Families face severe cuts
Parents and anyone planning a family were today dealt a hefty blow after the emergency Budget revealed severe cuts to kids' benefits and allowances.
In his first budget, which Chancellor George Osborne called “tough but fair”, he announced that child benefits rates will be frozen for the next three years.
Adding insult to injury, from April 2011 child tax credit will only be given to household earning less than £40,000 instead of at the current threshold of £50,000.
The baby element worth £545 – given to each family that includes at least one eligible child under the age of one - will also be scrapped at the same time.
And from April 2012, the family element of child tax credit given to every family caring for an eligible child – which is worth £545 per year – will be withdrawn.
Other benefits to be cut include the health in pregnancy grant. The one-off grant of £190 will be abolished from April 2011, while the Sure Start maternity grant will be restricted to the first child – or children where the first is a multiple birth - only.
Lone parents will also be expected to look for work when their youngest child goes to school.
Women who are already pregnant when the new rules come in will not be affected.
Defending the harsh moves, Osborne said "everyone will pay something but the people at the bottom of the income scale will pay proportionately less than those at the top” adding that the government’s child poverty reduction targets would still be met.
This will be achieved by granting an extra £150 a year for the poorest families by increasing the child element of the child tax credit by £150, the chancellor said.
As announced on the 24 May 2010, the government will reduce and then stop government contributions to child trust funds.
Child tax credit
A scheme started in 2003 that sought to replace a raft of other tax credits and benefits, the payout depends on the number of dependant children in a family, and its level of income. The amount of credit is reduced as income increases. It is payable to the main carer of a child, usually the mother, and is available whether or not the recipient is working.