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Spiralling homelessness costs leave £22.2m hole in Newham Council budget
Newham Council has overspent millions in its budget because of the spiralling costs of homelessness, according to a new report.
The budget was £22.2m in the red last year because of the cost of providing temporary accommodation.
Newham’s Summer 2024 Finance Review, published ahead of a cabinet meeting this week, found the council budget won’t balance despite the allocation of an additional £18.5m to the temporary accommodation fund.
It predicts costs in this area alone could spiral further, to £40m.
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Newham had around 6,500 households in temporary accommodation at the end of the 2023-24 financial year and more than 38,000 households are on the social housing waiting list.
In 2023-24 alone, it received 6,685 homelessness applications – up 26% on the previous year. This led to an increase of 14% in the total number of households in temporary accommodation, the provision of which is a statutory responsibility the council has no control over.
The borough is far from being on its own, or facing the worst situation in London. Figures show 30 of 33 local authorities in the capital reported a combined gross overspend of £636m.
Newham’s figure is the London average. The report also warns that, without significant policy changes from the government, Newham’s expenditure could account for one-third of its total budget.
Social care costs already account for a further two-thirds of the council’s budget, leaving few resources for any other services.
In the report, Zulfiqar Ali, cabinet member for finance and resources, said the homelessness prevention grant was not distributed “accurately or fairly”.
He said the council received £11,682,183 in 2023-24, when it had 6,430 households in temporary accommodation (around £1,816.82 per household).
In comparison, Wiltshire received £1,128,295 in the same financial year while having 125 households in temporary accommodation, which is £8,604.26 per household.
He said: “Newham has one of the largest numbers of households in temporary accommodation in the UK, with some of the highest costs in the country due to the growing number of people seeking help.
“Despite our many initiatives, prevention strategies and robust financial management, the challenges with temporary accommodation remain and are forecast to grow significantly. If Newham didn’t have the temporary accommodation landscape it has, our budget last year and this year would have been balanced without major difficulties.
“We are putting into practice as many actions as possible to ensure that we are able to continue delivering services for our residents, including the use of reserves or selling assets, while reducing our costs through transformation, which will make more savings and efficiencies.”
Mr Ali said the problems did not lie within the council’s financial management and homelessness approach, but “past government policies and the inefficacies of the housing market in London”.
Councils across the capital have been sounding the alarm on temporary-accommodation spending for some time, with the latest data putting the monthly cost at £90m last year.
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