Chancellor Alistair Darling said that in addition to a £150 increase to the child element of the child tax credit announced in the Budget in March, it would be raised by a further £25 a year from April 2008, and by a further £25 from April 2010.
The main income-related benefit not dependent on children would increase by £20 by the end of 2008, with a further increase to £40 from April 2010, he added.
These measures, he claimed, would lift a further 100,000 children out of poverty. But the Save the Children charity said the Government's pledge to boost child tax credits by £175 was equivalent only to an extra 48p per week for each impoverished young person. It also warned that ministers risked missing "by decades" their much-vaunted targets for helping poorer children.
In addition, Mr Darling said the in-work credit for lone parents would be rolled out nationally from April 2008 at a rate of £40 – but would remain at £60 in London. Jobseeker's allowance and income support for 16 and 17 year olds will be brought into line with the rates paid to 18 to 24 year olds.
Mr Darling revealed that, from April, the standard minimum guaranteed pension credit would rise to £124 for single people and to £189 for couples. While he claimed the Government was demonstrating its "continued commitment to tackling pensioner poverty", senior citizens' groups were not convinced.
"In spite of all the promises from the new Chancellor, he has shown absolutely no sign of tackling the poverty and hardship that affects at least one in five older people," said Joe Harris, the leader of the National Pensioners Convention.
"While the Government has re-stated its commitment to cut child poverty, the Chancellor bottled out of saying how much next year's rise in the state pension will be, refused to restore the link with earnings before 2012 and failed to end the indignity faced by millions of pensioners who have to survive on means-tested benefits."
If the state pension rose by 4.2 per cent – in line with the pension credit – it would mean a growth in income of just £3.66 a week for a single pensioner, Mr Harris added.
Even the Government's pledge to increase funding for social care, such as home care for the elderly, to £1.4bn per year by 2010 failed to win hearts and minds. Such a sum would "not be enough to meet the rising demands of the over-85s, the need for additional care home places or extra community care at home", said Mr Harris.
"Social care in Britain is in crisis," he added. "A postcode lottery exists in the scale of charges and older people are being denied services or are having to cut back because they cannot afford rising costs."
Gordon Lishman, the director-general of Age Concern, said that while Mr Darling had "dealt an ace card" on the critical issue of care, he had "dealt a poor hand to many of the disadvantaged pensioners who will see nothing new to help them".
He added: "It's really good news that pension credit will continue to rise in line with earnings and really promising that the Government has announced a public service agreement target around tackling poverty.
"But it is extremely disappointing that the Government has yet again failed to bring forward the date for re-linking the state pension to earnings. Without quick intervention, the real value of the basic state pension will continue to fall and today's pensioners will fail to benefit from any of the good measures proposed in the Pensions Bill."
Other groups were far more damning of the Government's announcement on social care. "At first glance, the settlement offered to local authorities will simply not be enough to ensure the gaps in social care funding can be properly filled," said a spokesman for Help the Aged. "There simply isn't enough in the Chancellor's statement to take account of the growing needs of an ageing population." The proposed higher pension credit, he added, "merely reinforces the regrettable reliance on means-tested benefits that shapes the lives of too many older people." While income tax did not get so much as a mention in yesterday's spending review, the headline-grabbing changes to income tax, announced by Gordon Brown when he was Chancellor back in March, come into effect from 5 April. A 2p cut will take the basic rate of income tax from 22 per cent to 20 per cent. While this will mean savings for any taxpayer who earns enough to pay the basic rate, it will be offset by two additional measures to be introduced at the same time. Firstly, the starting rate of income tax – the 10 per cent rate currently payable on the first £2,150 of people's taxable earnings – is being abolished. Secondly, the upper earnings limit on national insurance (NI) contributions will be raised by £75 a week – or £3,900 a year. This is the maximum salary on which taxpayers pay the full 11 per cent rate of NI, so it represents a tax increase. There are also plans to raise the upper NI earnings limit in 2009.
Justin and Andrea Badger: 'More money in education is a good move'
Television editor, Justin, who is 41 and lives with his wife, Andrea, and their children, Clio, six, and two-year-old Felix in north London. "We didn't think much about tax when we set up our children's inheritance. We hadn't realised how much would get stripped away. I'm not one for increasing tax.
"Putting more money into education is a good move. I've been happy with the primary education in our area but we are very worried about the quality of secondary education. There are only five years left until Clio will need to go, so any more money to make them better is good.
"It's good news that child benefit has doubled, but I'm surprised we qualify to get it really. We don't need it, so it would probably be better if it was pooled, then more could be available to those that rely on it. We'd be perfectly happy if it was judged on welfare. I suppose we've got the classic middle-class worries of health and education, so we'd be happy to see more money go to the NHS. We've already seen the benefit of extra funding at the new University College Hospital building. The more money put into health the better."
Emily Dugan
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