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In 2024, MHCLG did a bottom-up first principles review of the Homelessness Prevention Grant (HPG) formula to look at different ways to capture and represent homelessness pressures to fairly reflect need in the distribution of funding.Ìý

The consultation closed on 11 March 2025 and 189 responses were received in total. The aim of the consultation was to ensure the updated formula accurately reflects homelessness costs and pressures, avoids unintended consequences and is future proofed for the long-term. 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 update the funding arrangements for the Homelessness Prevention Grant from 2026-27 onwards.ÌýÌý

From 2026-27, MHCLG is also planning reform of the wider local government finance system. The objectives and principles of these changes were consulted on from December 2024 to February 2025. This will provide local authorities (LAs) with more flexibility to meet the needs of local people, and to decide how best to deliver on our national priorities. On June 20, the government launched a consultation on local authority funding reform which can be found at The Fair Funding Review 2.0.

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To develop the proposals for the consultation, we explored a wide variety of different metrics and approaches. We worked closely with a Reference Group to test our analysis and provide critical challenge on whether it accurately captured the realities on the ground. The HPG Review Reference Group was comprised of an independent academic and 15 LAs representing a cross-section of the different types, tiers and regions in England. This group provided extensive insight, challenge and feedback on the department’s proposals throughout the development process.Ìý

Details of how to respond to the consultation were published on the ÌìÃÀÓ°Ôº website, the Local Government Bulletin, and an email was sent to LAs’ homelessness leads and other interested stakeholders to make them aware of the consultation. This consultation was open to everyone, but of particular interest to LAs and any organisations involved in homelessness assessments and third sector organisations with an interest in homelessness. As part of the consultation, the department hosted five online events to help inform LAs on our proposals and gather feedback.ÌýÌý

This consultation gathered views on the approach to the funding arrangements for the Homelessness Prevention Grant for 2026-27 onwards. The consultation comprised of 16 questions. All questions asked for a standardised response and the majority of the questions were also set up with a free text option in which respondents could provide reasons and context for their answers. All written responses were analysed to identify common themes and coded to help inform our analysis. We gave online and written responses equal weight when responding to this consultation. We have analysed the suggestions that were provided on alternative metrics, to consider whether they are effective measures of relative homelessness demand and cost pressures that could be used in the HPG ´Ú´Ç°ù³¾³Ü±ô²¹.Ìý

Overview of consultation responsesÌýÌý

We received 189 responses on proposed new funding arrangements. The majority of these responses were contributed by LAs, with some responses from members of the public, MPs and representative bodies. The exact number of responses per question varies, as many respondents answered some questions, but not others.Ìý

This response covers all of the consultation questions categorised into four sections.

• Metrics in the formula: the proposed metrics to capture relative demand and costs of homelessness pressures. This includes measures of prevention and relief activity demand, Temporary Accommodation (TA) demand, prevention and relief activity costs and TA ³¦´Ç²õ³Ù²õ.Ìý

• Approach to missing data: where relevant, how we calculate allocations where data points may be missing.Ìý

• Funding proportions: the proposed proportion of the HPG funding pot that is allocated to the different metrics in the ´Ú´Ç°ù³¾³Ü±ô²¹.Ìý

• Transitional arrangements: the approach to managing changes in local authority funding allocations as a result of changes to the ´Ú´Ç°ù³¾³Ü±ô²¹.Ìý

We aimed to develop a formula that:Ìý

• reflects relative homelessness costs: making sure the formula accurately reflects factors that contribute to homelessness costs and the relative expense across different areas (for example, capturing that it may cost more to provide TA and homelessness services in one area compared to another)

• fairly reflects demand: making the calculation of funding need reflects demand across England. Demand captures both existing homelessness pressures, for example numbers in TA, and new pressures, e.g., people making homelessness applications and associated prevention/relief activity

• avoids unintended consequences: making sure the formula does not inadvertently create any unintended consequences e.g. a system and culture that incentivises the use of TA at the expense of prevention activity

• is future proof for the long term: making sure the formula is agile and can be responsive to changes in local conditions and national policy. This requires also balancing the need for funding certainty by avoiding overly volatile metrics in the formula.

Overall, responses to the consultation demonstrated broad support for the majority of proposed changes to the HPG funding formula. Following the consultation, we intend to make two changes to the proposed formula, how homelessness demand is measured in the formula (Question 1) and how homelessness costs are reflected for London boroughs (Question 5).Ìý

Respondents generally supported the proposed metrics on homelessness demand and costs, although some concerns were raised about capturing the full range of homelessness pressures.ÌýÌý

There was some support for using Housing Benefit plus Universal Credit (HB plus UC) claimants to reflect homelessness demand, however a significant number of responses stated that this did not fully capture homelessness pressures from households that are working and not in receipt of benefits. Based on this feedback we will amend the formula by introducing a new metric to capture working households owed a homelessness duty, alongside the existing metric on the number of HB plus UC claimants. Responses supported the use of Mean Rents in the Private Rented Sector (PRS), alongside a labour cost adjustment (LCA) to measure homelessness ³¦´Ç²õ³Ù²õ.Ìý

Views on the approach to TA costs were more mixed, with many responses pointing out that mean PRS rents are much lower than TA costs, and therefore the formula will underestimate the total cost of TA. However, it is not our intention that the formula should estimate total TA pressures, given that many other sources of funding such as the TA subsidy and local government settlement will continue to fund TA in part. The purpose of the use of the PRS rents metrics is to capture the relative difference in percentage terms of providing TA across different parts of the country. There was recognition that the metric serves this purpose relatively well. Based on the responses to the consultation and our policy development with the LA Reference Group, our position is that mean rents in the PRS remains the best proxy available and is preferable over the current LA Spend Declarations (RO4) expenditure metric^{[footnote 1]}.ÌýÌýÌý

Responses supported the proposed approach to missing data, and transitional arrangements. Responses were varied on the funding proportion to assign between TA and prevention and relief, and between labour and rent costs. We intend to maintain the proposed funding proportions for illustrative purposes at this stage. Final decisions will be taken later this year when budgets are confirmed, considering the amount of funding available and taking account of the consultation feedback.ÌýÌý

An illustration of proposed formula is in figure 1. The detailed analysis of consultation feedback and the government response are set out in the following sections.ÌýÌý

1. Proposed Metrics for the New FormulaÌýÌý

The consultation proposed using the following metrics in the new HPG formula to ensure that measures are most reflective of relative homelessness pressures.Ìý

• Homelessness demand: Our proposal was to measure this through ‘total Housing Benefit plus Universal Credit claimants’.Ìý

• Temporary Accommodation (TA) demand: Our proposal was to measure this through ‘TA numbers’.Ìý

• Homelessness costs: Our proposal was to measure this through ‘mean rents in the PRS’ alongside a ‘labour cost adjustment’ (LCA).Ìý

• TA costs: Our proposal was to measure this through ‘mean rents in the PRS’.Ìý

A. Homelessness DemandÌý

In our new formula, we proposed using ‘total Housing Benefit (HB) plus Universal Credit (UC) claimants’ to capture homelessness demand. Our proposal was to use an average over the last available 12 months of data from DWP published caseload records, to ensure allocations are reflective of the most recent pressures and not based on a single snapshot in time.Ìý

Using HB plus UC instead of Homelessness Case Level Collection (H-CLIC) data on ‘homelessness duties owed’ improves the consistency, objectivity, simplicity and data quality of metrics in the formula. Overall, our analysis has shown HB plus UC to be a strong indicator of homelessness demand – reflecting both homelessness cases and wider deprivation (a determinant of those at risk of homelessness).Ìý

Question 1: Do you agree with the proposal to use ‘total Housing Benefit (HB) + Universal Credit (UC) claimants’ as a measure of homelessness demand?Ìý

Answers	Number of Responses	Percentage
Yes	65	34%
No	98	52%
Indifferent	20	11%
Not Answered	6	3%

(unless stated otherwise, percentages have been rounded to the nearest per cent)Ìý

The consultation responses indicated mixed views on the proposed approach. 34% of respondents agreed with the proposal, while 52% disagreed, 11% were indifferent, and 3% did not provide a response.Ìý

Analysis of the free text feedback indicates that approximately half of responses suggest that using metrics on benefit claimants may not fully reflect the causes of homelessness, noting that individuals can become homeless without claiming benefits. Of these responses, approximately 1 in 3 comments specifically mentioned that we have not accounted for working people becoming homelessness.ÌýÌý

Our analysis found that the proposed metrics on total number of HB + UC claimants remains the most robust and consistently available single proxy for homelessness need at a national level, although we recognised it may have limitations, particularly in higher-cost regions. In particular, we found that the proportion of duties owed to working households compared to non-working households varies considerably across different regions, and as a result the use of the HB + UC metric may disadvantage LAs where a high proportion of duties are owed to household who are not eligible for benefits.Ìý

In addition, some of responses to Question 1 indicated a preference for using H-CLIC Prevention and Relief data (P&R) to capture homelessness demand. We have decided not to replace the HB plus UC claimant metric with total duties owed as it risks perverse incentives, as stated in the consultation.Ìý Also, we understand that H-CLIC data may be influenced by variations in local authority capacity, rather than underlying need, which could introduce inconsistencies. It is important to note that the HB plus UC metric captures opportunities for early prevention, including people who may be at a higher risk of homelessness before the 56-day prevention duty begins, therefore ensuring that LAs are not disadvantaged for undertaking proactive early intervention.Ìý

In response to the consultation, we have decided to amend our approach. Instead of only using HB plus UC claimant data to capture homelessness demand, we will include the number of prevention and relief duties owed to Households where the lead applicant is in full or part time employment. This adjustment ensures that the formula better captures homelessness pressures linked to affordability challenges, including among those who are in work.Ìý

Following analysis of H-CLIC data on the proportion of households owed a homelessness duty who are in work, we concluded that a 75:25 weighting between existing HB plus UC claimant measure and the new working households measure strikes the right balance. This approach moderately shifts funding towards areas with higher working homelessness pressures, while limiting the financial impact on cities where levels of worklessness remain higher.Ìý

Approximately a quarter of respondents raised concerns that the approach may not account for particular cohorts or key groups, for example people leaving Home Office funded accommodation. However, we have decided not to include anything specific to this cohort as the distribution of demand is likely to vary over the course of the next spending period and therefore hinder the future proofing of the funding ´Ú´Ç°ù³¾³Ü±ô²¹.ÌýÌý

Having carefully considered the feedback and further analysis, we will proceed with the introduction of an 75/25 split between the HB plus UC claimant metric and a new working households metric to measure homelessness demand.

B. TA DemandÌý

When developing the formula, we found that TA numbers have a strong correlation with historic TA spend. Likewise, historic TA numbers were also found to highly correlate with current TA numbers, indicating it is a good approximation of TA demand.ÌýÌý

Therefore, in the consultation, we proposed using ‘TA numbers’ to capture TA demand. Our proposal was to use LA H-CLIC data on TA, taking the average of all available quarters in the last year. This would ensure allocations are based on recent data and on average pressures, instead of a snapshot in time.Ìý

Question 2: Do you agree with the proposal to use ‘TA Numbers’ as a measure of TA demand?Ìý

Answers	Number of Responses	Percentage
Yes	118	62%
No	47	25%
Indifferent	19	10%
Not Answered	5	3%

The majority of respondents (62%) agreed with the proposal to use TA numbers as a measure of TA demand, while 25% disagreed, 10% were indifferent, and 3% did not provide a response.Ìý

A key theme from respondents who disagreed with the metric was a concern that it rewards LAs with high TA use and creates a perverse incentive. However, as HPG is not intended to meet all TA costs and LAs also have to draw on their general fund to meet TA costs, we are satisfied there is a strong incentive to prevent homelessness and reduce use of TA wherever possible.Ìý

Having carefully considered the responses received, we will proceed with the proposal to use ‘TA Numbers’ as a measure of TA demand.

C. Homelessness CostsÌý

We proposed using ‘mean rents in the PRS’ with a ‘labour cost adjustment’ (LCA) to capture homelessness costs. Our proposal was to use the latest annual Office for National Statistics publication on PRS rents based on Valuation Office Agency data and the latest available MHCLG LCA estimate.Ìý

Question 3: Do you agree with the proposal to use ‘mean rents in the PRS’ as a measure of homelessness costs?Ìý

Answers	Number of Responses	Percentage
Yes	95	50%
No	56	30%
Indifferent	33	17%
Not Answered	5	3%

The responses indicated broad support for the proposal to use mean rents in the PRS as a measure of homelessness costs. 50% of respondents agreed with the proposal, while 30% disagreed, 17% were indifferent, and 3% did not provide a response.ÌýÌý

Our analysis of the responses shows a general recognition that rental costs are a key driver of both homelessness pressures and the cost of preventing and relieving homelessness.ÌýÌý

Of the responses which did not support our proposals, a significant number suggested that using mean rents in the PRS does not capture a broader range of high-cost homelessness accommodation costs. Whilst homelessness costs are often higher than average PRS rents, the intention of including this metric is to reflect the difference in homelessness costs between areas, rather than capture the total costs. Our analysis has shown that PRS rents to be the best available dataset that closely aligns with homelessness service ³¦´Ç²õ³Ù²õ.Ìý

Having carefully considered the responses received, we will proceed with the proposal to use mean PRS rents as the measure of homelessness costs.Ìý

Question 4: Do you agree with the proposal to use the ‘labour cost adjustment’ as a measure of homelessness costs?Ìý

Answers	Number of Responses	Percentage
Yes	102	54%
No	41	22%
Indifferent	40	21%
Not Answered	6	3%

There was clear support for the proposal to use a LCA as a measure of homelessness costs. 54% of respondents agreed with the proposal, compared to 22% disagreed, 21% were indifferent, and 3% did not provide a response.Ìý

Respondents recognised that staffing costs represent a significant proportion of the costs incurred by LAs in delivering homelessness services. The use of LCA was therefore considered a practical and appropriate means to reflect regional differences in service delivery costs across the country.Ìý

While some concerns were noted regarding potential variation in labour costs between LAs, the majority view supported the need to account for differences in wage costs through a standardised and nationally consistent adjustment mechanism.Ìý

Having carefully considered the responses received, we will proceed with the proposal to use the labour costs adjustment as a measure of homelessness costs.

Question 5: If your LA is located within London, do you agree with the proposal to apply ‘average costs for London’?Ìý

Answers	Number of Responses	Percentage
Yes	11	6%
No	11	6%
Indifferent	5	3%
Our LA is not located within London/ Not Answered	162	86%

AnswersÌý (London only)	Number of Responses	Percentage
Yes	11	41%
No	11	41%
Indifferent	5	19%

Recognising that this question was only directly relevant to London-based LAs, we further narrowed the analysis to focus solely on respondents from London. Among this group, the responses were evenly split on the proposal to apply an average cost adjustment for London, with 41% agreeing, 41% disagreeing, and 19% indicating they were indifferent.Ìý

Of those who responded no to question 5, a significant majority suggested having more than one scale in London for the labour cost adjustment, whilst fewer comments related to the rent element.ÌýÌýÌý Inner London LAs pay more than outer London, reflecting the higher commuting costs in inner London so using a London-wide average disadvantages inner London, thus a more nuanced approach may be needed to adjust for labour costs in inner and outer London.ÌýÌý

Recognising that staffing costs can vary between inner and outer London boroughs, we intend to use the inner London average for inner London LAs and outer London average for outer London LAs in the formula. We will retain a London-wide average for the rents metric across London in line with feedback received in the consultation.Ìý

This adjustment will ensure greater accuracy in reflecting variations in service delivery costs across London, while maintaining consistency and fairness within the overall funding formula.Ìý

D. TA CostsÌý

In our new formula, we propose using ‘mean rents in the PRS’ to capture TA costs. Our proposal is to use the latest annual Office for National Statistics publication on PRS rents based on Valuation Office Agency data. Rents are closely associated with the cost of TA, so ‘mean’ are our best available metric to capture differences in TA ³¦´Ç²õ³Ù²õ.Ìý

Question 6: Do you agree with the proposal to use ‘mean rents in the PRS’ as a measure of TA costs?Ìý

Answers	Number of Responses	Percentage
Yes	68	36%
No	89	47%
Indifferent	25	13%
Not Answered	7	4%

The consultation responses indicated mixed views on the proposed approach. 36% of respondents agreed with the proposal to use mean rents in the PRS as a measure of TA costs, while 47% disagreed, 13% were indifferent, and 4% did not provide a response. Significantly, approximately half of respondents noted that the cost of more expensive forms of TA, such as nightly paid accommodation, is not captured by using mean rents.ÌýÌýÌý

Whilst we recognise the higher costs involved with TA over mean PRS rents, our analysis shows that PRS rents is highly correlated with the cost of providing TA.Ìý It is not our intention that the formula should estimate total TA pressures, given that many other sources of funding such as the TA subsidy and local government settlement will continue to fund TA in part. The purpose of the use of the PRS rents metrics is to capture the relative difference in percentage terms of providing TA across different parts of the country.ÌýÌýÌý

We also considered whether using more granular or alternative measures might better reflect TA costs as approximately a quarter of respondents expressed the need for more accurate metrics. However, there is a risk that adjusting the formula based on certain types of accommodation could inadvertently reward inefficient practices or lock in short-term behaviours over the course of a multi-year settlement. We have sought to strike the balance between allocating sufficient funding towards Local Authorities who rely on more expensive forms of nightly paid accommodation whilst not penalising or disincentivising use of cheaper forms of Temporary Accommodation, such as Local Authority owned stock, which will have required to Local Authority to invest capital expenditure. Our analysis indicates that the best way to do this is to use TA numbers, as it does not bias funding toward and particular type of TA stock.ÌýÌý

Mean PRS rents provide a consistent and nationally verified data sources. Whereas, LA Spend Declarations (RO4) can present significant challenges due to inconsistent accounting practices and difficulties in benchmarking costs reliably.Ìý

Following careful consideration of the responses to the consultation, we remain confident that mean PRS rents represent the most appropriate measure of TA costs.Ìý

Question 7: If your LA is located within London, do you agree with the proposal to apply ‘average costs for London’?Ìý

Answers	Number of Responses	Percentage
Yes	15	8%
No	11	6%
Indifferent	2	1%
Our LA is not located within London/ Not Answered	161	85%

AnswersÌý (London Only)	Number of Responses	Percentage
Yes	15	54%
No	11	40%
Indifferent	2	7%

Recognising that this question was only directly relevant to London-based LAs, we further narrowed the analysis to focus solely on respondents from London. Among this group, 54% agreed with the proposal, 40% disagreed, and 7% were indifferent.Ìý

We carefully considered the responses provided to the free text question, particularly from LAs for whom this proposal would have a direct impact. Despite concerns that one average for London would not reflect local variations in rent and costs between boroughs, we are confident that applying an average cost for London remains the most appropriate approach for the ´Ú´Ç°ù³¾³Ü±ô²¹.Ìý

Using an average across London recognises the broadly similar pressures faced by London LAs, while smoothing out anomalies in local rental data that could otherwise create unfair fluctuations in funding allocations and benefit LAs in higher rent areas placing households in lower rental areas.Ìý Therefore, we propose maintaining one London average for TA costs in the ´Ú´Ç°ù³¾³Ü±ô²¹.ÌýÌý

Taking all of these factors into account, and acknowledging the majority support, we will proceed with the proposal to apply average costs across London within the funding ´Ú´Ç°ù³¾³Ü±ô²¹.Ìý

2. Approach to Missing DataÌý

Missing data is an ever-decreasing issue, with only a very small proportion of LAs not returning up-to-date H-CLIC data every quarter. Based on our proposed new measures, the metrics that requires an approach to missing data are TA numbers and the number of duties owed to households where the lead applicant is in employment. Other metrics, such as PRS rents and HB plus UC claimants, are taken from national published data sets that have complete data.Ìý

In the current formula, when there is no TA data, we use a predictive method using a national H-CLIC estimate of TA and compare that to local authority proportions of RO4 (Revenue Outturn tables on TA spend). We then estimate their share of this total from the local authority RO4 share of spending on TA.Ìý

Our proposal is to continue with the existing approach to missing data and to apply this when a local authority has zero TA data within the annual dataset being used.ÌýÌý

Question 8: Do you agree with the proposal to use RO4 (Revenue Outturn tables on TA spend) to approximate TA numbers where there is no TA data available for the given year?Ìý

Answers	Number of Responses	Percentage
Yes	115	61%
No	34	18%
Indifferent	33	18%
Not Answered	6	3%

There was a strong overall support for the proposal to use RO4 tables on TA spend to approximate TA numbers where direct data is unavailable. 61% of respondents agreed with the proposal, 18% disagreed, 18% were indifferent, and 3% did not provide a response.Ìý

Respondents generally recognised the importance of ensuring that gaps in TA data do not undermine the robustness and completeness of the funding model. The use of RO4 data was seen as a reasonable approach to approximate TA figures where necessary, using a consistent and nationally available source.Ìý

While a small proportion of respondents raised concerns about the accuracy of approximating TA numbers from spend data, the majority view was that benefits of completeness and consistency outweighed these limitations.ÌýÌý

Having carefully considered the responses received, we will proceed with the proposal to use RO4 data to approximate TA numbers where direct data is not available.Ìý

3. Funding proportionsÌý

To reduce complexity, increase transparency and future-proof the formula, we proposed separating out the individual elements of the formula into two distinct parts for TA pressures and prevention and relief pressures. In doing this, we also proposed reconsidering the proportion of the overall HPG funding pot that is allocated to different parts of the ´Ú´Ç°ù³¾³Ü±ô²¹.ÌýÌý

Investment in homelessness prevention remains a top priority for this government. Our analysis of HPG spend declarations for 2023/24 suggests that the split of local authority spending is 49% on TA and 51% on prevention and relief. We therefore proposed to allocate 45% of funding for temporary accommodation and 55% on prevention and relief to support LAs to shift funding towards prevention.ÌýÌýÌý

Question 9: What do you think is an appropriate split of HPG funding between temporary accommodation and prevention and relief?Ìý

Answers	Number of Responses	Percentage
45% TA and 55% prevention and relief	49	26%
More than 45% on TA and less than 55% on prevention and relief	44	23%
Less than 45% on TA and more than 55% on prevention and relief	40	21%
Other	45	24%
Indifferent	6	3%
Not Answered	5	3%

The responses to this question were varied. 26% of respondents supported the proposed split of 45% of funding allocated to TA and 55% to Prevention and Relief. Meanwhile, 23% suggested allocating more than 45% to TA, and 21% preferred allocating less than 45% to TA. A further 24% selected ‘Other’, often expressing a preference for greater flexibility, and 3% were indifferent.Ìý

The responses to the free text question indicated that while views varied, many responses conflated the indicative funding split with policy proposals around ringfencing. Future decisions on ringfencing are out of scope for this consultation.Ìý

Given this range of views and recognising that final allocations will depend on the overall quantum of funding, which will be finalised later this year when budgets are confirmed, we intend to maintain the proposed weightings for illustrative purposes at this stage. However, we will revisit final decisions on the split when budgets are finalised.

Question 10: Should there be a phased approach to implementing a change in weighting? For example, implement a partial change in weighting in year 1 and the full change in year 2.Ìý

Answers	Number of Responses	Percentage
Yes	130	68%
No	25	13%
Indifferent	25	13%
Not Answered	9	5%

There was a strong support for the proposal to implement a phased approach to any change in weighting. 68% of respondents agreed with the approach, while 13% disagreed, 13% were indifferent, and 5% did not provide a response.Ìý

Respondents generally welcomed the proposal as a means of managing the financial impact of changes on LAs, giving them time to adjust to new funding allocations. The phased approach was seen as a pragmatic way to smooth transitions and minimise disruption.Ìý

The department has noted the overall support for implementing a phased changed in weighting. The final decision on our approach will be taken later this year when budgets are finalised.ÌýÌý

Question 11: If prevention and relief spend represented 55% of overall HPG funding, what do you think is an appropriate split between labour and rent costs?Ìý

Answers	Number of Responses	Percentage
30% labour 25% rents	33	17%
More than 30% on labour	39	21%
More than 25% on rents	27	14%
Other	60	32%
Indifferent	23	12%
Not Answered	7	4%

Responses to this question were varied. 17% of respondents supported the proposed 30% weighting on labour and 25% on rent. 21% suggested placing more than 30% on labour, while 14% proposed placing more than 25% on rents. A further 32% selected ‘Other’, often proposing alternative approaches or expressing concerns around flexibility. 12% were indifferent, and 4% did not provide a response.Ìý

Given this range of views and recognising that final allocations will depend on the overall quantum of funding, which will be finalised later this year when budgets are confirmed, we intend to maintain the proposed indicative split for illustrative purposes at this stage. However, we will revisit final decisions on the split when budgets are finalised.Ìý

4. Transitional ArrangementsÌý

Prior to the consultation, our engagement with LAs indicated there was on-going support for implementing transitional arrangements to mitigate against the impact of significant changes in funding, noting it is important for LAs to know how long transitional arrangements may last and for those due to see increases in funding do so as soon as possible.ÌýÌý

We proposed that we implement transitional arrangements to mitigate significant changes in allocations as a result of changes to the HPG ´Ú´Ç°ù³¾³Ü±ô²¹.ÌýÌý

Question 12: Do you agree with the proposal to use transitional arrangements to mitigate changes in funding allocations?Ìý

Answers	Number of Responses	Percentage
Yes	154	81%
No	18	10%
Other	1	1%
Indifferent	11	6%
Not Answered	5	3%

There was very strong support for the use of transitional arrangements to mitigate significant changes in funding allocations. 81% of respondents agreed with the proposal, while 10% disagreed, 1% selected ‘Other’, 6% were indifferent, and 3% did not provide a response.Ìý

Respondents recognised the importance of transitional arrangements in providing stability for LAs during periods of change. Feedback highlighted the need for clarity on how long transitional protections would be in place and the importance of ensuring a smooth adjustment process for LAs experiencing both increases and decreases in funding.Ìý

Having carefully considered the feedback received, we will proceed with implementing transitional arrangements to mitigate changes in funding allocations.Ìý

Question 13:Ìý Do you agree with the proposal to use transitional arrangements in line with the caps used in the previous formula (2% in the first year and 5% in the second)?Ìý

Answers	Number of Responses	Percentage
Yes - agree with 2% and 5%	91	48%
No - the % caps should be lower	34	18%
No - the % caps should be higher	12	6%
No - I do not agree with transitional arrangements	18	10%
Indifferent	25	13%
Not Answered	9	5%

Question 14: If you answered Question 13 with “the % caps should be lower – what % range would you prefer?Ìý

Answers	Number of Responses	Percentage
No - the % caps should be lower	34	18%
Up to 1%	17	50%
Up to 2%	15	44%
Up to 3%	2	6%

Question 15: If you answered Question 13 with “the % caps should be higher – what % range would you prefer?Ìý

Answers	Number of Responses	Percentage
No - the % caps should be higher	12	6%
Higher than 20%	5	36%
15-20%	3	21%
10-15%	3	21%
5-10%	1	7%
Indifferent	1	7%
None of the above	1	7%

Question 16: Do you agree with the proposal for transitional arrangements to be tapered between financial years?Ìý

Answers	Number of Responses	Percentage
Yes – I agree the cap should be increased in later years	94	50%
No – the % caps should be the same in all years	42	22%
No – I do not agree with using transitional arrangements	16	8%
Indifferent	30	16%
Not Answered	7	4%

Respondents were asked whether they agreed with the proposal to use transitional arrangements that include a cap of 2% in the first year and a cap of 5% in the second year to mitigate changes in funding allocations. 48% of respondents agreed with the proposed 2% and 5% caps. A further 18% indicated that the percentage caps should be lower, and 6% felt that the caps should be higher. 10% did not agree with the use of transitional arrangements, 13% were indifferent, and 5% did not answered.Ìý

Among those who believed the caps should be lower, 50% preferred a cap up to 1%, 44% preferred up to 2%, and 6% preferred up to 3%.Ìý

Among those who believe the caps should be higher, 36% preferred a cap higher than 20%, while 21% preferred 15-20% and another 21% preferred 10-15%. A smaller number (7% each) preferred 5-10%, were indifferent, or selected ‘none of the above’.Ìý

While views on the precise levels of caps were varied, nearly half of respondents supported the proposed 2% and 5% capping approach. Feedback highlighted some desire for both lower and higher caps, but there was no overwhelming consensus for an alternative approach.Ìý

There was moderate support for the proposal to taper transitional arrangements by increasing the cap in later years. 50% of respondents agreed with the proposal, 22% disagreed and preferred that the percentage caps remain the same in all years, and 8% did not agree with the use of transitional arrangements at all. 16% were indifferent, and 4% did not provide a response.Ìý

Having considered the consultation responses, we will proceed on the basis of implementing transitional arrangements with a capping mechanism. However, we will revisit final decisions on the level of the caps alongside funding decisions given the impact of transitional arrangements will depend on the overall quantum of funding, which will be finalised later this year when budgets are finalised.Ìý

Conclusion and next stepsÌý

This consultation sought input from LAs and other interested stakeholders on a new HPG formula. Our aim was to develop a formula that reflects relative homelessness costs, fairly reflects demand, avoids unintended consequences and is future proof for the long term.ÌýÌý

To meet these objectives, we consulted on funding arrangements to HPG including proposed metrics for the new formula, approach to missing data, funding proportions and transitional arrangements. Having carefully reflected on responses received during the consultation, our proposed response is as follows.Ìý

• We are making an adjustment to how homelessness demand is measured in the formula (Question 1), by introducing an additional metric on the number of working households who are owed a homelessness duty, to better reflect homelessness pressures linked to affordability. A 75/25 weighting will be applied between total number of Housing Benefit and Universal Credit claimants and the number of working households owed a homelessness duty.Ìý

• We are making an adjustment to how labour costs are reflected for London boroughs by using the inner London average for inner London LAs and outer London average for outer London LAs, while retaining a single London-wide average for rent costs (Question 5).Ìý

• We intend to proceed with using the labour cost adjustments (Question 4) and using mean PRS rents to measure homelessness costs (Question 3).Ìý

• We intend to proceed with proposals on the use of Temporary Accommodation numbers to measure TA demand (Question 2), mean PRS rents to measure TA costs (Question 6), apply TA ‘average costs for London’ (Question 7) and the use of RO4 data where direct TA data is missing (Question 8).Ìý

• On how the TA and Prevention and Relief elements are weighted in the formula (Question 9), we will maintain the proposed indicative split for modelling purposes. Likewise, we will maintain the proposed approach on rent and labour cost weightings (Question 11) for modelling purposes, recognising that final allocations and decisions on how the formula is weighted will depend on the overall quantum of funding, which will be finalised later this year when budgets are confirmed.ÌýÌý

• We note the support for the use of transitional arrangements (Question 12), feedback on the size of the caps (Question 13, Question 14 and Question 15) and support for the use of a phased approach and tapering for changes in allocations (Questions 10 and 16). A final decision on our approach to transitional arrangements will be taken later this year when budgets are finalised.ÌýÌý

We are grateful to all respondents for their contributions and engagement throughout this consultation process.