Community Law Service (CLS), formerly known as Welfare Rights, will have its Northamptonshire County Council contract terminated at the end of this month (September 2018).
Citizens advice services in Corby, Kettering, Daventry and South Northants, which work in partnership with CLS, will also have their grant withdrawn as part of £220,000 of savings being made from the information, advice and guidance service budget.
The organisations, which together offer specialist advice to more than 4,000 county residents each year, say the cuts will have a devastating effect and lead to more residents getting into debt, more families becoming homeless and more people developing mental health problems.
Chief executive of CLS Julie Silver said although the service will continue to run as it has other income sources, it will have less capacity to help.
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It is thought seven specialist advisors may have to be made redundant.
Services provided include specialist debt advice, casework and legal representation for those having benefit and housing issues and negotiations with landlords or lenders.
The advice sectors receives referrals from a huge range of organisations including councils, NHS bodies, the police and schools.
Julie Silver said the cuts could lead to a reduction in opening hours of the advice centres and also fewer drop-in services.
In a letter to council leader Matt Golby asking him to reconsider the funding withdrawal, Mrs Silver said: “CLS and our Citizens Advice partners provide specialist advice to over 4,000 local residents each year who are almost exclusively on low incomes with over 60 per cent of these having health problems or disability and over 50 per cent are families with dependent children. Over 30 per cent supported are frail or elderly.”
The county council is stopping the funding as it makes a bid to save £64m from its budget this year.
The service was previously funded from a Public Health grant but Public Health England has told the council it cannot use the funding to provide the service.
The advice sector is arguing that the council should be able to fund through the public health grant and is concerned that it has not challenged Public Health enough on its decision.
It also says the council has not assessed the impact of the services it offers properly.
A spokesman for the council said: “NCC was subject to a detailed review of grant spending earlier this year.
“As part of this review, Public Health England and auditors were presented with detailed information about each of the services being funded against the criteria for Public Health grant funding.
“Public Health England concluded that services providing information, advice and guidance and home improvements were non-compliant with grant funding guidelines and would normally be provided either through local government funding or adult social care.
“As such NCC has decided that it can no longer contribute to funding these services through the Social Wellbeing Services Contract.”
Labour county councillor Anjona Roy has backed the call to rethink the funding withdrawal.
She said: “This cut to advice services will mean more people in unmanageable debt, more people becoming homeless and increased use of health and social care services as people find themselves in situations they just cannot manage in and have no access to any practical help that will change their situation.
“Significantly it will also mean that when statutory services get things wrong people denied help or money will not have the support to get justice.
“Without justice what other recourse do people have?”