The councils doing most to ensure new homes are built are set to be punished in reforms to local government finance, analysis by the District Councils’ Network (DCN) reveals.

The Government’s Funding Review proposes redistributing money between councils, including by ending the bonus paid to councils when new homes are built and taking away the extra business rates received by councils that do most to grow their local economy.

As a result of the reforms, 41 district councils have been told by the Ministry of Housing, Communities & Local Government (MHCLG) that they are in line for the maximum funding cut – a possible 7% cash reduction in their spending power. Last year, these districts:

• Grew their housing stock 67% faster than the English average.
• Included four of the five councils with the highest proportion of new homes in their overall housing stock, of all tenures.
• Covered 9% of England’s population but 16% of the new homes delivered.

DCN is calling on MHCLG to ensure that no council’s spending power is cut in cash terms as a result of the Fair Funding Review.

Cllr Jeremy Newmark, Finance Spokesperson of the District Councils’ Network (DCN), said:

“District councils play a vital role in getting the homes built that the country needs. Until now, the funding system has rightly rewarded them for doing this.

“The Government is right to see housebuilding as a national priority, but it’s hard to see why councils that have been more successful than most in building new homes and driving growth are getting the worst deal from the funding changes. This seriously risks underming the Government’s own housebuilding targets and growth mission.

“The Government’s approach is short-sighted and could push a set of district councils into financial stress. That would put at risk vital frontline services and value-adding projects and activities that help create local jobs, prevent serious ill health and save money for the NHS. It would be bad news for local residents and taxpayers.

“Extra homes require extra infrastructure, but this does not come cheap. Councils need to be appropriately funded to supply all of the services required to support families when they move to an area – without these services communities are weaker and social problems can arise.”

Cllr Bridget Smith, Leader of South Cambridgeshire District Council, which had the highest percentage growth in its housing stock of any English local authority, said:

“In South Cambridgeshire, we’re proud to have delivered new homes at a faster rate than anywhere else, but growing communities lead to rising costs.

“The Government should recognise that new homes and the businesses that spring up alongside them bring new costs to a council: extra bin rounds, new roads to sweep and more leisure centre users.

“Either councils covering the fastest growing areas are properly compensated for these costs, or it’s a gift to those who want to turn local residents against building the new homes the country needs.”

Council areas with fastest housing growth 

¹ Please see section below for an explanation of transitional funding arrangements

DCN member councils deliver a wide range of local government services to over 21 million people – 38% of England’s population. They cover 60% of the country by area.

Over 91,000 households were owed a prevention and relief duty in the year to September 2024 by DCN councils. The homelessness crisis is no longer confined to London and Metropolitan areas. While London Boroughs still have the highest absolute numbers in temporary accommodation, district areas are experiencing a faster percentage growth in TA use, demonstrating how this challenge is rapidly expanding beyond traditional urban centres.

The number of households in temporary accommodation were 49% higher in September 2024 compared to 2021. For households with children, figures have grown by 70% in the same period. This rapid growth is creating an unsustainable financial burden, with some councils now spending over a quarter of their council tax income on homelessness services.

District councils are at the forefront of tackling homelessness, with responsibility for housing and homelessness services across their communities. Our members have statutory duties to prevent and relieve homelessness, provide temporary accommodation, and support vulnerable residents.

Question 1: Do you agree with the proposal to use ‘total Housing Benefit (HB) + Universal Credit (UC) claimants’ as a measure of homelessness demand?

No

We oppose using ‘total Housing Benefit and Universal Credit claimants’ as the primary measure of homelessness demand. This metric fails to capture the true nature of homelessness pressures facing district councils.

The proposed formula misses crucial cohorts who are vulnerable to homelessness but may not be claiming benefits. Young people, rough sleepers, and those who are sofa surfing but not claiming UC would be overlooked. The current formula’s focus on actual prevention and relief duties provides a more accurate picture of real demand.

We are also concerned that the formula fails to capture homelessness pressures from asylum seekers receiving positive decisions and households in resettlement schemes. These individuals aren’t represented in HB/UC claimant figures until after they present as homeless, creating disproportionate pressures on certain district councils with higher asylum accommodation numbers or resettlement scheme participation.

Several of our members in high-value housing areas have highlighted that their communities experience significant homelessness challenges despite having relatively low numbers of benefit claimants. The extreme housing costs in these areas create homelessness risks for working households with incomes above benefit thresholds. Many households presenting as homeless have never claimed benefits but face housing crises due to relationship breakdown, the end of private tenancies, or other life events. Under the proposed formula, these high-pressure areas would receive less funding despite their substantial need.

The drive for simplicity in the formula to the extent of using a single metric will significantly underestimate the true demands on councils for prevention and relief services. Alongside HB & UC claimants, government should also use the prevention and relief data it already publishes to ensure true demand for prevention services are reflected at a local authority level. There are two key measures which should be considered:

• The proportion of prevention/relief duties which end with councils securing PRS accommodation for that household. This represents the significant effort and time which councils put into preventing individual households from living in TA. These cases, and the demand on finite resources, are currently not reflected at all in the proposed formula.
• The number of households owed a prevention or relief duty who are in full time work and not in receipt of benefits. This is necessary to reflect the true demand on homelessness services in DCN and high-cost areas. In these areas, demand for support significantly outstrips the number of households receiving housing benefit or universal credit.

Question 2: Do you agree with the proposal to use ‘TA Numbers’ as a measure of TA demand?

Indifferent

While we are broadly supportive of using TA numbers as a measure of demand, we believe this metric alone doesn’t capture the full picture of how councils manage homelessness pressures.

To create a more balanced formula, we recommend also including the percentage of prevention and relief duties which end with securing private rented sector accommodation. This would properly account for successful prevention work that directly reduces the need for temporary accommodation placement.

We are concerned that using only TA numbers could create counterproductive incentives. As Exeter City Council points out, it “penalises authorities from working proactively to reduce length of time people are in TA and does not consider numbers of households where it is prevented.” Without acknowledging prevention outcomes, the formula risks rewarding higher TA numbers rather than successful prevention work.

Oxford City Council notes that “having 45-50% of the grant determined by TA costs reduces incentive to lower TA use when possible. A council that is focused on prevention and making major progress to lower TA use year on year will be penalised with cuts in HPG each year.” This appears to conflict with the government’s stated aim of reducing temporary accommodation use.

To truly support government’s prevention agenda, the formula should strengthen the prevention side by incorporating metrics that reward councils for keeping households out of temporary accommodation altogether through successful interventions in the private rented sector.

Question 3: Do you agree with the proposal to use ‘mean rents in the PRS’ as a measure of homelessness costs?

No.

We believe that using mean private rented sector rents as a proxy for homelessness costs is flawed for several reasons.

While moving from lower quartile to mean rents may better reflect market reality, basing calculations on two-bed rents does not reflect the diverse accommodation needs across our membership. Many of our members report significant pressures on one-bed properties and larger family accommodation.

A significant concern is the removal of the old formula’s inclusion of ‘prevention and relief into the PRS’ to help determine homelessness costs. This previous measure effectively acknowledged the difficulty that urban areas face due to expensive rental markets.

Local market conditions and affordability vary dramatically across district areas. In Hastings, for example, just 1% of properties are affordable within Local Housing Allowance benefit rates. Similar acute affordability crises exist in many district council areas, yet the proposed formula would significantly reduce funding to these places.

The formula assumes both availability and affordability of accommodation at mean rent levels. In practice, many districts have no properties available at these theoretical mean levels, forcing councils to use more expensive accommodation options. Additionally, the costs associated with securing accommodation for homeless households often exceed standard PRS rates due to additional fees, deposits, and support costs.

Overall, we believe the proposed measure oversimplifies the complex housing market conditions that drive homelessness costs and fails to account for the significant variations in local housing markets across district council areas.

Question 4: Do you agree with the proposal to use the ‘labour cost adjustment’ as a measure of homelessness costs?

No

While labour costs are a significant factor in delivering homelessness services, the proposed approach has several shortcomings.

Many of our member councils prefer the Area Cost Adjustment (ACA) over the Labor Cost Adjustment (LCA) as the ACA factors in property prices and travel times, both of which provide a better picture of extra costs on local authorities.

The Labour Cost Adjustment is not explained in detail in the consultation, with no information about what this is derived from, making it difficult to understand and assess its potential impact.

We question whether this adjustment considers that areas with higher wages are typically areas that are more costly to live in. This adjustment may disadvantage those areas that are less affordable to live in.

Without clear understanding of how this metric works, it’s difficult to assess its appropriateness or potential impact on homelessness funding.

Question 6: Do you agree with the proposal to use ‘mean rents in the PRS’ as a measure of TA costs?

No

This proposal misunderstands the reality of temporary accommodation costs for our member councils.

Mean rents do not capture the significant variations in cost between emergency, one-off bookings of accommodation versus longer-term, pre-negotiated arrangements. They also do not include cost of managing accommodation, utilities, or void costs.

The disconnect between PRS rents and true TA costs is particularly acute for district councils, where 49% of households in temporary accommodation are placed in expensive nightly paid accommodation. This represents a substantial cost pressure that mean PRS rents simply do not reflect.

The cost of temporary accommodation is higher than rent levels in the PRS for multiple reasons. Bills such as council tax and utilities are inclusive, unlike in the PRS. TA is often procured on a nightly paid basis from private landlords, leading to costs far above standard market rents.

Using mean PRS rents would not consider the property sizes needed to accommodate those in TA, the need for specialist TA, or the cost of TA locally which is often far higher than PRS rents. Many of our members believe the current use of 3-year average spend on TA is more appropriate and suitable for measuring TA costs.

A critical issue that the consultation fails to address is the substantial gap between Housing Benefit subsidy (frozen at 90% of 2011 LHA rates) and actual TA costs. DCN research has found that the subsidy only covers approximately 38% of the actual cost of providing temporary accommodation, with councils using HPG to bridge this gap.

The new funding formula would be particularly damaging for councils that have to rely mostly on private temporary accommodation. These councils face much higher costs than those with their own housing stock – with some now spending over a quarter of their council tax income on homelessness services. In Hastings, a council without their own housing stock, this figure reaches 58%, with council spending rising from £730,000 to £6.5 million annually in the past five years.

Proceeding with the formula as suggested would lead to councils with high numbers of households in council or housing association owned TA being overcompensated. In this circumstance, full costs can be claimed through the Housing Benefit system. It would be appropriate for government to apply a deflator to this part of the formula, where councils have a high proportion of households in this type of temporary accommodation. This would ensure that funding is directed to those areas bearing the highest costs locally.

Question 8: Do you agree with the proposal to use RO4 (Revenue Outturn tables on TA spend) to approximate TA numbers where there is no TA data available for the given year?

Yes

This is a reasonable approach for the small number of authorities where data might be missing. This is only applicable to the local authorities who are not returning consistent data to MHCLG.

We recommend that MHCLG continue to improve data collection methods and provide support to ensure all local authorities can submit accurate and timely information.

Question 9: What do you think is an appropriate split of HPG funding between temporary accommodation and prevention and relief?

Other

We believe that the split between temporary accommodation and prevention and relief should not be rigidly prescribed. Each local housing authority should continue to determine how to spend its HPG funding based on local circumstances and challenges.

A predetermined split would be particularly unfair to councils without their own housing stock who face significantly higher TA costs, as they must rely entirely on private sector accommodation at market rates (which is subject to the subsidy cap). These differences in housing create fundamentally different cost bases that a standardised percentage cannot address.

The underlying issue remains that many councils are forced to use HPG funding to cover the substantial gap between Housing Benefit subsidy (frozen at 90% of 2011 LHA rates) and actual TA costs. While our members would prefer to use this funding for prevention work, they have no choice given the significant subsidy shortfall.

Rather than imposing a fixed split, government should address the root cause by updating the TA subsidy rate, which would naturally allow more HPG funding to be directed toward prevention and relief as originally intended. Until government does this, we do not support any split and push for continued flexibility.

Question 10: Should there be a phased approach to implementing a change in weighting? For example, implement a partial change in weighting in year 1 and the full change in year 2.

Yes

Any significant changes to funding allocations should be phased in to allow councils to adjust their services and avoid disruption to vulnerable residents. Our members support a phased approach to implementing changes in weighting.

Many district councils have structured their homelessness services around current funding levels, and with some authorities facing potential cuts of up to 39%, abrupt changes would jeopardise critical support for those at risk of homelessness. A gradual implementation provides essential time for service planning and adaptation, should the proposed changes go ahead.

Question 11: If prevention and relief spend represented 55% of overall HPG funding, what do you think is an appropriate split between labour and rent costs?

Other

We do not believe it is appropriate to rigidly prescribe how prevention and relief funding should be split between labour and rent costs. Each local authority has been able to determine how it feels is most appropriate to spend its HPG funding, and we would welcome this to continue.

It makes little sense for MHCLG to prescribe specific spend on rent and labour. To impose such controls would go against government policy intention which is to decentralise decision making and control on spend.

Different areas face different cost pressures and have different approaches to preventing homelessness. Imposing a one-size-fits-all split would limit councils’ ability to deliver effective, local services tailored to their communities.

Question 12: Do you agree with the proposal to use transitional arrangements to mitigate changes in funding allocations?

Yes

Transitional arrangements are essential to avoid drastic funding reductions that could jeopardise vital homelessness services.

Our analysis shows that under the proposed formula, councils including Huntingdonshire (-39%), Exeter (-38%), Gloucester (-37%), Oxford (-36%), Broxbourne (-36%), Hastings (-34%), Arun (-33%), Mid Sussex (-31%), Welwyn Hatfield (-27%), and Tendring (-26%) would face major reductions in their homelessness prevention funding.

Transitional arrangements reduce the cliff edge scenario and allow the transition to be as smooth as possible. This is particularly important for smaller district councils, which often have more limited financial reserves to absorb sudden funding changes.

Most importantly, we would strongly encourage the department to reconsider the proposed formula itself, rather than simply mitigating its effects. Councils with high homelessness pressures should not lose critical funding for prevention and temporary accommodation costs. Without addressing the flaws in the formula, transitional arrangements merely delay financial distress for smaller councils already operating under significant budgetary constraints.

Question 13: Do you agree with the proposal to use transitional arrangements in line with the caps used in the previous formula (2% in the first year and 5% in the second)?

No – the % caps should be lower

The proposed 2% and 5% caps are insufficient to protect services in councils facing substantial funding reductions. While many of our members have accepted the proposed caps, some have expressed concerns that these levels would still create significant financial pressures.

With some district councils facing potential funding cuts of up to 39%, the proposed caps would result in substantial annual reductions. For example, Oxford City Council would lose £776,708 – 36% of its funding, while Hastings Borough Council faces losing £754,000 – 34% of its grant.

The impact of different cap levels is significant. With 5% annual reductions, councils like Oxford and Hastings would lose over £100,000 per year in vital homelessness funding. By contrast, a 2% cap would limit annual reductions to approximately £43,000, giving these authorities more time to adapt while maintaining essential services.

We believe that caps should be no more than 2% per year to provide stability for homelessness services and give authorities adequate time to adjust their service provision.

Question 14: If you answered Q13 with “the % caps should be lower – what % range would you prefer?

Up to 2%

We believe that caps should be no more than 2% per year. This would provide significantly better protection than the proposed 5% cap in the second year.

For authorities facing the largest proportional cuts, a 2% cap would mean annual funding reductions of approximately £43,000-£44,000, rather than over £100,000 under a 5% cap. This difference is particularly important for smaller district councils with limited financial reserves that still need to maintain essential homelessness services.

Question 16: Do you agree with the proposal for transitional arrangements to be tapered between financial years?

No – the % caps should be the same in all years

While our members have expressed different views on tapering, we believe consistent caps across years would provide greater certainty for financial planning.

New Forest District Council notes that consistent caps “enable better planning of resources in the longer term.” This predictability is particularly valuable for smaller district councils with limited financial flexibility.

With the scale of potential funding reductions facing some authorities – up to 39% in some cases – a consistent, lower cap provides more appropriate protection than a tapered approach. Tapering would mean that councils already under severe pressure would face increasingly difficult financial challenges each year, potentially compromising essential homelessness services.

Councils facing some of England’s worst homelessness pressures could lose millions in vital homelessness prevention funding under Government proposals.

The Homelessness Prevention Grant – which councils use to help struggling residents avoid losing their homes – is being recalculated using a new formula that fails to account for true local housing market conditions.

Analysis by the District Councils’ Network (DCN) reveals that while London boroughs are set to receive average increases of 10% in their homelessness prevention funding, many rural areas, coastal communities and smaller cities with high costs of living face substantial cuts – despite experiencing some of the country’s steepest rises in homelessness.

The formula the Government proposes to use, set out in a consultation, has been criticised for failing to sufficiently take account of many factors driving homelessness, including household sizes, social housing levels and affordability of private rental accommodation. This impacts negatively on funding for many towns and cities with significant homelessness problems.

Hastings The crisis is starkly illustrated in Hastings, where temporary accommodation needs have soared from just 37 households in 2016 to 567 today. Council spending on the issue has risen from £730,000 to £6.5 million annually in the past five years for which data is available. Just 1% of properties are affordable within housing benefit rates. Despite these unprecedented pressures, Hastings Borough Council faces losing £754,000 – 34% of its grant.

Oxford The number of households requiring homelessness support in Oxford has surged by 128%% in three years. However, Oxford City Council stands to lose £776,708 – 36% of its funding.

There are 164 district councils in England, most of them situated outside the biggest conurbations – but many of them experience huge housing shortages and high living costs. Across these areas, covering 20 million people, the number of households in temporary accommodation has soared by 49.4% in just three years, with an even more alarming 70% increase in households with children needing emergency housing during the same period. Social housing waiting lists have swelled to 303,000 households – comparable to the population of Manchester – with some councils seeing their waiting lists surge by more than 50% since 2020.

Recent data shows requests for homelessness support in district areas remains high – with 21% more households seeking council help to avoid homelessness since September 2021, a similar level to metropolitan areas.

Cllr Hannah Dalton, Housing Spokesperson for the District Councils’ Network, said:

“It defies logic that many areas facing the most severe housing affordability crises could see their homelessness funding cut.

“Much of the recent growth in homelessness has been felt hardest outside of the biggest cities, including rural communities, market and coastal towns, university cities and places where London boroughs have relocated many of their own homeless people, yet the Government’s funding plans will see such places lose out.

“Government funding is a lifeline that helps councils prevent local people from losing their homes – whether that’s through emergency support to cover rent arrears, helping with deposits for new properties, or providing crucial housing advice. Without proper funding, councils will be forced to make impossible choices about which desperate households they can help.

“Behind the data lies real human misery – children facing disrupted education, families living in squalor and workers having to leave jobs because they can no longer afford the commute. Let’s work together to ensure the funding system offers fairness to people in all places.

“Many councils facing funding cuts will have no option but to cut both homelessness support and other services amid growing bills for temporary accommodation.”

The new funding formula would be particularly damaging for councils that have to use private temporary accommodation, where costs far exceed housing benefit rates. These councils face much higher costs than those with their own housing stock – with some now spending over a quarter of their council tax income on homelessness services. In Hastings, this figure reaches 58%.

Cllr Glenn Haffenden, Deputy Leader and Lead Councillor for Housing and Community Wellbeing, of Hastings Borough Council, said:

“We are disappointed with the proposed changes to the Homelessness Prevention Grant formula. This could see Hastings lose out on £750,000, which would have a huge impact on our homeless prevention services.

“It would wipe out the increased funding we received last year and would mean us having to make difficult decisions about other council services which we would no longer be able to fund due to having to redirect funding towards tackling homelessness.”

The DCN is calling on the Government to:

• Urgently rethink the proposed formula to reflect the true state of local housing markets.

• Recognise that areas with the highest homelessness pressures need more support, not less.

• End the freeze on the subsidy for temporary accommodation.

• Commit to building 90,000 social rent homes annually to tackle the root causes.

“The Government’s simplistic approach ignores the complex realities our communities face,” added Cllr Dalton. “We need a formula that reflects these real challenges, not oversimplified data that could push more families into crisis.”

Worst hit councils

NB table shows the biggest district council losers under the formula change, for those councils with more than 100 households in temporary accommodation.

While the housing crisis in major cities traditionally dominates headlines, the report from the District Councils’ Network (DCN) advocates a series of measures to ease the spiralling housing crisis outside of the largest conurbations.

It comes as the social housing waiting list in district council areas has swollen to 303,000 households – almost equivalent in size to the population of Manchester. Meanwhile, social housing completions in the 164 district council areas have plummeted from an average of 126,000 homes annually in the decades after World War Two to just 9,866 in 2023/24.

Just three changes would have a huge impact:

• The potential exists to build an additional 88,000 council homes in district areas by raising the threshold at which councils must set up a Housing Revenue Account. This is the complicated bureaucracy currently required to oversee large-scale council housing which piles administration costs onto councils who would otherwise be enthusiastic social housing builders. Reducing the bureaucracy removes a barrier to progress.
• An extra 8,300 affordable homes could be built annually in rural areas by closing planning loopholes that allow developers to side-step commitments to include affordable housing in new developments.
• 8,688 empty properties could be brought back into use at just 10% of the cost of new-build housing by giving councils greater powers to take action.

Cllr Hannah Dalton, Housing Spokesperson for the District Councils’ Network, said: “The housing crisis is wrecking lives and destroying communities – teaching assistants and nurses can’t afford to live where they work, young people are priced out of the place they call home, and older residents are trapped in houses too big for them to manage. This is as true in district council areas as elsewhere.

“District councils want to tackle the affordable housing crisis head-on. We have the local knowledge, the relationships, and the drive to deliver, but what we need now are the powers and resources to get the job done. The fact that just three changes could deliver over 100,000 homes demonstrates the scale of what’s possible.

“The current Government requirement to set up a complicated and expensive bureaucracy if a council has more than 200 homes thwarts many from building new council homes. If the threshold to set up a Housing Revenue Account was raised to 1,000 homes, the potential exists to build 88,000 new homes.

“We need the teeth to force developers to honour commitments to include affordable homes in developments and the ability to take on empty homes. Such measures can bring about a step change in ending the housing crisis across England.”

Responding to the report, Matt Downie, Chief Executive of Crisis, said: “No-one should be forced to endure the trauma and indignity of homelessness, especially when we have tangible solutions to provide thousands with a safe and secure home.

“Years of government inaction has created a chronic shortage of social housing which has left our housing system at breaking point. In our services we hear daily the challenges people face from being turned away with nowhere to go – people forced to heat up food on radiators while others have no option but to move hundreds of miles away from their jobs, schools and support networks to have a roof over their head.

“With homelessness at record levels, it’s clear there’s no time to waste. It’s crucial that the Westminster government takes note of these recommendations for both its cross-departmental strategy to end all forms of homelessness and its long-term housing plan. As these are the changes we need to see, so that everyone has a safe place to call home.”

The Blueprint, which draws on extensive consultation with housing providers and sector experts, sets out detailed recommendations across four key areas: increasing council-owned homes, boosting affordable housing supply, optimising the planning system, and making better use of existing homes. You can read the documents here:

DCN Affordable Housing Blueprint – full report

DCN Affordable Housing Blueprint – summary report

DCN members highlight that building safety works, planned maintenance programmes and regeneration schemes all require sustained investment over many years and the importance of stability in rent policy, with more ambitious timeframes needed to deliver the scale of investment required in both existing and new social housing.

“We believe that a longer fixed settlement period, properly protected and adequately funded, would provide greater stability. This would give providers the certainty needed to deliver sustained investment programmes while avoiding the potential complexity and uncertainty of annual policy reviews.”

“If a rolling settlement is pursued, it should be based on a longer initial period – for example, a 10-year settlement that rolls forward annually. However, the crucial factor remains the length of the guaranteed period rather than the rolling mechanism.”

You can read the full response here.

The scale of the escalating housing crisis’s impact on valued community services is revealed in analysis by the District Councils’ Network (DCN), which is calling for urgent financial support for the most impacted councils.

DCN’s research suggests that 16 district councils spent equivalent to over 25% of their council tax income on temporary accommodation (TA) last year amid growing pressure.

The three councils spending the equivalent of 50% or more of their council tax receipts on supporting homeless households are:

• Crawley Borough Council 67%
• Hastings Borough Council 58%
• Dartford Borough Council 50%.

Nationally, the number of households in TA increased by 12.3% over the past year, to 117,450 households, including 74,530 households with children.

DCN’s analysis shows the 164 district councils, collectively serving 19.7 million people, overall spent the equivalent of 8% of their council tax yield on temporary accommodation.

A recent survey of district councils showed that they expect TA spending to increase by a third on average in 2024/25. This is an unsustainable financial burden on councils, with homelessness no longer a problem confined to metropolitan areas.

Crucially, the crisis has been significantly worsened by Government policy. Since 2011, it has capped the amount it pays councils for housing people in temporary accommodation. The funding councils receive is based on 2011 rental costs, leaving councils to cover an ever-widening shortfall, necessitating cuts to other services.

In DCN’s survey, 49% respondents said they expect to make cuts to cultural services next year without a fair funding settlement.  41% will cut community support services and 35% will make cuts to their leisure services.

We are calling on the Government to review temporary accommodation funding, including lifting the 2011 cap to reflect rents in 2024 – rents have increased sharply across the last 13 years. This is imperative to protect local services and make sure that councils can focus on finding families permanent homes.

Cllr Hannah Dalton, DCN Housing spokesperson, said:

“For too long the Government has increasingly shunted the costs of homelessness onto councils and their residents, straining our budgets to breaking point.

“Residents will be shocked to learn that the equivalent of as much as half of their council tax is being spent on temporary accommodation rather than the local services they expect their council to deliver for them. This housing crisis is impacting on every taxpayer and the entire community.

“When such a large sum is diverted to temporary housing, it leaves little for community initiatives, leisure services, green spaces and essential amenities. The Government must act now to address this unsustainable situation, providing immediate financial support for councils facing the worst problems and empowering councils to prevent homelessness in the first place.

“Without swift action, we risk a domino effect where councils have no option but to cut services which prevent homelessness, leading to a worsening homelessness problem and a vicious cycle that will swallow up even more of local taxpayers’ money.

“Councils would far rather be investing in preventing homelessness and in providing houses for everyone in our community who needs one, than spending vast sums on temporary accommodation. By giving us long-term sustainable funding and the powers we need we can make this much-needed shift, which will offer council tax payers better value in future.”

The DCN is calling for:

1. An immediate review of temporary accommodation funding, including lifting the 2011 cap to cover actual costs.
2. Investment in affordable housing initiatives.
3. Enhanced powers and funding for local authorities to tackle homelessness’s causes.
4. A cross-government strategy to address contributing socio-economic factors.

Cllr Michael Jones, Leader of Crawley Borough Council, said:

“The cost of temporary accommodation is now the greatest threat to district and borough councils’ budgets.

“Last year it cost our council £5.5m, compared to £262,000 in 2018/19. This is £2 for every £3 we get in council tax, which is spent on temporary accommodation – put frankly, most of it. If this continues, we will have no choice but to cut other services to continue to fund this.

“This is why we declared a housing emergency in February 2024 calling on the previous Government to act. The Government for a long time put us in a situation where we were massively subsidising costs they should have been paying and drastically running down our savings to do so.

“We need the new Government to take immediate action in relation to resetting the rate at which Housing Benefit Subsidy is paid, to stop many councils from going broke through no fault of their own.”

Cllr Stephen Holt, Leader of Eastbourne Borough Council, which spends the equivalent of 49% of its council tax on homelessness, said:

“Councils up and down the UK are dealing with a social and financial crisis that not only threatens the public services we deliver, but the future of local authorities as we know them.

“We launched a campaign over a year ago to highlight these issues, warning that numerous councils face effective bankruptcy unless proper intervention is provided, not just the high interest lending offered by the previous government.

“We need action including an end to no-fault evictions and an end to the 2011 freeze on the Local Housing Allowance.

“As a direct consequence of spending nearly £5m a year on temporary accommodation in Eastbourne – which equates to 49p in every pound of council tax we collect – we are currently consulting on in-year cuts and operational changes totalling £2.7m, despite already profiling £3m of savings in the 2024/25 budget.

“The situation is totally unsustainable.”

Cllr Bridget Smith, Vice Chair of the District Councils’ Network, said: “District councils are on the front line in responding to the housing and homelessness crisis. We know how urgently our residents need new housing. District councils play a pivotal role in providing not only immediate support to families and individuals affected but in helping to meet long-term housing needs.

“We share the Deputy Prime Minister’s commitment to ‘Get Britain Building’ and welcome the level of ambition which clearly runs through her proposals. We want to help the Government deliver the 1.5 million homes that our residents so desperately need.”

On housing targets

Cllr Smith said: “Housing targets may have a part to play but they are unlikely to be a silver bullet by themselves. We must build the types of homes that meet local needs – the right size for families, with the right adaptations for residents who are elderly or disabled, with enough provision for single people and be genuinely affordable to local people.

“These new homes mustn’t reflect what sells for the highest price – they need to reflect local circumstances and the needs of people on our housing waiting lists. They also need to be built to the highest standards of energy efficiency – the last thing we want to do is have to carry out expensive retrofit work within a few years.

“We support the measures to do more to improve the affordability of homes and we warmly welcome the Government’s commitment to address protracted conversations over viability raised by developers by offering fair but not excessive compensation’.”

On planning reform

Cllr Smith said: “The planning process is just one part of the picture. As a country, we need to build homes, not just give planning permission. We can’t have planning permission for 1.5 million homes approved and then have these sites sit empty, stalled, and not built out by developers.

“However, we continue to call on Government to give councils new levers to ensure that developers build out the many homes that already have planning permission much more quickly.”

On planning fees

Cllr Smith said: “We strongly support the proposals to allow local authorities to set their own fees to reflect the actual costs and reduce the huge financial pressures on district councils. We have long called for this reform to ensure that cash-strapped councils aren’t subsidising developers.”

On Right to Buy and the council homes revolution

Cllr Smith said: ”We are delighted that the Government has listened to our long-standing representations and announced greater flexibilities on the use of Right to Buy receipts and will hold a consultation on wider Right to Buy reform.

“We will continue to call for the Government to give councils the powers to set local discount rates that reflect market conditions and temporarily pause Right to Buy if they face extreme local housing pressures.

“We wholeheartedly support the Government’s pledge to bring about a council housing revolution but if we are to genuinely turn the tide and start restoring the supply of homes that our communities so desperately need, radical reforms together with dedicated funding are essential.”

On green belt:

Cllr Smith said: “We support a brownfield-first approach to development and welcome the assurance that strict rules will apply to release of any green belt land.

“We are clear that any decisions on where to release land must remain locally led. Local people and local authorities are in the best position to judge what land within current green belt boundaries will be most suitable for development.”

The letter is signed by councils from across the country led by Conservatives, Labour, Liberal Democrats, the Green Party and Independents. It follows an emergency summit held last week (Tuesday, 31 October), co-hosted by Eastbourne Borough Council and the District Councils’ Network.

According to the Department of Levelling Up, Housing and Communities, the cost of temporary accommodation to councils reached £1.7bn last year and it is increasing rapidly.

The signatories included 108 district councils – two-thirds of the total. In many parts of the country, district councils are the tier of principal government closest to communities and they oversee services including housing, leisure centres and waste collection. The rising cost of temporary accommodation hits district councils particularly hard due to a large proportion of their budgets being devoted to housing.

Councillor Hannah Dalton, the District Councils’ Network housing spokesperson, said:  “The fact that 119 council leaders from all political groups have joined up to demand urgent action from the Chancellor on homelessness demonstrates that we are in an emergency situation, right across the country.

“Councils simply do not have the money to cope with this surge of demand for temporary accommodation and without action from Jeremy Hunt they will have no option but to cut services. Such is the scale of the problem that some councils will find themselves effectively bankrupt.

“Unless action is taken in the Autumn Statement, society’s most vulnerable people will continue to be hit hardest – the lifeline that their councils offer them will collapse and there will be a knock-on impact on other public services, including the NHS. Funding councils’ work properly will prevent homelessness now, easing the need for public services like the NHS to spend huge amounts dealing with the consequences of homelessness in future.”

In addition to asking for a meeting with the Chancellor ahead of the Autumn Statement, the letter urges six key actions:

• Raise Local Housing Allowance rates to a level that will cover at least 30% of local market rent and commit to annual uprating.
• Provide £100m additional funding for Discretionary Housing Payments in 2023-24 and an additional £200m in 2024-25.
• Provide a £150m top-up to the Homelessness Prevention Grant for 2024-25.
• Review the cap for housing benefit subsidy rate for local authority homelessness placements.
• Develop policy to stimulate retention and supply in the privately rented sector.
• Give councils the long-term funding, flexibility and certainty needed to increase the supply of social housing.

Councillor Stephen Holt, Leader of Eastbourne Borough Council, said: “119 council leaders, representing areas across England and of all political persuasions are asking Jeremy Hunt to recognise the gravity of this situation and provide local government with the appropriate funding and response.

“I have no doubt that the Chancellor and the Prime Minister understand that this is threatening the very future of services that support and maintain hundreds of thousands of vulnerable residents.   They cannot allow the safety net we provide to fail, they must act now.

“I am also grateful that so many authorities have responded so quickly and positively to our joint letter. We are all in agreement – this is a national crisis.”

In our response, DCN called for additional funding to support the increased costs associated with adaptations and the growing level of need so that district councils can continue to best serve the needs of older and disabled people.

“We need greater support and powers from central government if we are to achieve our goal of making all housing in our areas as accessible as possible. DCN is calling for urgent reform of the planning system to ensure that more accessible and wheelchair user friendly properties are brought forward through the planning system.”

The Disabled Facilities Grant (DFG) is a helpful tool to adapt more homes to meet the requirement of disabled residents. However, the means test is in urgent need of reform and the maximum grant limit of £30,000 is insufficient.”

You can read our full response by clicking here.