London’s homelessness crisis is spiralling, with new figures showing boroughs now spend £5.5 million every single day tackling it. That’s up from £4.2 million a day just a year ago.

Almost all of this money is going on temporary accommodation for families who have nowhere else to live – nearly £5 million a day across the capital.

The rise in costs is far steeper in London than anywhere else in the country. Spending on homelessness is up 42% in London compared to 16% elsewhere in England.

Boroughs push for fairer funding

London Councils – the cross-party group representing borough leaders – say the figures are proof the government must base upcoming funding reforms on the latest data.

They warn that relying on last year’s numbers would hugely underestimate the pressures facing boroughs today.

They also argue that measures of deprivation urgently need updating. Right now, homelessness is given the same weighting as “road distance to a post office” in the official Index of Multiple Deprivation – a comparison boroughs say simply doesn’t reflect the real impact homelessness has on people’s lives.

Concerns over children’s services formula

Boroughs are also worried about a new funding formula for children’s services, which they believe could strip London of more than £700 million over the next three years.

Key concerns include:

- Using unreliable census-based parental opinions on children’s health instead of hard data on special educational needs and disabilities (SEND).

- Wrong assumptions – such as suggesting overcrowded homes make children less likely to need care.

- Outdated deprivation measures that ignore high housing costs in London.

Without changes, they warn more boroughs will be forced to seek Exceptional Financial Support (EFS) just to balance their budgets.

“A staggering £5m a day”

Cllr Claire Holland, Chair of London Councils, said:

“London boroughs are now spending a staggering £5 million a day on temporary accommodation – a stark reflection of the scale of the capital's housing crisis, which continues to worsen. 

“This underlines the importance of using the most up-to-date data in the forthcoming reforms to local government finances and ensuring measures of deprivation properly reflect housing costs and the impact of homelessness.

“After more than a decade of structural underfunding, rising costs and growing demand, it is vital that boroughs receive funding which genuinely reflects the level of need in the capital. We want to work with the government to address our concerns with the Fair Funding Review so that we can help restore stability to council finances and prevent more boroughs being plunged into crisis.”

The bigger picture

Boroughs already face a £500 million collective funding gap this year. Nearly a quarter of them are relying on emergency financial help from government.

London Councils is urging ministers to deliver a fairer funding system – one that takes into account the city’s high costs, high deprivation, and growing demand – before more councils are pushed to breaking point.