Consultation outcome

Homelessness Prevention Grant 2023/24 onwards: government response

Updated 23 December 2022

Introduction

Background 

1. The Homelessness Prevention Grant (HPG) is ringfenced grant funding paid to all local housing authorities in England, distributed using an allocations formula to reflect relative homelessness pressures. For 2022/23, £315.8 million in funding was provided to local authorities through the grant. It is part of a complex funding landscape, as local authorities fund their statutory homelessness duties through a combination of the Homelessness Prevention Grant, the Local Government Settlement, and Housing Benefit Temporary Accommodation subsidy (which local authorities reclaim from DWP).

2. The Department for Levelling Up, Housing and Communities (DLUHC) consulted on amending the funding arrangements for HPG for 2023/24 onwards, aiming to make sure the distribution of funding is more reflective of current pressures and demand in areas across England, improve understanding of how the grant is used in practice, and enhance the quality of homelessness data.

3. DLUHC consulted local authorities and other interested stakeholders on amending the allocations formula and grant conditions. We sought feedback on 5 key proposals through the consultation:

• updating the allocations formula so that it reflects current temporary accommodation (TA) pressures
• introducing transitional arrangements for changes to funding allocations
• determining the timing of the announcements of 2023/24 and 2024/25 allocations, including a possible 2-year funding allocation
• adding a grant condition to require local authorities to submit additional spend declaration information under the categories of ‘prevention and relief’ and ‘temporary accommodation’ and ‘main duty/other’
• introducing tranche payments and requiring accurate H-CLIC statistics (Homelessness Case Level Information Collection - data returns submitted by local authorities to DLUHC) to be submitted to receive the second tranche of funding

4. The consultation launched on 1 July 2022. Responses could be made via an online survey, written responses could be sent to the Homelessness and Rough Sleeping Team via post or email, and we also hosted 6 roundtables attended by over 50 local authorities to discuss the proposals in more depth. The consultation closed on 26 August 2022 and 170 responses were received in total - we are grateful to everyone who took the time to respond.

5. This document provides a summary of the consultation responses received; it does not attempt to discuss every point made. The document also details the government’s response and next steps in our approach to amending HPG funding arrangements.

6. Any enquiries regarding this publication should be sent to [email protected], or by post to:

Homelessness and Rough Sleeping Team

Department for Levelling Up, Housing and Communities

2nd floor, Fry Building

2 Marsham Street

London

SW1P 4DF

Methodology 

7. Details of how to respond to the consultation were published on the GOV.UK website and the Local Government Bulletin, and letters were sent to all local authority chief executives and copied to local authority housing leads. The consultation was open for all interested stakeholders to submit responses. We also held a webinar to explain the formula proposals in more detail, including Q&A, for which invites were sent to all local authorities.

8. The online consultation consisted of a technical note on the 2021/22 Homelessness Prevention Grant, a technical note on proposed formula changes, illustrative funding allocations, and a link to the Citizen Space response survey.

9. The survey comprised 19 questions. Nine of the questions were multiple choice, requiring a standardised response from the options provided, such as “yes, no, indifferent or unsure”. Four questions asked for a standardised response with a follow-up free text option in which respondents could provide reasons and context for their answers, as well as their own policy suggestions. Of the 19 consultation questions, 6 were free text only.

10. Alongside providing online and postal methods for engagement, we also arranged 6 roundtable sessions. All local authorities located across England were informed about the upcoming sessions via a letter to Chief Executives and an announcement in the Homelessness Advice and Support Team (HAST) newsletter. All of those who expressed an interest were invited to take part in a roundtable session. We also directly invited some local authorities that had not expressed an interest, to ensure fairer regional representation. These sessions were attended by stakeholders from over 50 local authorities.

11. All written responses were analysed to identify common themes and coded. We gave online, written and roundtable responses equal weight when responding to this consultation.

Overview of consultation responses

12. This response covers all the consultation questions categorised under 4 chapters - the funding formula, transitional arrangements, spend declarations and tranche payments.

13. By the conclusion of the consultation on 26 August, we had received 170 written responses on HPG funding amendments. The majority of these responses were contributed by local authority stakeholders, with some responses also received from established charities, service providers and representative bodies. The exact number of responses varies per question, as many respondents answered some questions, but not others.

14. Consultation responses were overall mixed, with differing views on each question often emerging within each chapter. Responses to proposed changes to the funding formula were largely in agreement with the need for change, but there were mixed opinions on the extent of change required and the metrics that should underpin the formula.

15. The majority of respondents agreed with transitional arrangements being introduced, although some respondents were concerned that this would restrict ‘actual’ allocations from being realised in the near future. The majority of responses agreed with our proposal to announce a 2-year allocation, although some respondents expressed preference for a single-year settlement, in order to facilitate a longer-term review of the allocations formula.

16. Responses to spend declarations were also mixed, owing to questions of how reporting under broadly-defined categories would work in alignment with current procedures, resources and infrastructure. Finally, a majority of responses disagreed with tranche payments as a method of incentivising improved quality of H-CLIC data.

1. Funding formula

Consultation responses (written)

Question 1: Do you agree with our proposal to combine the HRG and HRA uplift elements of the formula, using the HRA uplift formula for £110m of the grant?

Answers	Number of Responses	Percentage
Yes	94	60%
No	26	17%
Indifferent	15	10%
Not Sure	22	14%

17. 157 responses to Question 1 were received. The majority agreed with the proposal to combine the Homelessness Reduction Grant (HRG) elements with Homelessness Reduction Act (HRA) uplift element of the formula. Alternately, a minority of respondents disagreed, and just under a quarter of respondents were either indifferent or unsure.

Question 2: Do you agree with our proposal to apply an overall ACA in the £110m element of the formula?

Answers	Number of Responses	Percentage
Yes	82	51%
No	37	23%
Indifferent	12	7%
Not Sure	31	19%

18. There were 162 responses to the question on the introduction of an Area-Cost Adjustment (ACA). Just over half of respondents agreed with the proposal to apply an overall ACA in the £110 million element of the formula. Nearly a quarter of respondents disagreed, and over a quarter were either indifferent or unsure.

Question 3: Of the options presented to replace TAMF in the formula, which is your first preference? Please explain why.

Option 1: Replace the TAMF element of the formula with 90% of 3-year average of historic temporary accommodation (TA) spend.

Option 2: Replace the TAMF with a population-weighted area cost adjustment (ACA). The ACA is a tool used to measure the variation in the cost of delivering local government services for different local authorities in England.

Answers	Number of Responses	Percentage
Option 1	33	20%
Option 2	98	59%
Not Sure	10	6%
Indifferent	5	3%
Neither	20	12%

19. There were 166 responses to this question. Option 2 was preferred by the majority of respondents, while Option 1 was the preference of 1 in 5 respondents. 9% of the responses were either not sure or indifferent, while 12% preferred neither Option 1 nor Option 2.

20. Reasons for agreeing with Option 2 included: it would be a better reflection of costs or would be fairer (33%), because their local authority would gain funding (16%), not incentivising TA (11%). Reasons for disagreeing with Option 2 included: not accounting for homelessness costs well or not considering the bigger picture (20%), a bigger population not equating to homelessness pressures (11%), because their local authority would lose funding (7%).

21. Reasons for agreeing with Option 1 included: it would be a better reflection of costs or would be fairer (15%) and because the local authority would gain funding (4%). Reasons for disagreeing with Option 1 included: RO4 data being historic or not accounting for current costs (22%), not rewarding upstream prevention or that it could incentivise TA (13%), RO4 data being inaccurate or unreliable (12%).

22. A number of respondents chose ‘neither’ and made other suggestions to introduce metrics relating to private rented sector availability or housing affordability, and/or suggested using projections rather than historic data.

Question 4: Are there other indicators of temporary accommodation (TA) pressures you recommend we consider? Please explain why.

23. 129 (76%) of consultation respondents made suggestions for other indicators of TA pressures. Of those respondents who made a suggestion, 43% suggested either affordability, earnings, or disposable income metrics. 37% suggested PRS stock, and 30% suggested either more consideration for rents, or a more nuanced rental metric (for example, considering growth over time or other property sizes). 26% suggested either numbers of refugees or consideration for asylum dispersal areas. 26% suggested the impact of welfare policy, including Local Housing Allowance (LHA) rates or the number of families impacted by the Benefit Cap.

24. Other suggestions included: poverty or deprivation indicators, TA numbers (either solely, or by type of TA/duration of stay), other level of stock (either TA, social or affordable housing), numbers of out of borough placements (either as a receiving or placing authority), and varied suggestions relating to H-CLIC numbers (including all approaches, acceptances, household sizes and prevalence of complex needs). This list of suggestions is not exhaustive.

Question 5: Of our proposed options in relation to missing data, which is your first preference? Please explain why.

Option 1:

• Distribute the data to local authorities with missing data using their percentage share of a 3-year average of historic TA spend
• If historic TA spend is not available for a given local authority, instead calculate their share using a population-weighted ACA
• The data is then distributed using either of these shares and is adjusted using a missing data multiplier of 0.75

Option 2:

• Allocate the data to local authorities with missing data using their percentage share of population weighted area cost adjustment (ACA)
• The data is then distributed using these shares and is adjusted using a missing data multiplier of 0.75

Answers	Number of Responses	Percentage
Option 1	26	16%
Option 2	53	33%
Not Sure	30	19%
Indifferent	20	32%
Neither	18	11%

25. There were 159 responses to Question 5. The responses were mixed. A large number (around a third) of responses were in favour of Option 2 but just over half of respondents were either not sure or indifferent. A small minority (around a sixth) of responses favoured Option 1.

26. Reasons given for favouring Option 1 included: fairer/accounts for costs better (10%). Reasons for disagreeing with Option 1 included: uses historic or inaccurate data through RO4 (11%), unfair/doesn’t account for costs well (4%). Reasons for agreeing with Option 2 included: fairer/account for costs better (14%). Reasons for disagreeing with Option 2 included: Doesn’t account for costs well (11%). 11% of respondents disagreed with the 0.75 adjustment aiming to ensure that local authorities do not gain in the formula as a result of incomplete H-CLIC data, whereas 5% noted that they would be in favour of a 0.75 adjustment.

Question 6: Do these data sources (homelessness case acceptances, prevention and relief cases discharged into the private rented sector (PRS), lower quartile rents of 2-bedroom properties in the PRS) represent an accurate reflection of homelessness pressures? Please explain why.

Answers	Number of Responses	Percentage
Yes	20	13%
No	54	34%
Partially	69	43%
Not Sure	16	10%

27. There were 159 responses to this question. Responses were mixed on whether they felt that these data sources were an accurate reflection of homelessness pressures. A significant number (43%) of respondents felt that they partially reflect homelessness pressures, while around 1 in 3 felt that the data sources were not an accurate reflection of pressures.

28. The reasons given as to why data sources were an inaccurate reflection of pressures is as follows. 49% felt that at least one dataset was unfair or did not reflect costs well, and 61% indicated that other datasets should be included. Particular concern was raised regarding the use of ‘prevention and relief cases which ended in a PRS tenancy’ – respondents felt that this metric either did not fund areas with high access to social housing (18% of respondents), restricted funding for areas where securing PRS accommodation is more challenging (23% of respondents) or restricted funding for upstream intervention (42% of respondents). 18% felt that using ‘homelessness case acceptances’ (i.e. main duty cases) failed to account for other cases or approaches and 11% felt that this data source was not incentivising upstream prevention or could incentivise perverse behaviour. 11% of local authorities wanted to see a different data set used for rents.

Question 7: Do you have any alternative suggestions for data sources that could be used as indicators of homelessness pressures in the formula? Please explain why.

29. 130 responses were received for Question 7. Responses were highly varied. 25% of respondents felt that the availability of PRS stock should be used as an indicator of homelessness pressures. 25% recommended using a more nuanced rental metric – some suggested more emphasis on rents, rental growth over time or rent relative to income. 12% recommended social housing waiting lists or stock.

30. Many responses focused on various affordability metrics as an indicator of homeless pressures - including general housing affordability data (21%), welfare metrics including LHA rates in comparison with housing costs or the number of households affected by the Benefit Cap (21%), deprivation or poverty indicators (15%), population incomes (13%).

31. Some responses felt that other H-CLIC data would be a useful indicator of homelessness pressures – including all approaches (19%), all acceptances (17%), prevention cases (18%), or successful outcomes (17%). 15% of responses recommended using upstream or early intervention (pre-H-CLIC metrics) but were not specific on how this should be captured. Other suggestions included: house prices, unemployment data, DHP applications, supported housing stock, refugee numbers/asylum dispersal areas, length of stay in TA, evictions data. This list is not exhaustive.

Key themes from roundtables

32. Feedback received during roundtables was varied. Many local authorities expressed concern around wider homelessness pressures due to external demand and multiple coinciding factors that are currently having an impact on the housing market. The Department has noted wider points raised during the consultation. However, the key themes outlined in this response, relate to those that were raised in relation to the consultation questions.

33. Key themes included a general preference for using the most recent data available and caution around using data covering COVID lockdown periods. There was consistent feedback that high numbers of families in receipt of welfare support and availability of local housing stock (private and/or social), combined with relative rent levels, were key contributing factors towards relative TA pressures across local areas.

34. Overall, there was more of a tendency for attendees to prefer Option 1 over Option 2 for replacing TAMF, largely due to Option 1 being the option more directly linked to homelessness, and ONS/ACA population data being less directly applicable to homelessness and potentially less frequently updated. Some attendees noted the possibility of RO4 being unrepresentative or inaccurate and suggested that local authorities should have the opportunity to review and correct historic returns moving forward. A number of attendees expressed concern around updating allocations at a time of economic uncertainty. Other attendees welcomed the proposals due to the prospect of more recent increases in pressures being reflected in allocations.

Government response

35. We have considered the feedback from the consultation carefully, relative to our objective of amending the HPG funding formula so that it more accurately reflects current pressures. Our response to the feedback relevant to updating the formula is as follows.

Combining the HRG and HRA elements

36. Our proposal to combine the HRG elements with HRA uplift of the formula was popular among respondents, given that this will simplify the overall formula without having a significant impact on overall allocations. As this will avoid the complexity of using different formulas unnecessarily, we have decided to proceed with this approach.

Expanding the Area Cost Adjustment

37. The majority of consultation respondents supported our proposal to apply an overall ACA in the £110m element of the formula, to account for areas where it is more difficult to prevent homelessness due to high costs and acute housing market pressures. Some respondents raised that the ACA does not directly reflect homelessness pressures, as it relates to overall local authority expenditure (rather than homelessness specific expenditure) and that it reflects the costs of delivering in-person services (accounting for travel time, etc) which is less applicable to homelessness service delivery. However, although not specific to homelessness, the ACA correlates broadly with areas with higher homelessness pressures, and it benefits areas with overall higher costs and wages. Therefore, we have decided to proceed with expanding the use of an ACA, to better reflect difficulties in preventing homelessness in areas with high costs and relative wages, in a way that is challenging to capture through other datasets.

38. Some London boroughs expressed concern about the use of an ACA and that it benefitted inner London boroughs at the expense of outer London boroughs. In response to this and the fact that London boroughs are in close proximity to one another and have particularly strong transport links between them, meaning it is common to secure accommodation in neighbouring boroughs and employ staff from the London-wide labour market, we have decided to apply the London-wide average ACA for London boroughs.

Replacement of TAMF

39. TAMF replacement Option 2 (using, population, income, deprivation and overall local authority spend data) was significantly preferred over Option 1 (using historic 3-year average TA spend data) among written responses. However, this was not generally reflected in the roundtables, where there was a preferred tendency toward Option 1. We have considered the arguments for and against each option, including those responses which suggested ‘rolling over’ allocations for another year, in favour of a longer-term review.

40. While option 2 has the benefit of not using TA spend or numbers, and therefore eliminates the risk of ‘incentivising’ use of TA, discussions through the consultation have affirmed our view that the costs of TA are such that in practice it is highly unlikely that any local authority would increase use of TA in order to gain more funding in future years. Furthermore, Option 1 is likely to more accurately reflect TA pressures, as opposed to Option 2 as we consider TA spend to be a more direct measure of TA cost as opposed to general population numbers, and that the Area Cost Adjustment datasets are sufficiently represented elsewhere in the formula. Some respondents suggested using TA numbers, rather than TA spend, however, we consider that TA spend is a more accurate representation of actual cost and how this varies across different areas, as opposed to TA numbers. For these reasons, we have made the decision to proceed with Option 1 for replacing TAMF within the formula. We believe this option is a more direct reflection of TA spend when compared to the alternative suggestions raised as metrics for TA pressures and will therefore more accurately fund local authorities based on the level of pressure faced.

41. Some respondents raised concern around using a 3-year historic average to predict spend, and suggested we use a shorter time period. However, our view is that using a 3-year average mitigates against perverse reporting incentives and also helps to mitigate against short-term anomalies causing significant changes to allocations. Some respondents also suggested that we use projections rather than historic spend. However, these suggestions often related to the prediction of overall homelessness pressures rather than the distribution of the fund. It is also likely that any projection to predict proportional pressures would largely be based on historic data in any case. We have therefore decided to retain the approach of using a 3-year historic spend TA spend share, as set out in Option 1.

42. Some respondents raised concerns that the RO4 dataset under Option 1 would not accurately represent the spend of their authority – for example, where an local authority might not have fed into the RO4 return. To mitigate this, where it is clear that an authority has missing RO4 data for a certain year (e.g., where the TA spend value has been reported to be £0), we will instead use an average across the years where RO4 data is available for that authority.

Approach to missing data

43. For the same reasons as for the TAMF replacement – i.e., that we consider TA spend data to be a more direct reflection of pressures than a population-weighted ACA - we have decided to proceed with Option 1 for the approach to missing H-CLIC data in the formula. This means that historic TA spend (RO4) data will be used in the first instance where H-CLIC data is missing, and a population-weighted ACA will only be used where both H-CLIC and RO4 data is unavailable.

Other datasets for homelessness pressures

44. We have taken account of the feedback that was received in regard to the other homelessness metrics used in the formula - including concerns that focusing solely on discharges into the PRS does not apportion funding based on discharges into other tenures, and that the focus on ‘homelessness case (i.e., main duty) acceptances’ does not focus funding on earlier stage interventions, such as the statutory prevention and relief duties. Taking this into account, we have decided to change the ‘homelessness case acceptances’ metric to encompass all prevention and relief cases. This will mean allocations take account of prevention and relief work, rather than solely focusing on those cases that have progressed to the main housing duty.

45. We have decided to retain the metric of ‘prevention and relief cases discharged into the PRS’ because we feel that it is justifiable to apportion additional funding to those who are required to make greater use of the PRS to resolve homelessness in their area, given this is a particularly expensive method of homelessness intervention. As well as those who have been supported to move into a new PRS tenancy, this metric also includes those who have been supported to retain accommodation in the PRS, which is an effective prevention intervention that the Department is keen to ensure that authorities are supported to deliver.

46. We also considered feedback that some respondents would like to see a different dataset used for rents, and feedback that out-of-borough placements should be considered. In response, we have decided to use the London-wide average figure to calculate rents in London. We have decided to make this change to reflect the fact that London boroughs are in close proximity to one another and have particularly strong transport links between them, this means that the geographical scope of suitable accommodation is broader, and out-of-borough placements (for both TA and settled accommodation) are more common.

Other points raised

47. We recognise that the feedback on our proposals for the formula was mixed, there was not a clear consensus and that a number of respondents have called for the changes to be paused in favour of a longer-term review of the funding formula. We intend to progress with updating the formula as set out above, as we consider it more accurately reflects the distribution of homelessness pressures than continuing to draw on an outdated metric. However, we commit to review the formula, including additional datasets and metrics that could be incorporated into the formula to further reflect relative pressures and affordability. This will be completed before we set allocations for 2025/26.

48. We also considered feedback that this is a particularly uncertain time, with some suggesting that the redistribution of funding should not happen at a time of economic uncertainty. However, our view is that, given the current economical context and pressures on authorities, it is important that funding reflects the current distribution of pressures – and therefore we should update the formula to remove the outdated metric of TAMF, to ensure that funding is broadly allocated according to current need. We also considered that, in order to realise the benefits of a multi-year settlement to authorities, we would need to proceed with updating the formula this year so that we can confirm 2 years’ worth of allocations for local authorities. Our proposal to introduce transitional arrangements, as outlined below, will help to mitigate significant changes in the short-term.

2. Transitional arrangements

Consultation responses (written)

Question 8: Do you want to see transitional arrangements introduced for 23/24 FY?

Answers	Number of Responses	Percentage
Yes	108	70%
No	24	15%
Indifferent	9	6%
Not Sure	14	9%

49. 155 responses were received for Question 8. The majority of respondents (7 in 10) were in favour of transitional arrangements for 2023/24 financial year while just over 1 in 6 disagreed with the proposal, and just over 1 in 6 were either indifferent to, or unsure of, the proposal.

Question 9: Do you want to see transitional arrangements introduced for 24/25 FY?

Answers	Number of Responses	Percentage
Yes	106	69%
No	24	16%
Indifferent	11	7%
Not Sure	13	8%

50. There were 154 responses to this question. The majority of respondents (nearly 7 in 10) were in favour of transitional arrangements for the 24/25 financial year, while just under 1 in 6 disagreed with the proposal, and slightly less were either unsure or indifferent to the proposal.

Question 10: What percentage cap would you prefer to see?

Answers	Number of Responses	Percentage
5% change in 23-24 and 10% change in 24/25 as proposed	48	31%
2% each year	24	15%
5% each year	15	10%
10% each year	8	5%
20% each year	6	4%
None	20	13%
Indifferent	7	4%
Other	11	7%
Not Sure	18	11%

51. There were 157 responses to Question 10. Just under a third of respondents indicated they would like to see a cap of 5% change in 2023/24 and 10% change in 2024/25, assuming that transitional arrangements were introduced. A further 28% of respondents indicated they would prefer to see either 2% caps each year or no caps each year. Just under 1 in 6 respondents were either indifferent or not sure.

Question 11: Please explain the reasons for your answers to the questions in this chapter and provide any other thoughts or comments on this proposal.

52. There were 157 responses to this question. 44% of respondents noted that the transitional period would give more time to plan services and maintain delivery, and 10% of respondents described the proposed arrangements as ‘fair’. 10% of respondents argued for the need for a longer, more gradual transitional period. 28% of respondents noted that transitional arrangements would mean it would take too long to deliver actual allocations to local authorities that would be due to receive an uplift.

Question 12: Do you agree that funding allocations for 2023-24 and 2023-25 should be announced this year, providing the earliest funding certainty possible? Please explain why.  

Answers	Number of Responses	Percentage
Yes	129	80%
No	9	6%
Not Sure	18	11%
Indifferent	6	4%

53. There were 162 responses to this question. 4 in 5 respondents agreed with our proposal to announce a 2-year settlement. Reasons given included: the ability to plan and commission, or deliver, services (69%) and improvements in staff retention or recruitment (25%).

54. Around 1 in 17 respondents said that they would not prefer a multi-year settlement. Concerns around a multi-year settlement included: the formula could become out of date (15% of total respondents) and concern that this could restrict the ability for government to uplift funding where necessary (20%). 12% of respondents felt that indicative allocations should be released for the 2nd year, alongside more fundamental review of the formula in 2023.

Key themes from roundtables

55. Attendees were generally in favour of transitional arrangements in principle, however some found this difficult to answer without knowing their confirmed allocation, and some attendees expressed concern around applying transitional arrangements where an local authority would otherwise receive a large increase in allocation. A number of attendees wanted more clarity on the position after 2025.

56. Attendees were generally in favour of multi-year funding, and most agreed that certainty of funding outweighed the risk of funding distribution shifting significantly between years. A number of attendees agreed with multi-year funding, but with the caveat that DLUHC would be able to intervene to provide exceptional top-ups to the grant in exceptional circumstances.

Government response

57. We have carefully considered the responses received during the consultation concerning our objectives of introducing transitional arrangements to minimise the impact of changes in allocations following a refreshed formula, and announcing both 2023/24 and 2024/25 allocations to give early certainty to local authorities over the next 2 years, allowing for more strategic planning of services and staffing.

Transitional arrangements

58. We have considered the feedback both for and against capping funding changes in the short-term, and also considered some alternate approaches to this measure. However, we consider that the importance of providing stability to local services and mitigating against significant financial decreases in the short-term outweighs the benefit of allowing significant increases to be realised in the short-term. We have therefore decided to prevent any authority from having a cash loss from the previous year in their core allocation.

59. To enable this, we are increasing the funding by £3m in 2023/24 and £7.1m in 2024/25 and will be capping funding increases at 2% in 2023/24 and 5% in 2024/25. We think this is the fairest way to ensure a degree of continuity and we consider that those councils receiving larger increases would need time to plan for changes to their allocations.

Multi-year announcement

60. We have decided to proceed with announcing a multi-year settlement for 2023-25, as supported by the vast majority of respondents. We recognise the concerns that a multi-year settlement will prevent allocations from responding to a proportional change in demand between 2023 and 2024. However, we think it is unlikely that proportional pressures shift significantly enough between 2023/24 and 2024/25 to outweigh the benefits of a multi-year settlement.

3. Spend declarations

Consultation responses (written)

Question 13: To what extent do you feel confident that local authority homelessness teams would be able to provide a yearly spend declaration of HPG categorised under ‘prevention and relief’, ‘TA’ and ‘main duty/other’?

Answers	Number of Responses	Percentage
Very Confident	17	11%
Quite Confident	48	31%
Neutral	31	20%
Slightly Doubtful	30	19%
Very Doubtful	21	14%
Not Sure	8	5%

61. There were 155 responses to this question. Over 4 in 10 respondents felt either ‘quite confident’ or ‘very confident’ about their ability to report under the proposed categories. 1 in 5 respondents were neutral, and around 1 in 3 were either slightly or very doubtful about their ability to provide a yearly spend declaration as proposed.

Question 14: Please use this space to provide reasons for your answer and any further thoughts or comments on this proposal.

62. There were 155 responses to this question, just over half (51%) of which felt that a yearly spend declaration as set out would be a burden on services or staff or would take time away from service delivery. 25% of respondents felt it would overall be challenging to provide the spend declaration proposed and 12% felt that this change as proposed would need to lead-in time to change in IT systems. Specific concerns raised included the ability to separate staff into different types of spend according to the duty owed to the applicant, and the administrative effort that this would require (raised by 19% of respondents). 15% of respondents raised that the resulting data would not be useful or accurate, for example, due to discrepancies in local authority reporting, or HPG being internally collated with other funding streams.

Question 15: Would it be possible for local authorities to provide a more granular breakdown of spend than those proposed – for example, reporting the amount spent on staffing/incentive payments for a new tenancy/clearing rent arrears? Please explain why. 

Answers	Number of Responses	Percentage
Yes	46	29%
No	36	23%
Maybe	55	35%
Not Sure	19	12%

63. This question received 156 responses. The results were mixed – around 1 in 3 respondents felt that it might be feasible to provide a more granular breakdown of spend than those proposed, whilst a further 29% said that it would be possible. Other respondents were either not sure (12%) or felt that they were unable to provide a more detailed breakdown (23%).

64. 44% of the responses expressed concern that providing a more granular breakdown of spend than proposed would take time away from service delivery and/or would require additional resource. 16% felt this would be challenging to do, 13% felt that the increased reporting would need a lead-in time to change IT systems or to facilitate collection of information, and 6% felt this might lead to further inconsistency in reporting across local authorities. However, 15% felt this would be possible without additional resource, with some stating that more granular information is already collected by the LA.

65. Some suggested that it could be easier to report spend against more specific categories – such as staffing, or other granular payment areas such as incentive payments, as this is more likely to be collected already by the local authority and would mitigate the need to separate staff out ‘by duty’. Some noted that clearer definitions would improve the consistency of reporting across authorities.

Key themes from roundtables

66. A significant number of attendees felt that this proposal would be possible with lead in time, and some felt this data could be a useful benchmarking tool for authorities. However, many attendees raised concern that this proposal could constitute additional bureaucracy for authorities, and that sufficient data was already reported via H-CLIC to give DLUHC assurance that the grant was being used on its intended purpose. Particular concern was raised concerning the practicalities of being able to separate staff over various homelessness duties. Following consultation, an additional discussion was held with the Local Government Association and a small group of members, with the intention of establishing any new burdens on authorities. During this discussion, attendees raised further concerns around the impracticalities of collecting spend declarations for HPG without requesting spend declarations from other funding streams, especially in cases where HPG is collated with other funding streams prior to allocation on service delivery.

Government response

67. Whilst 42% of responses felt ‘quite confident’ or ‘very confident’ about their ability to report under the proposed categories, we considered the points put forward by those who felt that the proposed categories were too vague to facilitate accurate or meaningful reporting.

68. In light of the responses, we have decided to add a grant condition requiring authorities to report total spend for the financial year under the following categories, including how much HPG funded each:

• TA (actual TA costs and all administration/maintenance)
• Staffing (all homelessness staff irrespective of role, including training)
• Prevention or relief duty, across:
  • Incentive payment
  • Upfront costs (deposit / rent in advance)
  • Payment of arrears
  • Other prevention / relief spend (all other spend incurred during either the prevention or relief duty, including payments for household goods / storage / repairs / transport, also includes the commissioning of any service or scheme that would benefit households under the prevention or relief duty)
• Other spend (all other non-prevention, non-relief, non-TA and non-staffing spend. Would include upfront costs/incentive payments made during the main duty)

69. These slightly more granular categories should lessen the administrative burden on authorities, as separating ‘staffing’ out into various homelessness duties will not be required, and being more specific will improve the consistency of reporting across authorities.

70. We also considered feedback that solely reporting HPG would not allow authorities to demonstrate the ‘bigger picture’ of spend, and that reporting on HPG where total spend outweighs the value of allocation could lead to abstract reporting. We have therefore decided to amend the proposed condition to require reporting against total spend, including how much was funded by HPG across each category. Where HPG is collated with a larger pot prior to budget allocation, we will give the autonomy to authorities to decide how they want to report which intervention HPG funded. It would, for example, be acceptable to use a ratio estimate, by dividing up the HPG allocation across the total % spent across each category. We will provide further guidance alongside the grant determinations in 2023.

71. Following consultation, we conducted a new burdens assessment on this proposal in discussion with the Local Government Association and their members. Our assessment concluded that, as a result of post-consultation revisions to the categories and caveat around discretion around reporting where HPG is collated with other funding streams, the cost of meeting this new requirement will be negligible, and therefore is able to be met from core HPG allocations.

4. Tranche payments for H-CLIC

Consultation responses (written)

Question 16: What is your view on our proposal to introduce tranche payments in order to incentivise better H-CLIC data reporting?   

Answers	Number of Responses	Percentage
Strongly Agree	7	4%
Agree	31	19%
Neutral	31	19%
Disagree	40	25%
Strongly Disagree	47	30%
Not Sure	3	2%

72. There were 159 responses to this question. Over half (55%) of respondents either disagreed or strongly disagreed with the proposal, whilst just under a quarter (23%) either agreed or strongly agreed. Just over a fifth of respondents were either neutral or unsure.

Question 17: If we were to introduce tranche payments, what percentage of the funding would you recommend be released in tranche 2?

Answers	Number of Responses	Percentage
50%	12	8%
25%	30	19%
10%	11	7%
5%	8	5%
None	68	43%
Other	9	6%
Indifferent	10	6%
Not Sure	10	6%

73. There were 158 responses to this question. Responses to this question were mixed overall, with most respondents (43%) stating that they would rather see no tranche payments at all. Nearly one fifth of respondents indicated they would choose the recommended option - 25% - if tranche payments were introduced.

Question 18: What is your view on the proposed conditions – timely and publishable H-CLIC returns with full TA data - in order to receive tranche 2 of the grant?

Answers	Number of Responses	Percentage
Strongly Agree	10	6%
Agree	37	24%
Neutral	21	13%
Disagree	37	24%
Strongly Disagree	46	29%
Not Sure	6	4%

74. There were 157 responses to this question. Over half (53%) of respondents either disagreed or strongly disagreed with the proposed conditions. However, nearly a third (30%) of respondents either agreed or strongly agreed with the proposed conditions. The remainder of respondents (17%) were either not sure or neutral to the proposed conditions.

Question 19: Please explain the reasons for your answers to the questions in this chapter and provide any other thoughts or comments on this proposal.

75. There were 157 responses to this question. Reasons given in support of tranche payments included fairness (9%), driving better reporting (9%) or could be an effective incentive for local authorities to update their systems (5%).

76. Reasons given for opposition to tranche payments included potential negative outcomes relating to the impact of funding uncertainty – e.g. impact on staffing, service delivery, procurement or commissioning (41% of responses). 12% felt that the uncertainty of tranche payments could impact the services provided to homeless households, 15% felt there is no rationale to the intervention where local authorities already submit sufficient H-CLIC data, 18% felt that the conditions were unfair as technological infrastructure issues outside of the LA’s control could hinder H-CLIC data reporting, and 13% felt that the data collection targets introduced could be unrealistic or too hard to meet.

77. Some responses suggested alternatives to implementing tranche payments, such as providing more support to local authorities (20%) or only punishing ‘offending’ local authorities (11%).

Key themes from roundtables

78. Whilst some agreed with the proposal, most attendees generally disagreed with the use of tranche payments as a method of incentivising improved data collection. Some attendees encouraged DLUHC to engage with local authorities via the Homelessness Advice and Support Team (HAST) to improve the underlying causes of poor data submission. Some attendees asked that exceptional circumstances be considered, noting that poor submissions are sometimes outside of control of the authority.

Government response

79. We have carefully considered the feedback on our proposal to introduce tranche payments to drive higher performance in high quality, consistent H-CLIC reporting by local authorities.

80. We have reflected on the feedback that tranche payments undermine funding certainty for local authorities who are working hard to resolve homelessness in their areas. However, despite the mixed response to tranche payments, the issue still stands that over 3 years on from the introduction of H-CLIC - despite having received funding to implement new data systems - a small but nonetheless sizeable proportion of authorities fail to provide complete or accurate returns, or do not provide the returns on time. It is also important for authorities that H-CLIC submissions are returned accurately, as H-CLIC data will continue to be used substantially within the allocation formula.

81. Rather than introducing tranche payments, we have made the decision to include a grant condition that gives DLUHC the ability to deduct up to 10% of funding from 2024/25 payments where an local authority has not met the following conditions in relation to reporting for 2023/24, and where it is deemed appropriate to do so:

• has completed all H-CLIC returns due in the financial year, including full TA figures, and
• the data submitted is publishable, as defined by the fourth quality measure on the performance dashboard (please note, in order to assess whether data is publishable, DLUHC check that local authorities have signed off their quality assurance reports and, in some cases, ask the local authority to provide an explanation of large quarter on quarter changes. The published data quality measure is based on weighting for each section of data).

82. Our view is that introducing a grant condition, rather than tranche payments, will give authorities better certainty over their full funding amount, and reducing the penalty to ‘up to 10%’ will reduce risk of penalty impacting on the service given to homeless households.

83. In order to allow for exceptional circumstances, local authorities who have not met the specified conditions will have the ability to submit exceptional circumstances requests to DLUHC where an inability to meet these criteria is outside of the control of the authority, and where the authority can evidence demonstrable steps taken to rectify gaps in reporting adherence, which DLUHC may approve at its discretion. We will include further guidance on the conditions alongside the grant determination letter next year.

Conclusion and next steps

84. We set out to amend the HPG funding arrangements for HPG for 2023/24 onwards to better reflect current pressures, improve understanding of how the grant is used and improve the quality of homelessness data. To meet these objectives, we consulted on amending the funding formula, introducing transitional arrangements and multi-year funding, requiring yearly spending declarations, and introducing tranche payments for H-CLIC. In summation, having carefully reflected on responses received during the consultation, we have made the following decisions.

85. We will amend the funding formula by combining the HRG and HRA elements to avoid the complexity of using different formulas unnecessarily, and will expand the use of an ACA to account for areas where high costs make it difficult to prevent homelessness. In London, we will apply the London-average ACA and will do the same with the rents metric, to reflect the fact that London boroughs are in close proximity to one another, have particularly strong transport links between them, meaning the geographical scope of suitable accommodation is broader, and out-of-borough placements are more common.

86. We are replacing the old TAMF metric with replacement Option 1, 90% of historic TA spend. Regarding other datasets for homelessness pressures, we will change the ‘homelessness case acceptances’ metric to encompass all prevention and relief case, but we will retain the metric of ‘prevention and relief cases discharged into the PRS’ to account for greater use of the PRS and the use of the PRS as an effective prevention intervention.

87. We are proceeding with Option 1 for the approach to missing H-CLIC data in the formula, using historic TA spend or a population-weighted ACA where necessary.

88. We have announced a multi-year settlement for 2023-25. To minimise the impact of changes in allocations and give local authorities early certainty, we will ensure that no local authority receives a cash loss in their core funding allocation compared to the previous year and will cap funding increases at 2% in 2023/24 and 5% in 2024/25 as a transitional measure to give services time to adjust to the change.

89. Regarding spending declarations, we will add a grant condition requiring authorities to report total spend for the financial year under the categories of: TA (actual TA costs and all administration/maintenance); Staffing (all homelessness staff irrespective of role, including training); Prevention or relief duty across incentive payment, upfront costs (deposit / rent in advance), payment of arrears and ‘other prevention / relief spend’; and Other spend. We have also decided to require reporting against total spend, including how much was funded by HPG across each category where total spend outweighs the value of the HPG allocation.

90. We will not proceed with our proposal to introduce tranche payments, but will now include a grant condition that gives DLUHC the ability to deduct up to 10% of funding from 2024/25 payments where an local authority has not met H-CLIC requirements, but will take a discretionary approach to ensure that local authorities with extenuating circumstances are not unduly penalised.

91. We will continue to consider improvements that could be made to the formula in future and will review the formula again ahead of setting allocations for 2025/26.

92. We have announced local authority allocations alongside the publication of the response to this consultation.

93. The payment of 2023/24 allocations will be made to local authorities in April 2023. Changes to the grant conditions set out above will apply from FY 2023/24 and additional guidance on spend declarations and H-CLIC conditions will be provided alongside the grant determination.

94. DLUHC’s Homelessness Advice and Support Team (HAST) will continue to work with local authorities on the delivery of the Homeless Prevention Grant throughout 2023-25.