Charities gave warning that a one-off extra winter fuel payment would not help pensioners who are stuck in poverty. The Chancellor has promised pensioners over 60 £50 on top of their annual £200 winter fuel payments, while those over 80 will receive £400 in the next tax year, up from £300.

However, the increases were condemned as nothing more than “a spoonful of sugar” by pensioner groups, which said that the top-up failed to match the rising cost of living for older people and would not help to relieve pensioner poverty. The average fuel bill has reached more than £1,000 a year after recent price rises by energy companies. Age Concern estimates that about 2.25 million older people are living in fuel poverty.

Gordon Lishman, director-general of Age Concern, said: “An increase to the winter fuel payment this year is a spoonful of sugar to make the bad medicine Budget go down. Although this announcement is welcome, many older people will feel it is nowhere near enough to address the cocktail of price hikes they have had to swallow this year.”

The announcement came as the Treasury launched a tax “raid” on middle-income people who are saving for their retirement by contributing to the state second pension (S2P) on top of their basic pensions.

Rose-tinted specs fail to offer hope

The obvious justification for Mr Darling’s relatively upbeat scenario is that the outlook is fraught with uncertainty

Background

• Darling's first Budget: the main points

• The Chancellor's speech in full

• Darlings first Budget: the reaction

• Chancellor hits the home budget as his debts soar

• Need to know: Budget 2008

The Chancellor delivers a modest Budget

As so often is the case, virtue, in terms of improving public finances, is not now, but at least a year away

Multimedia

• Video sketch: Matthew Parris and Ann Treneman

• Eco-worrier: should we be pleased?

• Green Central: round-up of the green Budget measures

Related Links

• This won’t save the planet - or the elderly

Multimedia

• Red Box: a list of Darling's new enemies

• The winners and losers

• Video: the 'fingers crossed' budget

Government figures published in the Budget showed that the Treasury expected a windfall of £770 million in revenue as a result of changes to the way in which national insurance contributions are calculated. Experts said that the changes would mean that those who earn more than £40,000 a year would pay in more but receive smaller state pensions.

Tom McPhail, of Hargreaves Lansdown, the independent financial adviser, said: “This amounts to a raid. The Government is taking money from us but giving us nothing in return.”

Charities criticised the Government further for refusing to bring forward the date at which the basic state pension will be linked to earnings.

Accountants said that government proposals to make S2P a flat-rate benefit in 2030 was effectively a way of making more money.

Gordon Sharp, an accountant at KPMG, said: “The Government has shown that it will be making money by instigating a long-term rundown. Over time, less and less will be provided by the state second pension while more will be paid into it.”

From 2009 a limit will be introduced on how much a person can earn to be eligible. At the same time the Government is raising the income level at which workers must pay NICs into the state second pension pot to about £40,000.

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