The true cost of the homelessness crisis

Behind these figures are thousands of people and their families. Some of them will be highly vulnerable, some will have disabilities, while others will be working people – nurses, cleaners and teaching assistants – unable to afford rising housing costs. Often they will be moved many miles away from their jobs, children’s schools and support networks or living out of bags in cramped, inadequate conditions as councils attempt to limit the massive cost of giving them shelter.

According to the last official count, there were 79,880 households in temporary accommodation at the end of March – an increase of 44.8% since 2013. However, housing charity Shelter says that figure downplays the true scale of the crisis and believes more than a quarter of a million households could be in temporary accommodation, according to responses to its own FOIA question from November 2017.

‘Little choice’

Perhaps unsurprisingly, all of the top 10 biggest spenders are London boroughs. The capital’s 33 authorities account for 78.2% of temporary accommodation expenses in 2017/18 and 80% over the past five years.

Newham Council, in east London, spent the most of any authority in 2016/17 with a £61m bill – up £11.5m from the previous year. Unfortunately, it would not release the 2017/18 figure as it said it has not yet been finalised, but the borough remains England’s homeless capital with one in 25 people in temporary accommodation so would likely top the list again. For the purposes of the data, we have assumed its spend would be the same as the previous year – though in reality it may well have increased.

“Soaring rents, a skewed housing market and stagnant wages are fuelling the housing crisis we are seeing in Newham and across London,” a spokesperson for the council tells Inside Housing. “In Newham, we have lost 1,178 social rent council homes over the past eight years and it is one of the reasons why the number of genuinely affordable homes we have has declined dramatically. Until we can change that, we have little choice but to house our residents in expensive temporary accommodation which is not ideal at all.”

Hackney, Enfield and Westminster also had enormous bills in 2017/18, spending £54.8m, £49.9m and £48m respectively.

Outside London, the biggest spender was Birmingham City Council – the country’s largest local authority – which handed over nearly £23m last year. Manchester, Brighton and Hove, and Luton were the only other non-London councils in the top 30.

Most councils have seen their temporary accommodation spending spiral over the previous five years. For some, like Folkestone and Hythe in Kent and Worthing on the South Coast, the bill has increased more than fourfold. Both say they have now overhauled their homelessness strategies.

Meanwhile, Peterborough City Council’s outlay surged in 2016/17. Its spend last year was £3.7m, compared with £235,000 in 2013/14. A spokesperson for the authority says the rise was “due to an unprecedented increase in demand from households presenting to us as homeless, at the same time as seeing reducing numbers of available affordable rented accommodation”. In response, it has expanded its housing to prevent more cases of homelessness and set up a joint venture to deliver affordable housing.

There were some areas which managed to reduce their costs, however. For instance, Great Yarmouth Borough Council’s temporary accommodation spending plummeted from £1.2m in 2013/14 to £139,000 last year. It said that was down to a number of expensive lease agreements coming to an end and being replaced with cheaper alternatives.

Data breakdown

The figures we gathered also provide an insight into where the money is going. Of the councils which provided information, 181 broke the data down into different types of temporary accommodation spending.

These authorities spent just over £1bn putting up homeless people in B&Bs, hotels and guest houses in the past five years – with an 83.4% yearly rise over that period not including the figure for Newham in 2017/18.

They also paid out a little over £1bn for private sector temporary accommodation, most commonly either leased from individual private landlords or contracted out to companies. Inside Housing has previously revealed that hundreds of these properties are ex-local authority homes sold under the Right to Buy. Spending in this area – which will include repairs and maintenance costs on leased properties – increased 11.3% over the period covered, again not including Newham.

Of course, the true figure for spending on B&B and other private sector temporary accommodation across all 326 councils with responsibility for homelessness in England will be significantly higher. In comparison, these 181 respondents specified just £18.9m of spending on temporary accommodation agreements with housing associations over the same period, with annual amounts staying pretty much flat. Another £321m was spent keeping homeless people in hostels – though this data is less useful as most authorities did not specify whether the hostels were council owned, from a housing association or private provider. Most of the remaining spending is accounted for by local authority temporary accommodation.

The Ministry of Housing, Communities and Local Government points to the work of its homelessness advice and support team, aimed at helping councils with families in B&Bs for longer than the six week legal limit. It says the team’s work saw the number of families with children in B&Bs drop by 24% between September and December 2017.

A spokesperson also cites £1.2bn is providing through a range of homelessness reduction programmes “so those who are homeless get the support they need”. The spokesperson adds: “Councils have a duty to provide suitable temporary accommodation to those who need it.”

It’s not clear whether temporary accommodation costs will rise or fall. The Homelessness Reduction Act 2017, which came into force in April, places new duties on local authorities in an attempt to cut the number of people who become homeless in the first place. For instance, councils now intervene 56 days before a tenant is given a notice period, double the previous timeframe.

Critics say that the £72.7m provided by government over the next three years to cope with these new responsibilities is inadequate and question the efficacy of the new homelessness strategies introduced by many town halls in response to the act.

In any case, ministers, civil servants and councils will no doubt be desperate to get a handle on the spiralling cost of homelessness.