Working age benefits sacrificed to cut deficit

Bereaved families and those who have three or more children will have their benefits limited after changes to tax credits come into effect today.

Chancellor Philip Hammond told Sky News that the Government has had to make "tough decisions" to help reduce the deficit and honour manifesto commitments.

The Treasury claims tax cuts, which also kick in today, will put more money in people's pockets and help rebalance the economy in favour of working families.

Working age benefits will be frozen from today, a measure which was announced by former Chancellor George Osborne in 2015.

Inflation stands at 2.3%, so the move will amount to a real terms cut for many households.

Added to that, a new two-child limit will apply to the tax credit system, so any third babies born from today won't be entitled to support.

That benefit was worth up to £2,780 a year until the child reached adulthood.

:: UK prices rising faster after Brexit vote

There are also changes to the "family element" of universal credit which will not be paid for any new claims or new babies, although it won't affect families already in the system.

Bereavement payments are changing too with the lump sum paid to families after a parent dies rising to £3,500.

They'll also receive greater monthly payments of £350, but the time limit will be reduced to 18 months.

Previously it was guaranteed until the youngest child left full time education.

:: Households pay £21.31 more for food so far in 2017

The Government's tax cuts also come into effect today with the personal tax allowance - the amount you can earn before you start paying tax - rising to £11,500.

And the threshold for higher rate taxpayers is also going up by £2,000 to £45,000.

Charities, welfare groups and opposition parties say the changes will benefit the wealthy, while struggling working families will feel the pinch.

The Resolution Foundation claims that 80% of the tax gains will go to the richest half of households, while two thirds of the benefit cuts will fall on the poorest third of households.

It suggests that changes to the child tax credit could affect 160,000 families in 2017-18, rising to 640,000 by 2020-21.

A Government spokesman said: "Our reforms are incentivising work and restoring fairness to the system for those who need it as well as the taxpayers who fund it".

"This policy helps ensure that parents on benefits have to make the same choices as those supporting themselves solely through work," he told Sky News.

"Current claimants won't see any reduction in their benefits as a result of this policy, and we will continue to pay child benefit for all children in a household."