of London households living in temporary accommodation arranged by their local borough increased by 7% over the same time period
- More than 175,000 Londoners are homeless and living in temporary accommodation – equivalent to one in 50 residents in the capital
- A vast number of private landlords that are renting out their properties as temporary accommodation are cancelling these arrangements, as they are instead renting to private tenants or selling the properties altogether. The number of landlord ‘notices to quit’ received by boroughs rose by 56.5%
Image: Fred Moon
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