This report provides evidence of the financial and social impact of the gap between expenditure on temporary accommodation (TA) by London local authorities and related income in the last financial year (2024/25). It was funded by London Councils, the London Housing Directors’ Group and the Society of London Treasurers.
Local authorities are legally required to provide and pay for TA for qualifying homeless households. To help cover the cost they receive certain income streams; the largest is TA Housing Benefit (HB) subsidy, which is administered by the Department for Work and Pensions. TA HB subsidy has been frozen since 2011 and falls well short of what local authorities pay out for TA, especially in London. This shortfall, which boroughs must meet from their own resources, is often known as the ‘TA subsidy gap’ though might more accurately be called the TA income gap.
These shortfalls have ballooned in recent years and the cost to boroughs of meeting them now represents a threat to the overall financial position of many. The reasons for this, and their consequences, are the subject of this research. The methodology included a review of existing statistics and literature; collection of financial data from a sample of London boroughs; and a programme of interviews and round tables of London borough officers.