From Monday, the Homelessness Act will increase the number of people whom councils must house. But, reports Gemma White, many simply can't afford to meet this increased obligation
"This is the clearest example yet of the government telling us to do more – but with fewer resources," says Jim Wintour, housing director at Waltham Forest council, of the Homelessness Act. "While the number of people the council is responsible for housing increases, the supply of housing is decreasing. Where will we put them all?"

Wintour's question echoes the murmurs of discontent rippling through local authorities across the country over the legislation, which will come into force on Monday.

This is because tough requirements under the new act widen the definition of who should be classed in priority need of housing and extend the time that councils must accommodate the homeless (see "How it affects local authorities", page 18). As a result, the new law poses a triple problem for local authorities: councils have to house more people while suffering a chronic accommodation shortage and they are not going to receive any extra government money to help them do it.

As far as housing rights campaigners are concerned, the act is welcome because it will offer help to more people.

Local authorities have, of course, been aware for the past two years that this legislation has been in the pipeline. But they are anxious about coping with the new demands without additional funding. The government announced an extra £8m in March to help meet homelessness need, but councils say this is inadequate.

The Association of London Government, which represents all 33 boroughs in the capital, estimates that the Homelessness Act will increase homelessness acceptances by 22% compared to last year – giving councils in London a duty to house an extra 6500 people, at an extra cost of £15-20m a year.

At Waltham Forest, there is already a 70-year waiting list for council housing. Wintour anticipates a 10% rise in the number of acceptances for statutory homelessness, which totalled 1125 households last year, and estimates that the council's accommodation bill will rise by more than £650,000 to £2.65m.

No research has yet been done on the nationwide cost to councils, but Wintour warns: "For local authorities, the cost of implementing the act will be quite substantial."

It gets even more complicated. Whereas on one hand, the government is demanding councils house more people, on the other, it recently pledged that by March 2004 no families with children should live in the bed and breakfast hotels traditionally used by councils to house the homeless. Councils are obliged to phase out their B&B use over the next two years.

Although the government has earmarked £25m for councils to help them increase housing benefit allocations and therefore find alternative private sector accommodation, this cash is widely regarded as a drop in the ocean. The crackdown on the use of shoddy B&Bs is recognised as admirable but councils fear they will struggle to find cheaper alternative temporary housing.

The Isle of Wight is among the councils facing this catch-22 situation. Senior housing officer Martyn Stanley says: "What is causing us the most concern is finding accommodation for the 16 and 17-year-olds and emergency accommodation for homeless households with children.

We rely very heavily on B&Bs as temporary accommodation. Trying to find alternatives has been incredibly difficult

Martyn Stanley, isle of wight council

"As a stock transfer authority we rely very heavily on bed and breakfast as a form of temporary accommodation – trying to find alternatives has been incredibly difficult."

The government wants authorities to use private sector accommodation instead of B&Bs. But, Stanley says, this is not as easy as it sounds: "Local estate agents are promoting buy-to-let schemes," explains Stanley, "but with a view to renting to working people which does not tackle the right end of the market for us.

"We will look to use more private rented accommodation, but we need to encourage landlords to work with us and can only do that by bringing the rents we can pay in line with current market rents."

Gwyneth Taylor, housing policy officer at the Local Government Association, says: "There are areas outside London, such as the South-west or East Anglia, where housing demand is high and local authorities fear they will be unable to cope.

"We've been lobbying the Office of the Deputy Prime Minister for additional funding because the government wants local authorities to cope with the additional demands under the act by using private sector rented accommodation, but the gap between housing benefit allocation and private rents is too high to make this realistic. The Homelessness Act combined with the inadequacy of the housing benefit system will add further pressure to local authorities."

The government is relying on changes to the housing benefit system to ensure its targets are met. On 1 April it raised the level of rent that receives a 95% subsidy from £200 a week to £300, making it easier for homeless households to rent in the expensive private sector.

It also expects local authorities to use planning law to force developers to provide more affordable housing. But developers are reluctant to let these demands eat into their profits.

Another problem is that the new legislation classes ex-offenders as priority homeless. Dominic Raffo, a homelessness prevention coordinator for charity St Mungo's questions whether housing providers are willing to deal with ex-offenders. He once wrote to the London Housing Federation asking which associations would be willing to offer beds to ex-prisoners and was told that none were prepared to do so.

Raffo believes social care policies must run alongside the obligations in the Homelessness Act or the housing of vulnerable groups may fail.

The Social Exclusion Unit is proposing that prisoners receive housing benefit for up to six months while in prison so they can retain tenancies upon their release – housing benefit is currently paid only up to 13 weeks. But Raffo fears this is not enough and believes many ex-offenders will end up back on the streets. He says: "Unless a structure is put in place that gets to the very root of the problem – such as hostels specifically designed to accommodate prisoners who are ex-drug or alcohol addicts – the problems will never go away.

How many housing providers are actually willing to house ex-offenders? Many of these people could end up back on the streets

Dominic Raffo, st mungo’s

"I do wonder where the extra accommodation will come from because we already face enough difficulties finding move-on accommodation to get people out of hostels."

Among this wave of criticism, however, there are some who expect the Homelessness Act to have a positive effect.

Louise Casey, head of the Homelessness Directorate, says: "We will have accepted that there are more people out there who need help finding a home, and this can only be a good thing." She admits, however, that extending priority need "does not mean everyone will get a council flat".

We need "innovative housing programmes" across the country, says Casey, if we are to meet the obligations of the new legislation.

But, local authorities will ask, how innovative can they really be, faced with such intense pressure and starved of funding?

Karen Buck, Labour MP for Regents Park and North Kensington, pragmatically calls the Homelessness Act just "one side of the coin". She says: "We do need a far greater recognition of the pressures that many authorities are facing, especially in London and the South-east with falling supply and rising demand.

"We look to the forthcoming spending review to make sure the supply side is given equal priority."

Shaks Ghosh, the chief executive of Crisis, sums up the situation: "Just having the Homelessness Act will not get people housed, so local authorities have got to be given the ability to create more homes.

"It is definitely a step in the right direction but there is quite a way to go still.

Local authorities under pressure

118,360 households are unintentionally homeless and in priority need
12,800 households are in bed and breakfast hotels
80,000 households are temporarily housed in a combination of bed and breakfast and private sector accommodation

2002 Homelessness Act: how it affects local authorities

The act comes into force on Monday. It repeals the Conservatives’ 1996 Housing Act by restoring the duty on councils to provide long term housing for the homeless. The 1996 legislation reduced the rights of homeless families to just two years’ housing help. The 2002 legislation means that:
  • over the next two years, the use of bed and breakfasts must be phased out. Instead, the homeless must be given a suitable home he in the short term until they find a permanent place to live
  • the category of people classed as in priority need of housing, which previously covered people such as lone parents, pregnant women, the physically disabled or those suffering mental health problem, is extended to include 16-17 year olds, care leavers, former soldiers and ex-prisoners who are considered vulnerable
  • local authorities will no longer be required to have a single housing register but must work towards choice-based lettings to give the homeless a wider range of accommodation options.
The act also includes a new, preventative approach to the problems with the obligation to produce and review five-year strategies on homelessness in their area.