I know it's a bit late, but even if the children saw you upset all you have to say is that you're worried about money as everything has gone up and you haven't got so much money any more because of all the bills and things. You don't have to mention their dad and his payments in there at all. Of course the children will be worried, all they see is that daddy upset mummy and daddy is bad for doing that so they don't want to see daddy till he makes things better and stops being bad. That is the level of children's thinking.
Maintenance and contact should be unrelated. So him reducing the payments should not influence any decision as to how much contact he has. It doesn't matter how angry and upset you are, i'm afraid you have to accept he is their father, whether he matches up to your ideals of what a father should be or not, that is not going to change.
If you are worried about the children's safety while with him then you need to address that separately.
CSA should have written to you about this. COntact them at once. It is likely he has put in a change but it hasn't been processed yet. He's probably chnaged the payment based on what he calculates it will be. And yes the minimum amount of £5.
Is there no scope for you doing some extra hours at work or getting a xmas job in the short term? I assume you are working if you are getting to keep all the money he was paying before. Speak to your lone parent advisor and the council. With teh reduction in your maintenance payment you might be entitled to more housing benefit or council tax benefit for example.
I suggest you also write him a letter that is non confrontation which simply states that you have not had any confirmation of any changes from the CSA and that until you do you would expect the money to remain the same. Also that is future you would appreciate some warning of a significant change of this nature as you have to consider the impact on teh girls and it is not in their best interests to suddenly reduce the money available to spend on them with no warning.
Phone the CSA immediately if you haven't already and find out what is going on.
I know it's worrying and the stress much be enormous for you. But please try and keep it away from your girls and talk to us here or other grown ups to help you deal with it.
Stay strong
Gilly