The Government will provide for up to £750 million in additional funding for the health service next year in spending estimates due to be published next week.
The increase in day-to-day expenditure, bringing health spending close to £6 billion, far outstrips rises for other Government departments and prioritises a sector regarded as a key battleground in the next general election.
The huge boost for the health services - involving a rise in spending of up to 15 per cent - will require sacrifices by other departments as the Minister for Finance, Mr McCreevy, holds the average increase in expenditure next year to only 6 per cent. Government spending is currently running at 20 per cent ahead of last year.
Sources close to the Minister said he was adamant that, despite political pressure, the number one priority was economic stability rather than an election. "If anyone thinks there will be a giveaway Budget or any buying of votes in advance of the election they would be wrong. There is no way the Minister will be throwing the baby out with the bath water", one source said.
The £750 million rise in day-to-day health spending agreed by Mr McCreevy and the Minister for Health, Mr Martin, contrasts sharply with the funding available for other departments, many of which will see rises of just 3 per cent in their spending allocations for next year. That is a fraction of what they had been demanding.
No department other than health has won an increase of much more than 7 per cent and many are receiving far less. For some there were no negotiations and they were left to rejig the money within their existing allocations in drawing up their spending plans for next year.
As the economy slows dramatically, sources insisted that if the Government was going to err in a time of uncertainty, it would be on the side of caution. "The money is simply not there", one source stressed.
Much of the additional funding provided to departments other than health will be to meet the expected increase of just under 2 per cent in the Government's pay bill next year. A 1 per cent lump-sum is due to public servants in April and a further 4 per cent in October, which is reliant on changing work practices or productivity.
In contrast, next week's estimates will provide for a considerable boost in capital spending in line with calls from the Central Bank governor, Mr Maurice O'Connell, and the Economic and Social Research Institute.
Both argued that infrastructure spending would have to continue to ensure that the economy is in a position to benefit from any global pick-up.
Overall, day-to-day spending is expected to increase by £1.25 billion when the estimates are published on Thursday, with health making up 60 per cent of that rise. Total spending across all departments will run to just more than £17 billion. This does not include social welfare increases, which will be announced on Budget day.
Nor does it make any provision for pay increases which may be awarded under the benchmarking process.
The overall package is likely to be widely welcomed by organisations such as the Central Bank and the ESRI, which have been calling for a prudent Budget in the face of the economic downturn. An average increase of 6 per cent in pre-Budget spending is significantly below recent giveaways but is also likely to stimulate the economy.
The Minister has been subjected to increasing pressure in recent weeks as job losses mount and tax revenues fall off dramatically. Exchequer returns for October showed spending is increasing by 20 per cent while tax revenues were up by only 2.6 per cent.
The figures imply that Mr McCreevy may now have to target his first Budget deficit since 1997.
Estimates for economic growth next year have also been falling. The Central Bank governor admitted earlier this week that the bank's estimate of 3.5 per cent may be overly optimistic, while the Taoiseach has predicted that growth will fall to 2.5 per cent in the first three months of 2002.