McCreevy to allocate £14bn after tough talks

The Cabinet has signed off spending allocations for all Government Departments following a series of tough and protracted negotiations. Day-to-day spending will rise to almost £14 billion (€17.79 billion) next year.

Negotiations on the Government's Estimates, to be published November 16th were more difficult this year - with all Departments battling to increase expenditure. The final figures for key Departments like Health were agreed late on Wednesday night, hours before yesterday's crucial Cabinet meeting.

Sources said the negotiations were tougher than previous years as the Minister for Finance, Mr McCreevy, tried to restrain overall day-to-day spending, initially trying to limit the increase to 4 per cent. He was reluctant to agree larger spending increases despite an overflowing Exchequer surplus for fear of further fuelling inflation. But the continuing economic boom and the extra revenue flowing into the Exchequer have made this difficult.

Figures to be published this afternoon will show a growing Exchequer surplus. Estimates indicate that the surplus for the full year could run to £1,900 million well ahead of the figure of £1,609 million forecast on Budget Day. The Estimates are a key indication of Government spending priorities in the year ahead and day-to-day spending will rise by around £1 billion in 2001, compared to this year. Capital spending on infrastructure and other projects will increase dramatically, driven by allocations set out for implementing the National Development Plan.

The Department of Health had its toughest negotiations to date. Its budget for this year is £4.3 billion. At that level each percentage point rise translates into considerable sums of money. However, the Minister for Health, Mr Martin, is understood to have argued that inflation in the health sector always runs at a higher rate than elsewhere, and that the health services are likely to be a central issue in the next general election.

Education, another large spending Department, is understood to have won extra funding. The Cabinet has provided for substantial spending on new school buildings. Other areas likely to benefit include special education and initiatives to tackle disadvantage.

The Estimates earmark significant sums for investment in housing, roads, transport and other services - thought to be the largest ever set aside under this heading. Public transport has been allotted significant amounts as has the national road network.

Other Departments to do well are Foreign Affairs and Arts, Heritage, Gaeltacht and the Islands. Foreign Affairs has been awarded the money to cope with the increased demands of Partnership for Peace as well as new networks necessary to support Ireland's seat on the UN.

Arts funding aims to strengthen the film board along the lines proposed in the OJ Kilkenny report as well as funds to implement the arts plan.

Social welfare has been allocated one of the lowest percentage increases of any Department, despite significant expected rises for pensioners and those on disability to make up for rising inflation. The Estimates for next year give no clues about what will happen in the Budget.