Some parents could be hit with another reduction in Child Benefit payments in the next 18 months if the Department of Social Protection goes ahead with plans to implement a two-tier system aimed at saving up to €200m a year, the Irish Independent reports.

The proposals would give each family a basic payment, with a top-up for families on low incomes.  

There are doubts about whether the Government will implement the proposals, but senior civil servants told the Oireachtas Committee on Social Protection yesterday they were ready to make changes if required.

Assistant secretary Teresa Leonard said the Department of Social Protection would be able to “react quickly” if the Government goes ahead with the controversial plans.

The cost of providing Child Benefit payments has risen by €2.6bn over an eight-year period due to generous increases introduced by previous governments.  

Most of the increase was caused by hikes in Child Benefit payments, the committee heard. In 2000, the first two children got £42.50 each (€54) and each child after £56 (€71). The rates today are €130 for the first three children, rising to €140 thereafter – a hike in the basic rates of 240pc.

A report into Child Benefit, published last month, said the payment could be taxed, resulting in savings of up to €345m, or a two-tier payment system could be introduced, where each family would get a basic payment, with a top-up for families on low incomes.

Ms Leonard said while no decision had been taken on reforms to the system, it would take up to 18 months to implement the changes.

Fianna Fáil social protection spokesman Willie O’Dea, a committee member, said if the proposed system was introduced “an awful lot of low income people who are out there working for a living are going to be hit”.

He also said people in what he described as the “squeezed middle” would be disproportionately affected, the Irish Times reports.  

He was responding to remarks by the chairperson of the advisory group on tax and social welfare which recommended the change to Child Benefit payments, Ms Ita Mangan.

Quoting from the group’s report, Mr O’Dea said families in receipt of Family Income Supplements (FIS) would experience a reduction in their overall income. Ms Mangan said the group was looking closely at some type of “in-work” benefit to replace FIS.

Families will only qualify for maximum Child Benefit payment if they earn less than €25,000 under the system proposed in the group’s report submitted to Minister for Social Protection Joan Burton in April 2012, but not published until last month.

A reduced standard rate of about €110 a month would be paid for each child. The largest possible weekly “top-up” would be €38, but this supplement would be cut as income increased beyond €25,000.  

For every €1 over €25,000 earned by a household, 20 cent would be withdrawn from the “top-up” payment.