The Government is to cut tens of millions of euro next year from the back-to-work allowance scheme, which helped nearly 30,000 long-term unemployed people to get back into jobs last year.
The Department of Social and Family Affairs last night acknowledged that a major review of the scheme was under way.
"There will be more restrictions," a spokesperson told The Irish Times.
Under the scheme set up in 1993, people out of work for more than a year can hold onto the majority of their welfare benefits, including medical cards and other non-cash entitlements, for up to three years.
People are entitled to hold on to 75 per cent of their social welfare payments in the first year; 50 per cent in the second year, and 25 per cent in the third year if they quit the Live Register to take up a job.
The three-strong Independent Estimates Review Committee, which examined all existing public spending, last week recommended that no new people should be taken on to the scheme from next year.
In the 2003 Estimates, the Department cut the budget for employment support services by 31 per cent - down from €198 million in 2002 to €137.3 million.
The numbers on the scheme have been steadily falling in recent years. In December 2000, there were 39,000 participants. This fell to 32,000 a year later. By last October, 25,000 people were taking part. The scheme helped 28,483 people in 2001 to take up jobs, while 3,708 more were allowed to keep most of their benefits for up to four years to encourage them to start their own businesses.
In 2000, the consultants, Indecon, recommended that the numbers of people on the scheme should be reduced and those who remained should be given more support.
The Department's plans to cut spending on the scheme comes as the Department of Enterprise, Trade and Employment prepares to cut 5,000 places on the Community Employment Scheme.
Labour Westmeath TD Mr Willie Penrose demanded a full and immediate statement from the Minister for Community and Family Affairs, Ms Coughlan, about her plans.
"The Minister must now state, as a matter of urgency, what her proposals are for the scheme. To simply scrap the scheme would be a crude and unwise cut," said the Westmeath TD.
The programme has "played a major role" since 1993 to help the long-term unemployed.
"It is a scheme which should be developed and improved. Not simply scrapped."
In its findings, the Independent Estimates Review Committee said the scheme was established at a time when long-term unemployment had run at 8.9 per cent, while the figure today is 1.2 per cent.The cutbacks would save €24.4 million next year, it said.
