Why is homelessness spending not working?

How is the government spending so much on homelessness while the crisis continues to worsen? Elsie Furie examines why there’s no quick fix for England’s homelessness crisis.

The Labour Party recently announced an additional homelessness funding of £1 billion for local authorities in England. The decision follows years of Councils desperately appealing to central government for more cash – either officially or through whistleblowers in homelessness services. 

The decision to provide emergency funding was welcomed by anyone who pays attention to the homelessness crisis. Local authority cuts under austerity have led to council services cannibalising one another, and ‘limited resources’ is often councils’ argument for their inability to deal with demand for housing. There can be no effective solution to homelessness when statutory homelessness services are expected to make cuts, and charities are forced to compete for tenders to deliver services in the gaps as cheaply as possible. 

This is the most common narrative of anti-austerity commentators. But the stats tell a slightly different story. Spending on homelessness services increased in real terms from £1.14 billion in 2010-11 to £2.44 billion in 2022-23, an increase of 113 per cent. It now makes up 60 per cent of total gross expenditure on housing services, up from 25 per cent in 2010-11. 

Why has this additional funding made no impact on the homelessness crisis? Absent any other changes to the way the system works, could more homelessness spending from the government be making the problem worse? 

I think the answer to that is yes. I’ll try to explain. 

Who is homeless?

A household is legally considered homeless if its members have nowhere that is ‘reasonable to continue to occupy’. This may be because they are rough sleeping, but it can also mean sofa-surfers, people in very overcrowded housing, tenants awaiting being evicted by a bailiff, or people already in the homeless system who are currently in temporary or emergency accommodation. This group is huge in Britain. 

Just looking at temporary accommodation (TA) alone, 123,100 households were living in emergency or temporary accommodation in June 2024, an increase of 16.3 per cent since 2023. This is nearly triple the number of households that were housed in TA in 2010.

Temporary accommodation – mostly used when the council has a homeless duty to a household but nowhere suitable to ‘discharge’ them into – is exempted from the usual housing benefit limits, and so it is often extortionately expensive. The council can be paying hundreds of pounds a week for a single person to be housed in TA. These days, people are usually in TA for less than 6 months, but some households – especially those with children – can be in TA for longer than 5 years. Housing conditions are often very poor. A recent report found that there had been at least 74 children whose deaths were linked to the quality of their TA (e.g., due to damp and mould). The occupier has fewer rights than a tenant, they can be moved around at the will of the local authority, and they have little chance of affording the rent themselves, which means they often have to stay on benefits to have any hope of paying their rent. At a time when the government is obsessed with getting people into work, the growth in TA use creates a contradiction both for policy-makers and people living in TA, caught in a Catch-22 between their  landlord and the DWP.

Homelessness does not affect all demographics equally. The threat of homelessness hangs over some groups more than others. In the 2021 census, in every region in England except the North East, white British households were more likely to be homeowners than all ethnic minority households combined. You are far more likely to be homeless if you are a single parent (81 per cent of whom are mums). In one study, 25 per cent of trans people reported having been homeless in the past, many as a result of being kicked out by family members. It is not a coincidence that these things map onto wider patterns of oppression: it is harder to maintain and afford your home if you are systematically impoverished. Systemic factors include, for example, unequal pay, discrimination and hyperexploitation at work, reactionary prejudice from family, inadequate healthcare, lack of welfare support or immigration fees.

Homeless people could be described as the reserve army of tenants. Alternatively – and to avoid analogising with worker exploitation in a way that is open to debate – they are the closest that the ‘consumer’ of shelter comes to being a captive market for landlords. Driven out of an increasingly competitive and overpriced private rental market and shut out of the social housing market, but in unavoidable need of shelter, people threatened with homelessness turn to local authorities for support. At that stage, they become one of the many entries on a spreadsheet of people that need to be accommodated somewhere. 

Why is the homeless system distorted?

With local authorities owning less and less of their stock, where they can put homeless people becomes the main problem. Decades ago, councils owned more of their own stock and had more flexibility about which properties to use for which purpose, how much rent would be charged to occupants (if any), and the quality of housing conditions. In 1979, local authorities and housing associations let 5.5 million homes, which was down to 4.1 million in 2022. A huge transfer of housing stock to social housing providers in 2004 left many councils with little to no stock, and 40 local authorities built no new social homes at all between 2016 and 2021. 

Now that fewer homes are owned by councils themselves, they are required to come up with innovative, expensive and often inadequate solutions to urgent homelessness problems, often in partnership with rentiers. They are also getting more cutthroat and coercive with service users about their housing options, increasing pressure on people to take unsuitable offers, often in expensive private sector ‘discharge’ housing. If people push back on these unsuitable offers, councils can brand them ‘intentionally homeless’ and refuse to make them any more offers.

Homeless people tend to experience both social stigma and their own set of problems – low incomes, health issues, language barriers, or difficulties paying the rent in the past. So why would a commercially minded landlord rent to a homeless household? Why, even, would a social landlord, when there’s someone just as desperate in the queue behind them?

Landlords who make a deal with local authorities to accept homeless households don’t do so out of charity: often they proffer their least marketable properties – houses in poorer areas, houses in disrepair, large house shares full of poky rooms – and in exchange they ask for an enormous premium on the rent and a promise of more business later. Councils are left begging for these rentiers’ goodwill with sweetheart deals, rents in advance and golden hello payments. 

Sometimes the houses being rented back to local authorities as temporary accommodation, for two or three times the local market rent, are former council houses sold via Thatcher’s Right to Buy laws, now owned by a private company or individual. Let me labour that irony for a second: homeless people can be in a contractual relationship with the council in a house built as council stock, but, compared to a council tenant, they have fewer rights, the rent is exorbitantly higher, and there is an absent rentier inserted into the relationship, taking the lion’s share of the money. 

Homelessness, displacement and rent inflation

The search for discharge and temporary accommodation can often lead to wealthier local authorities cutting deals in areas miles outside of their boroughs, forcing homeless households to move to unknown locations, on pain of losing their rights to any help at all.

As Nick Bano explains in Against Landlords, wealthier urban councils offer landlords in cheaper areas much higher rents than they could get from local people as a way to secure more stock, driving up landlords’ expected yields in towns where the economic conditions (like local average wages) didn’t previously allow landlords to extract such high profits. We are in the era of homeless families from London being sent to Walsall and Stoke-on-Trent, of Mancunians being displaced to Hull, Blackpool and Blackburn. This tears up communities, showing an absolute disregard for the fabric of poorer people’s lives, relationships and hopes. The human effects of this were highlighted movingly by campaigns like Focus E15. Tenant activist groups like Housing Action Southwark and Lambeth and tenants’ unions continue to offer solidarity to the tenants being forced out of their communities.

The housing crisis and fascism 

The social effects of this kind of market engineering are myriad. Homeless people with little to no power in their situation become trapped in private rented and temporary accommodation amongst people who resent them moving there, ‘driving up the rents’ for those already rooted in the area. Often, the pattern is racialised, with Black and Asian low income families dropped into deprived areas with majority white British populations. It is also gendered and ableist: groups like single mothers and disabled people, who are more reliant on benefits, are demonised for relying on the state to house them. Other locals are then encouraged to identify the problem as related to ‘immigrants’ and ‘benefits scroungers’ taking up limited resources. 

Asylum seeker housing is also largely delivered by private firms. The racist pogroms last year targeted accommodation being used to house asylum seekers, including setting light to one hotel, highlighting how crucial this field has become in the fascist imaginary. Arguments about benefit ‘fraud’ also play into the same politics of hate, justifying sanctions and cuts to basic welfare spending. Landlords big and small get rich on public money while working-class communities are displaced, fragmented and turned on one another. 

In this context, handing even more money to landlords is the epitome of short-term thinking. It is the political horizon of cowards and corrupt conmen, carried out by politicians who either have no backbone to challenge private interests, or their hands in the till.

Derentierisation

What has happened to Britain’s housing system is a kind of privatisation. And, as with the NHS, when you privatise public services, the state tends to spend more to get less. 

Instead of pouring money into the hands of asset owners and facilitating the expansion of the asset-owning class, the state could derentierise the housing stock. The last thirty years have seen the mass transfer of housing from state into private control. If the task sounds vast, then the homelessness housing system would be a good place to make a start. Every year, homeless accommodation costs the state billions. The renationalisation of these assets could start to pay for itself – or at least subsidise itself – once the rentiers were taken out of the picture. This would make homelessness spending more effective, and prevent people getting stuck in cycles of homelessness from private rented houses with spiralling prices.

How to derentierise? There are so many ways, if there were the political will to do them. Banning the buy-to-let mortgage would be a start, and would begin to bring down rental and house prices as it reduced competition to buy properties. The state could stabilise rents with rent controls. They could end Right to Buy to stop the haemorrhaging of social housing stock. They could end no-fault evictions properly – not just by banning the most famous form of these (‘Section 21’ evictions), but by properly reforming tenure status and the grounds for eviction to remove loopholes and create security of tenure. They could create significant pots of money for local authorities to buy or build their own properties (which, to give them credit, some councils are already doing). If landlords squirm (which they would), they could open up buy-back schemes that help landlords exit the sector smoothly, and deposit their properties back into public hands. They could beef up enforcement on landlords who commit offences, like renting out unsafe properties. They could get rid of Right to Rent laws that push asylum seekers into the profit-seeking grip of Serco and Mears. 

The Renters Rights Bill currently making its way through Parliament is a step forward, but it barely tinkers round the edges of the structural disfigurement neoliberalism has enacted on Britain’s housing sector. However ‘good’ landlords are at following regulations, while the sector continues to use people’s homes as a generator of wealth, the problem persists.

Removal of the profit motive from the housing sector is a prerequisite for a functioning housing system.