The Government will invest up to £41 million (€52 million) a year in developing the social economy, the Tanaiste and Minister for Enterprise, Trade and Employment said yesterday. Up to 2,500 jobs will be created through the Social Economy Programme, but many of these will displace existing jobs in the community employment sector.

Ms Harney defended this approach by saying that when the community employment scheme was introduced, unemployment was running at record levels.

"Community employment was initiated with a view to creating employment, with spin-off benefits to the community. This programme is about creating benefits to the local community and the spin-off is employment."

Unemployment stands at 4.3 per cent, compared with more than 17 per cent when the community employment (CE) initiative was introduced. At that time, "there was only one CE job for every seven long-term unemployed. We are now down to one-to-one, or more than one-to-one CE places for each person long-term unemployed," she added.

There are 27,400 people who are long-term unemployed and 35,000 people in community employment and similar initiatives. Ms Harney believed the new programme would provide people on CE schemes with better options than at present.

Ms Harney stressed that she wanted the new social economy programme "to be as flexible as possible". She also hoped that it would not only reach disadvantaged communities but the many disadvantaged individuals living outside those communities. She cited lone parents as a good example of people who often experienced disadvantage in isolation.

From the floor, Mr John Butler, of the Dundalk Employment Initiative, expressed concerns about secondary welfare benefits. He welcomed Ms Harney's announcement that people joining the new programme would hold secondary benefits, but was worried at the low levels of rent subsidies involved.

At present, people on some schemes could find their rent allowance falling as low as 25 per cent. "In areas of very high rents some people may find it very difficult to join schemes," he said.

"The whole purpose of the programme is to open access to opportunities for people. That is why we are keeping secondary benefits," Ms Harney said. She added: "Rents is something I will give consideration to."

There are three main types of social economy enterprises that the new programme will support. One is community business initiatives, which would be supported on the basis that they eventually become self-financing. The second is deficient-demand social economy enterprises. These would provide services within disadvantaged communities which could not otherwise afford them because of disadvantage or low density of population. The third would be enterprises tendering for public service contracts in disadvantaged areas.

Ms Harney hoped childcare facilities would feature strongly in social economy initiatives, as well as care for the elderly and improving life and opportunities for those with disabilities. Father Sean Healy, of the Conference of Religious of Ireland, who was a member of the working group set up under Partnership 2000 to draft proposals on the programme, welcomed the Tanaiste's announcement.

He said: "Priority should be given to supporting programmes that will not be commercially viable . . . but which provide local services and supports essential for the viability and development of local services."