The new £1 billion-a-year fund launches on April 1, 2026 and will see direct cash ‘crisis payments’ handed out
Millions of families facing financial hardship are poised to receive support through a major overhaul of Britain’s welfare safety net. It follows the DWP’s announcement of a new £1 billion-a-year Crisis and Resilience Fund set to replace the expiring Household Support Fund.
The revamped DWP programme – launching on 1st April 2026 – grants local authorities extensive powers to distribute direct cash “crisis payments” to people experiencing sudden financial difficulties and struggling to afford essentials, regardless of whether they’re receiving benefits.
Additionally, the scheme introduces a completely new “housing payment” designed to assist people with rent arrears and other accommodation expenses, as Discretionary Housing Payments (DHPs) are scrapped. Government officials describe the fund as a cash-first, needs-led safety net, replacing a fragmented collection of temporary programmes with a multi-year pledge capable of better supporting households confronting unexpected costs, job losses, boiler failures or other unforeseen financial emergencies.
The announcement has been welcomed by prominent charities who have spent years calling for a permanent replacement to the previous decade’s temporary welfare provisions. Some campaigners have suggested that the initiative could significantly reduce people’s reliance on food banks.
Richard Lane, Chief Client Officer at StepChange Debt Charity, described the new fund as transformative for people teetering on the edge of financial ruin. The council leader welcomed the Government’s initiative, stating: “The Government’s commitment to a permanent Crisis and Resilience Fund will provide a lifeline to people facing, or on the precipice of, financial difficulty,” whilst noting that whilst the previous Household Support Fund had been an essential resource for councils, it suffered from short-term funding constraints.
He added: “This announcement confirming a long-term scheme is a big step forward and a vital foundation to support local areas to build joined-up support for people experiencing difficult life events and financial crisis.”
According to the guidance released this week, local authorities will be required to operate both crisis and housing payment schemes throughout the year, with financial support intended to be distributed rapidly – preferably within 48 hours for emergency applications.
Councils will also have the flexibility to allocate funds towards resilience initiatives that promote sustained financial wellbeing, including debt counselling, money management guidance or local community projects. However, concerns are already emerging that the new framework may face significant pressure.
A recent Local Government Association (LGA) survey revealed that just 2% of councils consider the allocated funding will be “sufficient to meet local welfare needs to a great extent,” with numerous authorities highlighting that the pressure on local provision remains substantial.
Several councils have also raised worries about transition arrangements and the risk of inconsistent “postcode lotteries” of assistance unless resources are strategically distributed when the existing Household Support Fund ends in March. In a significant shift, the scheme will absorb Discretionary Housing Payments – previously used by councils to assist tenants with rent deficits – and reintroduce it as the Housing Payment component of the new fund.
Councils will be tasked with establishing their own regulations within the general guidelines. Ministers argue that these reforms will provide local authorities with greater stability and predictability when devising support strategies for families in need – a move long advocated by campaigners following years of temporary financial resources and interim funding.
A DWP spokesperson said the fund reflects a shift in welfare policy – from ad‑hoc crisis payouts to a strategic, preventative model aimed at tackling the “financial shocks” that push families to the brink.
The guidance stresses that officials from the DWP will work closely with local councils, sharing data and oversight to ensure funding is used as intended, with regular reporting and accountability measures.
