Greenwich Council is spending about £800,000 each month on putting people up in Travelodge hotels as the number of households in temporary accommodation soars to record levels.
The council had responsibility for 1,880 households in temporary accommodation at the end of June, a report to senior councillors says – pushing it more than £11 million over budget, and contributing to a forecast £22 million overspend for the year across all departments.
Demand for temporary accommodation is soaring because of the government’s benefits cap and soaring private rents. Across the capital, one in 50 people are in temporary accommodation.
Council officers warn that Greenwich will need to buy more homes on the open market to accommodate demand and to save money on hotel bills. The council has already bought more than 500 homes on the open market in the past six years.
At the end of June, 125 families with children were in bed-and-breakfasts – up from just six at the same point last year. Half of those families had been in B&Bs for six weeks or more – while none had been last year.
About 950 households were put up in non-chain hotels at a cost of £1 million between April and June this year. But the £800,000 spent at Travelodges accounted for just 250 households over the quarter, at an average cost of £120 per night – most of which had to be covered by the council. The report warns that this is unsustainable.
“The supply of non-chain hotel emergency overnight accommodation has slumped, as this form of accommodation is effectively a sub-market of the overall private rental sector, which has itself slumped in a way never previously seen,” the report says.
“Private rents are now at an all-time high and only a fraction are affordable to people on low incomes, many of whom are workers.
“So not only are chain hotels causing huge financial losses, the unit cost of non- chain hotel units are increasing, so the obvious solution of using more non- chain hotel accommodation simply does not exist.”
While many travellers will be used to picking up bargains at budget hotel chains because they can book far in advance, last-minute bookings for Travelodges last night ranged from £95 in Gravesend to £187 in Woolwich, with higher rates elsewhere in London.
The report also warned that London boroughs were now competing against each other to secure non-chain hotels, ignoring an agreement where they agreed not to outbid the borough where the hotel was located.
“This agreement is now having to be routinely breached, so that boroughs – including Greenwich on a case by case basis and approved by management – can use this form of temporary accommodation at all, as it is still both cheaper and more suitable than the alternative of the chain hotel,” the report says.
“As a matter of extreme urgency, the council needs to reduce the use of all temporary accommodation but the priority is to reduce and potentially eliminate the use of Travelodge.
“Without the external drivers changing, which does not look likely, an innovative, creative approach is required to reduce this deficit and this will have to include a significant ramping up our acquisitions programme, through which we have purchased more than 550 homes since 2017 and may require a change in approach to how we set rents on temporary accommodation and/or changes in policy.”
The council is also £10m down on its expected income from transport and parking, which it says is due to delays in rolling out emissions-based parking charges and controlled parking zones.
The paper will go before the council’s cabinet next Wednesday.
Greenwich is not the only borough wrestling the effects of homelessness on its finances. London Councils, the umbrella body for all 32 boroughs, said today that council budgets across London were on a “knife edge”.
It has called for local housing allowance rates – used to calculate housing benefit – to be increased, and extra financial help for councils to buy homes and build new ones.
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