Struggling Local Authorities Face Hefty Expenditure on Short-term Housing
The financial strain on council budgets due to the rising costs of housing benefits for homeless households is causing significant concern. Over the past five years, local councils in the UK have faced a £737.3 million gap between the housing benefit they pay out for temporary accommodation and the government reimbursement they receive[1].
This shortfall strains local authorities financially as demand for housing support and temporary accommodation has risen sharply[1]. London boroughs alone spend around £4 million daily on temporary accommodation, yet the central government subsidy has been frozen for 14 years[2]. This freeze, coupled with the rising cost-of-living and rental prices, has pushed councils toward financial crises and made it harder to address homelessness effectively[2].
In response to these financial pressures and the freeze's impact, the Local Government Association (LGA) is calling for urgent government action to lift the freeze on Local Housing Allowance (LHA) rates[1]. They highlight how the growing gap between costs and funding exacerbates the homelessness crisis and places local authorities under unsustainable pressures[1].
The LGA’s call to action urges the government to adequately fund temporary accommodation to enable councils to meet rising demand and prevent rough sleeping, which has increased by 164% since 2010[2][4]. The LGA is also calling for the government to reconsider its decision to keep LHA rates frozen for other types of accommodation until at least April 2026[5].
The LGA believes that updating the LHA rates is necessary to address the current housing crisis and support homeless households[1]. Despite calls from some quarters to unfreeze the LHA to provide more funding, the government has resisted, with concerns that increasing LHA would disproportionately benefit private landlords rather than tenants[3][5].
This situation highlights a critical funding and policy challenge in the UK's efforts to address homelessness sustainably. The LGA's call for action comes as the cost-of-living continues to rise, putting further strain on the housing market and homeless households[1].
As Brits plan to give more during Christmas this year, the need for a more effective housing and welfare system to reduce or eliminate the need for temporary accommodation in the long-term becomes increasingly important[6]. A system that improves outcomes for communities and brings financial benefits to the public purse is needed[6].
References:
- Local Government Association (2022). LGA calls for urgent action to lift the freeze on Local Housing Allowance rates
- Hackney Council (2021). Budget 2021/22: Council tax and housing benefit
- Residential Landlords Association (2021). RLA responds to LHA consultation
- Shelter (2021). Rough sleeping has increased by 164% since 2010
- Department for Work and Pensions (2020). Local Housing Allowance rates
- Local Government Association (2021). Brits plan to give more during Christmas this year
- The Local Government Association (LGA) emphasizes the necessity of updating the Local Housing Allowance (LHA) rates to address the current housing crisis and support homeless households, indicating a need for intervention in personal-finance planning and budgeting regarding housing.
- The fiscal strain on local government budgets due to the rising costs of housing benefits for homeless households, coupled with the freeze on LHA rates for other types of accommodation, has led to significant concerns and unsustainable pressures in neighbourhoods across the UK, particularly those in London that spend around £4 million daily on temporary accommodation.
- As the cost-of-living continues to rise, the LGA urges the government to reconsider its stance on lifting the freeze on LHA rates, arguing that such a move would be beneficial not only for housing support but also for the overall financial health of local councils and the economy, thereby improving the local community.
