Town halls across the capital may soon be forced into issuing Section 114s – effectively declaring bankruptcy – if more is not done to tackle the £330m homelessness overspend, London Councils warns.
The increasing number of homeless Londoners and the rise in temporary accommodation costs resulted in boroughs overspending on their homelessness budgets by £330m in 2024-25 – 60% more than was originally budgeted, according to the cross-party group.
London Councils also warned there was a ‘growing mismatch’ between the costs of providing homeless residents with a short-term place to stay and the Government subsidy they receive to fund temporary accommodation.
In 2023-24 the gap was around £96m, but London Councils estimates the gap for 2024-25 reached £140m – a 45% increase.
Cllr Grace Williams, London Councils’ executive member for Housing & Regeneration, said: ‘If things carry on as they are, we will see more boroughs become effectively bankrupt. This brings massive uncertainty to the future of our communities’ local services and could ultimately mean more costs to the Government when emergency interventions are required.’
