Temporary accommodation costs could see Newham Council in need of government bail-out

Newham Council’s spending on temporary accommodation (TA) could soon account for a third of its total budget, potentially crippling the council financially.

The east London authority ended last year £22.2m in the red, citing spiralling costs of homelessness.

Despite allocating an additional £18.5m to the budget for TA, a statutory responsibility over which the council has no control, Newham’s Summer 2024 Finance Review revealed that costs were set to outstrip allocated resources again. 

Costs in this area alone could top £40m, according to the review, which comes ahead of a cabinet meeting tomorrow.

Newham has said national policy changes are needed, complaining at the uneven distribution of homelessness prevention grant. 

In the report, Zulfiqar Ali, lead member for finance and resources, noted that while Newham received £1,816 per household in TA in 2023/24, Wiltshire received £8,604.

Taken together with social care costs, the council said current projected costs for TA would leave “very little resource for any other service”.

Ali said: “Newham has one of the largest numbers of households in temporary accommodation in the UK, with some of the highest costs in the country due to the growing number of people seeking help. 

“Despite our many initiatives, prevention strategies and robust financial management, the challenges with TA remain and are forecast to grow significantly. If Newham didn’t have the TA landscape it has, our budget last year and this year would have been balanced without major difficulties. 

>> Read more: Northern Ireland temporary accommodation costs soar to almost £28m in one year 

“We are putting into practice as many actions as possible to ensure that we are able to continue delivering services for our residents including the use of reserves or selling assets; while reducing our costs through transformation which will make more savings and efficiencies”.

Ali added that cost controls implemented by the council “won’t be enough”.

“We haven’t failed in our financial management and homelessness approach; rather past government policies and the inefficacies of the housing market in London and the UK have failed us. 

“That’s why it will be essential to take urgent and vital choices, and some form of government assistance may also be required”.