A no-punches-pulled report on the future for local government reinforces the links between welfare reform and housing insecurity, as councils cope with crippling temporary accommodation costs in the billions.
Released by the Commons MHCLG committee, the report concludes that the government’s current response focusses investment on tackling the symptoms of homelessness rather than addressing its root causes.
The report references a joint submission from 15 organisations, including leading homelessness prevention and support charities, saying that an increase in the local housing allowance rates was now “desperately needed”.
Crisis told the Committee the majority of council spending on homelessness prevention and support was now going on temporary accommodation.
This, the report notes, as the number of councils investing in commercial property had doubled over the past two years.
In 2017–18 alone, councils spent £1.8bn on investment properties – a six-fold increase from 2013–14.
Overall, the committee says the government has been derelict in its duty to councils by failing to set out a funding settlement that addresses immediate service pressures or plan for future challenges.
Now, the report says, the government needs to end its piecemeal approach to council funding and revenue raising – providing a financial settlement that adequately supports councils to serve their communities and close the growing multi-billion pound funding gap.
The report puts housing among a number of ‘non-essential’ services gutted by a decade of funding cuts and increasing pressures on ‘safety net’ services.
This, the report says, is likely to be exacerbated by the government’s failure to set out plans for future funding, with the current four-year funding settlement coming to an end this financial year without a replacement in place.
Submissions to the inquiry raised homelessness support as an increasing pressure on councils.
Evidence from the LGA also highlighted “a potential link between welfare reform and increases in rent arrears, housing insecurity, and demand for temporary accommodation”.
Frances Foster of the Special Interest Group of Municipal Authorities (SIGOMA) considered that changes to the benefits systems were also causing problems for councils.
She told the committee: “There is a lot of anecdotal evidence from councils in our SIGOMA authorities of people in their housing system turning up at surgeries with issues about the various council tax support reductions, the benefit freeze or the caps on rents.”
A submission from the LGA said: “Changes and spending reductions introduced under welfare reform appear to be contributing to pressures on local government services.”
London councils told the committee that “rising demand for homelessness prevention and support” alongside social services for adult and children were the three main pressures that were making the funding situation unsustainable.
With 55,000 households in temporary accommodation, the capital now has 68% of the national total.
The report referenced evidence from Crisis noting that recent research has estimated around £1bn was being spent on temporary accommodation and highlighted the “sharp increase” in its use.
There were 82,000 households in temporary accommodation in July 2018 – a 71% increase since 2011.
A submission from the Salvation Army made a similar point to say that, between 2010–11 and 2017–18, spending on the former Supporting People programme fell by 69% from £1.44bn to £444m.
Much of this previous spend is now being used to cover temporary accommodation costs as a means of meeting legal responsibilities to ‘priority need’ cases.
To the Salvation Army, spending on temporary accommodation “brings little lasting benefit. By contrast, the former Supporting People programme generated net savings of £3.4bn per year against an overall investment of £1.61bn”.
The report recommends HM Treasury to provide councils with a significant real-terms increase in its spending power.
To restore local government expenditure to the position it was (as a share of GDP) in in 2000–01 would require an increase of around £4bn.
That is before taking into account the increased demands for services such as adult social care and children’s services over the last 20 years.
Analysis by the Local Government Association (LGA) and independent analysis from PwC on behalf of the County Councils Network both assess that the annual funding gap for local government will be around £5bn in 2020–21.
Looking further forward the LGA’s analysis has estimated that, by 2024–25, the funding gap will be around £8bn.
In the longer term, the report says, councils must be given greater freedom to pursue their own solutions to ensure financial stability.
“There is a disconnect between the services taxpayers expect their local authorities to provide and the level of service possible under current government funding,” said committee chair Clive Betts MP.
“The government has a duty establish a funding settlement that enables local authorities to provide services to meet the needs of their local communities.
“This constant stress on local government is now compounded by a failure to even set out how much money they will be allocated in the next financial year.
“Government’s attention has been elsewhere for too long, and it must now establish a system of funding that both addresses immediate need and supports local authorities in meeting challenges of the future,” he said.