A six-month extension to a fund helping the most vulnerable people struggling with the cost of living is welcome but is “only a temporary fix” with longer-term help needed, campaigners and councils said.
Chancellor Jeremy Hunt had been under pressure to continue the Household Support Fund (HSF) beyond the end of March and has now accepted that “now is not the time to stop the targeted help it offers”.
Council leaders from across the political spectrum wrote to him calling for an extension, as did almost 90 parliamentarians on the issue.
The Government needs to use the next six months to agree a more sustainable successor to the HSF
The Government has now confirmed it will extend the fund with an extra £500 million.
During his Budget speech on Wednesday, Mr Hunt told the Commons: “Next, the Household Support Fund. It was set up on a temporary basis and due to conclude at the end of this month.”
He said he had “listened carefully” to representations from anti-poverty charity the Joseph Rowntree Foundation and the Trussell Trust, which runs a network of food banks, as well as MPs.
He added: “I have decided that with the battle against inflation still not over, now is not the time to stop the targeted help it offers. We will therefore continue it at current levels for another six months.”
Started in 2021, the HSF has provided £2.5 billion of welfare support via local authorities to help vulnerable people with food, water and energy bills.
Shaun Davies, chair of the Local Government Association, which represents councils, said while they are “pleased” at the extension, the “very last minute” announcement and the fact it is “only for a short period” was “disappointing”.
He said: “Three-quarters of councils expect hardship to increase further in their area over the next 12 months.
“The Government needs to use the next six months to agree a more sustainable successor to the HSF.
“Councils need certainty and consistent funding to efficiently maintain the staff, services and networks that help our most vulnerable residents. Without this, we risk more people falling into financial crisis as we head into winter.”
To help make such loans more affordable, I have today decided to increase the repayment period for new loans from 12 months to 24 months
Citizens Advice echoed this, saying while welcome, the extension is “only a temporary fix” and that “a longer-term commitment (is needed) to ensure this vital fund doesn’t abruptly dry up in the future”.
Its chief executive Dame Clare Moriarty welcomed the scrapping of the £90 charge on debt relief orders – something it had called for.
Mr Hunt said the cost of getting an order, which can allow £30,000 or less to be written off, can “deter the very people who need them the most”.
He said: “Having listened carefully to representations from Citizens Advice, I today relieve pressure on around 40,000 families every year by abolishing the £90 charge completely.”
He also pledged efforts to help households falling into debt by lengthening the repayment period for new loans from one year to two.
He said: “Nearly one million households on Universal Credit take out budgeting advance loans to pay for more expensive emergencies like boiler repairs or help getting a job.
“To help make such loans more affordable, I have today decided to increase the repayment period for new loans from 12 months to 24 months.”
