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Policy Manager Cat Tottie analyses the announcements made in the recent Spring Budget and what impact they will have on the homelessness sector.

After the financial turmoil of the last year, Wednesday’s Spring Budget announcement was an opportunity for Government to show their commitment to ending homelessness and their support for homelessness services. Instead, the announcement was, primarily, more of the same. While there are some headline wins for the charitable sector, these sit alongside some glaring omissions, patches of uncertainty, and a largely unchanged picture overall – albeit one with fewer potholes.

Rough sleeping rose by 26% in 2022. At the same time we know hundreds of homelessness services are at risk of scaling back or closing down due to spiralling costs,. The Chancellor could have enacted some key changes to protect services and ensure people remain warm and well in their own homes rather than face homelessness, but the budget instead feels like a series of sticking plasters without much long-term support for those who need it most.

It's important first to look at the offer for those at risk of homelessness. Here, there is some good news. The extension of the Energy Price Guarantee will buy some much-needed flex in household budgets. For prepayment meter customers – who are disproportionately on very low incomes and at much greater risk of homelessness – the move to align costs with other energy tariffs is a huge win and one we hope the Government will make permanent. Finally, the additional £8.2 million in Staying Close funding for care leavers and £33 million dedicated to supporting veterans, including with housing, are investments we can celebrate.

Despite this, living standards are still set to fall further this year than in any other year since records began and the drivers to homelessness remain unaddressed. Local Housing Allowance – the rate of Housing Benefit paid to cover private rents – remains frozen at 2020 levels despite a 12% increase in prices since then. This means people on low incomes are left making choices between eating or topping up their rent, with many watching their arrears build up regardless. With most new private tenancies unaffordable under housing benefit, services are less able to move residents into homes of their own, meaning people remaining in supported accommodation longer and fewer beds available for those newly in need. Unless LHA is unfrozen urgently, we will see many more people facing homelessness in the coming months as rents continue to rise.

Work and welfare are clearly high on the Government’s agenda, but with this comes a phrase which will strike fear into hearts across the sector – benefit sanctions. Sanctions and deductions are disproportionately issued against people experiencing homelessness and trap people in destitution. Many want to work, but are restricted by physical and mental health conditions or disincentivised to do so because of welfare policies that the budget does not touch. The drive towards work also happens to take place while many organisations are reducing their offer due to costs, and as emergency support takes priority, holistic services such as employment support are often the first to be cut. With this in mind, a sanction-led approach is likely to feel less like a carrot and more like another stick used to hold people back.

For those delivering services, the picture is again mixed. The big headline – a £100million injection of funding for charities – has taken many by surprise and is an acknowledgement of the important work that takes place within the sector. It came through charities tirelessly making the case for more resources, including our own Keep Our Doors Open campaign, so thank you to all those who have supported it.

Details on this fund are sparing, although we do know it will be “targeted towards those organisations most at risk due to increased demand from vulnerable groups and higher delivery costs”. This comfortably describes our sector, and we will work hard to ensure as much support is made available for homelessness services as possible. But, while £100m is a big chunk of cash, it quickly begins to shrink when distributed across the breadth of the charity sector. Funding shortages are due to be compounded by upcoming changes in business energy support which will see charities paying yet more in utility costs, meaning extra funds are likely to be eaten up immediately. Considering some of our members have told us of multi-million pound increases in energy costs alone, DCMS have some very difficult decisions to make to ensure the money has maximum impact, and services shouldn’t count on this going terribly far.

Ultimately, for our sector the budget is largely more of the same. Commissioned funding remains frozen, meaning services continuing to absorb higher costs on static budgets. Large shortfalls also remain in the NHS and social care bills, both of which have inevitable knock-on effects on those experiencing homelessness. The support that has been offered is welcome – but it is a drop in the water while services are begging for a life raft. As funding falls further behind the actual cost of support and new people are dragged into preventable cycles of homelessness, we will continue campaigning to ensure that everyone has a safe place to live and the support they need to keep it.

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Cat Tottie

Policy Manager