Cllr Peter Zinkin is the Leader of the Conservative Group on Barnet Council.
In outer London boroughs such as Barnet, the spiralling cost of temporary accommodation has become one of the most serious threats to the long-term financial viability of councils. In Barnet, the shortfall the council must finance in relation to temporary accommodation is forecast to rise to over £30m a year by 2030. Alongside adult social care, children’s services and the ever-growing interest on the debt required simply to balance annual budgets, temporary accommodation is now one of the four pressures capable of pushing councils into permanent financial instability.
For Conservative councillors seeking to protect essential services for their residents, it is a daily operational challenge. Councils are under a strict legal duty to provide housing for households assessed as homeless. Yet the financial framework underpinning that duty is fundamentally broken. Central government subsidy is capped at Local Housing Allowance (LHA) rates, while the actual cost of securing accommodation in London routinely exceeds those limits. The difference falls directly on local taxpayers.
Councils across England now spend billions of pounds each year on temporary accommodation. In London, where private rents have risen sharply and supply is constrained, the mismatch between the subsidy and real-world costs is particularly acute. Much of the subsidy system remains tied to rates set more than a decade ago and bears little resemblance to today’s market. In London boroughs alone, this gap runs into hundreds of millions of pounds annually, forcing councils to make painful decisions about which services can still be sustained while meeting their homelessness obligations and balancing the budget.
Behind the figures lie real human dilemmas, both for families in housing need and for the wider community. Two recent anonymised cases from Barnet illustrate these dilemmas.
The first concerns a long-established local family, with deep roots in the borough, including members with significant disabilities. Despite a clear local connection and multiple vulnerabilities, securing suitable accommodation within LHA limits proved impossible. The council is forced to either rely on costly temporary in-borough housing, absorbing a substantial ongoing financial loss, or to find accommodation in an area where housing costs more closely match the available subsidy. The unresolved policy question is where the line should be drawn between paying for the family to stay in the borough and moving them to a new area. How do we balance the rights of our residents to quality Council services against the needs of a small family unit? The ability of the family to challenge the Council decision-making in these circumstances creates prolonged uncertainty, while resources that might otherwise have supported homelessness prevention are diverted simply to manage the placement and its fallout.
The second case, in some ways even more difficult, involves a family of former asylum seekers who were very recently granted permission to remain in the UK. The family had complex medical and welfare needs. When granted permission to stay the Home Office asylum accommodation ends and responsibility transfers to the council. The medical and welfare needs may mean that the family would ideally need to remain in the area. However, why should precious local housing be reallocated away from those who have been waiting for years in favour of a family put into the area by the whim of the Home Office placement process. Should the duty to house be an obligation to find housing somewhere in the UK where housing cost and subsidy balance? This would become the statutory housing offer even if the family has to move to a new area as a consequence. Why should services to all Barnet residents pay the price of housing those placed in the borough by the Home Office on a random basis.
These cases are far from unusual. London councils are increasingly forced to confront uncomfortable questions. To what extent should they be expected to fund indefinite, high-cost accommodation in some of the most expensive housing markets in the country? Why should the financial consequences of national asylum and immigration decisions fall on local residents simply because a hotel or hostel happens to be located in their borough?
The randomness of Home Office placement policy compounds the problem. Asylum seekers are accommodated wherever space exists, often in higher-cost areas. When status is granted and asylum support ends, councils inherit both the legal duty and the financial burden. Where medical or welfare needs are involved, courts can require individuals to remain locally, turning what should be a national responsibility into a long-term local liability.
This raises fundamental issues of fairness and accountability. Councils exist to serve their residents. Yet parks, street maintenance and other universal services are being squeezed to fund costs over which councils have almost no control. Combined with relentless pressure from adult social care, rising demand in children’s services and mounting debt interest, temporary accommodation has become one of the four horsemen hollowing out local government finance.
It is neither fair nor sustainable to cut services used by hundreds of thousands of residents to fund a system for individuals distorted by national policy failure. When unfunded mandates are imposed from the centre, it is residents who suffer and councillors who must explain the consequences.
The solution must come from Westminster. Temporary accommodation subsidy must reflect real market costs. The full financial consequences of asylum decisions should be met nationally, not downloaded onto a small number of boroughs. Until then, councils are simply trying to remain solvent while financially irresponsible national government writes blank checks against their revenue streams.
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