By Alexis Darby, Head of Advocacy, Policy and Research
The Household Support Fund was established during the Covid-19 pandemic as part of the government response to support those struggling with the cost of living. The funding was distributed to local councils in England and the devolved administrations and ran from 6 October 2021 to 31 March 2022.
In the spring budget the Chancellor announced £500 million of new funding for the Household Support Fund which local authorities can spend in the next six months (£27m has been allocated across Greater Manchester’s ten councils). The government hope this extension will help the most vulnerable households deal with rising living costs. A third of the funding has been ringfenced to support families with children and another third will be set aside for pensioners.
Government have said that “Local Authorities will determine how to best use the remainder of the fund within the scope set out by ministers. Previous funding has supported households with food, clothing, energy and water costs, and this extension will ensure that this support continues through to the autumn.” The guidance for the latest tranche of funding can be found here.
There are mounting financial pressures on households across the UK. We have seen inflation rise to 6.2%, the cost of essential food products rise by more than that and energy bills soar up to 50% in some cases. All this impacts low-and-modest-income households hardest. The Chancellor uprated benefits in April by just 3.1% despite the rise in inflation. The JRF highlighted that April saw the basic out of work benefit experience its biggest drop in value in fifty years – so those who receive benefits are experiencing a real-terms cut in income. JRF predict that as a result 400,000 people could be pulled into poverty and that nine million families who receive benefits due to low incomes will be £500 worse off on average as a result of this real terms cut.
While the extension of the Household Support Fund will provide short term relief for many it is a sticking plaster. Government must increase benefits in line with inflation and reverse the £20 per week cut to Universal Credit. There needs to be a well thought out, long term national strategy for ending poverty in the UK and permanent hardship funding for local welfare support, not one off, piecemeal funding.
Across Greater Manchester it is vital that we focus on maximising household income, providing cash first responses to poverty (something the Housing Support Fund should be used for) and boosting financial resilience by:
- Adoption of the Real Living Wage by employers. Nearly 200,000 workers in our city region would benefit if all employers paid the Real Living Wage.
- Promoting and supporting benefit take-up so people are accessing all the benefits they are entitled to. The annual amount of unclaimed benefits in Greater Manchester exceeds £100m.
- Maximising the help people receive through Council Tax Support and effective use of Discretionary Housing Payments – aspects of the benefits system that sit locally.
- Providing cash grants rather than in-kind support to people facing financial hardship. This is being done by some councils through their local welfare assistance schemes.
- Making use of support available from utility companies. For example, United Utilities offer a range of
different types of help those who are struggling with their bills.
- Supporting people to access affordable, ethical credit, for example through credit unions. Credit unions in Greater Manchester saved people £13m in interest last year.
Until we have a long-term national response to ending poverty in the UK it is through these local actions that we can do what we can, to protect people from the cost-of-living crisis.