The Government sought to kill off council tax as an election issue yesterday by pledging to give older pensioners an extra £100 a year to help with bills.
All those aged over 70 will get the one-off payment to add to the £200 they already receive in a winter fuel payment. The money will mean the over-80s get £400 including the fuel handout.
The surprise decision, which will cost £475m and require legislation, is a clear attempt to buy off what was threatening to become a council tax rebellion by millions of pensioners. Senior citizens have been among the hardest hit by record rises in bills in recent years, with an average 12 per cent increase last year, prompting demonstrations and non-payment campaigns.
Gordon Brown moved within weeks of his pre-Budget report in November last year to dampen rises for this year, providing millions of pounds of extra funding for council finances.
Bills are now heading for average increases of 7 per cent in the coming year, although John Prescott, the Deputy Prime Minister, is certain to cap the budgets of any councils that want unreasonable increases.
But the polls continue to show that voters, particularly the elderly, blame the Government for rises in the council tax bills. As a result, the Chancellor is keen to take the sting out of the issue before council elections in June and a likely general election in spring next year.
Mr Brown said he understood "the difficulties faced by older pensioners on fixed incomes, especially the over-70s. The evidence shows that their council tax bills take a higher share of their income than the rest of the population."
When asked why the £100 payment will be restricted to the over-70s and not all pensioners, Treasury aides said they wanted to target the money on the more elderly.
It was also announced that pensioners who apply for pension credit after October will have their entitlement backdated for up to 12 months. Backdating was previously planned to be restricted to three months from October.
Campaigners said that although the extra money was welcome, Mr Brown had missed a prime opportunity to tackle pensioner poverty.
Mervyn Kohler, the head of public affairs at Help the Aged, called the payment a "one-off gift" which will do little to address long-term problems - 17 per cent of pensioners are in "persistent poverty".
AgeConcern's director general, Gordon Lishman, said: "It's a disgrace the state pension is so inadequate that people have to rely on one-off payments to cover daily living costs."
Mr Brown also announced a simplification of taxation of pension schemes, but critics said that employers received no incentive to sponsor such schemes and there was no draw for employers and employees to contribute to them.