Minister for Social Protection Leo Varadkar previously claimed Irish welfare rates were too high by European standards and should be cut by one-fifth.

Mr Varadkar, who is now in charge of the welfare system in the new Fine Gael-Independent minority government, outlined the position at the start of the last government’s term.

The comments are contained in a letter the Dublin West TD sent to former minister for public expenditure and reform Brendan Howlin as part of the Fine Gael-Labour coalition's comprehensive review of expenditure in 2011.

Mr Varadkar was minister for transport at the time. He last night said the letter was written five years ago in the midst of the bailout, adding that ministers “had to think the unthinkable almost every day”.

“My desire was to prioritise protecting public services, frontline staffing levels and public infrastructure ahead of pay and welfare.”

He said the new Government would "use every opportunity" to prevent Ireland going back to a similar situation again and that he was pushing for budget increases in payments to carers, the blind and people with disabilities.

Two separate letters were released to The Irish Times through Freedom of Information requests, one dated July 6th, 2011, the other July 7th, 2011

Preferable

While the sentiments expressed in both letters are largely the same, there are differences between how they are phrased.

Both call for cuts in public sector pay and welfare rates, which Mr Varadkar said would be preferable to deep cuts in capital programmes and in services such as health, education and transport.

The letters also outline where savings could be made in the transport sector.

"I support the government view that we should adhere to the Croke Park agreement and maintain existing welfare rates," the July 7th, 2011, letter said.

Pay and welfare reductions

“However, given the scale of the task before us, we may have to consider whether further reductions in pay and social welfare rates might be preferable to cuts to current and capital programmes of the scale we are considering.

“Rather than maintaining pay and welfare rates at a level well above European norm, we could instead protect services like health, education and public transport that are already less than the European norm.”

The July 6th, 2011, letter said Mr Varadkar was “strongly of the view that government should reconsider its decision to rule out further cuts to public sector pay and welfare rates in the coming years”.

“Notwithstanding the painful reductions that have already occurred and the higher cost of living in Ireland, public sector pay and welfare rates are considerably higher than in other European countries.”

He said this was “no longer justifiable” to do so at the expense of services.

Savings

“A reduction in social welfare rates and public sector pay of an average of a further 20 per cent and 10 per cent respectively would yield gross savings of €5.7 billion and even adjusting for negative buoyancy, net savings of €3.5 billion.”

In both letters, however, Mr Varadkar says he has doubts that “austerity on the scale envisaged will actually achieve a deficit reduction at all, given the deflationary effect of taking so much money out of the economy”.

There was scope to release money into the economy through privatisations and the National Pensions Reserve Fund, he added.