Fears that the Health Service Executive would have to carry all of the increased costs of the National Children's Hospital next year are "off the table", according to the most senior civil servant in the Department of Health.
John Breslin, the Secretary General of the Department of Health, said the Summer Economic Statement has made an additional reserve of €200 million for the cost overruns at the hospital and the National Broadband Plan.
He said this has created a "buffer" that will enable the Department of Health and the HSE to resolve issues in its current discussions about capital spending for next year.
"It was harder when we didn't know that. It is now a much better environment and I am confident that we will be able to make progress on the health capital priorities outside of the Children's Hospital," he told the Dáil's Public Accounts Committee.
"There was a fear on the part of the HSE that it would have to carry all of the increased costs of the children's hospital in 2020.
"The fact that the Summer Economic Statement earlier this week has put an additional reserve in place €200m for that and the National Broadband Plan, takes that off the table and that concern is now gone," he said.
Mr Breslin was speaking after details emerged of correspondence between the HSE and the Department in May raising concerns about the knock-on effects of the National Children's Hospital for rest of the health service over the next four or five years.
The Director General of the HSE, Paul Reid, told the PAC that his organisation had expressed concerns in May about the implications of the cost overruns for the HSE's overall budget.
But he said more clarity is emerging and that the HSE is firming up its capital plan which will be published in the coming weeks.
He welcomed the Summer Economic Statement which he said had set out some "reserve" for spending on the Children's Hospital.
He said: "I would be more confidence in terms of what is being set out in terms of the economic statement that the flexibility in that capital will be there."