London's homelessness crisis poses ‘single biggest risk' to councils, warn leaders
London's homelessness crisis is now the single biggest financial risk facing local authorities, according to a new warning from London Councils.
The cross-party group, which represents the capital's 32 boroughs and the City of London, says spiraling temporary accommodation costs have forced councils to overspend by at least £330 million this year, an increase of 60% when compared to original homelessness budgets.
Councils are legally required to house eligible homeless residents, making it essentially impossible for councils to place strict limits on their expenditure.
The number of Londoners in temporary accommodation is now at a record high, with 183,000 people, around one in every 50 residents, needing shelter.
London Councils said the capital's boroughs are collectively spending £4 million a day on temporary housing, often relying on costly hotel placements due to a shortage of affordable homes.
Over recent years, 45,000 properties have disappeared from the lower end of London's private rental sector.
Grace Williams, Leader of Waltham Forest Council and Housing Lead for London Councils, said: "London councils are facing risk of bankruptcy and homelessness is becoming the biggest risk.
"They're spending £330 million overspend on homelessness on top of their housing budget.
"It's becoming a real risk of borrowers becoming bankruptcy and therefore having to get into debt to pay for local services for Londoners.'
Asked why the situation has become so bad, she said: 'London is like the epicentre of the housing crisis.
"56% of all homeless people nationally live in London...the reason homelessness is so bad is a really bad combination of things like massive reductions in the number of landlords that are in London, the fact that housing costs are so high and the lack of home building over a long period..."
Cllr Williams told ITV News of the implications of this in her borough.
She said: 'In Waltham Forest, we spend 60% of our budget on adult and children's social care and homelessness. That leaves less for all the other services our residents rely on.
"If councils go bankrupt, they'll have to borrow more, increasing debt over time.'
London Councils is calling for urgent action in the upcoming government Spending Review. Its demands include ending the 14-year freeze on how much councils can claim back for temporary accommodation, making the recent uplift in Local Housing Allowance permanent, and boosting long-term investment in affordable housing.
The group is also urging the government to prioritise the cross-departmental strategy on homelessness and ensure councils play a central role.
A Ministry for Housing, Communities and Local Government spokesperson said: 'We inherited a serious housing crisis which is why we are taking urgent and decisive action to end homelessness, fix the foundations of local government and drive forward our Plan for Change.
'This government is providing £1 billion for crucial homelessness services and tackling the root causes of homelessness by building 1.5 million new homes, boosting social and affordable housing and abolishing section 21 no fault evictions.'
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