The gap between what councils pay for temporary accommodation and what the Government reimburses them could balloon to nearly £4bn by 2029/30 without urgent action, council chiefs have warned.
New Local Government Association (LGA) analysis found that since 2017/18 councils across England have spent almost £1.5bn more on temporary accommodation than they have been reimbursed by the Department for Work and Pensions.
Without intervention, that cumulative shortfall is projected to reach £3.9bn within four years.
The root cause is a reimbursement cap set at 90% of Local Housing Allowance rates from 2011 — rates that bear little relation to today's costs. The annual gap alone is forecast to grow 65% to £595m per year.
The LGA is calling on the government to uprate reimbursement to 90% of current LHA rates, a move it says would save councils £1.5bn and free up vital funds for homelessness prevention and housebuilding.
More than 132,000 households, including 172,000 children, are currently living in temporary accommodation.
