The gap between what councils pay out in housing benefit and how much government reimburses them is projected to hit nearly £4 billion between 2017/18 and 2029/30, new LGA analysis reveals.
The analysis looked at the cumulative cost of the temporary accommodation subsidy funding gap in the past eight years, and projections of costs for the next four years.
It found that, since 2017/18, councils across England have spent almost £1.5 billion more on temporary accommodation than they have been reimbursed. This is alongside cost and demand pressures continuing to outstrip the overall funding available to councils, which has had a damaging impact on council services.
Without intervention, this figure could more than double to nearly £4 billion (£3.9 billion) within the next four years.
Demand for temporary accommodation continues to rise, with more than 132,000 households currently living in it, including around 172,000 children.
In 2024/25 alone, councils spent £1.27 billion on housing benefit for temporary accommodation, but were reimbursed just £911 million – a gap of £360 million. The shortfall stems from rules that cap what councils can claim back at 90 per cent of local housing allowance rates set in 2011, meaning subsidy levels no longer reflect current housing costs.
Cllr Tom Hunt, Chair of the LGA’s Inclusive Growth Committee, said: “The temporary accommodation subsidy gap is a problem that is getting worse each year, but that is fixable. We urge the Government to uprate housing benefits to 90 per cent of the current LHA rate – this outlay could yield significant results for the economy and national wellbeing.”