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Local authorities across England are currently grappling with unprecedented costs related to temporary accommodation for homeless individuals. Last year alone, councils spent £2.8 billion on housing the homeless, marking a 25% increase compared to the previous year and doubling since 2020. This surge in expenditure highlights a growing crisis that local governments must address.
One of the main drivers behind this escalating bill is the significant transfer of social housing from public ownership to private landlords. The government’s policies, especially the right to buy scheme initiated under Margaret Thatcher, shifted nearly 2 million social homes out of council hands. Today, 41% of these properties are rented privately, often at rates that outpace housing benefit subsidies. These subsidies have been reduced so severely that they currently only cover about 2.4% of rental properties in England. As a result, many people face homelessness, pressuring councils to secure accommodation by paying costly rents to private landlords — frequently in homes that were once sold at discounts of up to 30% off market value.
To manage these rising expenses, some councils have taken proactive steps to negotiate better deals and reduce their reliance on expensive hotel rooms. Liverpool city council, for example, faced a hotel accommodation bill forecasted to hit £28.4 million in the current year, an increase of 11,000% since 2019. The council responded by negotiating directly with landlords on behalf of approximately 1,600 households, lowering nightly hotel rates from an average of £83 to £57 and reducing hotel stays from over 1,000 rooms to just 277. Other councils, including Greenwich and Sheffield, have pursued similar strategies to move tenants out of costly hotels and into more affordable flats or houses.
Looking ahead, the deeper issue remains unsolved: where to relocate families once temporary accommodation ends. Former Labour leader Ed Miliband recognized this issue over a decade ago, proposing that councils be empowered to negotiate rents for housing benefit tenants collectively. This approach could yield substantial savings, which could then be reinvested into building new social housing stock. Presently, councils can only negotiate reductions for temporary accommodation, not for long-term housing benefit rents. Without expanding social housing, rising rents and inadequate housing allowance levels will continue to push vulnerable people into homelessness. Although Labour plans a “council housing revolution” with pledges to build 300,000 affordable homes over the next decade—primarily for social rent—the current homelessness crisis, affecting over 382,000 people in England, suggests that even greater efforts are necessary to stem future cost increases in temporary accommodation
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