Cost of living: £500m in new grants to help poorest households

The government has announced £500m of grants to help families struggling with the cost of living as other support schemes are withdrawn.

The move comes as rising prices, including spiralling energy bills, are making it harder for those on low incomes to make ends meet.

The end of furlough and the £20 increase to Universal Credit will also remove support provided during Covid.

The new fund will help households pay for essentials like food and bills.

Thérèse Coffey, Secretary of State for Work and Pensions, said: "Over the last year, we have helped millions of people provide for their families.

"Many are now back on their feet but we know that some may still need further support. Our targeted Household Support Fund is here to help those vulnerable households with essential costs as we push through the last stages of our recovery from the pandemic."

It replaces the Covid-19 local support grant programme, which was designed to support those most in need across England with the cost of food, energy (heating, cooking, lighting), water bills (including sewerage) and other daily needs.

Like those funds, the new grants will be distributed by local councils in England.

The cash will be made available in October and Scotland, Wales and Northern Ireland will receive up to £79m of the £500m.

In recent days, ministers have admitted that many families could face a difficult winter.

Following widespread criticism from charities, opposition parties and some Conservative MPs, the government has decided to offer additional support to the poorest families.

Chancellor Rishi Sunak said: "Everyone should be able to afford the essentials, and we are committed to ensuring that is the case."

He added that the new fund would provide a "lifeline" for those at risk of struggling to keep up with their bills this winter.

Households struggling with the cost of food, heating, water and other essentials will be eligible for support. They should contact their local council who will help them access the fund when it opens.

But the new fund will have to compensate for a higher cost of living and the loss of other support, such as the planned cut to the £20 uplift in Universal Credit that was introduced during the coronavirus crisis.

Recent analysis by the Resolution Foundation think tank suggested that a typical low-income family with children could see their income fall by more than £20 a week over the next six months as a result.

Housing charity Shelter has also warned that more expensive bills and the reduced benefit are creating a "perfect storm" for homelessness to rise this winter.