Councils Face £260M Shortfall in Temporary Accommodation Funding
Councils in England are grappling with a widening gap in their finances, as the cost of temporary accommodation outpaces the reimbursement they receive from the Department for Work and Pensions (DWP).
The Local Government Association (LGA) has sounded the alarm, reporting that councils spent £1.04 billion on temporary accommodation in 2023/24, while the DWP only covered £780 million, leaving a £260 million shortfall. This gap has ballooned by 30% in just one year, exacerbating the financial pressure on council budgets.
At the heart of the issue is the reimbursement cap set at 90% of Local Housing Allowance (LHA) rates since 2011. While rental costs have soared, the reimbursement rates have not kept pace. The LGA is advocating for the reimbursement rates to be realigned with current LHA levels to bridge this gap.
Had the current policy been implemented last year, councils would have received an additional £161 million, benefiting 83,150 families with children and 47,990 single households. Over the past six years, the cumulative funding gap has reached £1 billion. Currently, there are 131,140 households residing in temporary accommodation, a rise of 11.8% since March 2024.
The LGA's call for adjusted reimbursement rates aims to alleviate the financial strain on councils and ensure they are fairly compensated for their temporary accommodation costs. Addressing this issue could help alleviate the pressure on council budgets and enhance support for households in temporary accommodation.
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