Science Foundation Ireland, the body set up to distribute €635 million in Government funding for research and development, could lose up to €200 million of its budget up to 2006 because it hasn't spent money fast enough.

Dr William Harris, director of the foundation, confirmed yesterday the body would spend just €115 million by the end of 2003. The delay would enable the Science Foundation to set up proper systems to ensure that the money was spent in the best way possible, he told The Irish Times.

This disclosure followed the announcement by the Tánaiste in Washington yesterday of €32 million in funding for research projects in technology. The awards, combined with several made in July 2001, mean the foundation is currently funding projects worth almost €100 million over the next five years.

Dr Harris said his decision to scale back spending was not connected to the current economic difficulties faced by the Government and was decided last November at a meeting with the Tánaiste. He said the Government had made a commitment to provide the full €635 million funding over time. This was confirmed by the Tánaiste's spokesman yesterday.

However, sources in the Department of Finance said yesterday that money provided by Government under the National Development Plan that was not spent would be channelled into other needy areas.