Local authorities are experiencing some of the highest temporary accommodation bills on record. Councils in England spent £2.8bn last year on homeless accommodation – a 25% increase on the year before and a 100% increase since 2020.
How did the bill get so high? The government’s redistribution of social housing stock from public to private hands is largely to blame. Instead of creating the “property-owning democracy” Margaret Thatcher envisioned, her right to buy created a nation of landlords, selling off 2m social homes – 41% of which are now rented out. This, alongside cuts to housing benefit so steep that the subsidy now covers only 2.4% of rental properties in England, ensures a steady queue of homeless people knocking on council doors – with similar problems faced by the devolved administrations. Councils end up paying landlords eye-watering amounts to house homeless people in the same properties that the government sold for as little as 30% of their market value.
This is a long-term problem that requires long-term thinking. But until that happens, councils are left with the unenviable question of how to pay their bills. Liverpool city council provides one example of a short-term solution. Its hotel accommodation bill had been projected to reach £28.4m in this financial year – an 11,000% increase since 2019. So the council embarked on proactive negotiations with landlords to move residents out of hotels and into their properties. Acting on behalf of some 1,600 households, it was able to take a hardline approach – requesting lower prices, and rejecting non-competitive offers. Liverpool reduced hotel use down to 277 rooms, from a high of more than 1,000, and cut nightly prices from an average of £83 to £57.
The council joins others, such as Greenwich in London, and Sheffield, that have also negotiated with landlords to move tenants out of expensive hotel accommodation and into flats or houses. Of course, longer term, they will face the question of where to move families on.
Ed Miliband looked at the same problem when he was Labour party leader in 2013 and suggested local councils should be granted powers to negotiate on behalf of housing benefit tenants, using collective leverage to achieve far greater savings than tenants could achieve if left to fend for themselves. This idea is worth revisiting. Currently, councils can negotiate down temporary accommodation bills, but not rents for those living on housing benefit longer term. Mr Miliband proposed recycling the savings into new social housing, turning cuts into capital investment.
Councils are forced to house people in the private rental sector because they don’t own enough properties. Meanwhile, rents rise, and frozen local housing allowance rates push people back into homelessness, because they only cover a fraction of market rates.
Under Angela Rayner, the former Labour deputy prime minister, the party planned a “council housing revolution” and promised to build 300,000 affordable homes, with at least 60% for social rent, over the next 10 years. But with 382,000 people currently homeless in England – a number that is expected to continue rising – it still needs to build more. Otherwise even councils that have succeeded in reducing their temporary accommodation bills will end up paying more again in future years.
