Backlash at government's new £500m fund for vulnerable families – 'It's a sticking plaster'

The government has pledged to spend £500m to help vulnerable families get through what is swiftly becoming a potentially gruelling winter for those on low incomes.

The new Household Support Fund will be distributed to councils, and will be available from this month.

It comes as many reel from the end of the furlough scheme earlier this week, which is expected to impact up to a million people, and the scrapping of the £20 Universal Credit boost that is set to finish next week.

For devolved administrations in Scotland, Wales, and Northern Ireland the money will be distributed as usual using the Barnett formula.

Critics have pointed to the fact that the £500m announcement is just a fraction of the £6bn that is being axed from Universal Credit.

Labour has branded the fund an "inadequate sticking plaster", while debt charity StepChange said the move would not be enough and called for the government to reverse the Universal Credit cuts.

The Department for Work and Pensions claims the funds are being provided to "help those who need it most" via small grants for essentials like clothing, food, and bills.

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Chancellor Rishi Sunak said: "Everyone should be able to afford the essentials, and we are committed to ensuring that is the case.

"Our new Household Support Fund will provide a lifeline for those at risk of struggling to keep up with their bills over the winter, adding to the support the government is already providing to help people with the cost of living."

Poverty is a growing issue in the UK, with food bank usage soaring by more 2.5 million users since 2010.

According to government estimates, 14.5 million people live in poverty in the UK – about one in every five people.

Some estimates suggest that an additional 800,000 people will be pushed into poverty when the Universal Credit uplift ends the month, with Citizens Advice warning the cuts are coming at "the worst possible time".

Rising energy bills, inflation, and the end of furlough also threaten to make the situation more severe.

Labour have said that cuts to Universal Credit and rising energy prices risk creating "a perfect storm" this winter.

“Conservative choices have created a perfect storm this winter, leaving working people facing tax hikes, an energy crisis and cuts to Universal Credit," said Jonathan Reynolds, Labour's shadow work and pensions secretary.

"Temporary and inadequate sticking plasters are no substitute for a proper social security system that offers security to families in hard times.

"The government must learn the lessons of the pandemic, cancel their cut to Universal Credit and use our recovery to better prepare this country for the challenges of the future.”

Debt charity StepChange have also expressed concern about a perfect storm for those on low incomes or in debt this winter.

"This fund will provide welcome financial relief to households who face a perfect storm of cuts to Universal Credit, rocketing energy bills and inflated food prices in the coming months," said Richard Lane, director of the charity's external affairs.

"We agree with the chancellor that absolutely everyone should be able to makes ends meet – for this to be a reality the government must build on today’s announcement with plans to help households who are already struggling, including the three million people who’ve had to turn to high cost credit to get by since the start of the pandemic.

"This must come in the form of sustained financial support, which the government can begin to provide by reversing its decision to cut Universal Credit by £20 a week.

"For our clients who rely on it, this cut will see their average budget deficit triple from £40 a month to £126 a month."

He added: “A locally delivered grant fund is important for helping with emergency and crisis spends, and we would like to see this type of support extended to help tackle the millions in rent debt private tenants have amassed during the pandemic.

"But it must be matched by nationally delivered support, and £500m in a discretionary fund won’t plug the ongoing holes in household budgets, particularly when £6bn of Universal Credit is due to be cut.”

Crisis warned this week that up to 100,000 renting households are at risk of being evicted when benefit cuts start this month.

Jon Sparkes, chief executive of the housing charity, said: “For many struggling renters this cut could be the final blow.

“The UK government must change course and keep the £20 uplift so that people don’t needlessly lose their homes this winter and we have a fighting chance at recovery.

He added: "The UK government assured people they would not lose their home because of the crisis; we must not fail them now.”

The Treasury have been contacted for comment.

Watch: Families on Universal Credit seven times more likely to face financial crisis paying bills