Families with babies are hit hardest by cuts, warns FPI

An analysis by the FPI, Families in an age of austerity, found that families with newborns will lose millions of pounds a year through the loss of the Child Trust Fund, the axing of the Health in Pregnancy Grant, cuts to the Sure Start Maternity Grant, and the abolition of the baby element of Child Tax Credits.

The FPI estimates this equates to a total loss of £775.3m to the 790,000 babies born each year.

These families will also be hit by the three-year freeze on child benefit. Parents in part-time jobs will also lose out if they cannot find extra work to increase the number of hours they work from 16 to 24 a week in order to qualify for Working Tax Credits.

FPI chief executive Dr Katherine Rake said, 'Families are being asked to absorb much of the pain of the changes to UK tax and benefits.'

A separate report by the Resolution Foundation, breaking down how cuts to Working Tax Credits will affect each region for the first time, found that up to 500,000 families stand to lose out by £436 a year from cuts to the childcare element of Working Tax Credit.

Currently, families are able to claim up to 80 per cent of their childcare costs, but from April this will be reduced to 70 per cent, following a reduction to the amount working parents can claim made in the public spending review.

Around 450,000 working households receive the childcare element of WTC and most are on incomes below £30,000 a year.

Gavin Kelly, chief executive of the Resolution Foundation, said, 'For working mums on low to middle incomes, losses like these will be hard to bear. Many parents find support with childcare costs absolutely essential to staying in work, and the big worry is that some will now find that work doesn't pay.'