Government Cut Backs

With Government cut backs and prices rises on everything from food and petrol to heating bills, it’s no surprise that nearly 80% of us parents are being forced to make cuts of our own to cope with the ever increasing pressures on our family budget.

Here’s what some of those Government cuts mean for your family’s finances.


Child benefit cuts

This is the big one which will affect around one million families who’ll lose child benefit payments in three years time. 

Right now anyone with children gets child benefit; regardless of what you earn or where you live.  It’s £20.30 a week for your first child and £13.40 for each, and every other one; that’s over £1700 a year if you’ve got two children.   But the Government’s scrapping child benefit for higher rate taxpayers; anyone earning over £44,000 from 2013.  And this isn’t based on your household income; the cuts apply if either partner earns £44,000 or more.  Big losers in this will be stay at home Mums, dependent on their partner’s salary for the family budget, and single parents with a higher than average, but solo income, will see payments disappear too. 

My advice is to work out if you’re likely to be affected; and if so, put some of your child benefit aside right now.  Start by trying to save a third of it; then half and by the time the cuts come in you’ll have some money stashed away and be better able to cope on a reduced budget.


Child Trust Fund

This was the Government’s plan to encourage parents to save for their kids’ future, but eight years down the line it’s been axed.  If you’ve got an existing account you can stick with it and continue paying money in; but there’s no more Government top ups or free cash for new born babies.

I’d always suggest getting started with some form of savings for your baby as soon as you can; even if it’s a bank or building society account to pay in any money they’re given when they’re born.   Long term this won’t be the best option as interest rates are low right now and some children’s accounts pay less interest than the adult versions but it’s a good start.  And if you can commit to saving a regular amount; even just £10 a month, this will mount up over the years.


Child Tax Credit

The tax credit system is a complex one with no ‘one size fits all’ as payments vary according to how many children you’ve got and how much you earn.  Prior to April households with an income of under £58,000 could claim tax credits but from April changes mean it’s unlikely households with an income over £43,000 will get any payments.  And even if you are eligible for payments; the Government has also axed the ‘baby' element of Child Tax Credit, previously paid to parents with a child under one and worth £545.  Check how the changes affect you and how much you’ll get at


Any other payments that have been abolished?

The ‘Health in Pregnancy’ grant; worth £190 has now been cut and the

‘Sure Start’ maternity grant, worth £500, (for those on a low income), is now restricted to the first child since April.  Depending on your income you can still claim ‘Healthy Start’ vouchers; worth £160 a year, available from your midwife or GP, which can be used for milk, fresh fruit and vegetables.


Detox your spending to balance the family budget

First up I’d suggest getting a cup of coffee and taking a look through your bank statements.  Look at what you’ve got coming in; what you’re spending and ways you can cut back.  Switching your energy supplier or shopping around for a credit card deal can all save you pounds.  And no need to spend hours on the phone to check out prices; make the most of online price comparison services that do the job for you. 

Small changes add up too; paying upfront for an annual magazine subscription saves money rather than forking out £3 a time on a glossy magazine can save £20 a year, or read the paper online a couple of days a week to save over £50 a year.  

And if you’re planning to go back to work there’s ways to claw back some of your childcare costs.  Some employers offer a childcare voucher scheme; which effectively means swapping a slice of your salary for vouchers which can be used to pay your childminder or nursery.  As any money you ‘swap’ comes from your pre-tax income; you gain the chunk that the tax man would usually get; around £20 for every £100.  Ask your employer for details.

Have a go and carefully plan your family budget!