Social welfare payments have grown at more than twice the rate of Britain’s over the past seven years, putting Ireland at the top of the European Union welfare league table.

The €166-a-month rate of child benefit, which was 30% above the British equivalent in 2003, is now 66% greater, according to new figures from the Department of Social and Family Affairs.

Unemployment benefit has gone from 66% higher in 2003 to 200% higher, while the Irish old-age pension, which was 46% above the British equivalent in 2003, is now 112% greater. Employers claim the increases have killed the incentive to work in low-paying jobs.

The figures have emerged in advance of a government meeting this week to consider what spending cuts to make in December's budget.

Mary Hanafin, the social and family affairs minister, and Brian Lenihan, the finance minister, have already indicated that the government intends to cut the annual €2.5 billion in child benefit payments by €400m next year, through taxing or means-testing the benefit.

It is now believed that the Expenditure Review Group, also known as An Bord Snip Nua, recommended almost €2 billion in welfare cuts in a report it delivered to Lenihan last week. Social welfare spending will reach €21 billion this year, accounting for a third of all government spending.

Ireland was already paying well above British rates in three key welfare categories — dole, pensions and child benefit — in 2003, but the increase in the intervening seven years has widened the divide.

The weekly state pensions (contributory) stood at €157 in the republic compared to Britain’s €107 (£77) in 2003,

but have increased by 46% since, while Britain’s have risen by 23%.

The fall in the value of sterling in recent years has increased the gap. When the payments are converted to euro, Britain’s £95-a-week pension is €109, while the weekly Irish pension is €230.

The gap is less pronounced in child benefit. The British handout has risen 24% from £69.55 per month to £86.66 (an increase from ¤96.68 to just ¤99.67 when sterling depreciation is factored in).

The Irish payment has risen by 32% — from ¤125.62 to ¤166. But British parents also receive a tax credit from the Inland Revenue for each child born, which partly offsets the gap.

The most significant difference lies between the dole payments in the two jurisdictions, a gap that has prompted social welfare officials to mount joint border checkpoints with gardai and customs personnel to crack down on welfare fraud.

The republic’s dole payment to those recently made redundant (jobseekers’ benefit) has risen 63.4% from €124 a week in 2003 to the current €204. In Britain, the £54.65 dole payment in 2003 has risen 10.7% to £60.50 this year. The euro value of the payment is actually lower than it was seven years ago — €69.58 versus €75.96.

Mark Fielding, the chief executive of the Irish Small and Medium Enterprises Association (Isme), said: “The scale of our unemployment payment is a major problem for the Irish economy,” said . “The cost of paying jobseekers’ benefit is adding to our exchequer deficit and it’s affecting the incentive to go back to work.

“We have employers who are looking for workers, but with our foreign workers returning home in greater numbers it is creating a problem. Managers of small Irish firms are finding it difficult to get the Irish unemployed to go back to work.”

Recent EU figures also show the level of Ireland’s welfare payments exceeds that in Germany, France, Spain and other EU nations, trailing only occasionally behind Luxembourg and some of the high-tax Nordic nations.

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