Don't accept less than you should for the children. It doesn't matter how hard up he is, all that matters is what his net income is. True there's a credit squeeze at the moment and we're all having to tighten our belts, but the bottom line is the net figure of his income and that is what you should be basing your calculations on.
To be honest the pet insurance isn't really child maintenace. If you choose to spend some of the money on that then of course you can, but the CSA wouldn't regard it as a maintenance payment or something he should pay. Looks like he's getting himself ready for some kind of battle over this.
If you have 2 children with him then he should be paying 20% of his net income (less 1/7th for each whole night on average he has the children overnight) according to the CSA caclculation. Is what he's offering close to this amount? Has he being paying over the odds up till now or is he now underpaying? The CSA aren't that good, but if he is seriously underpaying you should think about using them. Presumably you are working if the CSA aren't already involved? Have you applied for WTC, CTC and help with childcare?
As for the unkind words, all he has to fight you with are words. And while they might hurt (as they are meant to) all they are are words. You need to gain some confidence on how to deal with him. Keep copies of all the messages he has sent you. Sounds like you are going to need them. And then think about what you want to do to move things forward for you and the children. Once you know what you want (whether it be moving back nearer your parents, attending mediation to work through the issues, coming to an agreement re money and contact, how to find that extra £50 a month you need or whatever) then work out how you are going to achieve it.
Yes he could kick up a fuss re moving, but in reality if you are moving within the UK and to be closer to family support and he still has regular access and contact with the children which you are willing to facilitate it is very unlikely a court is going to stop you.
Don't get angry and upset (easier said than done i know). he is not worth it and you wouldn't want to be with a person who can behave in that kind of way in reality now would you!
Stay strong girl. Focus on what you want and start writing it out and working towards achieving it. Having something to aim towards, no matter how small a step forward, will help move you forward. That and time I'm afraid.
Best wishes
Gilly