London Councils warns that skyrocketing homelessness in the capital is “pushing boroughs to the brink”, with unsustainable pressure on local services and budgets.

The cross-party group has welcomed a new report from a parliamentary committee highlighting the challenges for local authorities and the need for more action at a national policy level.

The Public Accounts Committee has found councils across England are at “breaking point” as they “haemorrhage funds” to cover the rising costs of housing families in temporary accommodation.

London Councils describes the homelessness situation in the capital as an “emergency”. Its analysis shows 183,000 Londoners – equivalent to one in 50 residents of the capital – are homeless and living in temporary accommodation arranged by their local borough. This figure includes almost 90,000 children, or on average at least one homeless child in every London classroom.

The cross-party group estimates boroughs in the capital spend £4m every day on temporary accommodation. This spending has jumped 68% over the past year and London boroughs are forecast to overspend their homelessness budgets by more than £270m in 2024-25, a figure which has doubled over twelve months. London Councils says these pressures pose a critical threat to boroughs’ financial stability.

Cllr Grace Williams, London Councils’ Executive Member for Housing & Regeneration, said:

“London is the epicentre of the national homelessness crisis.

“The number of Londoners in temporary accommodation is going through the roof. The impact on individuals – especially families with children – is devastating. The pressures on local services are also pushing boroughs to the brink. Temporary accommodation is the fastest-rising threat to London boroughs’ finances as the costs we face are simply unsustainable.

“Boroughs support the committee’s call for urgent policy action to reduce homelessness. We are keen to work with the government on a national strategy that addresses the unfolding emergency in the capital.”

London Councils’ policy priorities include:

Removal of the January 2011 cap on Local Housing Allowance payable for temporary accommodation in Housing Benefit subsidy. This is the amount of money local authorities can claim from the government for their temporary accommodation costs.

Currently the subsidy has been frozen at 2011 rates – even though temporary accommodation has become significantly more expensive over the past 14 years. London Councils’ data from 24 boroughs shows a gap of more than £96m in 2023-24 between the cost of providing temporary accommodation and what councils can recover from government through the housing benefit subsidy for temporary accommodation.

The ‘subsidy gap’ is a priority concern for London boroughs, especially as they increasingly rely on relatively high-cost temporary accommodation options in B&Bs and commercial hotels. Lifting the cap would better reimburse boroughs for their temporary accommodation costs.

Make the increase in Local Housing Allowance rates a permanent measure. Research published by London Councils shows only 5% of London’s private rental listings in the capital are affordable to households in the private rented sector relying on Local Housing Allowance.

Boroughs are calling for the increase in LHA rates to become a permanent measure, with LHA rates updated annually to track market rents and help ensure adequate support for low-income tenants in the private rented sector.

Bring forward a cross-departmental strategy to reduce homelessness. Tackling homelessness must become a major priority at a national level with government departments working together – in addition to key partners such as local authorities – as effectively as possible.