Action against poverty misses the poorest

Millions of low-income families with young children were given further tax credits and benefits in the Chancellor's Budget. He claimed that "every family in Britain will be better off" as a result of his policies.

Millions of low-income families with young children were given further tax credits and benefits in the Chancellor's Budget. He claimed that "every family in Britain will be better off" as a result of his policies.

Gordon Brown announced that he was using £1bn to raise the child tax credit by 13 per cent over the next three years, in line with earnings. A middle-income family on annual earnings of £23,400 will be £260 a year better off under the changes.

The increases will mean that three million of Britain's seven million families with children will now receive more in tax credits and child benefits than they pay in income tax, the Chancellor said.

Middle-income families will also benefit from the rises in child-tax credits. For instance, a couple with two children and a combined salary of £25,000 will now have in effect an income tax rate of just 6 per cent, while a similar family on £30,000 a year will pay 10 per cent income tax after the credits.

But higher-earning parents and the poorest families in workless households will not gain anything from the Chancellor's announcements.

Child benefit is to rise to a maximum of £63 a week for a first child and £111 a week for families with two children.

Low and middle-income families will also benefit from rises in the amount of help they can claim from the Government in childcare costs, announced in last autumn's pre-budget report. From April this year, a family with one child, and claiming working tax credit, will be able to claim a maximum of 70 per cent of £175 a week in childcare bills, rising to 80 per cent of £175 from next year.

The increases in tax credits and child benefits are in line with earnings, a move which charities had said was vital if the Government was to hit its targets on reducing poverty.

Kate Green, the chief executive of the Child Poverty Action Group, welcomed the announcements on tax credits. She said: "The commitment to continue to increase the child element in child tax credit in line with earnings is vital if the Government is to stay on track to meet its child poverty target. We are pleased that our pleas to the Chancellor have been listened to. Investment in support of tax credits and child benefit as children grow up helps families to meet the immediate costs of raising children."

The Government has set a target of halving child poverty by 2010 and eliminating it by 2020. But a spokesman for the Save the Children charity said: "The children of unpaid carers, the ill, disabled people and others who cannot work will miss out - again. The Labour government, since coming to power in 1997, has concentrated its child poverty strategy on welfare to work, increasing rewards for work and helping more people into work. This has been successful in reducing child poverty but has left those in severe and persistent poverty further behind."

Mr Brown said that he would also consult on whether to extend the child trust fund scheme so that payments were made beyond primary school and into secondary education.