Luton council to borrow extra £20m to help tackle homelessness issues amid 'severe' financial challenges

The local authority is experiencing “severe financial challenges around temporary accommodation, with immediate pressures owing to greater demand and reduced supply of options”, according to a report to councillors.

“This has increased our need to use nightly paid hotels and bed and breakfast,” said the report. “To reduce this impact, the council needs to urgently acquire its own temporary accommodation.

“Charges would be greatly reduced, income can be claimed by housing benefit and LBC would own these assets, which would increase in value over time. The council has invested in transitional housing before.”

Its first temporary accommodation purchasing scheme (TAPS) provided 85 street properties and Sherd Lodge, while its second funded 23 properties, added the report.

“The third allocation of TAPS finance has been included in the 2024/25 capital programme, aiming to buy larger hostel type accommodation and other street properties.

“There were 139 households in hotels, and a further 89 households in nightly rate accommodation in July 2024. LBC has a chance to change this around by acquiring its own buildings to accommodate our homeless households.

“These blocks will become council-owned assets and will be situated in Luton, enabling us to keep homeless households as local as possible. As a result, the council can offer more suitable and sustainable accommodation, as well as reducing budget overspend.

“This TAPS four programme could enable the acquisition of an extra large block of accommodation of more than 100 homes or large street properties.”

Labour Northwell councillor and finance portfolio holder Rob Roche told a full council meeting: “The report covers required change to the 2024/25 strategy to address the pressing issue of temporary accommodation, which means the council’s prudential indicators need changing.

“These are components of the council’s financial health and are important, given the key objective in the corporate plan to be a financially sound and efficient local authority,” he explained.

“The council wants to borrow an extra £20m in respect of the financing of the TAPS four, as funding for this isn’t provided in the council’s current budget framework. This manoeuvre requires an adjustment to the capital programme for 2024/25, through an increase to the capital financing requirement of £20m.

“To maintain proper control over borrowing, that means the prudential indicators for liability, benchmarking, operational boundary and authorised limit all need to be increased by £20m.

“This project will generate cost savings from the use of the council’s own buildings to be purchased within the TAPS four budget, instead of the currently used high cost external provision, for example the use of bed and breakfast establishments and nightly paid hotels.

“There’ll be no impact on the council’s revenue budget. The council will be able to operate within these adjusted indicators, which will be reviewed within the 2025/26 budget setting framework.”

Councillors approved the adjustment to the borrowing strategy for 2024/25 to allow for the additional TAPS prudential financing and the adjustment to the council’s prudential and treasury indicators, while noting this would have no impact on its revenue budget.