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No Room at the Inn

16.11.23 | Written by Paul Smith

As the stores fill with Christmas goods and our thoughts turn to turkey, families get togethers and presents. Over 100,000 families (with over 130,000 children) are wondering whether they will have anywhere permanent to live. These are families which councils have accepted as being both homeless and the state having a legal duty to house them. 

These are the highest numbers ever recorded and the data is already out of date as it is based on those being ‘helped’ earlier this year. The largest number is predictably in the largest City, bankrupt Birmingham with over 4,000 families, my own city, Bristol is 15th in the terrible league table with 1,242. The majority of people in temporary housing live in London with Southwark, Wandsworth and Westminster all supporting over 3,000 households.

Temporary accommodation is largely hideous, a mixture of rooms in shared houses, B&Bs, hotels and housing below normal quality standards. Also, temporary doesn’t mean a few weeks, it means months, often years. The housing, if we can call it that, is often many miles from peoples’ homes, children’s schools, and family support networks. They will be sharing bathrooms and kitchens with people who they know nothing about and whose behaviours could be challenging.

That so much human misery has a cost is driving a bid to change the Government’s policy on housing benefit. This is a classic example of short-term savings in national government spending creating financial pressure for local councils.

Last month 158 councils attended a summit called by the District Council’s Network (smaller councils which don’t provide education or social care) to discuss the crisis. Last year the council bill for temporary accommodation was £1.7bn, a cost driving some council budgets to the edge. The most extreme case is Hastings where the bill of almost £6m is half of their core budget. The rise in temporary accommodation costs is expected to see other councils to follow Birmingham in declaring a financial failing.

This problem has been created by a mixture of issues, most obviously the enormous lack of social housing but also the perverse incentives caused by cuts to the housing benefit budget. The Local Housing Allowance (LHA), the maximum which private tenants can claim in benefits, was supposed to track the rise in private sector rents, however the last rise was in 2020 based upon 2019 data. The LHA is now massively out of step with actual rents. The system rewards landlords for evicting tenants and replacing them with people funded directly from council budgets under contract because they are homeless. As the contract fees are not subject to the LHA this can increase the money received by landlords several fold.

Councils and homelessness charities are calling for more social housing, but that takes time to build, and therefore the pressure is on an interim measure to raise the LHA levels to reflect inflation. Some in Government are listening. The BBC has reported that Michael Gove and Mel Stride, responsible for housing and benefits respectively have written to the prime minister calling for an uplift.

Later this month the Chancellor will be making his autumn statement. There is speculation that he might cut inheritance tax or stamp duty. The housing sector, local councils and those facing a winter of uncertainty will be hoping that he uses some of his rumoured headroom to raise the Local Housing Allowance.

Paul Smith blog