As the Household Support Fund winds down, what will its legacy be? Well, at the very least it has made a strong case for money guidance

Two years ago, the government unveiled a £500m fund designed to help the most vulnerable households get through the coming winter.

This Household Support Fund was allocated to councils across England to offer discretionary support at a local level to those in need. Devolved governments received their share based on the Barnett formula.

Back then, in the autumn of 2021, the £20 a week uplift to Universal Credit and tax credits (introduced early in the pandemic) was coming to an end. 

Around the same time, changes to the taper rate and work allowances on Universal Credit allowed working claimants to keep more of their earnings.

It was reported at the time that the Institute for Fiscal Studies (IFS) judged that these measures weren’t enough to mitigate the end of the uplift though. Not least because it did absolutely nothing to help those claimants who were unable to work.

This was where the Household Support Fund came in. Initially touted as a six-month fund, it was subsequently extended multiple times. At the time of writing, it was due to draw to a close in March 2024 having paid out more than £2bn over the course of its lifetime. 

Some £800m of that has gone straight to vulnerable families to help them cope with rising prices, according to government figures.

This cost significantly less than the £20 uplift, which came to £6bn a year.

Go local

But notwithstanding the hefty savings to the government, the idea of funnelling money to councils to distribute locally (also known as Local Welfare Assistance, or LWA) has been backed by data from social policy software and analytics company Policy in Practice.

Their research found that, since Covid, councils UK-wide play an “increasingly important role” in delivering crisis support to households. It also found that even when the grant was of a fairly low monetary value it still made a considerable difference to the person’s life.

With councils relatively free to spend the money where and how they saw fit, many chose to fund support services as well as or instead of issuing grants directly to households.

Policy in Practice welcomed this approach too, saying their findings showed that local welfare has the most impact where it’s part of a holistic system of support. That means folding in things like income maximisation, benefit checks and budgeting.

Their findings align with the Clean Slate/Quids in! impulse to help people further upstream – after they’ve begun to struggle but before the crisis becomes entrenched.

In fact, the Household Support Fund will shortly fund Quids in! drop-in money skills sessions in Bristol, and also funds our services in Stroud.

Sustainable change

Given previous results, it’s fair to expect that attendees will walk away from the sessions more than £1,000 a year better off and have picked up learnings to last them a lifetime.

Jeff Mitchell, founder and MD of Clean Slate, says: “We speedily turn a hand-out of a couple of hundred pounds into an annual uplift of over a thousand for those struggling most. Money coaching is not a crisis intervention like debt advice. 

“Delivered well, it puts people back in the driving seat and shows them things can change for the better. It sounds cheesy but grants mean people survive, easy-to-follow guidance helps them thrive.”

So if building resilience offers both value for money to the taxpayer and meaningful change to the client, is there not a case for maintaining the Household Support Fund?

Feeding Bristol is adamant that there is. The charity has been working with Bristol City Council to distribute the HSF to ease food insecurity, and in the process identified many harder-to-reach households.

They say: “If the HSF were to be continued next year – which we believe is absolutely crucial – we would strongly recommend advising local authorities to work collaboratively with their VCSE [voluntary, community and social enterprise] counterparts.

“We have been able to support groups the council have previously found hard to reach, and who have been largely supported in the past. By tapping into that local knowledge and understanding, local authorities can utilise the HSF to help build resilience within their communities.”

The case for money guidance

And Joseph Rowntree Foundation is also on the side of keeping the fund running – indefinitely. Earlier this year, it published a report recognising the value of this support and called for the HSF to be made permanent in England.

Researchers Katie Schmuecker and Joseph Elliott pointed out that the fund identified the type of people who may not be eligible for benefits but who have no savings or safety net.

“As the nights draw in and we head towards winter, charities are expecting this one to be worse than the last,” warns Katie.

“Inflation may have dropped back a bit, but prices are still rising, just not as fast. Meanwhile, the amount of support from the government is lower compared to last year. JRF’s work with Heriot Watt University shows 3.8 million people – a million of them children – experienced destitution last year, a figure that has more than doubled in five years.

“This means people were unable to meet their most basic physical need to be warm, dry, clean and fed.  In this context, the government should commit to making the Household Support Fund a permanent fixture, maintaining its funding level to at least £1bn per year and providing certainty over at least three years. This will provide local authorities and their partners with the certainty they need to put in place measures to help protect people from hardship when they experience a crisis or emergency.”

Ultimately, she says, we need to get to a situation where local crisis and emergency funds are genuinely for crises and emergencies, rather than plugging gaps in social security. That’s why JRF and the Trussell Trust have joined forces with other organisations in calling for an essentials guarantee to be built into Universal Credit.

The findings of their report stressed that cash grants and vouchers should be coupled with the type of wider support that allows people to change their life for the better. Again, that often means simple, inexpensive services like benefits advice and budgeting support.

This way, there’s a chance of helping someone before they fall into crisis – and that makes the path back to financial resilience a much smoother one.

The Household Support Fund may disappear next spring. But the need for money skills and guidance almost certainly will not.

Image: Maria Lin Kim / Unsplash