Newham’s budget ended £22.2m in the red last year– caused by spiralling costs of homelessness, and despite allocating additional money this year, demand is already forecast to outstrip resources.
- Spiralling costs of homelessness forecast to outstrip allocated resources in-year
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Council budgets would balance without TA costs, last year and in 2024/25.
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Controls put in place, but hard choices ahead without national help or policy changes.
Ahead of a Cabinet meeting on the 6th August, a report published this week states that the Council would have remained within its budget in 2023/4 without additional costs of providing temporary accommodation (TA) – a statutory responsibility over which the council has no control. And despite allocating a further £18.5m to the temporary accommodation budget for the current 204/25 financial year, predictions are that costs in this area alone could top £40m.
The Summer 2024 Finance Review report warns that without significant national government policy changes, being asked for by councils across the country, Newham’s spending on TA could account for one third of its total budget. And taken together with social care costs which already account for a further two thirds of the council’s budget, this would leave very little resource for any other service.
In the report, Cllr Zulfiqar Ali, Lead Member for Finance and Resources said: “Newham has one of the largest numbers of households in temporary accommodation in the UK, with some of the highest costs in the country due to the growing number of people seeking help.
“Despite our many initiatives, prevention strategies and robust financial management, the challenges with TA remain and are forecast to grow significantly. If Newham didn’t have the TA landscape it has, our budget last year and this year would have been balanced without major difficulties.
“We are putting into practice as many actions as possible to ensure that we are able to continue delivering services for our residents including the use of reserves or selling assets; while reducing our costs through transformation which will make more savings and efficiencies
“Yet despite our challenges the homelessness prevention grant is not distributed accurately or fairly. For instance, in 2023-2024, Newham received £11,682,183 while having 6,430 households in TA; equating to £1,816.82 per household. In the same financial year, Wiltshire received £1,128,295 while having 125 households in TA, resulting in £8,604.26 per household.”
The report outlines the Council ‘s prudent approach to dealing with its budgetary challenges, investing in housing, implementing spending controls, challenging and changing historic procedures and practices and looking at new ways of delivering services. But says Cllr Ali “It won’t be enough, because we haven’t failed in our financial management and homelessness approach; rather past government policies and the inefficacies of the housing market in London and the UK has failed us. That’s why it will be essential to take urgent and vital choices, and some form of Government assistance may also be required. ”
Newham’s Cabinet will hear that the borough is far from being on its own, or even facing the worst situations among its peers in London as figures show that by the end of Quarter 3 in 2023/4, 30 of 33 local authorities in London were reporting a combined gross overspend of £636m, with Newham being exactly on the London Average figure.
