One in six local authorities will abandon any crisis safety net, forcing families to use food banks or loan sharks, LGA warns

Almost three-quarters of local authorities will abandon or scale back welfare schemes designed to provide emergency help for England’s most vulnerable citizens from next April because of government funding cuts, ministers have been warned.

Tens of thousands of people – including victims of domestic violence, care-leavers, homeless people and low-income families in crisis for a range of reasons from flooding and fire to benefit sanctions – will receive little or no state help as a result.

One in six councils say they would be unable to afford to run a crisis safety net scheme at all if the government presses ahead with plans to cancel its £175m a year local welfare grant from next year, effectively wrecking a cornerstone of the coalition’s welfare reforms just two years after it was introduced.

Many vulnerable people would be forced to turn to food banks and loan sharks as a consequence, say campaigners, while the removal of crisis help from vulnerable families would lead to costly interventions further down the line, such as child protection orders or homelessness.

Cllr Claire Kober, chair of the resources board of the Local Government Association (LGA), which carried out the survey, said: “If government pulls the plug on funding from April, many local authorities will be unable to afford to make up the difference at a time when we are tackling the biggest cuts to council funding in living memory.

“For some local authorities, where budgets are already on the brink, they will have no choice but to close their local welfare assistance schemes down altogether.”

The Department for Work and Pensions (DWP), which had provided the specific grant funding, said the government had taken the view that local authorities were adequately funded to continue to provide welfare support after April 2015 without specific grant funding.

However, last month it settled a judicial review brought by the Child Poverty Action Group charity to contest the decision to end the grant, and agreed to review its position pending the outcome of a fresh consultation, now under way, on how funding should be provided. A decision is expected by December.

A DWP spokesperson said that regardless of the outcome of the consultation, the government expected local authorities to “act responsibly” and to continue to provide local welfare services.

The LGA survey of 88 of 150 English local authorities found that over half said their local schemes will either be cancelled or scaled back “significantly”. Just 8% said they would continue to run the scheme at current levels if the government grant was discontinued.

Ministers have come under pressure from Conservative-run councils, as well as Labour ones, to ensure the schemes are centrally funded. Earlier this year, Louise Goldsmith, the Tory leader of West Sussex county council, called local welfare “a real life saver to many” and described plans to scrap it as a “cut too far”.

A report published by the LGA on Monday notes that a significant proportion of the demand for crisis help was triggered directly by individuals and families requiring emergency assistance after the DWP had withdrawn social security support, for example through benefit sanctions.

The report cites 10 councils that have used local welfare to effectively support people who need it, and argues the local schemes are more efficient than their predecessor, the centrally-run social fund that was abolished by the coalition in April 2013.

However, a Guardian survey published in April, based on freedom of information requests, revealed that three-quarters of the way through the first year in 2013-14, the scheme was in chaos in many council areas, with £67m unspent and thousands of vulnerable applicants turned away.

Two authorities, Nottinghamshire and Oxfordshire county councils, scrapped their local welfare schemes in April.

Gillian Guy, the chief executive of Citizens Advice, said: “People in crisis would be left stranded by loss of government support. Even with these important schemes, far too many people are unable to get basics like food, fuel or clothes.”