Councils in England facing bankruptcy as lack of
housing pushes up costs
Budgets could be overwhelmed as evictions and rising
mortgage rates cause homelessness to surge
Patrick
Butler and Michael Goodier
Mon 30 Oct
2023 05.00 GMT
England’s
housing crisis will push many local authorities into bankruptcy as the
increasing cost of emergency accommodation for thousands of homeless families
threatens to overwhelm council budgets, leaders have warned.
The
worst-hit councils are now spending millions of pounds a year – in some cases
between a fifth and half of their total available financial resources – to try
to cope with an unprecedented and rapid explosion in homelessness caused by
rising rents and a shrinking supply of affordable properties.
The scale
of the crisis means smaller councils, often in affluent shire counties, are
struggling to supply enough emergency homes to meet their legal duty to support
homeless families. Homelessness rates in some districts have more than doubled
year on year.
Councils
that have enjoyed housing stability for years are now reeling at the
accelerating cost of the crisis. Basildon borough council in Essex has seen
spending on temporary accommodation rise from £7,000 in 2017 to £2m in 2022.
Hastings borough council, in East Sussex, spent £750,000 in 2019 but expects
its annual bill to be £5.6m by next April.
There is
cross-party consensus in local government about the need for urgent ministerial
action, with even Tory-controlled councils calling for rent controls, increases
in housing benefit rates and investment in new social housing to prevent the
crisis from dragging smaller districts into insolvency.
“Unless the
government acts now, many of us will go over the edge financially, with a
devastating impact on local services. The decline of the safety net which
district councils provide will hit the most vulnerable members of our
communities hardest,” said Hannah Dalton, housing spokesperson for the District
Councils’ Network.
A Guardian
analysis of local authority revenue expenditure found 10 councils where more
than £1 in every £10 of core spending – which is not ringfenced and that
councils can use to take decisions – went on temporary accommodation in
2022-23.
Many of
these councils have also seen large rises in the number of people housed in
temporary accommodation. In Crawley, in West Sussex, the number of households
doubled between December 2019 and March this year; in Hastings the number
tripled and in Havant, in Hampshire, it grew tenfold, according to government
homelessness figures.
The crisis
is being driven by rising evictions from private rented housing over the past
two years, coupled with local housing benefit cuts and the scarcity of suitable
homes as rising mortgage interest rates force landlords to sell up or switch to
short-term lets, such as Airbnb, forcing potential first-time buyers to stay in
rented homes.
Councils
have described increasingly chaotic local private rented housing market
conditions as the crisis spreads, including:
Unscrupulous private landlords evicting tenants
and then offering the property to the local council to use as temporary
accommodation and charging a substantially higher rent – a process known as
“flipping”.
Families increasingly being placed in temporary
housing miles from where they live and far from their children’s school.
District councils in Essex routinely house families in Norfolk and
Cambridgeshire, and one family was reportedly placed in Inverness, in northern
Scotland.
Councils are in direct competition with the Home
Office, and its asylum seeker housing contractors, Serco and Clearsprings, to
secure scarce temporary accommodation in their area. Some councils are
considering offering “golden hello” cash payments to landlords to secure
priority access to homes.
The latest
figures for England published last week showed a record 104,000 households in
temporary accommodation, at a cost to the taxpayer of £1.7bn. Councils said
these figures have been swelled by growing numbers of working families made
homeless after being turfed out by landlords wishing to sell up or raise rents.
Stephen
Robinson, the Liberal Democrat leader of Chelmsford city council, said: “As a
country, we’ve not built enough homes for 30 years. If the crisis in
homelessness is not addressed, it could bankrupt very many district and unitary
councils within two years, with those in south-east England at particular
risk.”
Labour-run
Hastings, which has said it in effect faces bankruptcy as a consequence of
rising temporary accommodation bills, said in a recent paper that the financial
and social consequences were so serious that “even the term ‘housing crisis’
insufficiently conveys the systemic and embedded challenges we face”.
A
spokesperson for the government said ministers were committed to ensuring that
families could move out of temporary accommodation into stable housing. “Local
authorities have seen an increase in core spending power of up to £5.1bn or
9.4% in cash terms on 2022-23, with almost £60bn available for local government
in England.
“We are
committed to reducing the need for temporary accommodation by preventing
homelessness before it occurs in the first place, which is why we are providing
councils with £1bn through the homelessness prevention grant over three years.”
Sem comentários:
Enviar um comentário