Council overspends on homelessness budget amid housing crisis
A senior councillor says there should be government intervention over the housing crisis
The government should ‘intervene’ over the housing crisis, according to a senior councillor in Tower Hamlets, where homelessness accounted for the bulk of the council’s £16.5 million net overspend last year.
Tower Hamlets Council spent £16.9m more than it planned to on homelessness in the 2024/25 financial year that ended in April, although this was offset by underspends in other areas of the budget.
It comes as the number of people needing help to avoid homelessness has skyrocketed – putting pressure on councils’ budgets across the country.
Aspire councillor Saied Ahmed, responsible for resources and the cost of living, told a meeting on Monday (21st): ‘The council’s outturn has been significantly impacted by the nationally recognised demand pressures in homelessness.
‘It’s not just a Tower Hamlets issue, it’s a national issue when it comes to homelessness.’
He added, ‘If you asked me, if there’s an area within my budget that I may lose sleep over, it is this area.
‘If there’s an area where I want government to intervene and provide some additional support, it is this area. Not just for Tower Hamlets, overall for all boroughs – especially in London.’
Councils have a duty to provide temporary accommodation for vulnerable people who would otherwise become homeless, such as families.
A rise in demand for temporary accommodation, and the costs of paying for it, is causing many councils to spend tens of millions of pounds more than they have budgeted for.
Rising rents and a shortage of available accommodation can mean they have to fork out for hotels, B&Bs or private accommodation on expensive nightly spot rates.
The council says it currently houses 3,222 people in temporary accommodation – up from 2,973 in April 2024.
It says the main reasons that people come to it for help are that they’ve been evicted by landlords or families, or are escaping domestic abuse.
David Joyce, the council’s corporate director for housing, said the authority was aiming to ease the pressure by renting 500 private homes on less expensive long-term leases, and allocate 200 council homes for temporary accommodation when they become vacant.
He said: ‘We’re seeing increased demand so we have to procure more properties than we ever have done before. Year on year we’re seeing a 10% increase in households in temporary accommodation.’
The figures were included in a report on the council’s total outturn for the 2024/25 financial year, presented to councillors on the overview and scrutiny committee.
It said the council covered the £16.5million net overspend with its risk reserve, which is used to cover spending caused by unforeseen issues.
However, that left the risk reserve with just £1.7million at the end of the year.
Labour councillor James King asked if the council expected to top up its reserves – and if it would cut services’ spending to do so. He said: ‘The emergency reserve, as I understand it, is being depleted massively this year, and it will have to be topped up next year.
‘Are you planning to top it up? If so, how so? What services are going to have to be cut, what savings are going to have to be made to top it back up?’
The council’s interim director of finance, Abdulrazak Kasim, said that this year’s budget had included £2million to top up the risk reserve, and that it would be topped up further by re-allocating money from other lesser-used, non-earmarked reserves.
He added that the council’s general reserves – which he described as the council’s ‘last option’ to cover unbudgeted spending – are currently at £21m.
If you like this story, read Will The Truman Brewery Become Homes or Offices?