The government will introduce a new £1 billion a year support scheme to give people on low incomes direct access to emergency cash if they face sudden financial shocks.
The crisis and resilience fund, which will start in April, will initially run for three years and replaces the temporary budget support fund, which has been repeatedly extended since its introduction during the pandemic in 2021.
Under the new system, individuals will be able to apply for emergency payments from their local authority, regardless of whether they are receiving benefits. Local authorities can provide financial support in cases such as a sudden loss of income, a layoff, an unexpected bill such as a broken boiler, or in cases where early intervention could prevent someone from falling into a deeper financial crisis.
The fund represents a shift in the way crisis assistance is delivered. Unlike previous systems that relied heavily on vouchers, food parcels or transfers to food banks, communities are now explicitly encouraged to make cash payments. Ministers hope this will help fulfill a manifesto promise to reduce what they describe as “mass reliance on emergency food parcels” by giving households more flexibility and dignity in how they use the support.
The Department for Work and Pensions has produced guidance allowing local authorities to use the funds in three broad areas: immediate crisis payments, housing-related support in the event of sudden shortages and longer-term resilience services, including funding for charities and local organizations providing frontline assistance.
Although the overall level of funding is broadly in line with the previous Budget Support Fund, some councils have expressed concerns that it will not be enough to meet increasing demand. A recent survey by the Local Government Association found that most local authorities in England believe current funding levels are not sufficient to meet local social needs, particularly given continued pressure on the cost of living.
However, the commitment to provide guaranteed funding for at least three years has been welcomed by local authorities and charities as it allows communities to plan their support programs more effectively rather than relying on short-term extensions.
Emma Revie, co-chief executive of Trussell Trust, said the new fund was an important step forward. She said it could help ensure fewer people are forced to rely on food banks to make ends meet.
The children’s charity Barnardo’s also welcomed the move towards initially providing cash support. It says that allowing municipalities to provide direct payments instead of vouchers or packages would give families more freedom and choice in times of crisis.
Some municipalities are already taking similar approaches, distributing funds through post office cash vouchers or digital “pay-by-SMS” systems that allow people to quickly withdraw money from ATMs.
The new guidance gives councils flexibility in allocating funding between crisis payments, housing support and resilience services. But they must publish how the money will be used and open applications to the public by April 1.
Equivalent funding will be allocated to Scotland, Wales and Northern Ireland, with devolved administrations free to decide how the money is spent in their own areas.
Labor Minister Dame Diana Johnson said the fund will give communities the reassurance they need to intervene early and prevent families from falling into crisis. She said the goal is to provide quick, practical help where people need it most.
