Councils Face £260M Shortfall as Temporary Accommodation Surges
Councils in England are facing a significant financial strain due to a sharp increase in the number of households living in temporary homes. The Local Government Association (LGA) reports a £260 million shortfall, a 30% rise in just one year.
The surge in temporary homes, now housing 131,140 households, has led to a funding gap. Councils cover upfront costs before being reimbursed by the Department for Work and Pensions (DWP). In 2023/24, councils spent £1.04 billion, but received only £780 million in reimbursement.
The LGA highlights that under current rules, reimbursement is capped at 90% of Local Housing Allowance (LHA) rates set in 2011. If the policy had been aligned with current LHA levels, councils would have received £941 million last year. Over six years, the cumulative funding gap has reached £1 billion.
The LGA is calling for the Department for Levelling Up, Housing and Communities to adjust billing rates for housing care costs to current regional housing allowance levels. This would help ease the financial burden on councils and ensure they are fairly reimbursed for the temporary homes they provide.
