’We are not about the nice to haves - spending must be judged on a need to have.’

That was the message from Alfred Cannan as he confirmed that department budgets will remain tightly controlled - and the 1% cap on the pay budget will stay in place for now.

But he said the better than expected results provided more flexibility to direct some additional spending - and if the strong economic performance continues, there was a prospect of the pay cap rising to 2% from 2019-20 onwards.

He told Tynwald: ’This means that should pay awards be made at a level over and above the cap, departments will need to find savings elsewhere within their allocation.’

Mr Cannan unveiled an extra £13.8m investment in public services.

Ths includes an increase of £5.5m for Health and Social Care to help with on-going cost pressures.

The Treasury Minister accepted £5.5m may not seem enough but said this government has given the DHSC a combined £16.5m of additional revenue funding in the last two years together with £20.6m of supplementary votes.

He said: ’It is vitally important we achieve a balance between providing the funding that is required, but also to ensure there is the motivation to utilise these funds in the most efficient way.

’So, £37.1m of additional funds - 18.5% of their net £200m budget in two years. Do not tell me that this government is not placing the highest priority on health.’

He said the DHSC has agreed a target cost improvement plan of £7m overall for 2018-19 including £5m within its hospitals division.

Mr Cannan also awarded an extra £3.1m for the Department of Infrastructure, including an additional £1.1m to tackle potholed roads.

The remaining £2m will go on measures including investment into the operation of the horse trams.

Finally, as part a commitment to improve the lot of working families, Mr Cannan announced £1.5m extra funding for pre-school credits.

This will enable funding for children to attend privately run pre-schools for 20 hours per week during the academic year and means pre-school credits have risen from £1,700 per child to £3,420.

’Intervention in early years produces benefits for children, their families, the communities in which they are located and society as a whole. This is more good news for our working families,’ Mr Cannan said.