An inner London council on Wednesday became the latest borough to issue a funding crisis warning over the cost of housing homeless families.
Lambeth council admitted its bill for temporary accommodation has become unsustainable.
It has issued a stark warning to Chancellor Rachel Reeves insisting that unless the borough receives an “urgent” funding boost in the October 30 budget it will face a £70million deficit over the next four years.
Claire Holland, leader of Lambeth Council, said: “Lambeth’s core spending power in real terms has reduced significantly since 2010, despite population increases, rising demand for social services and increased responsibilities from central government.
“And, looking ahead over the lifetime of this Parliament, current levels of public spending plans combined with inflation and huge demands for services like temporary accommodation mean we face a funding pressure of around £70m deficit across the next four years.
“Through the Autumn Statement, the government must provide urgent support to enable local government, including Lambeth Council, to manage the immediate crises impacting the sector, to ensure councils can continue to provide vital support to those most vulnerable and confirm their long-term financial sustainability.”
The number of families housed in temporary accommodation by Lambeth council has risen to 4,600 as rents in the capital have skyrocketed.
The town hall said it is relying more and more on expensive hostels and hotels, pushing its bill for temporary accommodation up to at least £28million this year.
Ms Reeves has said that the new Labour government’s first Budget next month “will involve taking difficult decisions to meet our fiscal rules across spending, welfare and tax”.
In its submission to the Treasury, Lambeth council said: “Following more than a decade of chronic underfunding, local government is facing several simultaneous urgent and debilitating crises which threaten the future of the sector and our communities.
“Recent analysis by the Local Government Association has estimated a staggering £2.3billion budget gap in the sector in 2025/26, with the gap estimated at £700million across London borough councils alone.
“These numbers are largely driven by factors out of local government control including huge increases in demand for social care and housing when costs have surged due to inflation.”
Ms Holland added: “The housing crisis is a tragedy for so many families in Lambeth who deserve a permanent home.
“Sadly, the scale of the demand in boroughs like Lambeth makes that impossible for many.
“It isn’t sustainable for those families, or for councils like Lambeth, for this huge demand to fall on a small number of local areas and we need a national solution to this crisis that supports families and puts councils on a sustainable footing.
“Without action in the budget, the scale of our overspend in temporary accommodation means we’ll need to consider even more drastic savings in other services, services that many people value and rely on.”
Lambeth’s warning follows Newham revealing it is facing “considerable financial pressures” because of its temporary accommodation bill.
The council is forecasting a £40million overspend in this financial year, on top of the £22 million in 2023. The borough is supporting around 6,500 families in temporary accommodation and has more than 38,000 households on its social housing waiting list.
It will dim its streetlights, review bin collections and stop funding Christmas decorations in a desperate bid to save cash.
London Council’s estimates that one in 50 people in the capital is now homeless and boroughs spend more than £90million per month on temporary accommodation
All but two of the 32 boroughs overspent on their original budget plans this year because of increasing costs, according to cross-party umbrella group. The majority have said they will need to dip into reserves to continue providing services without further funding.
