The Cabinet made significant progress on finalising next year's budget during a three-hour meeting this morning but it has yet to agree on health spending, according to Minister for Public Expenditure Brendan Howlin.

However, the budget for the Department of Health has not yet been finalised.

Speaking after the meeting Mr Howlin said he had spoken to Minister for Health Dr James Reilly last night and held further discussions on health spending at Cabinet today.

“There are two issues: we are framing next year’s right budget now. In terms of this year we know that health is on budget to September but it would be a wise man indeed to predict what might happen in health services over the next three months.”

Speaking before the Cabinet meeting Minister for Finance Michael Noonan said the Government was finalising details in relation to the health budget in particular.

There is still a lack of clarity as to whether there will be a supplementary budget for the health service, which has cost overruns this year estimated at €150 million, or whether the overruns will have to be carried over into next year’s budget.

Mr Noonan said the goal of the budget was to “maintain the health services and maybe expand them a little bit, but at the same time come under the expenditure ceilings that are required”.

Mr Howlin and Dr Reilly and their officials are “working through various options” in relation to the health department, he revealed. There will be another Cabinet meeting on Sunday.

Mr Howlin said they had difficult decisions to make because they were returning to the same measures they had examined “again and again, year-on-year” for savings.

“The choices are narrowing, but we are close down to a final settlement across all Government departments which is fair and reasonable. We have to go through it line-by-line with Cabinet colleagues today. Bit by bit the jigsaw is taking shape and we will be in good shape by Tuesday.”

Taoiseach Enda Kenny said earlier today that the Cabinet was working on the “fairest and most equitable” budget possible.

Speaking on his way into the Cabinet pre-budget meeting, Mr Kenny said there was still a lot of work to do in advance of Tuesday's announcements, with "some very tough decisions to be made" even while the forecast expenditure cuts had been reduced from € 3.1 billion to € 2.5 billion.

The Taoiseach did not comment directly on reports in this morning's Irish Times that Minister for Social Protection Joan Burton was looking at cuts to secondary benefits for pensioners and the disabled such as for electricity and telephone allowances.

He said Ministers would “make the best decisions that they can”.