Over two-thirds of council homelessness services pushed into the red

By agency reporter
January 31, 2020

Rising levels of homelessness and the increasing cost of using expensive bed and breakfast accommodation to place families have plunged more than two-thirds of all council homelessness services in England into the red, according to new analysis by the Local Government Association (LGA).

Figures compiled by the LGA show that nearly seven in 10 council homelessness services are having to spend more than they planned to on homelessness support.

The LGA, which represents councils in England and Wales, is warning homelessness services are being pushed to breaking point as a result of rising demand driven by a severe shortage of affordable social housing and huge gaps between rents and housing benefits which is leaving housing too unaffordable for low-income families.

This is leaving councils with no choice but to place more and more families in temporary accommodation including bed and breakfasts. 

Latest figures show that council spending in England on placing families in bed and breakfasts rose by more than a fifth in the last year alone, from £93.3 million in 2017/18 to £114.9 million in 2018/19. There are 7,110 homeless households currently in bed and breakfast accommodation – a 15-year high.

The LGA is calling on the Government to use the forthcoming Budget to give councils the tools and powers they need to resume their historic role as major builders of good, quality affordable homes for social rent, and to invest in homelessness prevention to stop people from becoming homeless in the first place.

This comes as LGA analysis shows that 69.3 per cent (226) of councils responsible for housing in England (326) overspent their homelessness budgets. Councils planned to spend a total of £502.7 million in 2018/19. Yet they ended up overspending by a combined total of £140 million – almost a third more than they had budgeted for.

Rising homelessness pressures have also led to:

  • Temporary accommodation placements by councils having had to rise by almost 80 per cent since December 2010
  • An increase of more than 200 per cent in bed and breakfast accommodation being used over the same period
  • Councils having to house more than 86,000 households in temporary accommodation, including over 127,000 children.

The LGA is urging the Government to use the Budget to provide councils with sustainable, long-term funding to prevent homelessness in the first place. As part of this, it needs to give councils the powers and funding to spark a genuine renaissance in council house-building to provide the social homes for rent that are desperately needed to help boost affordability, home ownership and reduce homelessness.

For this to happen, councils need to be able to keep 100 per cent of Right to Buy receipts to reinvest in new homes, and to be able to set Right to Buy discounts locally.

It is also calling on the Government to adapt welfare reforms to protect families at risk of becoming homeless, by restoring local housing allowance rates to cover at least the lowest third of market rents.

Cllr David Renard, the LGA’s housing spokesman, said: “Homelessness is a tragedy for every individual who experiences it and one of the most pressing issues facing councils and the Government. To reverse rising levels of homelessness, which represents huge human consequences and financial costs, the Government needs to invest in homelessness prevention. Councils want to work with government to be able to prevent homelessness before it happens, but as a result of unprecedented funding pressures, they are becoming increasingly limited in what they can do.

“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.”

* Local Government Association https://www.local.gov.uk/

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