Hackney Council has defended its homeless services in the wake of a damning report by a health watchdog.

As revealed during the Gazette’s Hidden Homeless campaign in May, Healthwatch Hackney and City & Hackney Mind found evidence of “sexual exploitation, drug dealing and prostitution” in hostels after speaking to single homeless people and mental health advocates.

At the time the council said it would respond in due course and, ahead of a town hall meeting on Thursday, chiefs have finally spoken out.

The council says it “does not recognise” claims that workers have refused to accept clients as homeless and said the Greenhouse, its centre run with NHS England and homelessness charity Thames Reach, is an exemplary cross-agency service recognised by the government.

Chiefs said they agreed improvements were needed, but that it was difficult when government austerity measures continued to reduce funding.

“Hackney has 33 temporary accommodation hostels providing 820 plus bed spaces; the largest of any local authority in the capital,” the report states. “Despite this our provision is overstretched and to meet the shortfall, the council has no alternative other than to make use of privately run hostels.”

The council also “absolutely refutes” claims staff in hostels and housing services have little regard for homeless people. Healthwatch called for all staff working with homeless people to be given mental health awareness training, which the council said it was providing.

On calls for rigorous monitoring of hostels, the council said it already does that once a year under Setting the Standard, a London-wide scheme to monitor accommodation used by councils.

The report also explains the town hall is looking to place people into permanent private sector homes outside of the borough and offer incentives to families to do so.

It states: “Many households, even single persons, are reluctant to move away from the local area with which they are familiar, but we are continuing to work on improving the offer, including facilitating access to support structures and agencies within the new locality.”

Chiefs were also keen to point out that Hackney spends more per person on housing support than neighbouring boroughs Islington and Camden.

Regarding supporting mental health hospital patients into housing, the council revealed it now has a housing adviser based at Homerton Hospital and works with the City and Hackney CCG to offer funding to not-for-profit bodies coming up with innovative ways to solve entrenched health and issues in the borough.

One example of this is the East End Citizens Advice Bureau being given £60,000 to deliver its Getting Home Project, helping people leave hospital sooner.

Claims from the council that it wasn’t give time to respond to the report have been scoffed at, however, by Healthwatch Hackney. The group said it had given the head of housing 15 days to respond and that it wanted to include the council’s response in the original report had it received one.

Healthwatch, which also called for a “safe space” forum for hostel tenants, disputed the council’s claims it would be ineffective.

A spokesperson said: “A major issue highlighted by our report was the reluctance of vulnerable hostel residents to raise safety concerns with hostel staff or complain to council housing staff, because they fear being evicted.

“Hackney Council regularly uses forums to enable specific groups of residents to provide feedback on services. We are puzzled that the council is unable to set up similar forums for people in temporary accommodation and hostels.”