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London could lose £50m in homelessness funding under reforms
London could lose almost a third of its homelessness funding under potential reforms, London Councils has warned.
Responding to a government consultation on changes to the Homelessness Prevention Grant, the cross-party group said its analysis suggested that the proposals could lead to an overall reduction of 32% for local authorities across the capital – the equivalent to losing nearly £50m.
The Homelessness Prevention Grant provides the main source of funding for councils across England to tackle and prevent homelessness.
The government launched a consultation on funding arrangements and conditions for the grant for 2023 onwards at the start of July. It said it wanted to make sure money was being allocated “fairly to authorities based on current homelessness pressure”.
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But London Councils said the two options the government has proposed would result in a drop in funding in the capital, which has the highest rates of homelessness in the country.
It estimates that the first option, which would replace the temporary accommodation management fee (TAMF) element of the formula with 90% of three-year average historic spend on temporary housing, would reduce funding by 32%.
The TAMF is a grant specifically used to fund the administration of temporary accommodation for councils, but was discontinued in 2016.
The formula uses data from the Department for Levelling Up, Housing and Communities (DLUHC) to estimate levels of TAMF the council would have received in 2016-17, projected into the future, ensuring that no authority received less than 75% of what government estimates they would have received under the grant.
The government said it is “not reasonable” to continue using this data source, “given it may not be representative of current pressures”.
London Council said the second option, which involves changing the original formula to take population size more into account, would reduce funding by 6%.
It also said the use of general population figures as a basis for deciding homelessness funding levels is flawed as the capital accounts for just 16% of the population but 60% of homelessness across England.
The organisation said there is a lack of appropriate measures to reflect housing affordability – the key driver of homelessness in London.
The group also said the proposed formula is too complex and that there is a lack of transparency in how the allocations have been calculated.
It has called on government to halt any changes and said it should instead undertake a more fundamental review of homelessness funding, including the role played by welfare policy, ahead of the next Spending Review.
Darren Rodwell, executive member for regeneration, housing and planning at London Councils, said: “We’re worried these proposals would see London lose out massively on homelessness funding.
“The capital already faces the most severe homelessness crisis in the country, and it is about to get worse as the cost of living crisis deepens into the autumn.
“Although we agree with the government’s ambition of simplifying how homelessness services are funded, it makes no sense to reduce London’s overall level of resources.”
A DLUHC spokesperson said London Councils’ analysis was a “total misinterpretation of the figures, which are purely illustrative and do not reflect the amount of funding councils will receive” through the Homelessness Prevention Grant.
He said this year the department has provided £316m to councils through the grant, “including over £150m to councils across Greater London”.
“This is on top of a £37bn package to help households with rising costs, including £1,200 this year for the most vulnerable, helping them to pay their bills and stay in their homes,” the spokesperson added.
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