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Boost London’s homelessness funding – or crisis will only become worse

We support the new homelessness duties, but London’s councils cannot bare the huge costs without help from government, writes Darren Rodwell

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Picture: Getty
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We support the new homelessness duties, but London’s councils cannot bare the huge costs without help from government, writes Darren Rodwell #ukhousing

Boost London’s homelessness funding – or the crisis will only get worse, writes Darren Rodwell #ukhousing

Again and again we see fresh evidence that London faces the most severe homelessness pressures in the country.

Recent statistics show that the number of households living in temporary accommodation in England is at its highest level for more than a decade, with London accounting for two-thirds of the national total.

Distressingly, Office for National Statistics figures reveal that one in five deaths of homeless people in 2018 took place in London.

And now new research from the London School of Economics (LSE) – commissioned by London Councils and the London Housing Directors’ Group – reveals the full-scale of the impact on the London boroughs and the services they provide to the growing number of homeless Londoners.


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In 2017/18, 55,000 London households required support from boroughs’ homelessness services. This compares with an average of less than 30,000 households per year in the previous decade (2008 to 2017).

Boroughs’ spending on homelessness reached more than £919m in the same year – of which £201m was not covered by central government grants or councils’ housing income (such as rental payments). Boroughs instead had to cover the costs from general funds, which could be used for other hard-pressed services.

If current trends continue the total cost of London’s homelessness services will increase to more than £1bn a year by 2021/22. And if funding arrangements do not change, the cost to boroughs’ general funds is estimated to rise to £237m by 2022/23.

As the report makes clear, the government’s Homelessness Reduction Act – introduced last year – is a significant factor in these skyrocketing costs.

Boroughs support the ambitions of the act, which has put renewed focus on prevention and expanded entitlement to support. In the long term, these changes should help reduce homelessness.

However, the combination of new duties for local authorities, the continuing chronic shortage of affordable housing, and insufficient support from the welfare system has led to massive costs for London boroughs.

The cost of handling a homelessness case in London is at least double the cost for England as a whole, mostly because of the higher costs of securing accommodation.

And the cost of preventing a London homelessness case (that is either helping a household to stay in their current accommodation or find a new place to live prior to becoming homeless) is almost four times the national average.

Boroughs remain determined to provide the best possible homelessness support and to make a success of the Homelessness Reduction Act. However, it’s unfair and unsustainable for boroughs to be left facing these unique costs with inadequate funding.

The LSE report highlights that the government underestimated these costs when allocating new burdens grant funding, which is due to end in March 2020 anyway. The government’s assumption that the act would be cost-neutral by 2020/21 is obviously far off the mark.

Boroughs remain determined to provide the best possible homelessness support and to make a success of the Homelessness Reduction Act. However, it’s unfair and unsustainable for boroughs to be left facing these unique costs with inadequate funding.

With more and more Londoners coming through boroughs’ doors to seek support, the demand on homelessness services will only increase – but budget constraints raise uncertainty over whether the staff and other resources will be in place to carry out effective interventions and to help Londoners avoid (or leave) homelessness situations.

The act brought new burdens without boosting boroughs’ ability to prevent or relieve homelessness. On top of this, homelessness pressures continue to grow because of policies such as the freeze on the Local Housing Allowance – boroughs want to see Local Housing Allowance rates restored to cover at least 30% of local private sector rents – and continuing restrictions on use of Right to Buy receipts for investing in new social housing – boroughs want these removed so that every penny raised from London council house sales goes into building replacement homes.

Ministers must listen and act. Although the challenge is substantial, the government can work with London boroughs to address these concerns.

This research from the LSE will hopefully prompt an urgent rethink of the national support given to local homelessness services and the realistic investment needed to ensure the Homelessness Reduction Act’s goals are achieved.

Darren Rodwell, executive member for housing & planning, London Councils

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