Richmond faces huge homeless bill:London's richest borough to spend £3.5m with more than 100 families in need of emergency housing

The maximum allowed in benefits falls short of the cost of renting in London’s richest borough and the steep rise in the number of families needing help with accommodation will result in job cuts to make up the funding gap, warns the council.

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London’s richest borough says it is spending so much money on housing the homeless it will have to sack its own staff to avoid going bust.

In a new report, wealthy Richmond is shown as one of the councils hardest hit by the introduction of the Government’s reduced benefits cap. The council has budgeted £3.5 million for emergency accommodation but will need to find an extra £214,000 on hostels and B&Bs for more than 100 homeless families. A recent study by Hamptons International found it costs £10,600 a year to rent one room in Richmond.

The council warns that job cuts will be necessary to make up its funding gap. It says the number of families needing help with accommodation is rising steeply as the maximum allowed in benefits falls short of the cost of renting in the borough.

Brian Castle, assistant director in Richmond’s community services operations department, blames a shortage of private homes to rent, and rent increases.


The Government’s controversial cap is a key factor. “Income received from housing benefit towards the costs of temporary accommodation is capped ... and therefore income does not increase in line with increased costs of leased accommodation,” says Castle.

The council hopes the Greater London Authority will help to provide extra housing in other boroughs. However, it admits the situation is “volatile”, and that it is impossible to be sure it will be able to cover its losses through this measure and through its own planned job cuts.

All boroughs blame the Government’s benefits cap which was introduced in 2013 and lowered this month. From 2013 couples and families could claim no more than £26,000 per year towards housing costs. That cap is now £23,000 per year. Single childless people can claim £15,410.

A report by the Institute for Fiscal Studies estimates that about 19,000 households will lose money as a result of the cap being lowered. Critics argue that the 2013 cap was strict enough, pushing many families either to move to new areas to find cheaper housing or — in extreme cases — becoming homeless.

London wide, more than 50,000 people live in temporary accommodation. A study by the University of York concluded that in 2014/15 the likely cost of temporary accommodation in the capital was £663 million.

A recent study by consumer intelligence company CACI found the Richmond Park constituency was the highest earning in Britain with an average household income of £58,000 compared to a national average of just over £36,000.

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