Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 20
20
Acknowledged
Ringfencing of Homelessness Prevention Grant funding may detrimentally impact some local authorities.
Conclusion
We welcome the Government’s decision to increase homelessness funding for 2025/26, including the £192.9 million uplift to the Homelessness Prevention Grant (HPG). However, the decision to ringfence 49% of HPG funding for activities to prevent and relieve homelessness may be a detrimental, one-size-fits-all approach towards the pressures facing some local authorities. The ringfence may leave a gap in the funding of those councils which rely heavily on the HPG to fund temporary accommodation, at a time when local authorities are facing acute financial pressures. (Conclusion, Paragraph 87)
Government Response Summary
The government defended the 49% ringfence on the Homelessness Prevention Grant (HPG), explaining it was based on historical local authority spend and stating the HPG was not intended to cover all temporary accommodation costs, but committed to monitoring local authority spend.
Government Response
Acknowledged
HM Government
Acknowledged
The Government currently spends around £34 billion annually on housing support including around £12 billion in the private rented sector. Local Housing Allowance (LHA) rates, which set the maximum level of support in the private rented sector, were last increased in April 2024 costing approximately £7 billion over 5 years. When considering LHA for 2025/26, the Government considered a range of factors, such as the rental market; impact of LHA, including the impact on cross-government issues such as homelessness; and the fact that rates had been increased the previous year. In the challenging fiscal context, at Autumn Budget the Government prioritised investing £1 billion in funding for both the Household Support Fund (HSF) and Discretionary Housing Payments (DHPs) (including Barnett impacts) for 2025/26, maintaining DHP funding at the same levels in England and Wales. This allows councils to provide discretionary support to those most in need. DWP continues to work closely with MHCLG to make sure that links between housing and benefit policy are considered, including when the LHA rates for 2025/26 were considered, and through the homelessness Inter-Ministerial Group. Any future decisions on LHA will be taken in the context of the Government’s missions; goals on housing; and which measures can best meet Government ambitions within the challenging fiscal context. The most recent increase in April 2024 cost around £7 billion over 5 years. We have increased the Homelessness Prevention Grant (HPG) by £192.9 million in 2025/26 and created the 49% ringfence to be spent on prevention, relief and staffing activities, so that more work can be done to prevent families from entering temporary accommodation and save costs in the long-term. The HPG was never intended to meet all costs of temporary accommodation. Local authorities can also draw on the wider government settlement, which is over £69 billion in 2025/26. The HPG increase of £192.9 million also took into account the increase in temporary accommodation pressures in 2025/26. The decision on the level of the prevention ringfence was made based on local authority spend declarations submitted in 2023/24, which showed that an average of 49% of total HPG funding was spent across these activities. We will continue to monitor local authority spend throughout 2025/26.