Preventing further increases in homelessness will only be possible with billions being invested in new housing, says Patrick Mooney, with record-high rough sleeping and temporary accommodation figures exposing the urgent need for action.

The overwhelming case in favour of building new homes at a rate we have not achieved in many decades, is being made for us on a daily basis by the rising tide of homelessness and rough sleeping which continues to hit new highs or lows depending on your perspective.

Coinciding with the start of Meteorological Spring, the Government released the latest homelessness figures. These revealed a 15.7% increase in the number of households living in temporary accommodation, including 164,040 children. This is the seventh time in which the quarterly figures have hit a new record high in the last two years.

Many of these children are living (or should that be ‘existing’) in wholly unsuitable squalor, such as a single room within a grotty B&B along with all of their family members. And in many cases they will be left there well in excess of the statutory time-limit of six weeks which is allowed by law.

In addition some 4,667 people were found sleeping rough on the streets on a single night in the Autumn of 2024, an eyewatering increase of 20% on a year earlier. This number has risen for the last three years and shows an inhumane disregard for the lives of desperate people left without a safe or affordable home.

Our local authorities are meant to provide a safety net and to assist people who have fallen on hard times, but after 14 years of austerity and funding cuts, the sector has been left in a precarious financial situation and barely able to keep itself afloat, with dozens of councils facing the threat of bankruptcy.

Spending review

Council staff are being asked to manage with wholly inadequate resources – and in reality the true picture is probably far worse than the one painted by the statistics – with no respite in sight.

The forthcoming Spending Review (in June) will show us just how seriously the Government is taking this problem. The review is a crucial opportunity to restore sustainability to local government budgets, much of which are currently taken up by skyrocketing levels of demand for homelessness support and adult and children’s social care which councils have a legal duty to provide.

The need for urgent action is further underpinned by further statistics which reveal:

• A total 24,360 households are living in B&Bs and hostels, which is the most damaging form of temporary accommodation for children – a rise of 17% in a year;
• 38,690 households have been uprooted to out of area temporary accommodation away from the support of families and friends – a 24% rise in a year; and
• The number of people sleeping rough in England has more than doubled since 2010 when the data started being collected – up by 164% overall.

The housing charity and campaigning group Shelter is urging the Government to use the Spending Review to invest in building a new generation of social rent homes that will tackle the housing emergency head on and end homelessness for good.

Polly Neate, chief executive of Shelter, said: “It is unacceptable that homelessness continues to rocket when the Government has the power to end it entirely. Thousands of children are being robbed of stability in temporary accommodation, crammed into B&Bs and hostels without any space to sleep, play or do their homework. Whole families are being uprooted at a moment’s notice, forcing children to travel hours to school, leaving them exhausted and falling behind.

“Homelessness has a simple solution – a safe, secure social rent home gives everyone the chance to succeed, but there’s nowhere near enough. If the Government is serious about tackling the housing emergency, we must see ambitious investment in social housing in June’s Spending Review. Investing in 90,000 social rent homes a year for 10 years would give families a fighting chance and end homelessness for good.”

Prevention is better than cure

A surprising ally to Shelter has emerged in the shape of the National Audit Office, which acts as the Government’s spending watchdog. It is calling on Ministers to incentivise spending on homelessness prevention to avoid the need for families to be housed in B&Bs and to cut the huge growth in expenditure on short-term solutions. 

In a recently published report, the NAO has highlighted that councils spent a combined total of £2.13bn on temporary accommodation in 2023/24, nearly double what they spent in 2015/16.

Gareth Davies, head of the NAO, said: “There have been repeated delays to local government finance reform and central Government can no longer resort to short-term solutions to support local authorities. Action to address this must resolve the systemic weaknesses in local government financial sustainability through a comprehensive, cross-government approach.”

The NAO recommends that the Ministry of Housing, Communities and Local Government take the lead in building a “cross-government approach” to local government financial sustainability. Of course it is the very same department which is also taking the lead on trying to build 1.5 million new homes by the end of this Parliament in 2029. Some joined-up thinking is clearly called for!

As part of the upcoming Spending Review, the NAO is urging Ministers to develop a funding and service reform plan that focuses on delivering long-term value for money. It says MHCLG and the Treasury should explore how the impact of preventative services can be evaluated and incentivised to deliver better outcomes and improved value for money.

Over recent years councils have been given temporary assistance with their budgets, including £233m last autumn for homelessness services, but these emergency handouts do not address the underlying financial pressures and they can create unintended longer-term risks.

The NAO reports that the financial pressures created by using expensive short-term solutions are limiting councils’ ability to invest in homelessness prevention. Spending on homelessness services increased in real terms by 105% from £1.49bn to £3.06bn between 2015/16 and 2023/24. 

But a significant portion of the Homelessness Prevention Grant which councils receive is used to fund temporary accommodation, rather than being spent on prevention work. Over the same period, spending on other housing services, which includes some preventative services, fell by £642m. This gives the strong impression that Whitehall’s left hands and right hands are not working in unison. 

A new approach

Pete Marland, chair of the Local Government Association’s economy and resources board, said: “The NAO rightly highlights that funding pressures are being exacerbated by a lack of reform, which has weakened the financial sustainability of councils and left them with a complex, outdated funding system.

“Creating an improved and more sustainable funding system for local government is critical to strengthen the value for money of local spending and, most importantly, to improve services for communities.”

Sir Geoffrey Clifton-Brown, chair of the Public Accounts Committee, said: “Short-term support is a sticking plaster to the underlying pressures facing local authorities. Delays in local audits are further undermining public confidence in local government finances. 

“There needs to be a cross-government approach to local government finance reform, which must deliver effective accountability and value for money for taxpayers. At the same time, council finances are under extreme pressure and many are struggling to keep their head above water.”

You would think that everyone was pushing at an open door in Whitehall, as members of the Government from the Prime Minister down have been saying that England’s housing crisis cannot be solved without forcing councils to build more homes. 

Ministers have repeatedly declared that binding targets will compel authorities to build 370,000 homes a year. But the volume housebuilders, local councils and housing associations do not believe such figures are attainable without a massive increase in the availability of resources – adding to the pressure on Rachel Reeves, as Chancellor of the Exchequer, to conjure up billions of pounds in new investment.

Building over 100 new towns (or extensions to existing communities) will help deliver a substantial number of homes, but with the plans for these very much in their infancy it is debatable when the first new homes in the new towns will emerge.

The National Housing Federation is talking in terms of a 10 year plan, which is looking increasingly more realistic in the eyes of many across the whole housing and construction sector. This would surely be a better fit for the promised long term housing strategy which the Government has started work on producing.

Modelling done by the NHF of housing association finances shows that the social sector could deliver 320,000 new affordable homes over five years. But this is dependant on a significant programme of support being put into place, including a 10 year rent policy, £2bn a year in grant to invest in existing social homes; and a ten-year Affordable Homes Programme with an average of £4.6bn a year over its first five years.

With a larger investment aimed at the whole social housing sector, including local authorities, an Affordable Homes Programme of £7.8bn per year across all social landlords, with a larger uptick in Section 106 contributions, could deliver 500,000 homes over five years. 

In this case – development by year five would reach 140,000 affordable homes, including 90,000 for social rent. If sustained into subsequent years, this would be enough to meet housing needs and to make the contribution which the NHF estimate is required to build 1.5 million new homes. No doubt we shall have to wait until June before we find out how persuasive the NHF has been, and also how open minded the Treasury has been.