A landmark overhaul of support for low-income families moved a step closer today as Parliament debated legislation to scrap the two-child limit on benefits, alongside the rollout of a £1 billion

Crisis and Resilience Fund for local authorities.

The bill, which had its second reading in the Commons, would remove the two-child limit on Universal Credit and related benefits — widely recognised as the single biggest driver of rising child poverty in the UK. If passed, it is expected to deliver the largest reduction in child poverty achieved in a single parliament, lifting hundreds of thousands of children out of hardship.

At the same time, councils across England are preparing to launch the new £1 billion Crisis and Resilience Fund (CRF) in April. Described as the most significant investment in local crisis support in a generation, the fund is designed to prevent families from falling into poverty by offering help earlier, before financial shocks turn into full-blown crises.

A long-term safety net for families

Unlike previous emergency schemes, the Crisis and Resilience Fund will run on a multi-year basis through to March 2029, ending the annual “cliff-edge” funding cycle that councils say made long-term planning almost impossible. The fund replaces the Household Support Fund and folds Discretionary Housing Payments into a single, streamlined grant.

Ministers say this approach will cut bureaucracy and give councils the certainty they need to design lasting, locally tailored support — from emergency cash payments and help with housing shortfalls, to debt advice and programmes ensuring children do not go hungry during school holidays.

The funding has been co-designed with local authorities and charities, with new guidance encouraging a “cash-first” approach that prioritises dignity, choice and financial resilience.

Central plank of the Child Poverty Strategy

Both the legislation and the new fund sit at the heart of the government’s Child Poverty Strategy, described by ministers as the most ambitious plan to tackle child poverty in a generation.

The two-child limit is estimated to be pushing around 450,000 children into poverty. Removing it is seen as the fastest and most cost-effective way to reverse that trend. Alongside expanded free school meals and increased free childcare hours, the strategy aims to break the cycle linking childhood poverty to poorer health, education and employment outcomes later in life.

Minister for Employment Dame Diana Johnson, said: “Families deserve support before a crisis hits, not after. By scrapping the two-child limit and launching a £1 billion Crisis and Resilience Fund, we’re giving councils the tools to help families build real financial security.

“Growing up in poverty has a significant impact on health, education and employment and lifting 550,000 children out of these circumstances isn’t just about fairness today, it’s about building a stronger Britain for the future.”

Backed by charities and communities

Sabine Goodwin, Director of the Independent Food Aid Network, said: “The eagerly awaited Crisis and Resilience Fund is set to be groundbreaking for households living on low incomes in English local authorities. Its newly published guidance outlines the delivery of effective crisis support via prioritised cash payments enabling choice and dignity as well as the need to help residents build financial resilience through bolstered community support.

“Taking a cash-first approach to poverty, this multi-year funding pot has the capacity to reduce the number of people having to turn to charitable food providers and to help fulfil the Government’s commitment to end mass dependence on emergency food parcels.”

Emma Revie, co-chief executive at Trussell, said: “We are delighted to see the Crisis and Resilience Fund launched this year, and to have been able to work with the government and our partners to ensure it is designed to provide effective support for people at risk of needing a food bank. Every day, food banks see how people living on the lowest incomes can be quickly tipped into crisis by an unexpected cost or financial shock such as illness or a job loss. Effective crisis support is crucial to prevent people from falling into severe hardship, so they can still afford the essentials we all need.

The new Crisis and Resilience Fund is a vital step towards ensuring no-one is forced to turn to a food bank to get by, and represents important progress on the government’s manifesto commitment to ending the need for emergency food. We welcome its development, which is based on the evidence and insights from our community of food banks and other experts in the Crisis Support Working Group and we look forward to continuing this work in partnership to help end the need for food banks for good”.

The Minister for Employment is marking the announcement with a visit to Hope4All in Sunderland, a community-led food club and advice service that has reduced local food bank use by 40%, highlighting the role of locally designed solutions.

Wider cost-of-living measures

The government says the reforms sit alongside broader action to ease pressure on household finances, including increases to the National Living Wage, cuts of around £150 to average household energy bills, and freezes to rail fares and prescription charges.

With funding allocations already shared with councils and legislation progressing through Parliament, ministers argue the combined measures represent a decisive step towards a more secure safety net — and a turning point in the fight against child poverty in the UK. Photo by Catherine Scott, Wikimedia commons.