LGA calls for temporary accommodation subsidy rates to be uprated to 90% of current LHA

However, the amount councils can claim back is currently capped to 90% of the LHA rates from 2011.

The LGA said these rates have massively failed to keep pace with rising rental prices and the increased demand for temporary accommodation. This means that if the cost of the housing benefit claim is higher than those rates, the local authority has to pick up the cost.

Therefore, the body has called on the government to uprate temporary accommodation subsidy rates to 90% of current LHA rates.

It also wants the government to reconsider its decision to keep LHA rates frozen for other types of accommodation until at least April 2026, to protect them from homelessness costs that are continuing to spiral.

According to the LGA’s analysis, there has been a £737.3m gap in the amount councils have paid out in housing benefit to households living in temporary accommodation and the amount they have been reimbursed by the government in the past five years.

The size of this subsidy gap in 2022-23 was double what it was in 2018-19. This is in addition to the amount councils pay over housing benefit limits to meet the total cost of temporary accommodation, which reached £1.75bn in 2022-23 alone.

The LGA has also called on the government to urgently implement a cross-government homelessness prevention strategy which address the drivers of homelessness, including a lack of genuinely affordable homes, to tackle the rising tide of people presenting to councils as homeless.

It said it is essential the new strategy recognises the experience and expertise of local government.

Adam Hug, housing spokesperson for the LGA, said: “We are in the midst of a housing crisis, with more people than ever seeking homelessness support from councils as there aren’t enough affordable homes available.

“The pressure this puts on councils’ budgets is putting councils under enormous strain. Without serious intervention, more councils will be at risk of having to seek emergency government support.

“Council housing budgets are being stretched to the limit and they must not keep being left to bridge the gap between rent and the amount we are able to recover via housing benefit subsidy.

“We need urgent government action to address the temporary accommodation subsidy gap, alongside the creation of a more effective housing and welfare system which reduces and ideally eliminates reliance on temporary accommodation in the long-term. This will not only improve outcomes for communities but also bring significant financial benefits to the public purse.”

The LGA is not the only organisation calling for an uplift in LHA rates. A number of leading homelessness charities recently criticised the government over its “extremely disappointing” failure to unfreeze housing benefit in the Autumn Budget.

A spokesperson for the Department of Work and Pensions said: “We have inherited a housing system which is broken, which is why we are committed to the biggest increase in affordable housing in a generation and to ensuring our social security system is fair and sustainable.”