Council warns of the impact of homelessness costs

PUBLISHED: 21 November 2023

Colchester City Council is set to discuss its latest budget assessment at a meeting of the Governance and Audit Committee on 28 November. Council leaders warn that increasing costs and demands for temporary accommodation are placing additional significant pressures on the council’s budget.

Projected increases in demand for temporary accommodation for Colchester residents who become homeless could cost the council an extra £860,000 this year, or £1.4 million to end of March 24. This will further increase the Council’s budget gap.

This follows on from the City Council’s Housing Insights Report 2023, which examined the impact of the housing crisis and challenges facing the Council.  This revealed that, like many across the country, Colchester residents are struggling to cope with a shortage of affordable housing and a rise in private rental costs, at a time when demand is increasing and house prices are high.

With the added pressures of the cost-of-living crisis, including high energy costs, many more people and families on low-to-middle incomes are now struggling to afford to rent or to buy a decent home. This is leading to increased numbers of people facing eviction, homelessness, or living with increasing debts.

The Government provides some money to councils to help pay for accommodation for homeless households. But this is provided at 2011 prices, not those that must be paid today. The council’s Cabinet cautions that this overspend and a lack of support is not sustainable and will lead to cuts in services, if the Government does not step in to help.

Colchester City Council is not alone in facing this challenge – it is a national problem. In Essex, other district councils have very high numbers of homeless households, with Chelmsford City Council also recently warning of the impact temporary accommodation is having on its budget.

Cllr David King, Leader of Colchester City Council, said: “People may see a few of our homeless residents when they sleep rough, but this is just the tip of the iceberg. There are currently 316 families in temporary accommodation in Colchester and we’re expecting more at risk of homelessness in the coming months.

“We will meet our legal duty to those at risk and to help others helping them, and we are working hard to provide more affordable and council homes in Colchester. This year we have built 20 new council homes, purchased 42 existing homes to bring them back into social housing stock and delivered 47 affordable rented homes. But demand outpaces supply, and the shortfall in Government support is not sustainable.

“These new pressures are on top of the £5.26 million in savings we’ve had to identify in this financial year (2023-24) and the need to find a further £3 million in savings next year.

“We’re starting to see other councils either warning of or issuing section 114 notices. We are not going broke, but our challenges are growing every day – made worse by the costs of providing temporary accommodation. We and other councils will do whatever we can to alleviate this pressure, but we need national fixes for a national problem.”

The report also explains that ongoing work to reduce costs includes a review of capital financing costs, which will be used to offset higher-than-expected costs in running core services, and the extra costs expected from current pay negotiations.

The budget monitoring report will be considered by the council’s Governance and Audit Committee on Tuesday, 28 November. You can watch the meeting on the council’s YouTube channel, as it happens, or afterwards as a recording.

Page last reviewed: 21 November 2023


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