So you were looking after him financially before you separated? As you don't anymore, it's reasonable to assume he would have to work, and so he can't be available all hours to look after the children while you go to work. Even if he lives with his mum, it's reasonable that he needs to contribute to his mum's household (rent, bills, food etc). So yes, he too needs a job and can't be looking after the children every weekday 8-6. He can't live off thin air and needs an income and roof over his head.
So he had to move an hour away to live with his mum,as probably he didn't have the funds to get together a deposit and pay rent independently. That's quite normal and what a lot of separated fathers have to do. It probably takes longer than 6 months for him to get on his feet after having to start from 0 with no job and presumably with no savings. Now he can't see the children very often. I feel this issue could have been foreseen - perhaps you could have done more to help him get started rather than just kick him out? I appreciate he wasn't acting honestly, but you kicked him out with nowhere to go, no job and no home, and now you expect him to be able to just muster up a big amount of money to live locally by himself in a big enough apartment to facilitate having 3 children stay over, while not having a job, while paying food and expenses for three children while you work, and while paying you child maintenance? Doesn't make any sense. You had very unreasonable expectations.
He was paying 650 per month previously (150*4.33), which is a good amount for 3 children, and you took him to CMS. No he is pissed, and I'd say justifiably so. I appreciate 650 doesn't cover the childcare, but maybe you should have tried to come up with a bit more fare arrangements to begin with.
I feel you started on a wrong foot, and you need to take a long and hard look at the situation and think what is both fair and realistic. You need to coparent with this person for 16/17 years still, so it would be in your and the children's benefit to find a compromise, no matter how hard it can be. Speaking with a mediator can be a big help, and I'd do it soon before things get even more sour between the two of you. If you can't get this sorted, you're headed towards family courts. Who, by the way, can do nothing to help you - they don't award child maintenance (only CMS does this) and they can't force him to have the kids (they can only say you have to make the children available to spend time with him, but it's up to him whether he picks the kids up or not). And also courts cost a lot of money, take years to complete, sours your relationship even more, and harms the kids in the process.
How about you think about something like this -
You both work part time, and have the children 50/50. If you need some childcare, you split the cost. Nobody pays child maintenance as it's a 50/50 arrangement, and child benefit gets split in half too. Each parent pays half the costs (clothes, hobbies, etc). This arrangement can start once he is back on his feet and can afford to live closer in an apartment that's big enough for the children. As you were together for 10 years and he sacrificed his career for several years to look after the kids for years, you should think about contributing to his deposit / paying for it. This patch will only last for another 4 or so years until the youngest one is in school (or you can both even increase hours earlier when you start getting the free childcare hours). Then you can both start working full time and making more money.
That's just my suggestion of something to think about and see whether that would be feasible?
Sorry this probably wasn't what you wanted to hear