The Labour government has issued a major directive to local authorities across the United Kingdom, mandating a shift from vouchers to direct cash payments for low-income families facing sudden financial emergencies.
What is the new Crisis and Resilience Fund?
From 1 April 2026, a new £1 billion Crisis and Resilience Fund will replace the previous Household Support Fund. This multi-year scheme represents a significant change in how emergency aid is distributed. The key difference is that support must now be provided as cash, giving households full autonomy over how to address their crisis, rather than as restricted vouchers for specific items like food.
A Labour Party spokesperson stated: “We're committed to tackling poverty and delivering more security and opportunity for families across the UK. The £1bn multi-year Crisis and Resilience fund will help prevent households from falling into crisis by giving local authorities the certainty they need to provide emergency financial support.”
Who qualifies for the emergency cash payments?
Eligibility is focused on low-income households experiencing a “financial shock.” Crucially, recipients do not need to be on benefits to qualify, broadening the potential scope of support. The government has also confirmed that people will not need to apply for this payment; it will be proactively given to identified families.
Local councils will be responsible for two key decisions:
- Defining what constitutes a “financial shock.” This could include events like a boiler breaking down, flooding, fire damage, a sudden job change, or a mental health crisis.
- Determining which households in their area are considered low-income.
This localised approach is designed to allow authorities to respond to the specific needs and cost-of-living pressures within their communities.
National rollout and funding
The £1 billion in funding has been allocated to authorities across England, Scotland, Wales, and Northern Ireland to be distributed over the next three years. The fund aims to provide long-term certainty, enabling councils to plan effective support systems rather than managing short-term, reactive grants.
This policy shift from the Labour government underscores a move towards trust-based support, recognising that families are best placed to decide how to use funds during a personal crisis. The change from vouchers to cash is intended to offer dignity, flexibility, and immediate relief for unforeseen expenses that could otherwise plunge households into severe debt.
