Barnet Council is spending more than £50,000 a month on emergency hotel and B&B accommodation thanks to soaring homelessness fuelled by the cost-of-living crisis.
The authority said its Homelessness Prevention Grant for this year would not cover its outgoings as demand for help with homelessness grew.
But despite ballooning demand, the Government has imposed a real-terms cut on Barnet’s grant for next year.
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In the meantime, some families are being kept in hotels for longer than six weeks – the legal cap on how long households with children can remain in emergency shared accommodation.
Cllr Ross Houston, cabinet member for housing, said this had happened “on very few occasions” and that the families were “transferred to alternative suitable accommodation shortly afterward”.
Growing Problem
“There is already a lack of good quality affordable housing in the borough and this crisis is exacerbating the problem,” Cllr Houston said of the rising cost-of-living.
“We are now, very sadly, seeing more people becoming homeless as they are no longer able to afford their rent.”
In the 24 months from October 2020 to September 2022, the number of households placed in hotels or B&Bs only exceeded 30 per month five times – and never hit 40.
But in October it rose to 56. In November it hit 67 and in December it was 54.
In October 2020, Barnet spent £12,337.60 on hotel and B&B accommodation.
By October 2022, that was up 173% to £33,697.61.
In the lead-up to Christmas, it grew even higher – to £55,429.13 in November and £52,26337 in December.
Dwindling Funding
Each year, government gives councils a Homeless Prevention Grant, to “prevent and tackle homelessness”.
Barnet uses that grant to make up the difference between housing benefits and rents, and on homelessness prevention such as emergency hotels and B&Bs.
In 2022/3, Barnet was awarded £5,732,888. Late last year, in recognition of the huge demand councils were facing, the government topped that up with an extra £913,995.
But when the Government announced the 2023/4 grant just before Christmas, it was £5,794,778.
That is a 1.1% increase on the prior year’s initial grant. But according to the Bank of England’s inflation calculator, by November 2022, the 2023/4 grant already represented a real-terms cut of 6.6%.
By the end of this financial year, it will likely represent an even more substantial cut.
Local Housing Allowances
Part of the problem is landlords increasing rents to cover their own rising costs, such as substantially increased interest on their mortgages.
All boroughs are subject to Local Housing Allowances (LHAs), which are government caps on how much they are allowed to spend on rent for homeless families.
While rents skyrocket, LHAs have been frozen for several years.
In Barnet, the maximum LHA for a three-bedroom family home is £441.86 per week.
According to Foxtons estate agency, average rents for three-bedroom homes in Barnet begin at £507.69 per week.
Property search service home.co.uk says the median monthly rent in Barnet is £2,438 (roughly £609.50 per week) and the mean is £3,444 (around £861 per week).
A long-term solution, said Cllr Houston, would be for the council to build more of its own social housing – but government has already stopped providing the grant funding to facilitate this as well.
Government Response
We asked the Department for Levelling-Up, Housing and Communities (DLUHC) why it had imposed a real-terms cut on Barnet’s Homelessness Prevention Grant amid soaring demand.
It did not answer, but said: “Barnet Council has up to £311 million available for this financial year so it can continue to deliver vital services for its residents, rising up to £335 million in 2023/4.
“We have also provided the council with more than £6 million this year as part of the Homelessness Prevention Grant to prevent evictions and ensure families in Barnet are not left without a roof over their heads.”
According to the Bank of England inflation calculator, by November 2022, an increase from £311 million to £335 million amounted to a slight real-terms cut.
We asked DLUHC whether it would urgently review Barnet’s LHA, but it did not answer.
We also asked: “What is DLUHC's message to families living in hotels because Barnet's LHA will no longer pay for them to live in a proper home?”
It did not answer.
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