Over recent years homelessness has risen all across the country, but London faces the most severe challenge of all. High housing costs, difficulties accessing accommodation and restrictions on support from the welfare system have created real hardship for many Londoners.

New analysis from the London School of Economics (LSE) – published yesterday, and jointly commissioned by London Councils and the London Housing Directors’ Group – shows the extent of the homelessness pressures that the London boroughs face.

The report estimates that 55,000 London households required support from a borough homelessness service in 2018/19. This compares to an average of under 30,000 households per year over the previous decade.

The sudden increase is due primarily to the Homelessness Reduction Act, which was implemented in April 2018 and has significantly widened access to homelessness support and advice from local authorities.

London Housing Directors supported the intentions behind that Act. But, as this review from LSE lays bare, the costs associated with delivering much needed support on a statutory basis, and the increased administrative processes that underpin the Act, have not been fully recognised by the government. 

Prior to the Homelessness Reduction Act, London boroughs were already spending more than £200 million above the amount they receive to deliver homelessness services – a figure LSE estimates will increase to £237 million by 2022/23.

The government severely underestimated London boroughs’ homelessness costs when it undertook the new burdens assessment used to calculate the amount of money needed to introduce the Act. For example, the cost of supporting London households that are already homelessness is more than double the government’s estimate, while a prevention case costs on average almost four times the amount that the government said it did.

LSE’s review forecasts that total spending on homelessness in London will top more than £1 billion a year by 2021/22.

At present, the government’s position is that the new responsibilities contained in the Act will be cost neutral by April 2020, and there are currently no plans to provide further funding specifically for these widened responsibilities.

However, without the funding to deliver them, we risk undermining the Act’s principles and the hard work put in by campaigners and local government to make it a success.

We also need structural reforms.

In the short term, the biggest step the government could take to halt rising homelessness is to invest in Local Housing Allowance (LHA) rates, the housing benefit that supports private renters. The London Housing Directors’ Group – along with London Councils, Crisis, and others – are calling on government to restore LHA so that it covers at least 30% of local rents. 

Recent research by London Councils found that, after more than eight years of underinvestment on LHA, just 8% of properties across London are now affordable to those supported by the benefit. In some areas, no properties were affordable within LHA rates. 

The restrictions on LHA, along with dramatic increases in the cost of renting in London, have been a key driver behind rising homelessness. Restoring LHA would give households threatened with homelessness greater opportunity to find a home in the private rented sector. Not only would this help more of our residents avoid homelessness; it would better enable councils to work with those households to prevent and relieve their homelessness. And the recent Crisis research shows that it could also save government money.

In the longer term, we also need to see a significantly increased delivery of genuinely affordable homes – supported by increasing grant rates to councils and housing associations, and greater freedoms for borough to build on a substantial scale.

The Homelessness Reduction Act has been a positive step forward, and we believe it has brought about improved services in London. But the current approach is not sustainable. To deliver on its objectives, the government needs to ensure councils’ homelessness services are sufficiently funded and to tackle the wider systemic policy and market factors that have increased homelessness.

 

To join Crisis' campaign to invest in housing benefit so that it covers the cost of rent, please visit: www.crisis.org.uk/coverthecost