The cross-party group London Councils has welcomed the Chancellor's decision to extend the £20-a-week uplift to Universal Credit for six months, but describes this as the "bare minimum" needed to stop homelessness rates increasing even further.

The umbrella body, which represents all 32 boroughs and the City of London Corporation, says the government should show far greater ambition in addressing homelessness through welfare policy changes and investment in social housing.

London is suffering the most severe homelessness crisis in the country. The latest official data shows 62,670 London households are homeless and living in temporary accommodation arranged by their local borough, accounting for two thirds of England's total and the highest figure for 15 years. A quarter of a million Londoners are also on waiting lists for council housing.

London's economy has been particularly hard hit by the Covid-19 pandemic, with boroughs concerned that the job losses and financial hardship faced by many Londoners will lead to even higher homelessness rates. As of January 2021, 485,180 Londoners received Universal Credit. This marks a 157% increase since March 2020 compared to 102% for the whole of UK. The capital also has the highest rate of increase across the UK regions. London remains the region with the largest proportion of claimants on Universal Credit. Almost of a fifth (19%) of all Universal Credit claims in the UK have been made in London.

Cllr Darren Rodwell, London Councils' Executive Member for Housing & Planning, said: "This Budget does the bare minimum to address the homelessness crisis.

"While we welcome the uplift to Universal Credit staying in place until September, we're disappointed the Chancellor hasn't shown more ambition in using the policy tools at his disposal to tackle homelessness. The five-week wait for Universal Credit payments remains in place, and this is a key factor in tenants falling into debt and struggling to pay their rent. We're also worried about what will happen beyond September, especially since the government has not clarified its next steps for Local Housing Allowance rates.

"Although the Chancellor set out numerous measures for helping private house buyers, the Budget had nothing to say on social housing – which has a crucial role to play in improving housing affordability and reducing homelessness.

"London boroughs are fully committed to helping the government meet its homelessness reduction targets, but there is little chance of success unless ministers use the welfare system to prevent homelessness and provide long-term funding increases for homelessness support and social housing investment."

Analysis by London Councils shows that spending on homelessness and rough sleeping in the capital has risen by an extra £118 million in 2020/21 due to Covid-19. Even before the pandemic, boroughs together spent approximately £900 million on homelessness, with London Councils warning these costs pressures were unsustainable.

London Councils is calling on the government to:

Improve the welfare system's ability to prevent homelessness from occurring in the first place. This could be achieved through: ending the five-week wait for Universal Credit payments to begin; making sure Local Housing Allowance continues to match the cost of renting in London (in April 2020 the government increased LHA rates to cover at least 30% of local private sector rents); restoring government funding for councils' local welfare assistance schemes supporting residents in financial crisis (the government abolished its £178 million annual funding for local welfare assistance from 2015/16, forcing councils to finance this provision from their own general funds).

Confirm long-term funding arrangements for sustaining local homelessness services, including extra investment to help services cope with increasing homelessness levels and to reduce pressure on boroughs' general funds.

Boost councils' resources for building social housing. If the government confirmed social rent levels for the next ten years (as opposed to only four) and ended its restrictions on how councils can use Right to Buy sales receipts, boroughs would be in a stronger financial position to invest in new social homes for their communities.