Half of all homes with children better off

A couple with two children will pay no tax on their income until it reaches almost £20,000 a year. changes to the tax and benefits system that came into force this month mean that 50 per cent of families with children will be better off, even after rises in taxes.

The Treasury said that the Budget marked "the next step in the Government's strategy for supporting families".

The Chancellor also announced a review of support for those aged 16 to 19. Mr Brown asked the Low Pay Commission to look at extending the minimum wage to those aged 16 and 17 and to report its conclusions next year. "We will also review, for 16 to 19-year-olds, training, pay and employment needs, including the case for 16 and 17-year-olds to have a minimum wage."

Apprenticeships, "once withering away", will rise to 320,000 by the year 2006, he said. Mr Brown also pledged further consultation on targets to end child poverty in a generation, and to halve it by 2010.

The new child tax credit will help about 5.75 million families improve their living standards, the Treasury said. Measures that came into force a week ago will mean that a single-income family earning £21,400 a year with two children will be nearly £5 a week better off, mainly because of the child tax credit.

The Treasury claimed that since 1997, families with children are on average £1,200 a year better off.

"Tax credits are the modern route to eradicating poverty by making work pay," the Chancellor said. "With the new tax credit system, a couple, both earning, with two children now have their tax bill cancelled out until their income including child benefit is just under £20,000 a year: £19,800 a year."