Homelessness: London councils claim they are set to lose £50m under proposed funding changes

·3-min read
Proposed changes to a homelessness grant has caused a spat between local councils and government (PA)
Proposed changes to a homelessness grant has caused a spat between local councils and government (PA)

London could lose nearly a third of its funding to tackle homelessness - almost £50 million - under the government’s proposed changes, councils have warned.

London Councils has claimed that suggested changes to the Homelessness Prevention Grant could lead to an overall reduction of 32 percent in funding for local authorities across the capital - equivalent to losing £50 million.

But a government spokesperson said that’s “a total misinterpretation of the figures”, which are “purely illustrative” and £150 million has been given to councils across Greater London this year.

“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,” said councillor Darren Rodwell, London Councils’ Executive Member for Regeneration, Housing and Planning.

“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.”

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 per cent of England’s total number of homeless households in temporary accommodation, London Councils said.

Meanwhile spending to tackle the issue in London has increased by over 120 per cent from £560 million in 2010-11 to £1.2 billion in 2020-21. London accounts for 60 per cent of expenditure nationally.

The Homelessness Prevention Grant is the main source of funding for local authorities to tackle and prevent homelessness.

Two proposed options would both result in reduced resources from 2023, despite London having the highest homelessness rates in the country, London Councils said on Friday.

A second option outlined in the consultation would lead to a reduction of six per cent, which boroughs say would still undermine their homelessness prevention work.

London Councils has claimed the use of general population figures as a basis for deciding homelessness funding levels is flawed.

This is because London accounts for just 16 per cent of the population but 60 per cent of homelessness across England.

London Councils suggested the government review the role played by welfare policy ahead of the next spending review. The group has also called for the Homelessness Prevention Grant to rise in line with inflation.

“This is a total misinterpretation of the figures, which are purely illustrative and do not reflect the amount of funding councils will receive through the Homelessness Prevention Grant,” a spokesperson for the Department of Levelling up, Housing and Communities said.

“This year, we have provided £316 million to councils through the Homelessness Prevention Grant, including over £150 million to councils across Greater London.

“This is on top of a £37 billion package to help households with rising costs, including £1,200 this year for the most vulnerable, helping them to pay their bills and stay in their homes.”

The eight-week consultation on the Homelessness Prevention Grant closed last week.

The indicative allocations provided in the consultation are “purely illustrative” to help local authorities understand how different elements of the funding formula may impact their allocation, the government said.

Actual allocations are highly likely to change before being finalised, it added.

Irrespective of any funding changes as a result of an updated formula, the government is proposing to mitigate against financial losses or gains in the short-term, by introducing transitional arrangements and capping the percentage change in funding for each local authority at five per cent in 2023/4 and 10 per cent in 2024/25.