NEW Sliderobes ward-robes, a long weekend away in a zombie hotel, or paying off a few bob on the new SUV? This is the 'tough' decision faced by many middle-class couples when they are deciding how to spend their annual child-benefit slush fund.

While monthly child benefit payments are essential for some parents to make ends meet and provide for their children, there are couples who use the universal payment as a gift from the state. They stash it away and at the end of the year they spend it on a treat when the payments have accumulated in their bank accounts.

Last week, at the Tory party conference, British chancellor of the exchequer George Osborne announced his intention to cut child benefit from middle-income families.

Under proposals announced at the conference which was titled 'Together in the National Interest', from 2013 one-income families earning more than £44,000 (€50,000) a year will lose child benefit, worth up to £20.30 a week per child. Families with three children will lose £2,500 a year when the new measure comes in. The announcement sparked controversy in Britain as the Conservatives had made a pre-election promise last year that they would protect child benefit from cuts.

Closer to home, Osborne's move led to questions to Éamon Ó Cuív, the social protection minister, about the possibility of a similar cut to Irish child benefit payments.

The junior minister for children, Barry Andrews, claimed that changes to higher income parents should be looked at.

As the government needs to make Budget cuts of over €4bn in December, Ó Cuív would not rule out cuts in the area.

He repeated the mantra shared by all cabinet ministers at the moment and said that "every area of public spending will have to be looked at ahead of December's Budget."

The minister continued by stressing the complexities of cutting child benefit in the Irish tax system and said that there may be constitutional issues with removing it from high-earning households.

The Irish wing of the Barnardos children's charity expressed grave concerns about any further cuts to child benefit and the organisation's CEO Fergus Finlay claimed, "any further cuts to child benefit would be immoral."

He added that children are going hungry in communities across Ireland and many families are ill-equipped for the winter ahead, with no idea how they will afford home heating and clothing for their children.

Last week was actually a 'tale of two Barnardos' as Martin Narey, the chief executive of the charity's UK division, claimed that universal child benefit should be abolished and tax credits used instead to bolster the income of poor families.

'Morally overwhelming'

He added that the case for removing welfare benefits from the UK's rich and the middle classes was now "morally overwhelming" and that limiting payments to poorer people would make more money available to be spent on the poorest in society.

So is there really any justification for a cash-strapped nation such as Ireland offering a universal child benefit to all parents? The cost of child benefit this year is estimated at €2.26bn and Friends First economist Jim Power calculated last week that a reduction of universal child benefit through either means testing or taxation could achieve savings of at least €800m.

Last year's Commission on Taxation report contained figures detailing that 65% of families who receive child benefit have an income of between €40,000 and €100,000 and 15% have an income in excess of €100,000.

Under our current system, Michael O'Leary's children are entitled to the same amount of child benefit as those whose parents have lost their jobs. There is no reason to believe that O'Leary (who in fairness is not a tax exile and pays a lot of tax here) does claim child benefit but he is perfectly entitled to do so under the current system and this begs the question: is this equitable?

The reality is that with the current severe financial strains, if the government does not consider cutting child benefit payments to the wealthy, there will be another flat rate cut across the board that will see the poorest and most marginalised parents being hit in the same way as the couple who used their child benefit to pay for holidays before the economic bubble burst.

Iceland and Ireland

At the beginning of our economic collapse the well-known joke in the City of London financial community was: "What's the difference between Ireland and Iceland?" The answer was "the letter 'C'!"

The Tory-leaning Daily Telegraph reported last week that the latest joke, after news of the cost of the Anglo bailout reached Canary Wharf, is: "What's the difference between Ireland and Greece?" The answer was: "the weather."

Long before the latest jokes comparing Ireland to Greece were conjured up, international bond analysts, academics and sections of the financial press were referring to the PIIGS, an acronym for the beleaguered economies of Portugal, Italy, Ireland, Greece and Spain.

In the context of Osborne's announcement in Britain about child benefit cuts and suggestions that the Irish government could follow his example, the Sunday Tribune has compared the Irish child benefit payment system with that of the UK, Portugal, Italy, Greece and Spain (see panel, right).

The data is compiled using the EU's Mutual Information System on Social Protection (MISSOC). This resource provides detailed, comparable and regularly updated information about national social protection systems and includes data on child benefit.

It is important to point out that, unlike Ireland, most European countries offer tax breaks for childcare. There are also marked differences in the cost of childcare and the overall cost of living between the countries. But as Ireland is now pooled with Portugal, Italy, Greece and Spain in terms of its deplorable public finances, and as the debate over child benefit cuts continues, it is a worthwhile exercise to see how our child benefit rates compare.

Child benefits at home and abroad

Ireland

There is a flat rate benefit that universally covers all children and the rate of payment is dependent on the ranking of the child within the family. It is paid to all children under 16 years old and under 18 years if disabled or in full-time education. While some countries stipulate that the child must be resident in the state, the Irish system rules that the "child must be normally living with and supported by the recipient." It is paid monthly and parents are paid more for the third child and upwards. In cases of triplets and quadruplets, the allowance is one and a half times the first child payment.

Monthly amounts: €150 for the first and second child and €187 for the third and further children.

UK

For the next three years at least, the UK has a non-contributory child benefit system and offers a tax credit for all parents of children under 16. The child must be resident in the UK and if more than one person claims for the same child, the person the child lives with has priority of title so only one person can receive benefit for each individual child. Child benefit is only paid to parents of children up to 16 years of age, unless they continue in non-advanced education or approved training up to their 20th birthday.

Monthly amounts: €97 (£86.67) for the eldest qualifying child and €64 (£57.20) for each other child.

Portugal

Portugal has a compulsory universal system for all inhabitants financed by taxes, with the amount of child benefit payments depending on household income, the number and age of the children. It is paid to all resident children up to 16 or up to 18, 21 or 24 if the child is in full-time education or vocational training.

Monthly amounts: The amount is determined using a special index reference system which is determined by the parent's earnings and the number of children in the family. There are six different payments levels starting at Level 1 where parents get €174.72 (for children under 12 months old) and €43.68 (for children over 12 months), Level 2 where it is €144.91 and €36.23, Level 3 where it is €92.29 and €26.54, Level 4 where it is €56.45 and €22.59, Level 5 where it is €33.88 and €11.29 and Level 6 where there are no payments for high earners.

Italy

The Italian child benefit system is financed by employers' contributions. The money is paid by the state to employers to pass on and it can be reduced if workers are absent. As well as penalising work absenteeism, the amount of money paid is determined by family income and the numbers of family members. The children must be resident in Italy and benefit is paid to parents of children up to 18 years old. The annual income parents can receive in child benefit must not exceed an amount fixed by Italian law and at least 70% of the earnings must be derived from employed work.

Monthly amounts: The amount of benefit is calculated on the basis of the family income and the number of children. For example, a family with four members earning up to €13,119 get a monthly benefit of €258.33; the same family with an annual income of between €25,818 and €25,923 get a monthly benefit of €126.17. A family with an income of over €70,949 receives no benefit.

Greece

Jokers in the City of London may claim that the only difference between Ireland and Greece is the weather but they clearly have not compared the two countries' child benefit systems. The Greeks have a tax financed system whereby benefits are provided to salaried workers and a separate system exists for private and public sector employees. According to EU statistics, the amount paid does not vary with the age of the children or the income of the parents. Among the conditions associated with the Greek system is that employees must prove that they have worked 50 days in the previous year before they can receive any child benefit payments.

Monthly amounts: €8.22 a month for one child, €24,65 for two children, €55.47 for three, €67.38 for four and an additional €11.30 for each child after that.

Spain

Spain has a system of tax financed non-contributory benefits for all residents with benefits depending on income, age and, in some cases, the degree of disability a child has. The child must be resident in Spain to receive the benefit which is means tested, except in the case of disability. It is paid to children up to 18 years old (or over if the child is affected by a degree of disability equal to 65% or more). Under the Spanish system, no benefit is paid to parents if the family income per year exceeds €11,264 and this ceiling increases to €16,953 from the fourth child upwards.

Monthly amounts: €41.67 a month per child under five years old and €24.35 per child between 5 and 18.