Westminster: homeless costs explode as benefit cuts kick in. (Image: Homeless via Shutterstock.com)

One of Britain’s wealthiest boroughs is the new centre of the homelessness epidemic after admitting it will spend a record £41.8m housing families in temporary accommodation this year.

Cuts to housing benefit are having a reverse effect on costs for Westminister Council, which is predicting its bill for homelessness will rise 63.5% since last year when temporary accommodation cost the council £25.5m.

The scale of the crisis means it cost Westminster more placing thousands of people in temporary accommodation, including hotels, than it has saved through the government’s welfare clampdown. The council says it has saved ‘around £40m’ thanks to the introduction in 2011 of restrictions to housing benefit.

Figures obtained by the Bureau through Freedom of Information requests show it has cost Westminster £135.83m rehousing homeless people since 2009. This year’s £41.8m homeless bill means it will spend more housing vulnerable households than any other local authority in Britain.

And Westminster is now keeping more families in B&Bs beyond the statutory minimum six weeks than any other borough in the UK according to government figures out last week

As the average monthly rent in London reached £1,100, a rise of 8% in a year, new figures released by the government last week showed that the number of households made homeless in England in the financial year to March 2013 has reached 53,540 – a 6% average increase on the previous year and a 16% increase in the capital.

This year’s £41.8m homeless bill means it will spend more housing vulnerable households than any other local authority in Britain.

Rents are rising so fast in London that charities are seeing people who found new homes after being evicted in the first round of benefit cuts being made homeless again as costs soar.

Related story: Scale of UK housing crisis revealed

‘Worryingly, with temporary accommodation funding now hit by the benefit cap, many are finding that their only options are poor quality bed and breakfasts, or a place miles away from their family, schools and jobs,’ said Shelter chief executive, Campbell Robb. ‘The future for families who lose their home risks becoming even bleaker unless the government exempts accommodation for homeless families from the benefit cap. This would give families the best chance of getting back on with their lives and will save more money for the taxpayer in the long run.’

Westminster is also facing a possible legal action for keeping families in B&Bs beyond the statutory minimum six weeks.

Education impact

‘We are now seeing the costs and consequences of the government’s salami slicing approach to housing benefit as homelessness rises and millions are being spent keeping families in hotels and bed and breakfast,’ said Karen Buck, Labour MP for Westminster North. ‘Not only are there massive costs associated with homelessness, the lives of children and families are being damaged and disrupted, with a particular impact on children’s education.

‘This is the government’s responsibility rather than local councils – although I am critical of Westminster for being cheerleaders without having worked through what the costs would be.’

But housing minster Mark Prisk said: ‘This country has some of the strongest protections for families in the world to guard against homelessness, and the Government has invested £470m to ensure we don’t return to the bad old days under the last Government when levels of homelessness were over double what they are today. While it is for councils to decide how they use their budgets most effectively, it cannot make sense to pay more for housing a family in a bed and breakfast rather than putting them in a stable home. There is also absolutely no excuse to send families miles away without proper regard for their circumstances.’

Not only are there massive costs associated with homelessness, the lives of children and families are being damaged and disrupted, with a particular impact on children’s education.

Karen Buck, Labour MP for Westminster North

In a statement, Westminster Council said: ‘The effects of reform in Westminster was always going to be more pronounced than any other area with limited space to build new housing and with high rents.’

It argues that it is ‘misleading’ to link the cash the council has saved from housing benefit reform with its temporary accommodation budget as it has always spent significant sums on homelessness. Yet there is now clear evidence that Westminster’s spending on homelessness is rising sharply.

Most people forced out of rented homes because of housing benefit restrictions are not ‘long term residents of the borough’, Westminster maintains, and that it is working hard to renegotiate the costs of rents to save housing benefit bills.