London council warns of potential need for “some form of government assistance” as cost of temporary accommodation provision soars

Newham said in its summer 2024 finance review that the council was among those struggling with the cost of temporary accommodation (TA), revealing that spending in this area was projected to exceed £40m over the current financial year, despite the allocation of a further £18.5m to the temporary accommodation budget.

If costs do reach this level, the review said it would account for a third of its total spending, which when combined with the two-thirds of the budget spent on social care, would leave “very little room for any other services".

Zulfiqar Ali, Newham's Lead Member for Finance and Resources, claimed that despite "many initiatives, prevention strategies and robust financial management, the challenges with TA remain and are forecast to grow significantly”.

Ali said the council was taking "as many actions as possible to ensure that we are able to continue delivering services for our residents" including cost-cutting, using reserves and selling assets.

However, he said "some form of government assistance may also be required" because the measures "won’t be enough".

Ali also argued that the homelessness prevention grant was “not distributed accurately or fairly”.

The London Councils data showed that in the year up to April 2024, London boroughs overspent on their homelessness budgets by £208m, with a total of 29 out of London's 33 boroughs having breached their spending goals.

Councils can claim money from the government for temporary accommodation costs, but the limit of this grant has been frozen at 2011 rates, despite it becoming more expensive and the stock of housing being widely short in supply, London Councils said.

Alongside a rise in homelessness, the shortage of affordable accommodation is a key driver in the struggles that London boroughs are facing, it added.

In the first quarter of 2023, there were 41% fewer London rental properties available than the pre-pandemic average, compared with 33% fewer nationally. This is likely due to private landlords having increasingly cancelled their agreements with councils to either rent to private tenants or sell their properties. The number of notices to leave those arrangements received by boroughs from September 2022 to April 2024 was more than 10,000 - a loss of 18% of London's total temporary accommodation stock.

A Ministry of Housing, Communities and Local Government spokesperson said: “Homelessness levels have sky-rocketed and too many families are living in temporary accommodation in our towns and cities, including London boroughs like Newham.

“We will take the action needed to tackle this issue and develop a long-term, cross-government strategy working with Mayors and Councils to put Britain back on track to ending homelessness.”

Harry Rodd