London’s funding ‘raw deal’ undermining homelessness push

New research carried out by the London School of Economics has shown that the implementation of the Homelessness Reduction Act in April 2018 has substantially increased the number of people seeking help from boroughs and the resources required for services.

The findings have caused London Councils to claim that a growing homelessness crisis and inadequate funding are costing London boroughs more than £200 million every year – with councils warning the worsening situation risks undermining the government’s national push on reducing homelessness.   

The Cost of Homelessness Services in London report reveals that, due to the chronic lack of affordable housing and record number of homeless households, the homelessness costs burden falls disproportionately on London. Therefore, the cost of handling a homelessness case in London is at least double the cost for England as a whole, while the cost of preventing a homelessness case in London is almost four times the England average. The ‘new burdens’ grant funding to support implementation of the Homelessness Reduction Act did not take into account London’s higher costs and is due to end after March 2020.

Furthermore, London Councils claims that the capital’s local authorities spent over £919 million on homelessness services in 2017/18, £201 million of which was not covered by central government grants or councils’ housing income, meaning boroughs resorted to covering the costs from their general funds.

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

If current trends continue, the total cost of London’s homelessness services will increase to over £1 billion a year by 2021/22. If funding arrangements do not change, the cost to boroughs’ general funds is estimated to rise to £237 million by 2022/23 – representing an increasing proportion of boroughs’ total homelessness spending. In the five years following the 2018 introduction of the Homelessness Reduction Act, boroughs will have to find an extra £70 million as a result of increasing homelessness and service costs.

Darren Rodwell, London Councils’ executive member for Housing & Planning, said: “Even though London faces the most severe homelessness crisis in the country, the capital gets a raw deal when it comes to funding. London boroughs are committed to tackling homelessness and making a success of the Homelessness Reduction Act, but this crucial work can’t be done on the cheap. It’s unsustainable to leave London boroughs covering more than £200 million of costs from our general funds when our core funding has been reduced by 63 per cent since 2010.

“While we welcome the recent increase in homelessness funding set out in the government’s spending round, it does not come close to reflecting the true cost of addressing homelessness. The government must make sure London’s hard-pressed homelessness services have the resources they need.”