Homelessness: Funding

Kim Johnson Excerpts

Tuesday 2nd December 2025 Westminster Hall

[Bob Blackman]

I thank the hon. Member for that intervention, which leads me on to the aspects of what local authorities have to do. They are the front door; they are dealing with this crisis 24/7, 365 days a year. The Government must provide them with more help with temporary accommodation costs. Last year alone, local authorities spent £2.8 billion on temporary accommodation, which often came from homelessness budgets. It is positive that TA funding is being moved into the revenue support grant, but the lack of Government subsidy for housing benefit and temporary accommodation costs means that the core issue remains unaddressed.

The welfare system and other public services must do more to prevent homelessness. The lack of social homes and the continued freeze of local housing allowance leaves people with nowhere to go. Fewer than three in every 100 homes for rent are affordable for someone who needs local housing allowance. Furthermore, according to the Crisis monitor, homelessness on discharge from public institutions—hospitals and prisons—has risen by 22%. I have raised that repeatedly in this place, but I have seen no action on it. If it does not change, councils will continue to face impossible levels of need with inadequate levels of funding.

[Kim Johnson (Liverpool Riverside) (Lab)]

I thank my hon. Friend for securing this important debate. Liverpool is paying £25 million in the current financial year to house 1,700 people in temporary accommodation, 450 of whom are children. Does he agree that, although it is welcome that temporary accommodation funding is being moved into the revenue support grant, local authorities urgently need more support, given that they spend £2.8 billion on temporary accommodation, and we need to look at raising the local housing grant?

[Bob Blackman]

I am grateful to a Liverpool MP for calling me an hon. Friend; as I spent four years at the University of Liverpool, I have a shared interest in the great city of Liverpool. I agree that we have to do something about the local housing allowance, and I believe that that was a missed opportunity in the recent Budget.

Supported accommodation funding must be addressed. The removal of ringfencing has led to many supported housing services relying on exempt housing benefit to cover the cost of provision, spurring a proliferation of rogue providers. That must be addressed, and the Government must urgently bring forward the powers introduced by my Supported Housing (Regulatory Oversight) Act 2023, which we are still waiting for despite deadlines having passed and the Government now technically being in breach of the law.

Fundamentally, the homelessness strategy must be backed by adequate funding models to enable an evidence-based approach to tackling homelessness. The Government have made welcome funding announcements regarding housing and homelessness—funding for rough sleeping and temporary accommodation hit £1 billion in 2025-26; 60% of the £39 billion of social and affordable housing funding has been committed to social homes; and they have committed to developing a £2.4 billion homelessness, rough sleeping and domestic abuse grant for 2026-27 to 2028-29—but the fact that homelessness continues to rise is clear evidence that we need to review the adequacy of funding and the overall approach to homelessness at a systems level, via the cross-Government strategy. That includes ensuring that the new homelessness, rough sleeping and domestic abuse grant enables local authorities to provide effective homelessness support in line with evidence-based best practice.

To do that, the MHCLG must ringfence the new grant, so that local authorities do not use it for purposes that do not meet the requirements in the guidance. It must also develop outcome-based scrutiny mechanisms, such as reductions in presentations to housing options through preventive work; higher assessment rates relative to presentations; the introduction of face-to-face assessments; and housing-led approaches to addressing homelessness, so that people’s ability to access a secure home, with support if needed, is prioritised over temporary solutions.

In their response to the fair funding review, the Government propose consolidating all homelessness and rough sleeping revenue grants, except for temporary accommodation grant funding, which is to be moved into the revenue support grant. That will be £2.4 billion over the next three years, matching the call from the sector and the all-party parliamentary group for ending homelessness, of which I am co-chairman, for consolidated multi-annual funding.

Throughout that process, we should ask whether the Government are ensuring efficacy. To ensure that funding tackles homelessness, the Government must work with councils, strategic authorities and the sector to develop appropriate scrutiny and accountability mechanisms, requiring local authorities to demonstrate how the new grant funding has been used to achieve targets. In doing that, the Government must link funding to outcome-based targets, with clear lines of accountability and performance monitoring. Examples of outcome-based targets are reductions in presentations to housing options, through proactive preventive work; increases in face-to-face assessment; and the development of local housing-led approaches to addressing homelessness, which we know are the most effective ways of sustainably ending homelessness.

Although the Government did not propose including domestic abuse funding in the new consolidated grant, I am a firm believer that that might encourage local authorities to consider the intersections between homelessness and domestic abuse. In the 2023-24 financial year, domestic abuse accounted for 12,130, or 25%, of the households with children owed a relief duty.

Homelessness funding reached £1 billion for 2025-26, with two main funding pots and several smaller ones. Should that level of funding have continued over the 2026-27 and 2028-29 periods, councils would have received £3 billion. That does not match the provisional funding allocation for the next two to three years, so it is fair to ask whether that is a cut just when services need more support. Remember that the homelessness, rough sleeping and domestic abuse grant does not include funding for temporary accommodation. Of the £633 million allocated to the homelessness prevention grant this year, 51%—£322 million—will be allocated to temporary accommodation, so this could leave councils with just £310 million to spend on homelessness support.

At the heart of the matter are the pressures faced by temporary accommodation. Government data shows that in 2023-24, local authorities in England spent nearly £2.3 billion on temporary accommodation, including very expensive nightly paid accommodation and more specialist emergency housing such as hostels and refuges. Spending on nightly paid accommodation has increased from 6% to 30% of the total temporary accommodation bill in the past 10 years.

For the next three years, temporary accommodation funding will be separated from wider homelessness funding and included in councils’ revenue support grant. For that three-year period, councils will receive temporary accommodation funding worth £969 million, which is around £323 million a year. That was previously part of the homelessness prevention grant, for which councils had roughly the same amount of funding. I welcome the decision to separate the funding, but we should not allow local authorities to choose between paying for expensive and often unsatisfactory temporary accommodation and homelessness support.

There is concern that the impact of temporary accommodation funding reforms will be limited because of the shortfall in financial support, paid at 90% of 2011 local housing allowance rates. It is unlikely that the reforms proposed by the Government will mitigate that subsidy gap, particularly given that the proposed level of funding is similar to that in the current year.

Let me take us back to 2003, when English local authorities were allocated ringfenced Supporting People funding to commission housing support. In 2009, that ringfence was removed, enabling local authorities to decide how the funding was used in their areas. That has led to significant variation in how services are commissioned across local authorities, with some supported housing services directly funded and commissioned by local authorities and other, non-commissioned services receiving no direct grant funding from the Government. The impact is that many providers are ending up using the higher rates of exempt housing benefit to offset higher housing management costs and pay for support. Although housing benefit should not be used to pay for that support, many providers report having to do so.

Many of the problems that we have seen in the exempt sector are driven in part by reductions in funding for support and increased dependence on exempt housing benefit. Unscrupulous landlords have used the higher rates of exempt housing benefit to profit from the provision of supported accommodation, while providing poor and sometimes unsafe services. That was the core reason for my Supported Housing (Regulatory Oversight) Act 2023, whose implementation we still await. When the Minister responds to the debate, she can give us the good news that we will implement that without any further delay.

A lot of good work has been done. People are more aware of the struggles of homelessness and the enormous amount of charitable work that continues to support, lobby and raise awareness for us all. The three-year grant is welcome, but homelessness continues to rise. It is clear that we need to review both the adequacy of funding and the overall approach, via the cross-Government strategy, so the next question for the Minister is when we will see that strategy actually being delivered.

Basic principles are still missing. Indexing local housing allowance to cover just the cheapest 30% of local homes is one of the most impactful measures that the Government could introduce. The cross-Government strategy must address the drivers of homelessness and be clear about the outcomes that we are trying to achieve. We cannot forget that local authorities are the front door—they are dealing with the crisis literally every single day, and 24 hours a day at that—and we are still waiting for the protections and regulations enshrined by my Supported Housing (Regulatory Oversight) Act to be enacted.

Let us not forget these points. Homelessness is rising. More than half of homelessness cases are in London. The cost of temporary accommodation is rising. Council budgets are shrinking. That is all while thousands are sleeping rough, on a sofa or on the street. The weather will be changing and temperatures will be dropping in the coming weeks. We stand here and call for change, and change must come.