Coastal towns, rural areas and university cities are likely to lose out despite soaring temporary accommodation rates 

Councils facing some of England’s worst homelessness pressures could lose millions in vital homelessness prevention funding under Government proposals.

The Homelessness Prevention Grant – which councils use to help struggling residents avoid losing their homes – is being recalculated using a new formula that fails to account for true local housing market conditions.

Analysis by the District Councils’ Network (DCN) reveals that while London boroughs are set to receive average increases of 10% in their homelessness prevention funding, many rural areas, coastal communities and smaller cities with high costs of living face substantial cuts – despite experiencing some of the country’s steepest rises in homelessness.

The formula the Government proposes to use, set out in a consultation, has been criticised for failing to sufficiently take account of many factors driving homelessness, including household sizes, social housing levels and affordability of private rental accommodation. This impacts negatively on funding for many towns and cities with significant homelessness problems.

Hastings The crisis is starkly illustrated in Hastings, where temporary accommodation needs have soared from just 37 households in 2016 to 567 today. Council spending on the issue has risen from £730,000 to £6.5 million annually in the past five years for which data is available. Just 1% of properties are affordable within housing benefit rates. Despite these unprecedented pressures, Hastings Borough Council faces losing £754,000 – 34% of its grant.

Oxford The number of households requiring homelessness support in Oxford has surged by 128%% in three years. However, Oxford City Council stands to lose £776,708 – 36% of its funding.

There are 164 district councils in England, most of them situated outside the biggest conurbations – but many of them experience huge housing shortages and high living costs. Across these areas, covering 20 million people, the number of households in temporary accommodation has soared by 49.4% in just three years, with an even more alarming 70% increase in households with children needing emergency housing during the same period. Social housing waiting lists have swelled to 303,000 households – comparable to the population of Manchester – with some councils seeing their waiting lists surge by more than 50% since 2020.

Recent data shows requests for homelessness support in district areas remains high – with 21% more households seeking council help to avoid homelessness since September 2021, a similar level to metropolitan areas.

Cllr Hannah Dalton, Housing Spokesperson for the District Councils’ Network, said:

“It defies logic that many areas facing the most severe housing affordability crises could see their homelessness funding cut.

“Much of the recent growth in homelessness has been felt hardest outside of the biggest cities, including rural communities, market and coastal towns, university cities and places where London boroughs have relocated many of their own homeless people, yet the Government’s funding plans will see such places lose out.

“Government funding is a lifeline that helps councils prevent local people from losing their homes – whether that’s through emergency support to cover rent arrears, helping with deposits for new properties, or providing crucial housing advice. Without proper funding, councils will be forced to make impossible choices about which desperate households they can help.

“Behind the data lies real human misery – children facing disrupted education, families living in squalor and workers having to leave jobs because they can no longer afford the commute. Let’s work together to ensure the funding system offers fairness to people in all places.

“Many councils facing funding cuts will have no option but to cut both homelessness support and other services amid growing bills for temporary accommodation.”

The new funding formula would be particularly damaging for councils that have to use private temporary accommodation, where costs far exceed housing benefit rates. These councils face much higher costs than those with their own housing stock – with some now spending over a quarter of their council tax income on homelessness services. In Hastings, this figure reaches 58%.

Cllr Glenn Haffenden, Deputy Leader and Lead Councillor for Housing and Community Wellbeing, of Hastings Borough Council, said:

“We are disappointed with the proposed changes to the Homelessness Prevention Grant formula. This could see Hastings lose out on £750,000, which would have a huge impact on our homeless prevention services.

“It would wipe out the increased funding we received last year and would mean us having to make difficult decisions about other council services which we would no longer be able to fund due to having to redirect funding towards tackling homelessness.”

The DCN is calling on the Government to:

• Urgently rethink the proposed formula to reflect the true state of local housing markets.

• Recognise that areas with the highest homelessness pressures need more support, not less.

• End the freeze on the subsidy for temporary accommodation.

• Commit to building 90,000 social rent homes annually to tackle the root causes.

“The Government’s simplistic approach ignores the complex realities our communities face,” added Cllr Dalton. “We need a formula that reflects these real challenges, not oversimplified data that could push more families into crisis.”

Worst hit councils

NB table shows the biggest district council losers under the formula change, for those councils with more than 100 households in temporary accommodation.