DWP launches new cash payments scheme from April 1 – see if eligible | Personal Finance | Finance

The DWP has unveiled sweeping welfare reforms that will see councils in England administer a £1 billion‑a‑year scheme. Millions of struggling households are set to benefit from the shake-up of Britain’s safety net after the Government confirmed a new £1 billion-a-year Crisis and Resilience Fund that will replace the soon-to-end Household Support Fund.

The new scheme – due to launch on April 1 2026 – gives councils powers to hand out direct cash “crisis payments” to people hit by sudden financial shocks and struggling to cover essentials, even if they aren’t claiming benefits.

It also builds in a brand-new “housing payment” to help people with rent shortfalls and other housing costs as Discretionary Housing Payments (DHPs) are abolished.

Officials say the fund is designed to provide a cash-first, needs-based safety net, replacing a patchwork of short-term schemes with a multi-year commitment that can better support families facing unexpected bills, redundancy, boiler breakdowns or other sudden expenses.

The move has drawn praise from leading charities who have long campaigned for a permanent version of last decade’s stop-gap welfare payments.

Some have argued that the scheme could dramatically reduce the need for people to rely on food banks.

Richard Lane, Chief Client Officer at StepChange Debt Charity, said the new fund will be a game-changer for people on the brink of financial collapse.

“The Government’s commitment to a permanent Crisis and Resilience Fund will provide a lifeline to people facing, or on the precipice of, financial difficulty,” he said, adding that the previous Household Support Fund had been a crucial tool for councils but was hampered by short-term funding.

He said: “This announcement confirming a long-term scheme is a big step forward and a vital foundation to support local areas to build joined-up support for people experiencing difficult life events and financial crisis.”

Under the guidance published this week, councils will be expected to run both crisis payments and housing payments schemes year-round, with cash awards designed to be disbursed quickly – ideally within 48 hours of application in urgent cases.

Authorities also have scope to spend on resilience services that help build long-term financial stability, such as debt advice, budgeting support or community programmes.

But there are early warnings that the new system could be stretched thin.

A recent Local Government Association (LGA) survey showed only 2% of councils believe the planned funding will be “sufficient to meet local welfare needs to a great extent,” with many warning that the burden on local services is still huge.

Some councils have also expressed concern about transition planning and the potential for chaotic “postcode lotteries” of support unless funds are carefully targeted when the old Household Support Fund closes in March.

In another major change, the scheme will swallow up Discretionary Housing Payments – the payment councils used to make to help tenants cover rent shortfalls – and relaunch it as the Housing Payment strand of the new fund. Authorities will be expected to design their own rules within the broad guidance.

Ministers say the reforms will give local authorities more stability and predictability when planning support for struggling families – something some campaigners have been calling for after years of temporary cash pots and stop-gap funding.