Government to offer cash payouts for people in financial crisis

A new funding scheme will give access to emergency cash for people on low incomes across England.

The Crisis and Resilience Fund beginning at the start of April will provide £1bn annually for the next three years.

People will be able to apply for emergency funds through their local council, whether or not they currently receive benefits.

The new rules say councils can give money to people in financial shock where there is “a sudden, unexpected expense or drop in income”, like a broken boiler, the loss of a job or to prevent people from entering crisis.

It is a replacement for the temporary Household Support Fund which had been extended on a rolling basis since it was set up in 2021, but was due to finish at the end of March.

The level of funding is broadly the same as the previous scheme, leaving some councils disappointed that there has not been more money allocated.

A recent survey for the Local Government Association showed most councils in England did not believe the current funding will be sufficient to meet local welfare needs.

The cash element is a significant change to the past scheme, which the government hopes will help fulfil a manifesto pledge to end “mass reliance on emergency food parcels”.

It means councils can give those experiencing difficulties direct access to cash in the hopes of removing the need for hand-out provisions.

The guarantee of at least three years of funding mean councils can plan their support schemes and provision over a longer period.

Emma Revie, co-chief executive at the Trussell Trust, a charity that supports food banks, said: “The new Crisis and Resilience Fund is a vital step towards ensuring no-one is forced to turn to a food bank to get by.”

In guidance to councils, the Department for Work and Pensions said the money can be used for three different purposes: crisis payments, housing payments – for those facing an unexpected shortfall, and resilience services for funding the charities and local organisations currently providing front-line support.

The payments could help in scenarios such as redundancy, help leaving an abusing relationship or an unexpected bill.

There is no stipulation about how each local authority should divide their funding between those different purposes.

Barnardo’s, the charity, said shifting the way support is given from vouchers, food bank referrals and emergency food parcels to cash payments will aid millions who are currently dependent on government and council-funded help.

Some councils have already been using a cash-first approach and deliver them through Post Office cash vouchers or Pay-By-Text platforms that allow people to withdraw money at cash machines.

The charity said those struggling should have more agency to choose how and where they want to spend that cash.

“This guidance sets out how crisis support can be delivered in a way that protects dignity, offers real choice and reaches those who need it most, said Barnardo’s chief executive Lynn Perry.

“It has the potential to make a meaningful difference to children growing up in poverty.”

A proportionate level of funding will be given to Scotland, Wales and Northern Ireland, but it is up to those authorities to decide how the extra money is used.

In England, local authorities will have to publish how they are going to use the money, and open up applications to the public by the 1 April.

Minister for Employment Dame Diana Johnson, said: “Thanks to this £1bn fund local authorities will have the certainty to provide emergency support and stop families falling into crisis in the first place.”