The cost to councils of providing temporary accommodation for homeless people in England is projected to more than double to almost £4bn by 2029–30, the Local Government Association (LGA) has said.
The national membership body for councils found that since 2017-18, local authorities across England had spent almost £1.5bn more on temporary accommodation (TA) than had been reimbursed in housing benefit from the government.
Without intervention, this figure is set to balloon to £3.9bn in the next four years, the LGA said as it urged the government to take action to help councils facing soaring demand and funding pressures.
It also found that the annual cost to councils of TA was set to grow by 65% in the next five years, from nearly £360m to £595m.
Tom Hunt, the chair of the LGA’s inclusive growth committee and leader of Sheffield city council, said the TA “subsidy gap is a problem that is getting worse each year”.
“Because of this ever-widening issue, councils are caught in a vicious cycle of ever-increasing temporary accommodation costs versus static rates they receive back to cover their costs,” he said.
The scale of the temporary accommodation crisis in England, in which homeless people are placed in hotels, B&Bs or self-contained flats, shows no sign of abating after soaring to record levels following the Covid pandemic.
Last week, data showed the number of children living in temporary accommodation had increased to the highest levels on record, up 12,020 in a year to 175,990. More than 130,000 households live in TA in total.
Local authorities cover the cost of temporary accommodation, and the amount they can claim back from the Department for Work and Pensions (DWP) is capped at 90% of local housing allowance (LHA) rates set back in 2011.
The LGA said the problem was getting worse as the demand for temporary accommodation rises and councils can claim back less.
In 2024-25, councils in England spent a total of £1.27bn on temporary accommodation and were reimbursed £911m by the DWP – leaving a gap of almost £360m.
“We urge the government to uprate housing benefits to 90% of the current [2024] LHA rate,” said Hunt. “This would give a huge boost to council finances, money which could go towards preventing homelessness and building the homes that our communities desperately need.”
The LGA said this change would reduce the projected cost increase by 37% and save councils £1.5bn.
The government has vowed to reduce the use of temporary accommodation to house people, with the homelessness minister, Alison McGovern, saying she wanted to end the use of B&Bs by the end of the parliament.
Despite calls from across the homelessness sector for a boost, the government has frozen local housing allowance rates until 2026, and instead said building more homes and tackling bad practice in the private rented sector would solve the problem.
A government spokesperson said: “We’re tackling the impact of rising rents and the housing shortage with our commitment to build 1.5m homes - including the biggest boost to social and affordable housing in a generation.
“We are also investing more than £1bn in homelessness services, launching a cross-government homelessness strategy, and investing a record £39bn in affordable and social housing.”
