A council leader has written to communities secretary Eric Pickles warning him that scrapping emergency welfare support will drive vulnerable people into the hands of loan sharks.
Louise Goldsmith of West Sussex Council said the move was counter productive and would lead to greater problems in the future.
Earlier this year the Government announced the £347m Local Welfare Assistance fund, which provides emergency support for families in crisis, would not be renewed after 2015.
Cllr Goldsmith said work carried out locally by the West Sussex Local Assistance Network offered ‘cracking good value for money’.
‘It is a fine example of cost-effective preventative early intervention very much in line with the county council’s belief and policy to help people to help themselves and we are happy for our process to be used to help other authorities,’ she told Mr Pickles.
‘When the fund is withdrawn we are seriously considering that in West Sussex we will have to continue funding our local assistance network. For us this represents an unfunded new burden of around £1.24m a year which means we will have some unpalatable choices ahead of us in deciding where in our budget the £1.24m sum will come from in future years.
‘We are in West Sussex continually finding more savings and cutting our coat according to our cloth, but finding the additional £1.24m at a time when resources are stretched within local authorities will be an additional pressure.’
While Goldsmith has not yet received a response to her letter, a government spokesman said: 'Councils will continue to provide support to those in their community who face financial difficulties or who find themselves in unavoidable circumstances.
'In contrast to a centralised grant system that was poorly targeted councils can now choose how to best to support local welfare needs within their areas – what is right for inner London will not be for West Sussex.
'Government continues to provide support to local authorities’ through general funds as part of the Government’s commitment to reducing ring-fencing and ending top-down Whitehall control.'
