Government accused of underestimating homelessness costs

The government has underestimated the cost of tackling homelessness in the capital, leaving local authorities £200m out of pocket, according to new research.

The research carried out by LSE London on behalf of London Councils found that the boroughs spent over £919m on homelessness services in 2017/18, including £201m, which was not covered by central government grants or any other sources of income.

The report also warns that if current trends continue, the total cost of London’s homelessness services will increase to over £1 billion a year by 2021/22.

And if funding arrangements do not change, the cost to boroughs’ general funds is estimated to rise to £237m by 2022/23 – representing an increasing proportion of boroughs’ total homelessness spending.

The report examines the impact of the Homelessness Reduction Act, which came into effect in 2018 and gave all local authorities a statutory duty to prevent homelessness and relieve homelessness.

It states the number of London homelessness cases over the first five years of the Homelessness Reduction Act may have been underestimated by around 50% – with severe implications for boroughs’ services.

Around 55,000 London households required support from homelessness services in 2017/18.

This compares to an average of under 30,000 households per year in the previous decade (2008 to 2017).

The report also warns that the government’s assumption that the Act would be cost-neutral by 2020/21 is highly unlikely to materialise and not suggested by trends since the Act was introduced.

‘Even though London faces the most severe homelessness crisis in the country, the capital gets a raw deal when it comes to funding,’ said London Councils’ executive member for housing and planning, Cllr Darren Rodwell.

‘London boroughs are committed to tackling homelessness and making a success of the Homelessness Reduction Act, but this crucial work can’t be done on the cheap. It’s unsustainable to leave London boroughs covering more than £200m of costs from our general funds when our core funding has been reduced by 63% since 2010.

‘While we welcome the recent increase in homelessness funding set out in the government’s spending round, it does not come close to reflecting the true cost of addressing homelessness. The government must make sure London’s hard-pressed homelessness services have the resources they need.’

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