London boroughs’ monthly spending on temporary accommodation for homeless households grew by almost 40 per cent last year, new data reveals.
It means the capital’s councils collectively spent around £90 million a month putting people up in hostels, bed and breakfasts, and other forms of emergency housing.
The ballooning expenditure has been labelled a “critical danger” to the financial stability of councils, who made a plea for more support as Chancellor Jeremy Hunt prepares to announce details of his Spring Budget on March 6.
The Government said it is giving the city’s boroughs £352 million over three years, through the Homelessness Prevention Grant.
London Councils, the parent body for the capital’s local authorities, said ministers should lift the “unfair” cap on the money boroughs can receive from the Government to subsidise their temporary accommodation spending, which is currently tied to 2011 benefit rates. They said these rates no longer reflect the costs incurred.
Darren Rodwell, London Councils’ executive member for housing, said: “Homelessness has a devastating impact on individuals and families, while also bringing massive and unsustainable costs to boroughs’ budgets.
“Boroughs work hard to house homeless Londoners. 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.”
Mr Rodwell, who is Labour leader of Barking and Dagenham Council, added: “We’re urging ministers to boost funding support for boroughs grappling with a worsening homelessness crisis.
“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.”
A spokesman at the Department for Levelling Up, Housing and Communities said: “We are committed to preventing homelessness before it occurs.
“The Government is increasing the Local Housing Allowance to the 30th percentile of market rents from April, benefitting 1.6 million low-income households by an average of approximately £800 a year to help pay their rent and stay in their homes in 2024-25.
“We are giving councils over £1 billion through the Homelessness Prevention Grant over three years, including £352 million for London between 2023 and 2025.”
According to Government data, London alone accounts for 57 per cent of England’s 105,750 homeless households living in temporary accommodation.
Since 2010, the number of London households in temporary accommodation has almost doubled – from 36,000 in March 2010 to 63,000 in September 2023, according to London Councils’ latest data.
The main causes are thought to be the fast-rising cost of living and turbulence in London’s private rented sector, alongside the shortage of affordable housing.
A London Councils analysis has found that more than 175,000 Londoners are homeless and living in temporary accommodation – equivalent to one in 50 the capital’s residents. This figure also includes 85,000 children – suggesting on average at least one homeless child in every London classroom.
