Hackney Council proposes 50% rise in service charges for homeless residents

Hackney Council is set to raise service charges by 50% for people living in its temporary accommodation hostels to bring down ‘significant’ overspends.

A report tabled at the council’s cabinet meeting on Monday warned it was seeing ‘significant increased demand and cost relating to the provision of temporary accommodation’, with the cost to the council expected to reach £10m for 2022/23 including a ‘significant overspend’ on the original budget.

‘The Government’s cuts to council funding and benefits caps mean that we don’t receive the funding we need to meet demand for TA and the rapidly rising costs and demand mean that we expect these pressures to worsen in the years ahead,’ the report said.

More than 3,500 residents approached the council for help with finding accommodation in 2021/22, a 44% rise since 2017/18. The council expects the number of approaches to continue to rise by around 8% a year.

While temporary accommodation usually takes the form of private housing that councils pay to secure for use by homeless people, Hackney Council has its own in-house hostels. It sets a service charge for residents of £6 a week per household to cover heating, lighting, hot water and council tax bills.

However, the costs of these utilities have become a budgetary pressure for the council. The report said that ‘in the years since [the service charge] was last reviewed the true cost to the Council has risen significantly and is now estimated to be £19.75 / week, leaving a significant shortfall’.

‘While it is relatively unusual for councils to run their own hostels, we have tried to compare with other councils who do and the equivalent charges in a similar borough are understood to be £19.07 / week – £27.41 / week,’ the report continued.

‘We know that simply changing our service charges to reflect full cost will be challenging for hostel residents, especially in light of the cost of living crisis.’

As a result, the council report proposed increasing the service charge from £6 a week to £9 a week – a 50% rise equating to £156 a year, taking the total annual service charge to £468. The rise is to take effect from May 2023, allowing for a month’s advance notice.

The report said the higher service charge would reduce the budgetary pressure on the council by £500,000 a year, while still leaving hostel residents paying “well below” the market rate for utilities.

‘Officers will also be looking at our longer term strategy for service charges, and we propose to take a phased approach to further increases that are needed to address the shortfall so that the impact on residents is mitigated,’ the report said. ‘Recommendations from this review will be brought back to Cabinet in due course.’

Image: Samuel Regan-Asante