The council has predicted it will overspend by £1.8 million this financial year, with £1.2 million of that due to supporting people in temporary accommodation.
The Government roll-out of Universal Credit (merging benefits into one payment) and higher taxation on landlords is being blamed by council officers for the rise in homelessness.
Universal Credit, which began being rolled out in the city last December, sees housing benefit given to tenants rather than directly to landlords.
Adrian Chapman, council service director for adult services and communities, said a number of landlords were no longer taking on tenants on housing benefit because they were “nervous” they would not get the rent. He added: “The tax burden is far greater now and we are seeing a lot of landlords just choosing to sell up.”
The council has run out of hostel beds and B&B rooms to house people. However, the number of people presenting themselves as homeless has risen from an average of 60 to 90 in 2012 to 150 last month. Mr Chapman called it an “unprecedented spike.”
This means the council is having to home people in the city’s three Travelodges at a cost of £294 to £588 per week. The average number of families staying at the hotel is 28, but this has been as high as 40. The average stay is 20 days.
To alleviate the problem, the council will soon sign a deal with estate agents Stef and Philips Ltd which has bought 74 properties from a private provider at St Michael’s Gate off Keys Park, Parnwell.
The tenants at the homes have stayed beyond their fixed terms and will be evicted, with a deal struck for the council to use the properties for overnight stays.
Steven Pilsworth, service director for financial services, said he was “reasonably confident” the council would make a balanced budget through greater than previously expected savings in concessionary bus fares and cheaper borrowing costs due to Brexit.
Asked about the rise in homelessness, Cllr Irene Walsh, Conservative cabinet member for communities and environment capital, said: “I’m very concerned we may not see an improvement in the near future.” But she added: “The Government’s intention is to reduce dependency on welfare and this will eventually succeed. Maybe not in the short-term, but over a number of years the situation will improve.”
The city’s Tory MP Stewart Jackson said: “The tax changes and forthcoming residential landlords selective licensing scheme will remove a small minority of poor or slum landlords and that’s frankly a good thing.
“Universal Credit is about simplifying the benefits system, making them more independent with tailored support and focusing on getting all claimants into good quality paid work and it’s a massive project which clearly will have teething problems. That said, unemployment in Peterborough has dropped hugely since 2010.
“The city council needs to work harder to deliver more affordable homes for working people especially via shared equity schemes.”
North West Cambridgeshire MP Shailesh Vara, a former minister in the Department for Work and Pensions, said: “It is estimated that nearly one third of households privately renting are in receipt of housing benefit, so I am not convinced by the argument that landlords are not taking on people in receipt of housing benefit.
“As for Universal Credit, it is intended to encourage people back to work, which has got to be good. Work is the best way for people to get out of the poverty trap.”