A series of measures were announced regarding welfare reform that will have a significant impact on children, young people and families.

• From April 2011, all tax credits, benefits and public service pensions will be indexed to the Consumer Price Index rather than the Retail Price Index. This will save £6 billion a year by the end of the Parliament and is being brought in rather than the ‘benefits freeze’ some had called for.

• Tax credits will be targeted more to those earning less through a variety of measures, including reducing eligibility to those earning £40,000 and increasing the rate at which credits decrease as income increases. Other measures included were a reduction of the income disregard to £5,000, and a reduction of back-dating from three months to one.

• The Health in Pregnancy Grant will be abolished and the Sure Start Maternity Grant will be given only in relation to the first child. Both of these will not apply to current expectant mothers.

• Child Benefit will be frozen for three years, rather than any means testing or taxation that had been considered. It is argued that the increase in the targeting of tax credits will prevent a disproportionate impact in families with lower incomes.

• Lone parents will be expected to enter paid work once their children reach school age. Lone parents currently receive income support until their child reaches age 10. Income support will be replaced with job seekers allowance when a lone parent’s child reaches school age from next October. This will involve lone parents proving that they are actively seeking employment or facing having their welfare support reduced.

• The child element of the child tax credit will be increased by £150 above indexation next year.

• An increase in VAT from 17.5 to 20% will take effect from 4 January 2011. 4Children is concerned about this regressive tax as the poorest pay a larger proportion of their income on VAT.

• An increase in personal tax allowance of £1,000 is expected to take 880,000 people out of paying income tax altogether and save basic tax rate payers £200 per year

• The Government remained committed to a number of benefits for older people, such as Winter Fuel Payments, free prescriptions and off-peak local bus travel.

• Councils that work to keep costs low will receive Government help to freeze council tax for one year starting from April. According to the Chancellor, this council tax freeze will leave the average family £35 a year better off.

• In a statement light on education related announcements it was announced that all departments (apart from Health and International Development) will see a budget cut of 25% in real terms during the life of this Parliament. Additionally the Chancellor confirmed that the student loan book would be sold off.

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