Budget 2010: £1293 a year income cut for poorest families with babies
Today’s Budget set out how the poorest pregnant women and families with very young children will see their incomes fall.
- The Sure Start Maternity Grant will, from April 2011, only be available for the first child in a family. This is a cut of £500 for low income pregnant mothers.
- The Health in Pregnancy Grant has been abolished – this was a universal grant of £190 available to all mothers to promote child and maternal health and engagement with health services.
- The Baby Element to Tax Credits has been cut. This is an additional payment of up to £545 a year for families in receipt of Tax Credits with a child aged under one.
In addition, the previous Government’s introduction of a new Tax Credit for low income families will not go ahead. This Toddler Tax Credit would have provided an extra £4 a week for families with children aged one or two. This is essentially a further cut of £208 .
Child Benefit has also been frozen for three years – which will mean a significant reduction in its real terms value. And of course the Child Trust Fund has already been cut.
At the same time, Child Tax Credit is being increased by £150 above inflation. This will mean that for families on low incomes with older children will see a small increase in their incomes (although their costs will also rise as a result of the VAT hike).
Those who will be hardest hit by these policies are therefore the lowest income families with very young children, and middle income families with children who find their Tax Credit eligibilility has been reduced (as a result of the eligibility thresholds being lowered).
The lowest income families with new babies will now be £1293 a year worse off than they would have been had the grants and Baby Element remained in place, and a Todder Tax Credit been introduced.