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Council leaders from across England have urged ministers to urgently uprate funding subsidies for temporary accommodation, warning that soaring levels of homelessness threaten to tip many authorities into insolvency.
Local leaders, speaking on Tuesday at an emergency meeting in Westminster, said budgets were being devastated by the exponential cost of keeping vulnerable people off the streets.
They called on the government to raise the “housing benefit subsidy”, which supports councils with the provision of temporary accommodation, in line with inflation.
The subsidy has been capped since 2011, which has led to a growing gulf between what councils pay to fulfil their statutory duty to help the homeless and the support they receive from central government, as the cost of housing has risen.
“They are presiding over the end of local government if they fail to take the urgent action needed,” said Michael Jones, Labour leader of Crawley council in West Sussex.
The annual cost of providing temporary accommodation in his district had risen from a manageable £262,000 five years ago to more than £5mn last year, Jones said, and was using up a third of council spending.
“It’s the acceleration of the issue that is so concerning,” he added, explaining that an increase in homelessness among asylum seekers in the borough had added to recent pressures.
The meeting came after more than 40 Tory MPs, including seven former cabinet ministers, wrote to Prime Minister Rishi Sunak threatening to vote against the local government funding settlement next month, warning that without urgent intervention from Westminster their constituents would pay more council tax for fewer services.
Research by Shelter found a record 279,400 people were in temporary accommodation in England and Wales last year. The housing advocacy group also reported a 26 per cent annual jump in the number of rough sleepers in 2023.
Jeremy Hunt, the chancellor, has committed to raising the cap on “local housing allowance”, a benefit that goes to lower-income households, in May to reflect huge increases in the cost of renting privately.
However, Steve Holt, the Liberal Democrat leader of Eastbourne council, said this fell “a long, long way short of what we need to avoid decimating essential frontline services”.
He said his council was spending 49p on temporary accommodation for every £1 it raised in council tax, threatening the viability of its finances.
The Treasury has now offered to hold a special meeting to discuss the acute pressures facing councils as a result of the housing crisis, Holt said.
The Department of Levelling up, Housing and Communities said it was “committed to reducing the need for temporary accommodation,” and was providing councils with £1bn through the “homelessness prevention grant” over three years.
“Councils are ultimately responsible for their own finances, but we remain ready to talk to any concerned about its financial position,” it added.
