It was a fairly subdued Charlie McCreevy who announced the Government's spending plans yesterday. And it was unclear if this was because the accountant in him did not like spending such huge sums of money or if he had taken a new approach to public relations.
Once again Mr McCreevy had more money than ever at his disposal. He announced day-to-day spending of some £14.8 billion along with capital spending of £3.9 billion, and he disregarded warnings that this would fuel inflation, already at 6.8 per cent.
Compared to this year, the figures for next year amount to a spending increase of £2.2 billion, or 13 per cent, with day-to-day spending increases running at 10.9 per cent.
Mr McCreevy also sought to play down expectations for the upcoming Budget. "Given the high level of pre-Budget expenditure, the expectations on the amount of additional spending which can be provided in the forthcoming Budget must be realistic," he cautioned.
The 10.9 per cent rise in current spending provides no funding to take account of additional pay demands from secondary-school teachers or other public servants waiting in the wings. Already the pay bill for 2001 is £7.62 billion, a rise of 11.3 per cent on projections for 2000.
Mr McCreevy would not be drawn on the teachers' dispute but he did point out that an additional 1 per cent on the public service pay bill would add £70 million to overall spending.
He also warned that wage increases impinged on the cost base of private-sector firms, making it difficult for them to compete. "That is the difference between tax cuts and pay rises," he noted.
He added that most public servants got 14 per cent in pay rises and tax cuts last year, well ahead of average inflation of 5.5 per cent. "Now we only hear about pay but it was a pay and tax deal and we have the lowest tax on lower-paid workers in the EU."
Of the increased funding allocated yesterday £776 million, more than half, went towards pay, with £683 million towards non-pay expenditure.
The Minister said that to contain inflation the Government had to exercise restraint in deciding on the Estimates, since "additional public expenditure adds to total demand in the economy".
However, in a subsequent press conference he repeated that inflation was mostly outside his control, with the exchange rate and oil prices primarily responsible, as well as the 50p increase on cigarettes in the last Budget. He described the latter as "a prudent health measure".
Asked if high spending restricted his room for tax cuts in the Budget, he repeated that most commentators agreed that increased demand in the economy did not add to inflation. "It is a difficult balancing act between different levels of spending and tax cuts, but I believe we will achieve the right balance and I dare say that other economies are envious of ours."
One element that has disappeared is Mr McCreevy's overall average spending target of 4 per cent. He has said this will now be 6 per cent on average over the four years, if the decreasing costs of debt service are stripped out of the figures.
However, he justified this rise by pointing to higher-than-expected growth in the economy and a wish to spend on key areas such as health and education.
"The Government decided that an increase above the 4 per cent was justified to meet commitments in health, education, social welfare and children."
Certainly on health the Government has become a big spender, with an additional £586 million allocated to day-today spending under this heading, bringing the total to £3.92 billion. Pay rises will absorb some £358 million of the increase: £216 million of this relates to national agreements, with the remaining £142 million covering the cost of an additional 3,000 health agency staff.
Almost 40 per cent of the £586 million is for non-pay expenditure, covering healthcare initiatives as well as the effects of inflation.
Contrary to expectations, the rise in spending on education is far lower. Education and science will receive an extra £271 million for day-to-day spending, £254 million of which will meet pay costs under the Programme for Prosperity and Fairness and cover the costs of extra staff including teachers' childcare assistants, psychologists and others. First- and second-level education will get rises of 7 per cent and 8 per cent respectively, while third level wins an 18 per cent increase.
As usual there were no clues about social welfare rises in the Budget. The Department received an increase of £131 million in its current spending allocation, but that includes no provision for a rise in social welfare in the Budget.
An extra £119 million is being provided for the Department of Justice, particularly for childcare provision, equality initiatives and refugee and asylum services. Additional pay costs account for £37 million. This will be used to fund general pay increases under the PPF as well as an extra 1,000 personnel, primarily in asylum services and prisons.
Of the extra £82 million in non-pay spending, some £28 million is for increased childcare provision. Total spending on childcare - current and capital, across all departments - is to increase from £37 million in 2000 to £104 million in 2001.
Defence will receive an additional £95 million to enhance its capability and to cover the cost of the Army hearing-loss compensation cases.