Delivering the Summer Budget 2015 in parliament today, Chancellor George Osborne announced that support through child tax credit will be limited to two children for children born from April 2017.
Meanwhile the total amount of benefits a family can claim in a single year will be reduced from the current level of £26,000 to £23,000 in London and £20,000 elsewhere in the UK.
In addition to this, working-age benefits will be frozen for the next four years and automatic entitlement to housing benefit will be ended for 18- to 21-year-olds.
Matthew Reed, chief executive of The Children’s Society, described the budget as “a disaster for low-income working families”.
He said the government’s announcement that it will slow welfare cuts, with the £12bn in savings being made over three, rather than two years, will “make little difference to the millions of children who are living in poverty”.
“Their families will still lose the critical support that tax credits give to make ends meet and provide their children with the basics of life,” he said.
“The chancellor has said this is a budget for working people, but he has hammered the hopes of millions of children living in poverty,” he said.
“It fails to provide a route out of poverty for families that are already struggling to make ends meet.
Kate Mulley, director of public policy at Action for Children, while welcoming the commitment to introduce a living wage, which will be worth £9 an hour by 2020 for those aged 25 and over, said that restrictions to housing benefit “place the burden of budget savings on young people’s shoulders”.
“Young people in the benefits system do not always have the same opportunities as many of their peers which is why extra support is so important,” she said.
“It is vital that the government implements exemptions that work in practice to support young people facing uncertain futures.”
Denise Hatton, chief executive at YMCA England, said the majority of young people on housing benefit are not on it out of choice.
“They are on it because their circumstances mean they have no choice,” she said.
Imelda Redmond, chief executive of 4Children, said that although the introduction of a living wage will help working families earn enough money to raise their children, she is concerned about cuts to benefits.
“A higher wage economy is the right goal, but we can’t cut off vital support before being assured that wage increases can offset such a loss,” she said.
“Cutting tax credits fails to recognise the simple fact that it costs money to bring up a child – and that children are an asset to, not a drain on, society.”
Osborne said that details of the welfare changes will be set out as part of a Welfare Reform Bill, due to be published tomorrow.