The end of Local Government? The role of temporary accommodation and why it must be at the centre of reform

Much has been written in the media lately about the dire financial situation of Local Authorities (LA) across the country, and how this is linked, in part, to the cost of placing people experiencing homelessness in Temporary Accommodation (TA).

Eight English councils have declared themselves effectively bankrupt since 2018, by issuing a section 114 notice, as their forecast income is insufficient to meet their forecast expenditure. This includes councils like Birmingham and Croydon. Many others have warned they may soon have to follow suit. A recent poll by New Statesman revealed that a quarter of councillors believe their council will go bankrupt in the near future.

Here we take a closer look at what role TA plays, and what is needed to begin to address the problem.

There are a number of reasons why LAs face financial difficulties. Increasing demand for statutory services, in addition to TA this includes children’s services and adult social care, combined with a reduction in central government grant funding from 2009/10 to 2019/20 by 40%, have made it difficult for local authorities to balance the books. And of course the impact of rampant inflation has only made matters worse.

But the rapid increase in people presenting as homeless and in need of TA has played a substantial part in pushing local authorities into crisis. There are now 105,750 households in TA, including 138,930 children. This is more than double the number of households, 48,330, in TA in 2011. In Bristol, this number is up by 87% since before the pandemic.

Nottingham City Council currently has an average of 165 homelessness caseloads per officer, more than five times the recommended caseload of 30. Liverpool City Council has reported that its temporary accommodation costs have gone up by 7,660% since 2019, from £250,000 to a projected £19.4m in 2023-24.

In Eastbourne, the Borough Council is spending 49p of every pound in their budget on TA. Nationally, the Local Government Association has reported that the annual cost of providing TA has surged past £1.7bn, and that LAs face a funding gap of £4bn over the next two years.

It is this spiralling increase in demand, while resources are dwindling, that have led local authorities to come together to raise awareness of the situation and demand government action.

Two summits have been held by Local Authorities from across the country to discuss the financial crisis they find themselves in, largely due to the spiralling cost of placing people in TA.

The first meeting was hosted by Eastbourne Borough Council on the 31st of October 2023. The meeting was attended by 158 Local Authorities from across the country. 119 council leaders, representing different political parties, subsequently signed a letter to the Chancellor asking for help. You can read the letter’s six requests here. A second meeting was held in Westminster on the 23rd of January 2024, this time attended by about 50 council leaders.

The Government's response to the concerns raised at these summits is that they remain committed to providing councils with £1bn through the Homelessness Prevention Grant over three years, adding that “councils are ultimately responsible for their own finances, but we remain ready to talk to any concerned about its financial position.”

This statement fails to recognise the systemic nature of the problems, and falls considerably short of the £4bn the Levelling Up, Housing and Communities Committee has said the government must urgently inject into LA budgets to head off an “out of control” financial crisis.

These figures are so stark that it can be hard to get your head around. It can be even harder to stay cognisant of the human cost behind them.

Temporary Accommodation should only ever be short, safe and healthy. Currently, however, this is far too rarely the case due to the pressures of rapidly increasing demand and substantially reduced funds in the context of a housing crisis.

The impact goes far beyond local authorities declaring bankruptcy. Behind the increasing statistics are hundreds of thousands of individuals and families facing a bleak daily grind in TA. The impact on them is often devastating in terms of health, mental health, children’s development and education. This hampers any ability to move on from historically sustained trauma or trauma gained as a result of homelessness.

The ruined lives of people stuck in TA, and the dangerously overstretched local authority employees, are the collateral damage in a system that was always flawed. The current scale and severity of underfunding is making it harder to ignore, as more and more people and services are affected.

But money alone does not fix the flaws in a system that continues to push more people into homelessness and unsuitable temporary accommodation.

“The system is broken”- Michael Gove, Secretary of State for Levelling Up, Housing and Communities

Solutions need to come from across the government, including the Treasury, DWP, DLUHC and the Home Office. To begin to fix this 'broken system' there needs to be:

• More truly affordable and social housing
• Local Housing Allowance must stay at rate fixed to 30th percentile beyond 2024/2025
• The Household Support Fund needs to be continued beyond this financial year

For those still in need of, and living in, TA there needs to be:

• An independent regulator of TA with a meaningful ability to act when breaches are leaving people in unsuitable TA
• Holistic housing support, including bus passes to parents travelling with children to schools when placed out of area, and a notification system so households are not lost between local governments, education and the NHS

This is not an exhaustive list, but considering these areas, in conjunction with providing adequate funding to local authorities, may begin to lay the foundations of a system that works for all, by ensuring that as few people as possible are pushed into homelessness, and stays in temporary accommodation are as short, safe and healthy as possible.

The financial as well as human cost of doing nothing is devastating, and may well spell the end of local authority as we know it. For more recommendations on how to improve the TA system, see the APPG on TA Call for Evidence report here.