Rising Costs of Temporary Accommodation for Homelessness in England

The Local Government Association (LGA) has projected that the cost of providing temporary accommodation (TA) for homeless individuals in England will exceed £3.9 billion by the fiscal year 2029-30. This represents more than a doubling of costs from previous years, with local authorities having spent approximately £1.5 billion more on TA than they have received in housing benefit reimbursements since 2017-18. The annual expenditure on TA is expected to rise by 65%, increasing from nearly £360 million to £595 million over the next five years.

The Guardian

The crisis surrounding temporary accommodation has intensified, particularly following the COVID-19 pandemic. Recent data indicates that the number of children living in temporary accommodation has reached a record high, with 175,990 children reported as of the latest figures—an increase of 12,020 in just one year. Overall, more than 130,000 households are currently residing in temporary accommodation, which often includes hotels, bed and breakfasts, or self-contained flats.

The Guardian

Local councils bear the financial burden of these accommodations, with the reimbursement they can claim from the Department for Work and Pensions (DWP) capped at 90% of local housing allowance (LHA) rates established in 2011. In the fiscal year 2024-25, councils spent £1.27 billion on TA but were reimbursed only £911 million, resulting in a funding gap of nearly £360 million.

The Guardian

Tom Hunt, chair of the LGA’s inclusive growth committee and leader of Sheffield City Council, emphasized the urgency of addressing the widening "subsidy gap." He stated, “Because of this ever-widening issue, councils are caught in a vicious cycle of ever-increasing temporary accommodation costs versus static rates they receive back to cover their costs.” The LGA has urged the government to adjust housing benefits to reflect current LHA rates, which they claim would reduce the projected cost increase by 37% and save councils £1.5 billion.

The Guardian

The government has expressed intentions to reduce reliance on temporary accommodation, with Homelessness Minister Alison McGovern stating a goal to eliminate the use of bed and breakfasts by the end of the parliamentary term. However, despite widespread calls from the homelessness sector for increased funding, the government has opted to freeze local housing allowance rates until 2026. Instead, they have focused on building more homes and addressing issues within the private rented sector as solutions to the ongoing crisis.

The Guardian

While the LGA advocates for an increase in housing benefits to alleviate the financial strain on councils, the government maintains its stance on alternative solutions without increasing funding. This divergence highlights a critical gap in addressing the immediate needs of local authorities and the homeless population.

The Guardian

• “Because of this ever-widening issue, councils are caught in a vicious cycle of ever-increasing temporary accommodation costs versus static rates they receive back to cover their costs,” — Tom Hunt, Chair of the LGA’s Inclusive Growth Committee

The Guardian

• “We urge the government to uprate housing benefits to 90% of the current [2024] LHA rate,” — Tom Hunt, Chair of the LGA’s Inclusive Growth Committee

The Guardian