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Councils’ temporary accommodation bill to reach £3bn by end of decade, LGA finds
English councils’ spending on temporary accommodation is likely to reach £3bn by the end of the decade due to limits on how much they can claim from the government, the Local Government Association (LGA) has found.
Councils’ temporary accommodation bill to reach £3bn by end of decade, LGA finds #UKhousingEnglish councils’ spending on temporary accommodation is likely to reach £3bn by the end of the decade, the Local Government Association has found #UKhousingCouncils’ annual funding gap for temporary accommodation is also due to grow significantly over the next five years from £270m to nearly £400m, according to an analysis by the local authority lobby group.
The LGA has renewed calls for the government to cap temporary accommodation subsidy at 90% of current Local Housing Allowance (LHA) rates, rather than the LHA rates from 2011.
If the uprate is brought in, it would save councils £700m by the end of the decade, wiping off nearly 30% of the projected £3bn bill, the LGA has estimated.
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This comes just three days after the District Councils’ Network released its latest figures showing the strain of unfunded temporary accommodation costs on lower-tier councils in England. The body also called for the cap on reimbursements to be uprated.
Both organisations have called for action in the run-up to the Budget, which is due to be announced by chancellor Rachel Reeves on 26 November.
Tom Hunt, chair of the inclusive growth committee at the LGA, said: “It makes no sense that the rates that councils are receiving from the DWP [Department for Work and Pensions] are a decade-and-half old – the LHA rate must be brought into line with the current reality.
“While the cost of delivering essential services keeps climbing, councils are caught in a vicious cycle of ever-increasing temporary accommodation costs versus static rates they receive back to cover their costs.
“This means that more and more pressure is applied to their finances, having real-world implications for service delivery and growth.”
He called on Ms Reeves to use the Budget to undo this “immediately”.
“Not only will it [increasing rates] mean councils can address the housing crisis more effectively, it will mean that they can focus on investment to drive growth and prosperity for their communities,” Mr Hunt added.
Recent figures showed that as of 31 June 2025, 172,000 children in England were living in temporary accommodation – the highest number since records began.
Over the past year, the government pledged money to help councils with the pressures they are facing. This includes £1bn from April to tackle homelessness and £950m in June to improve the quality of temporary accommodation and drive down the use of expensive B&Bs.
Last month, the government announced it would give £11m to councils with the highest temporary accommodation figures.
However, this week housing secretary Steve Reed admitted to MPs that the government’s homelessness and long-term housing strategies could be delayed until after Christmas.
A government spokesperson said: “We recognise that the demand for temporary accommodation has now reached record highs.
“That’s why we are investing more than £1bn in homelessness services, launching a cross-government homelessness strategy, and investing a record £39bn in affordable and social housing.
“Any future decisions on subsidy rates will be taken in the context of the government’s missions, goals on housing and the financial context.”
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