Council network’s analysis finds £268m drained from local authorities annually

The DCN’s research shows this funding gap has now reached a total of £268m a year across England’s 164 district councils, with the average district losing £1.6m.

Based on Housing Forum analysis showing it costs £243,700 to build a house on council land, the £268m funding shortfall is equivalent to 1,101 new social homes every year across district areas alone. Over five years, this amounts to the cost of 5,505 homes.

The analysis comes as Government reimbursement for temporary accommodation remains frozen at January 2011 rates.

Rental costs have risen dramatically, meaning the Government now covers just 34% of district councils' temporary accommodation costs, as opposed to the 90% it was originally intended to cover.

As a result, the temporary accommodation crisis continues to develop, with 132,410 households in temporary accommodation in June 2025, the highest number on record.

In the last year alone, there was a 10% increase in households with children placed in temporary accommodation by DCN member councils.

Cllr Richard Wright, District Councils’ Network Chair, said: “The use of grossly insufficient 2011 rates to refund temporary accommodation costs both threatens councils’ financial sustainability and undermines our housebuilding ambitions.

“Councils are having to devote an ever-greater proportion of our resources to dealing with the consequences of homelessness, enriching private landlords in the process, when we’d far rather invest in new housing which would prevent homelessness in the first place.

“The Government has set bold targets to build 1.5 million homes, including a revolution in social housing, yet councils are losing the equivalent of over a thousand homes worth of funding every year because our temporary accommodation funding is nearly 15 years out of date.

"The solution is to update the funding to reflect current rental costs, so councils stop losing money and can free up resources to invest in permanent housing solutions."

The DCN is seeking the following action in the Budget:

● An immediate review and uplifting of temporary accommodation subsidy funding rates to reflect 90% of current Local Housing Allowance rates
● Capital investment to support councils in building and acquiring their own temporary accommodation
● Long-term sustainable funding that enables councils to shift from expensive emergency accommodation to permanent housing solutions.

Harry Rodd