London boroughs face soaring homeless costs of over £5 million a day

London boroughs are spending more than £5 million a day on temporary accommodation to house the homeless.

Analysis by London Councils reveals the amount spent on placing homeless families in temporary accommodation in the capital has risen by 42% since last year, compared to a 16% increase across the rest of England.

London Councils is calling for the government to provide additional funding.

Stark reflection of the scale of the capital’s housing crisis

Cllr Claire Holland, chair of London Councils, said: “London boroughs are now spending a staggering £5 million a day on temporary accommodation, a stark reflection of the scale of the capital’s housing crisis, which continues to worsen.

“This underlines the importance of using the most up-to-date data in the forthcoming reforms to local government finances and ensuring measures of deprivation properly reflect housing costs and the impact of homelessness.

“After more than a decade of structural underfunding, rising costs and growing demand, it is vital that boroughs receive funding which genuinely reflects the level of need in the capital. We want to work with the government to address our concerns with the Fair Funding Review so that we can help restore stability to council finances and prevent more boroughs being plunged into crisis.”

Update the Index of Multiple Deprivation (IMD) to reflect the cost of housing

As part of the Fair Funding Review 2.0 reforms, the government is simplifying how it measures relative needs across the country.

While London Councils has welcomed the proposed introduction of a new formula to reflect levels of spending on Temporary Accommodation, the cross-party group is concerned that using 2023-24 spending data would significantly undercount the scale of the pressures facing boroughs and other parts of the country.

London boroughs are also calling for the government to update the Index of Multiple Deprivation (IMD) to reflect the cost of housing and increase the weighting given to factors such as homelessness and housing affordability, in light of the escalating crisis.

Currently, homelessness is given equal weighting to ‘road distance to a post office’ in the IMD, suggesting these factors have a similar impact on people’s life chances.