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Low-income mums could need debt advice

24/06/2010

Low-income mums could need debt advice

New mothers on lower incomes could benefit from seeking professional debt advice to avoid getting into financial problems as a result of the changes laid out in the emergency budget.

According to the Trades Union Congress (TUC) new mums could be more than £1200 worse off a year thanks to huge cuts in child tax credits and grants.

One of the biggest losses will come from a modification of The Sure Start Maternity grant, which from April 2011, will only be available for the first child in a family.

The change means that low-income pregnant mothers who already have a child will now lose out on £500.

Another major blow to new mums is the abolition of the Health in Pregnancy grant. This was a universal grant of £190 that was given to all expectant mothers to promote child and maternal health and engagement with health services.

The baby element of tax credits has also been affected. Whereas previously there had been an additional payment of up to £545 a year for families in receipt of tax credits if they had a child under one, they will now receive nothing.

A further cut has been brought about with the scrapping of the Toddler Tax credit which would have provided low-income families with children ages one or two an extra £4 a week or £208 a year.

The Child Trust Fund scheme has also been abandoned and a freeze in child benefit for three years means a significant reduction in its real terms value.

According to the TUC those who will be hardest hit by these policies are the lowest income families with very young children. It will also hurt middle income families with children who find their tax credit eligibility has been reduced as a result of the eligibility thresholds being lowered.

The lowest income families with new babies will now be £1,293 a year worse off than they were before.

TUC General Secretary Brendan Barber said: "Today's big claim is that this is a fair and progressive budget. Try telling that to those poor mothers who will lose more than £1,200 as a result of today's announcements."

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