Homelessness Prevention Grant 2023/24 onwards: technical consultation - consultation response by London Councils

  • By Nancy hunt

Key headlines

  • There is a national homelessness crisis with demand and expenditure increasing disproportionality since 2010. We strongly urge the Government to revisit the HPG settlement and provide, at the very least, increases in the grant in line with CPI inflation over the next 2 years.
  • While there is a national homelessness crisis, there is no doubt that it is most severe in London. The number of homeless households living in TA is at near-record levels, with 56,460 households living in TA in March 2022, accounting for 60% of England’s total TA numbers (95,060 households).
  • The central issue is one of affordability, not vulnerability. Homeless households in London have an average stay in TA five times longer than elsewhere in the country and analysis by Shelter shows that, in London, 56% of households in TA are actually in work.
  • The cost of living crisis will compound the already severe homelessness pressures - 79% of Londoners surveyed said their cost of living had increased in the last 6 months. As a result, London boroughs are forecasting a 4% rise in the number of households in Temporary Accommodation (TA) in 2022-23

Key response lines to the consultation

  • We are very concerned that the Area Cost Adjustment (ACA) – which is overwhelmingly driven by wage differentials - is seen by Government as an appropriate measure to reflect the differences in the housing market. This is simply incorrect, and we oppose the use of the current ACA within the formula.
  • We are very concerned about the proposals in the consultation that will redistribute funding away from London and cause significant volatility during a time of heightened economic and financial uncertainty.
  • Population as a measure of need: The general population is in no way a suitable proxy for homelessness demand. London accounts for 16% of the overall population of England, but 60% of the overall share of households in TA.
  • London Councils agrees that the current funding landscape for homelessness is too complicated and supports the Government’s objective to simply it. It is disappointing that the consultation only takes a narrow view of one of those funding streams (the HPG), rather than taking a holistic review of the whole system. Reforming one part of the system in isolation doesn’t make sense and is a further reason to pause the reforms.
  • If the welfare system was reformed to ensure that the actual cost of TA provision was met by Housing Benefit. This would free up HPG funding to focus solely on prevention and enable the design of a simpler allocation methodology that didn’t need to account for the cost of TA.
  • Given the complexity in the formula, it is concerning that the modelling which sits behind the proposals has not been published in the way that the Government has done for other funding streams
  • We urge the Government to pause the implementation of a new allocations methodology in order to work with local authorities to develop a robust formula that accurately captures ongoing homelessness pressures and costs.

Summary of responses to key questions

Q1. Do you agree with our proposal to combine the HRG and HRA uplift elements of the formula, using HRA uplift formula for £110m of the grant? (Yes – No – Indifferent - Not sure)

No. While we agree with the need to simplify the overall allocation methodology and move to a single formula for this portion of the funding, we do not believe the HRA uplift formula reflects an accurate picture of homelessness pressures.

We believe further work is required to develop a more appropriate formula for this element of the grant.

Q2. Do you agree with our proposal to apply an overall ACA in the £110m element of the formula? (Yes – No – Indifferent - Not sure)

No. While it is true that it is more difficult to prevent homelessness in areas with higher costs, it is not the case that the ACA accurately reflects the real differential cost of homelessness prevention across the country. Areas such as London, which faces the most acute housing market pressures, suffer from a severe lack of supply of affordable properties, making prevention and relief both very challenging and expensive, while driving up the cost of TA.

Q3. Of the options presented to replace TAMF in the formula, which is your first preference? (Option 1 - Option 2 - Not sure – Indifferent - Neither) Please explain why.

Neither. We agree that the TAMF element is outdated and should be replaced. However, we do not think either of the options presented accurately reflect homelessness pressures and call on the Government to pause the implementation of a new allocations methodology in order to work with local government to develop a formula that does.

Q6. Do the listed data sources used in the FHSG element represent an accurate reflection of homelessness pressures? (Yes - No - Partially - Not sure) Please explain why.

Partially. H-CLIC data only consist of prevention work that can be considered a duty under the Homelessness Reduction Act and does not include the wide range of earlier stage prevention work carried out by authorities. The realities of the housing market also make it a costly form of prevention in London, particularly in the form of payments to Landlords.

Q7. Do you have any alternative suggestions for data sources that could be used as indicators of homelessness pressures in the formula?

The key driver of homelessness pressures in London is housing affordability which cannot simply be understood from the perspective of housing cost data, such as rent levels. It is the gap between a household’s income and housing costs that is the key determinant of affordability. If the Government were to pause the implementation of the new allocation methodology, they could work with local authorities to develop a measure that captures this gap and therefore properly reflects homelessness pressure in the formula.

Q8. Do you want to see transitional arrangements introduced for 2023/24 financial year? (Yes – No – Indifferent - Not sure)

Yes. In the context of rising homelessness pressures, we strongly oppose any changes to the funding formula that would lead to a reduction in allocation for authorities and thereby reduce their ability to meet these pressures. Were the reforms to be implemented, we therefore urge the Government to increase the level of funding within the grant overall such that no local authority is worse off as a result of the changes to the formula.

Q12. Do you agree that funding allocations for 2023/24 and 2024/25 should be announced this year, providing the earliest funding certainty possible? (Yes – No – Indifferent - Not sure) Please explain why.

Unsure. While we welcome the department’s desire to give authorities a longer-term view of homelessness funding, enabling them to better plan their homelessness services and invest in longer term service provision, we are concerned that a two-year funding allocation would not reflect the significant increase in homelessness pressures boroughs anticipate in the coming months, or indeed guard against the uncertain economic environment caused by rising inflation.

Nancy hunt, NGDP Policy Officer