HEALTH:THE FUTURE of several of the Government's planned co-located hospitals could be in doubt following the abolition of tax breaks for private hospitals in yesterday's budget.

Mr Lenihan made it clear transitional arrangements would be put in place for projects at “an advanced stage of development”.

However, what precisely is defined as an advanced stage of development is unclear. This will be detailed later in the Finance Bill.

A spokesman for the Beacon Medical Group, which plans to build three co-located hospitals on public hospital sites in Cork, Limerick and at Beaumont, Dublin, said the situation was unclear at the moment on how the budgetary measure would affect co-location.

“Naturally, we would hope it would not be affected but we will have to wait and see . . . We will not be saying anything until we see the detail in the Finance Bill.”

A spokesman for the Department of Health said the tax breaks would only be abolished for projects that had not arrived at a certain level of approval or development.

Planning permission has been granted for the co-located hospitals in Limerick and at Beaumont, and the Cork one is with Bord Pleanála. Whether others that have not yet received planning could be affected by the budgetary decision remains to be seen.

The Government announced its controversial plan in 2005 to build 10 co-located hospitals on the grounds of public hospitals across the State to free up 1,000 private beds in public hospitals for public patients.

Tax breaks for nursing homes and mental health centres were also abolished in yesterday’s Budget, but capital allowances for palliative care units and childcare facilities will remain in place.

Meanwhile, there is to be a further reduction of €20 million in the HSE’s funding for capital developments this year. It will require a revision to the draft HSE capital plan, and it is not clear at this point which projects will be affected.

Minister for Health Mary Harney has indicated some money has been set aside for paying hospital consultants part of the salary increases they are due for changing to new contracts. The Department of Health did not say how much was set aside, but said this issue would be “addressed as part of the Minister’s decision on the HSE service plan”.

However even if the consultants are paid higher salaries, their salaries, along with those of other higher-paid public servants, are to be reviewed between now and July by the Review Body on Higher Remuneration in the Public Sector “to take account of the changed budgetary and economic circumstances, and the changed private sector pay environment” and will be benchmarked against those of other EU countries of comparable scale, Mr Lenihan said.

Meanwhile, Ms Harney said €160 million extra has been made available to the HSE in respect of the shortfall in health levy receipts it is getting this year as a result of growing numbers losing their jobs and she may seek a €100 million supplementary estimate later in the year, if needed, to fund additional medical cards.

She said the HSE was facing “a very difficult challenge in delivering its service plan within its approved allocation”.