Deputy Mayor writes to Prime Minister about Council’s financial challenges

CC: DWP, MHCLG and HM Treasury

Dear Andy,

I am writing as Deputy Mayor of Lewisham, and Cabinet Member for Finance, to raise the alarm on the austerity being imposed on Lewisham Council and the communities we serve.

We welcome your promise to end rough sleeping and to give people breathing space. But right now the crisis in homelessness is placing unsustainable pressure on our entire council budget.

We simply cannot meet the cost of services with the funding we receive and we need urgent action to close the funding gap and protect frontline services.

In the upcoming Budget and Local Government Settlement, your government has the chance to start reversing the devastating impact of more than a decade of austerity. 

The true cost of the housing crisis

At the outbreak of austerity, the then government froze funding to local councils for temporary accommodation, tying them indefinitely to the 2011 rate, quietly passing the true cost of homelessness directly onto local council taxpayers.

Councils have a legal duty to provide shelter, and in Lewisham alone we now have 2,150 households who are homeless. But years of austerity has damaged our ability to build social housing and many council homes have been lost through Right to Buy. This means that the only option we have to house these families is in temporary accommodation. 

The cost of providing this has massive knock-on effects to our finances, with private landlords charging as much as £100 per night for a single nightly paid dwelling. This is creating a £21 million annual funding shortfall in Lewisham’s budget. 

One corrective measure that would give us breathing space

1.Reverse the 2011 freeze on temporary accommodation funding. Restoring this funding would entirely close Lewisham’s budget gap, and give protection to day-to-day services residents rely on and deserve.

Three measures that would tackle the problem at its source

2.Restore Local Housing Allowance. Tied to April 2024 rates, this benefit cut is pushing families into homelessness and shifting far greater costs onto councils. Unfreezing would reduce homelessness and reduce council spend on temporary accommodation.

3. Accelerate council house building. With a strategic housing delivery partner appointed, Lewisham Council is ready to build. Greater upfront funding and cheaper borrowing would accelerate delivery and reduce reliance on temporary accommodation.

4.Introduce rent controls. The cost of renting is displacing communities, tearing apart families and pushing people into homelessness. The Renters Right Act goes part way, but the real issue is unaffordable market rent levels. Giving councils powers to regulate the market would tackle one of the leading causes of homelessness at its source.

If we don’t see these changes, the Council and government will spend £750 million over the next ten years on temporary accommodation in Lewisham alone. Money that leaves the public purse and goes directly into private profit. Only by working together can we reverse this gross misuse of public resources.

We would welcome your support in bringing the relevant departments together to find a solution with urgency.

With best wishes,

Rudi
Cllr Rudi Schmidt