SOCIAL welfare chiefs have dismissed criticism by grassroots groups that the new government spending Budget has failed to substantially increase cash allowances to the needy. Expenditure on social welfare services will increase by 16.6 per cent to $3.5 billion, while spending on social security payments and allowances will rise by only five per cent to $6.3 billion. But the Secretary for Health and Welfare, Elizabeth Wong Chien Chi-lien said: ''We care for everybody including people who are very unfortunate and most vulnerable. It's not only in terms of cash, but services.'' Director of Social Services Ian Strachan said: ''Social welfare is more than just cash payments. Welfare is also direct service to the people'', adding that the Government was helping the needy in many ways. Society for Community Organisation director Ho Hei-wah said it would be ''more realistic'' to give poor people more money. ''Social welfare services cannot replace food and clothes or help improve their standard of living,'' he said. ''For them, money is of paramount importance because they have to pay for clothes, food, accommodation and transport.'' Mr Ho urged the Government to increase cash allowances or subsidise regular expenditure such as transport. Commenting on the Budget, Mrs Wong said increasing the Mark Six proceeds which went to the Lotteries Fund from five to 15 per cent would ensure the construction of seven new nursing homes for the elderly before 1997. She also applauded the introduction of a dependent grandparent allowance as encouraging community care for the elderly. ''The $7.5 million grant for anti-smoking campaigns and research is also significant because fewer smokers will mean that fewer people will need to use our hospitals and clinics so saving more money in health care.''