Jonathan Werran
Housing is among the most contested and consequential dimensions of place-based policy. Within that landscape, the interaction between temporary accommodation and the sustainability of local public finances is particularly acute: it concentrates human need, statutory responsibility, financial risk and political sensitivity into a single set of local delivery pressures.
Nationally, around 1.3 million people are on social housing waiting lists, up 3% since 2024. In London, where the issue bites hardest, survey work by London Councils suggests the scale of the problem is substantially higher than headline official figures; their estimate is around 183,000 people, or roughly one Londoner in 50 (and around one in 20 in Newham). This is the equivalent of one child in every classroom, with boroughs spending around £5m daily dealing with the crisis.
Alongside the fiscal pressure sits a profound human cost. Shelter’s 2023 report documents households living for prolonged periods in unsafe conditions, with predictable consequences for health and wellbeing.
For London boroughs, reported annual temporary accommodation costs of more than £2bn are increasingly difficult to sustain in the context of already stretched budgets. Outside of the city, coastal towns in the south also see some of the highest levels of homelessness, while the North East has the highest proportion of homeless households living in temporary accommodation.
Exacerbating the situation
Recent years have seen a concatenation of negative impacts, which have compounded the pressure on local authorities to provide temporary accommodation.
These include rising rents and the increasing cost-of-living, pushing up demand and reducing affordability; the impact freezing of the Local Housing Allowance subsidy for temporary accommodation in the last decade; and a chronic under-supply of social housing causing councils to rely on more expensive forms of accommodation, including a huge increase in the use of nightly paid accommodation. The latter has been especially damaging, with a third of councils more than doubling their gross spending on nightly paid temporary accommodation since 2018-19.
Local authority spend on homelessness services has ramped up dramatically by 293% from 2010-11 to 2022-23, totalling £3.7bn in real terms. In all, more than 60% of overall housing services’ expenditure goes towards homelessness – up from only 25% in 2010-11. For some district councils, spending on temporary accommodation accounts for half of their total net budget.
The most recent escalations in temporary accommodation spend can be to some extent pinned on the Homelessness Reduction Act 2017, which extended the statutory duties of local authorities. Concurrently, government funding arrangements for local authority homelessness services are often criticised as too complex, fragmented and uncertain.
Top-ups to local government funding for homelessness and affordable housing have come in the form of capital funding, such as rough sleeping programmes, and revenue funding for support services. Tackling homelessness and reducing those in temporary accommodation relies on both early intervention by authorities and the expansion of capital funding to build genuinely affordable housing to prevent, rather than respond to, homelessness.
Building a way out
The assumption is that, in providing more homes, the inefficiency of spend on temporary accommodation, and particularly nightly paid accommodation, will lessen.
Indeed, more broadly, ministers have recently framed their intent around meeting housebuilding targets and delivering the largest increase in social and affordable housing in a generation. Even with ambitious delivery, however, hotel and B&B-style provision is likely to remain part of the temporary accommodation system for many places in the short-to-medium term.
