Without government intervention, the rising costs of homeless accommodation could bankrupt boroughs in England’s capital, London Councils has warned.
Data indicates that the monthly spend on temporary accommodation for homeless people in London increased by nearly 40% last year and reached £90m.
Between September 2022 and September 2023, the number of Londoners looking for homelessness support from their local borough jumped by 14.5%.
Over 175,000 people in London are living in temporary accommodation, which is the same as one in 50 people. The figure also accounts for around 85,000 children, or in one in every London classroom.
London Councils is calling for the government to give councils more support to reduce the risk of them needing a section 114 notice and effectively going into bankruptcy.
“...it’s no exaggeration to say these enormous costs pose a bankruptcy risk.”
London Councils says lifting the cap on how much boroughs can get from the government to subsidise their temporary housing costs should be a top priority for ministers – especially as the 2011 benefit rates it is linked to no longer reflect current pressures.
“Boroughs work hard to house homeless Londoners,” explained Councillor Darren Rodwell, the executive member for regeneration, housing and planning at London Councils.
“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.”
Government data suggests the homelessness crisis is most pronounced in the capital, as London accounts for more than half (57%) of England’s 105,750 homeless households in temporary accommodation.
In March 2010, the number of households in temporary housing stood at 36,000 in London – as of last September, this has almost doubled to 63,000.
If the £90m monthly spend trend continues, that would mean annual spend of over a £1bn on temporary accommodation for homeless people in London. Boroughs are currently forecast to overspend their homelessness budgets by a minimum of £150m this year.
“We’re urging ministers to boost funding support for boroughs grappling with a worsening homelessness crisis,” added Cllr Rodwell.
“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.”
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