The capital could lose almost a third of its homelessness funding under potential reforms, London Councils has warned.
Responding to a government consultation on changes to the Homelessness Prevention Grant, which provides the main source of funding for local authorities to tackle and prevent homelessness, London Councils stated that the two proposed options would both result in reduced resources from 2023 onwards — despite London having by far the highest homelessness rates in the country.
While reaffirming its support for the Government’s aim of simplifying homelessness funding and ensuring resources are targeted to areas with the highest need, London Councils is calling for a pause to the Homelessness Prevention Grant changes.
The cross-party group’s analysis suggests the proposals could lead to an overall reduction of 32% for local authorities across the capital — equivalent to London losing almost £50m.
A second option outlined in the consultation would lead to a reduction of 6%, which boroughs say would still undermine their homelessness prevention work.
An estimated 150,000 homeless Londoners live in temporary accommodation arranged by their local borough — including 75,000 children. The capital accounts for around 60% of England’s total number of homeless households in temporary accommodation.
In the face of growing cost-of-living pressures and rent rises in the private rented sector, London Councils recently warned another 125,000 low-income households in London are at heightened risk of homelessness.
Total spending on homelessness in the capital has increased by over 120% from £560m in 2010-11 to £1.2bn in 2020-21. London accounts for 60% of expenditure nationally. The rise has been during a period in which London boroughs’ overall Core Spending Power — the funding available for spending across all council services — has fallen by more than 20% in real terms.
London Councils highlights several specific flaws in the proposals, including:
- the use of general population figures as a basis for deciding homelessness funding levels, as London accounts for just 16% of the population but 60% of homelessness across England
- a lack of appropriate measures to reflect housing affordability, the key driver of homelessness in London
- overcomplexity in the proposed formula and a lack of transparency in how the allocations have been calculated
the risk that funding volatility will destabilise services going into a period of great economic uncertainty.
London Councils suggests the Government should instead undertake a more fundamental review of homelessness funding — including the role played by welfare policy — ahead of the next Spending Review. In the meantime, London Councils wants the Homelessness Prevention Grant to rise at least in line with inflation, bolstering boroughs’ ability to keep services running and provide housing assistance to those in need.
Cllr Darren Rodwell, London Councils’ Executive Member for Regeneration, Housing & Planning, said: “We’re worried these proposals would see London lose out massively on homelessness funding.
“The capital already faces the most severe homelessness crisis in the country, and it is about to get worse as the cost-of-living crisis deepens into the autumn. Although we agree with the Government’s ambition of simplifying how homelessness services are funded, it makes no sense to reduce London’s overall level of resources. There definitely needs to be a re-think on these particular proposals, and we’re keen to work with ministers on finding a better way forward.”
Joanne Drew, Co-Chair of the London Housing Directors’ Group, commented: “There is serious concern across the capital’s housing and homelessness sectors about potential reductions to London’s funding at a time when demand for services has never been higher.
“Local authorities in the capital have successfully worked with the Government and other partners in targeting resources and reducing rough sleeping on London’s streets. We know this collaborative approach can be extended to tackling other forms of homelessness — particularly the huge number of Londoners, including children, living in temporary accommodation.
“We must have adequate funding for London’s hard-pressed homelessness services. Reducing London’s share of the Homelessness Prevention Grant risks making the problem even worse, leading to higher costs on councils and the wider public sector. No one wants to see this happen.”
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