BUDGET COUNTDOWN: After the shock of the Estimates which brought growth in education spending to a halt, the sector is hoping for better news in the Budget, writes Sean Flynn, Education EditorThe Department of Education is brutally frank about the limits of itscapital programme for next year: "The detailed capital expenditure proposalsfor 2003 to be published in January will show little or no new activity atall levels"

These are changed times in Irish education. The recent Estimates brought a long period of unparalleled growth in spending to a shuddering halt.

Whereas Micheál Martin and Michael Woods were able to spread the good news - and the cheques - to every school and every parish, Noel Dempsey has been forced to rein in spending.

Mr Dempsey was the last minister to have a bilateral with Charlie McCreevy in advance of agreement on the Estimates. It is known he was fiercely opposed to some of the strong medicine doled out to the education sector.

In all, overall spending has been increased by only 3 per cent. Crucially, capital expenditure is down by 16 per cent. The Department of Education is brutally frank about the limits of its capital programme for next year: "The detailed capital expenditure proposals for 2003 to be published in January will show little or no new activity at all levels."

The irony is that the spending cuts will be felt most deeply in two areas the Government has identified as a key: research funding at third-level and primary education.

The Programme for Research in Third-Level Institutions may not be something which sets the political pulse racing but it is vitally important to the colleges and, not least, to the wider economy. The Programme for Government identified it and the drive towards a knowledge economy as a priority.

So what happened in the Estimates? The Department says: "There will be a pause in cycle 3 of the Programme for Research in Third Level Institutions." Moreover, the allocation available to the colleges was cut to €7.5 million; the colleges say they need at least €50 million just to keep the existing programmes going.

There is dismay in the university sector about the cuts. As one source explained: "Research is not like other infrastructural spending; you cannot just turn it on and turn it off. It is not like a stretch of road which can be delayed and re-started. You need to plan, assemble your capital, your equipment and your researchers."

Another university figure complained that some research programmes had to be shelved because, while staff and researchers were available, there is now no money for equipment.

The third-level sector hopes the Budget will herald a more expansive approach towards capital spending. Ideally, the universities would like to be in a position where they could borrow funds to complete vital research projects.

There is a logic to this argument. The National Development Plan identified the "Programme for Research in Third-Level Institutions" as key to future economic progress. Is there not a sustainable case for giving the colleges the resources they need to fulfil this function - either by more capital spending or borrowing?

At the other end of the education spectrum, Mr Dempsey is also under pressure to help undo some of the damage imposed by the Estimates. The most serious immediate problem is the poor state of many primary schools. Stories of rat-infested schools, severely overcrowded classrooms, outdoor toilets and dangerous wiring are legion in the primary sector. But the Estimates cut of 4 per cent in the building programme will make it difficult to achieve progress.

There are few issues more politically sensitive than the state of primary schools. One political figure says there is scarcely a week the issue does not come before the Fianna Fáil parliamentary party.

There is very little optimism that the Budget will reverse the cuts in the building programme. The Minister is hoping to unveil a new five-year School Modernisation Programme, once agreement is reached with the Department of Finance and the new National Development Finance Agency. At least, this will help to make the allocation of school building grants more open and accountable.

To his credit, the Minister has managed to protect the disadvantaged in the Estimates. Those programmes designed to combat disadvantage have been sheltered from the cuts evident elsewhere across the education sector.

Priority has also been given to special needs education. The Budget may take further steps in this direction. But it will probably kick for touch on re-introducing third-level fees, pending a review promised next year. The education sector will also be anxious to learn how the Independent Estimates Review Committee viewed education spending. Mr McCreevy has promised to publish this information on Budget day.