Councils spent almost £300m on private firms 'profiting from misery' of homelessness 5

Councils spent almost £300m on private firms ‘profiting from misery’ of homelessness

Councils have been accused of a “moral failure” to provide decent housing to homeless people and of overseeing a “fiscal disaster” as new figures reveal they spent over a quarter of a billion pounds on homeless accommodation provided by private companies and landlords. 

The figures, released under freedom of information legislation, reveal councils spent over £296m on private landlords and firms providing flats, B&B and hotel accommodation for homeless people over a five year period.

Campaigners said some of the temporary housing provided – which can cost more than £300 per week – could be “hell holes” of “Dickensian quality”. They claimed councils were allowing private landlords to “profit from people’s misery”.

Eight of the 28 councils who provided information to The Ferret reported increased spending on privately run accommodation from 1 April 2017 to the end of January 2022.

Figures were especially high during Covid-19 in some areas, which councils said was due to problems in moving people out of temporary flats and into permanent ones, meaning they had to rely heavily on hotels and homeless B&Bs. In total councils paid private firms and individuals almost £80m in 2020/21 alone.

Edinburgh City Council spent almost £24m on B&Bs in 20/21 and Glasgow City Council over £9m. Dundee City Council didn’t use B&Bs until 2019. But in 20/21 spend on hotels and B&Bs had increased to almost a quarter of a million.

Councils said they stepped in during the pandemic to ensure no-one was left on the streets. The move, recommended by the Everyone Home initiative, reportedly led to record lows in rough sleeping across Scotland, though the Scottish Government’s figures were disputed by some.

Homeless applications fell by nine per cent to 33,792 in 2020/21. Until that point they had been rising consistently since 2017/18.

In most Scottish cities councils pay for B&Bs and hotels that exclusively house homeless people. In other parts of the country some are also bookable by the public.

The practice has been repeatedly criticised by those living in the system, as well as homeless charities and researchers. Rooms are often cramped and ill-equipped, and have no cooking or laundry facilities. In some homeless B&Bs curfews are put on residents and guests are not allowed. 

Privately run hotels and B&Bs are not regulated by the Care Inspectorate and staff do not need any social care qualifications even though they are often working with vulnerable people struggling to cope with both drug and alcohol addiction.

In 2020 nine people died at the Alexander Thomson hotel in Glasgow, which was being used as homeless accommodation. It was closed but re-opened following refurbishment.

These are not the B&Bs you or I would book for a holiday, unless you want a holiday from hell.

Mike Dailly, solicitor advocate at Govan Law Centre.

In May 2020, following a recommendation by the Scottish Government’s Homeless and Rough Sleeping Action Group, the Scottish Government brought in rules to ensure councils could only house people in B&Bs for seven days. Exceptions to this rule during Covid-19 were lifted last September, but charities claim it is still routinely breached.

Despite this, a quarter of councils who responded had increased costs due to a growing reliance on B&Bs and hotels. 

Edinburgh City Council’s costs were by far the highest. In total it spent over £200m on privately run accommodation over the five years, almost £85m of which was on B&Bs and hotels. The rest was spent on privately owned flats.

It said its success in getting people off the streets in 2020 had been “incredible” but warned that figures were likely to rise still further due to the cost of living crisis.

Glasgow City Council spent a total of more than £26m on homeless B&Bs and hotels in total, more than £17m of which was over the last two years. It too said the figure reflected demand for accommodation during Covid-19.

Other councils where costs rose included West Lothian, where costs for homeless hotels and B&Bs topped £2m from April 2021 to February 2022.

Many councils’ costs were especially high in 2020/21. Argyll and Bute spent over £1.5milllion and Inverclyde Council more than £360,000, Renfrewshire Council’s bill topped £250,000 and Angus Council paid over £100,000 to owners of privately run hotels and B&Bs.

In Highland costs fell overall but by 2021/22 total costs had reached over £85,500. In other councils, such as North Lanarkshire and Aberdeenshire costs for private accommodation went down consistently over the five year period. 

Charities acknowledged that councils had worked hard to get people off the streets during Covid-19 but said the figures revealed a broken system. 

Gavin Yates, chief executive of Homeless Action Scotland, said: “B&B accommodation can make a useful contribution to people’s very short term housing needs. However, it’s clear that too often people are being dumped there long term.

“This is not just a moral failure to provide decent and permanent homes for people but a fiscal disaster too. All levels of government have failed to invest in social housing and we are now reaping what has been sown – a money pit of epic proportions.

“The upcoming elections will examine many issues but few can be quite as damning as the vast waste of valuable public money on what is frankly unsuitable accommodation.”

Shelter Scotland director Alison Watson said there was an “over reliance on poor quality, expensive, temporary accommodation” where people could spend months or even years, which she claimed could be “nothing short of traumatic”.

We need stronger standards to make sure temporary accommodation is truly fit for purpose - but more than that we need a real housing strategy to prevent homelessness.

Mark Griffin, Scottish Labour Housing Spokesperson.

Matt Downie of Crisis added: “We know how damaging spending long periods of time in temporary accommodation can be for someone’s mental health, as well as their personal relationships, and the impact can be particularly pronounced for children. Let’s be clear – a B&B is not a home.”

Both Shelter and Crisis said the figures showed the urgent need for greater investment in social housing across Scotland.

Campaigners in Glasgow claimed that the city’s spending was bad news for taxpayers as well as homeless people. 

Mike Dailly, solicitor advocate at Govan Law Centre, added: “These are not the B&Bs you or I would book for a holiday, unless you want a holiday from hell.

“In my experience as a Glasgow housing lawyer for almost 30 years, the private sector is ill-equipped to provide the kind of expert support that vulnerable people so desperately need – whether that's in terms of mental or physical health, addiction, or trauma support.

“Using B&B's in my opinion is worse than our old system of hostels. We abolished them  – rightly so as they were Dickensian and squalid – yet, B&Bs and homeless hotels are nothing better".

He claimed it was time for political leaders to “think creatively” about alternative ways to use public funding to provide high quality emergency accommodation, perhaps borrowing from the Scottish National Investment Bank. “We have a poverty of ambition and apathy of innovation in this city.” he added.

Natalie Logan-MacLean, chief executive of Sisco criminal justice charity, said that too many of the city’s B&Bs were still “hell holes” and especially unsuitable for people struggling with addiction and mental health issues or newly released from prison.

“They are often poorly managed, money-making machines,” she added. “They do not offer therapeutic support. They are being allowed to profit from people’s misery.”

Scottish Labour Housing spokesperson Mark Griffin said the “astonishing sums” showed the financial cost of the government's “failed” housing policy. He added: “The human cost is far greater. 

"Across Scotland families are being left stranded in unsuitable temporary accommodation for months on end, and now it emerges we are paying millions for the privilege. 

"We need stronger standards to make sure temporary accommodation is truly fit for purpose - but more than that we need a real housing strategy to prevent homelessness.”

Many councils said their aim was to reduce their reliance on B&Bs and claimed that current pressures on budgets made this challenging. 

An Edinburgh City Council spokesperson said: “Our number one priority has always been to help everyone who needs a safe place to stay. We plan to reduce our use of B&Bs but the reality is, the financial impact of Covid on the council and on households will continue to be felt for years to come.”

A spokesperson for Dundee City Council added:  “The Covid-19 pandemic has had a significant impact on homelessness and the demand for temporary accommodation. 

“We have made strenuous efforts to limit the use of B&Bs and will only use this type of accommodation as an absolute last resort. We will always prioritise a move to suitable temporary accommodation within seven days.”

Others said they made sure additional support was on offer. A spokesperson for Glasgow City Council added: “Those who are accommodated in a B&B or hotel receive support from caseworkers and our homelessness team liaises directly with the accommodation operators on a regular basis to ensure support is available to residents placed there.”

Several said they were working on longer term solutions. A spokesperson for West Lothian Council said: “We work in a number of ways to try and address the issue, including building more new homes for rent, working with our register social landlord partners to make best use of accommodation, and working with people who are at risk of becoming homeless to look at their housing options.

“Plans are also underway for an additional accommodation facility for homeless young people to reduce the need for hotels and B&Bs in the future.”

A Scottish Government spokesperson said it was up to each local authority “to make decisions about the amount they choose to allocate to homelessness services on the basis of local needs and ensuring they fulfil statutory obligations”.

It has committed £52.5 million to help councils with implementing plans for rapid rehousing and Housing First, which are both aimed at providing people with more secure accommodation.

Photo Credit: iStock/txking

This story was co-published with the Sunday National.

*This piece was updated to give current figures on homeless applications.

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