Worse off than a year ago

Emma and Richard Beagley from Twickenham, Middlesex are typical of many middle-income families - most of what they gain from new child tax credit, they lose in extra national insurance.

Add their recent 15.6% council tax increase and the Beagleys and their two young children, Daniel, five, and Imogen, three, are worse off than a year ago.

Almost all of the changes to affect the Beagleys and other familes were announced last year, but came into effect this month.

Despite Mr Beagley's £50,000 a year as business development manager at a local advertising agency, the Beagleys see themselves as, "a struggling family, always overdrawn by the end of the month".

"I know Richard's take-home pay of about £2,600 a month sounds a lot, but it doesn't go far living where we do," says Mrs Beagley who is taking a long career break while her children are young.

"High house prices in south-west London mean we've got a £180,000 mortgage on our three bedroom semi, so we pay out over £1,000 a month on that alone, plus £155 on council tax."

This month the family, whose income was too high to qualify for previous state benefits, can get the child tax credit which is payable to all families with incomes of up to £58,000.

This benefit replaces all previous means-tested, income-related support for children into a single payment made direct to the main carer, usually the mother. It is paid on top of universal child benefit, which goes to all families with children regardless of income and which has just gone up to £16.05 per week for the first child and £10.75 for each subsequent child.

The Beagleys will get CTC of £10.50 a week - £545 a year.

Almost cancelling out this is the national insurance rise, announced in last year's Budget, which will take nearly £42 a month from Mr Beagley's salary.

From this month, NI goes up by 1% to 11% on annual earnings above £4,615, and for the first time people earning above the "ceiling" of £30,420 a year pay a 1% rate on all their earnings above that figure.

"I feel the chancellor has done nothing for us except land us with a lot of paperwork which we have to fill out to claim the child tax credit in order to end up with virtually the same money as we had before," says Mrs Beagley.

"And we're actually worse off if we take the extra money we're now paying on council tax into account. I feel that every Labour Budget seems somehow to make families like us a bit worse off, though I do approve of what the chancellor has done for pensioners this time."