Policy insights for 2026: Why proactive support needs to be the new normal

We hope that 2026 will mark a slow but steady move away from the emergency sticking plasters of recent years. For local authorities, the arrival of multi-year settlements represents a long awaited shift toward stability. The outlook for low income families will depend on their individual circumstances, but it looks like much more of a mixed bag.

While landmark reforms like the above inflation increase to Universal Credit, and the removal of the two child limit will offer relief, the reality on the frontline is shaped by the complex and often contradictory mix of forces. These include rising costs, with food, energy and council tax at historically high levels, alongside changes in the wider economy that affect jobs and wages, and the combined impact of new and existing policies on household incomes, rents and living costs.

The goal for any organisation supporting vulnerable residents in 2026 must be to move beyond reactive crisis management towards a new normal of proactive, data led support.

The policy landscape for 2026 presents a mixed bag of ups and downs, particularly for children and vulnerable households. While significant relief is on the way through landmark reforms, broader structural changes create a more complex picture for frontline delivery.

Several key areas of cost of living relief are set for April 2026:

• Two child limit removal: This policy will be removed, pulling an estimated 450,000 children out of poverty
• Minimum wage increase: Young workers will see a large increase in the minimum wage
• Energy bill support: The government will foot the bill for environmental schemes, leading to reduced energy costs for households
• Earned income disregard: A new disregard will be introduced for those in supported housing and temporary accommodation
• Uprating of Universal Credit: the Universal Credit standard allowance, State Pension and Pension Credit (via the triple lock) will all rise above inflation
• Tax and housing freezes: Income Tax and National Insurance thresholds will be frozen, as will Local Housing Allowance (LHA) rates and the benefit cap
• Disability support falling for new claimants: Support for new LCWRA claimants will be halved, adding further pressure to people with health conditions

In addition, the new three year Crisis and Resilience Fund will be introduced in April. Then Free School Meals for all children on Universal Credit will come into effect from the September term, as Policy in Practice has been calling for since 2013.

The new Crisis and Resilience Fund (CRF) replaces both the Household Support Fund (HSF) and Discretionary Housing Payments (DHP) funding on 1 April 2026, consolidating them into a single, ring fenced multi-year settlement that represents the most significant funding stability for decades. This moves away from the six month limbo of temporary HSF extensions and provides £1 billion per year for three years.

CRF is not merely an administrative change; it is a policy reset. The government has explicitly linked the CRF to its ambition to end the need for emergency food parcels, signalling a shift towards dignity and financial autonomy.

To ensure the Crisis and Resilience Fund creates a stronger, more sustainable safety net than its predecessors, our joint research with Trussell recommends a focus on:

1. A cash-first, needs-led approach to crisis support. This means prioritising cash payments for people facing a financial crisis, with flexibility to provide alternative support to suit individual needs and ensure value for money, for example, direct provision of furniture or appliances. This is the most effective and dignified approach, providing speed, choice, and flexibility. Crisis payments should also be closely connected to advice and wider support to help prevent future crises

2. Tackling the drivers of financial crisis, not the symptom of food insecurity. An inability to afford food is a symptom of not having enough money to afford the essentials, including rent, energy, clothes, and transport. Free and low-cost food is neither the best form of crisis support nor a preventative measure that builds financial resilience, and should not be a priority for the CRF

3. Preventive support and building financial resilience for people most at risk of financial crisis. Local authorities should be encouraged to use the CRF to invest in effective models of support that increase access to income and advice for people facing financial crisis, and reduce the need for emergency food parcels

4. A systematic approach to monitoring and evaluating outcomes. An agreed approach to collecting data on outcomes is essential for understanding the impact of the CRF and learning where improvements can be made

Register to hear Trussell and Policy in Practice discuss this analysis and recommendations in our free webinar. Of particular interest to councils, as well as organisations supporting people at risk of financial hardship

Throughout 2025, Policy in Practice released eight policy reports that highlighted the cracks in the system. Four in particular stand out as we look towards 2026:

Missing Out 2025: £24 billion of support is unclaimed. Over 7 million households are missing out on record support, driven by under claiming and new eligibility, but targeted action is beginning to turn the tide

Automating access to water social tariffs: This report highlighted a breakthrough in practice where we demonstrated how residents could be auto-enrolled onto social tariffs. In pilot areas, we auto-enrolled over 1,200 people onto lower bills, proving that technology can close the support gap without placing the administrative burden on the organisation or resident

Checks and imbalances: Our investigation into income volatility showed that half of all people working while on Universal Credit see their incomes fluctuate enough to move them in and out of eligibility for things like Free School Meals

Hidden holes: We found that one in two households on Universal Credit are living with some form of deduction or sanction, significantly reducing their ability to weather even small financial shocks

In 2025 our clients proved the power of data led intervention. Last year alone, Policy in Practice’s LIFT platform helped 62,000 households become better off by more than £77 million. This impact proves that even in a volatile policy environment, proactive support works.

As our Director and Founder, Deven Ghelani, noted during our recent review of the year webinar, 2025 was a year defined by policy friction and unprecedented political shifts. We saw significant back and forth on welfare policy changes, including the partial reversal of Winter Fuel Payment decisions and the overturning of planned disability benefit reforms. While policy ultimately landed in a good place, the journey there was concerning for claimants.

1. Benefit reform and the risk of a two tier system

The year began under the shadow of the Winter Fuel Payment decision, which created significant political tension and set a difficult tone for the government’s relationship with older voters. This friction carried over into the disability benefit reform debate. While many of the most significant proposed cuts to PIP were subsequently overturned following pressure from backbenchers and campaigners, the final result remains a mixed bag.

Notably, changes to the Limited Capability for Work and Work-Related Activity (LCWRA) element are still proceeding for new claimants. This creates a concern: the emergence of a two tier benefit system where new health related recipients receive less support than existing claimants.

2. Work incentives and landmark upratings

Despite the challenges, 2025 delivered several landmark wins that provide the foundation for 2026:

• Above-inflation uprating: The Universal Credit standard allowance saw an increase that arguably remains under recognised for its role in supporting household budgets
• Universal Free School Meals: The expansion for all children on Universal Credit addressed a long standing work incentive barrier. Previously, families often faced a cliff edge where earning enough to lose Universal Credit eligibility resulted in the sudden, full cost of school meals, effectively leaving them worse off for working more
• Funding stability for councils: For the 100+ local authorities we partner with, the move to a three year funding settlement represents a vital shift. This stability allows for the long term investment in solutions required to move from crisis management to strategic prevention

3. The Budget: A win for child poverty campaigners

Budget 2025 finally addressed the two child limit, a move long championed by poverty campaigners. This was followed by the Child Poverty Task Force report, which Policy in Practice was pleased to contribute to, that sharpened the focus on families in temporary accommodation and the deepest poverty.

While the removal of the limit is a significant success, the two years of political back and forth preceding the decision serve as a reminder that the journey to reform can be as impactful as the policy itself.

We look forward to the removal of the two child limit this April, a reform we’ve called for for years, as it is one of the most cost effective ways to pull children out of poverty. However, this policy does not exist in a vacuum.

Our analysis shows that one in five families who should benefit from the removal of the two child limit will see their gains either fully reduced or partially reduced because they will immediately hit the overall benefit cap. This benefit cap interaction trap means that, for thousands of families, a significant policy reform will result in no extra money in their pockets.

Understanding who these families are before April is the only way to ensure they receive the wrap around support they will need to manage the ongoing budget shortfall.

In our December webinar Abbie Everett, Head of Client Services, shared how leading organisations are already preparing for these shifts using their data to proactively protect residents.

• The benefit cap and two child limit interaction: New filters in LIFT allow practitioners to identify households that are likely to be benefit-capped when the two child limit is removed. Identifying these households now allows for targeted intervention, such as the Redbridge Council model which used LIFT data to target over 1,200 households for support, helping 17 families move out of temporary accommodation and saving the council £300,000 in costs
• LCWRA and PIP alignment: LIFT allows councils to identify households claiming LCWRA who do not receive Personal Independence Payment (PIP). Ensuring these residents are on the correct benefits is a priority before the halving of LCWRA for new claimants
• Transitioning from crisis to resilience: With the Crisis and Resilience Fund (CRF) arriving in April, the focus shifts to long term prevention. Plymouth Council already demonstrated the power of this proactive approach. By using LIFT to identify at-risk residents early, they turned £26,000 in crisis grants into £125,000 of long term income uplift

Beyond April’s policy changes, the focus shifts to ensuring that eligibility for support translates into actual income for households.

• September 2026 free school meals: Free school meals will be expanded to all children in households receiving Universal Credit, though eligibility for a meal does not automatically secure Pupil Premium funding for the school. Registration for FSM is key, and successful auto-enrolment strategies, such as those done by Lambeth and Northumberland, match local data with school census records to identify eligible non-claimants. In Lambeth, this approach enrolled over 1,500 students, boosting school funding by £3 million and average household income by £600
• Streamlining access with Apply Once: To help the 1 in 10 households facing an average £400 monthly shortfall, technology is being used to streamline support applications. The standard for 2026 must be to make support invisible and automatic. Southern Water is pioneering our Apply Once model, identifying nearly 5,000 households missing out on support and helping them access £2.45 million in unclaimed benefits through a single, integrated process. This pre-fills the necessary forms and removes the friction that often prevents people from accessing help

Success in 2026 will not just come from reacting to changes as they happen but from building a proactive infrastructure, enabled by data, that puts the customer at its heart. Whether it is addressing the £24 billion in unclaimed support or navigating the transition to the Crisis and Resilience Fund, the goal is to make support invisible, automatic, proactive and efficient.

To see the full policy timeline and see a demonstration of how to identify households at risk in your local area, watch our strategic look ahead webinar on demand.

1. Join live: Learn more about the CRF and its implementation on our free webinar on 21 January. Details and register here
2. Listen back: Learn more about our policy review of 2025 and what’s ahead for 2026, including Q&A with the audience. Slides and recording here
3. Ask us: Find out how much of the £24 billion of support is unclaimed in your area here