Ulster faces severe public spending cuts

Northern Ireland is bracing itself for a particularly severe round of public expenditure cuts this autumn, following a ministerial warning that the region 'cannot be excused our share of this misery'.

A very high level of public spending has meant that Northern Ireland has so far escaped many of the worst effects of recession and fared better than many other parts of the United Kingdom.

It is heavily dependent on public money, with spending per head running at about half as much again as the UK average. The round of cuts due this autumn may therefore have a marked effect on economic conditions there.

The Exchequer subsidises the local economy by about pounds 2bn annually. While a large proportion of this sum goes, not surprisingly, on security costs, expenditure per head is well above the UK average in practically every area of government activity. Spending in industry and agriculture, for example, runs at almost five times the UK average.

Michael Mates, a Northern Ireland Office minister, told an accountancy conference this week that there was no intention of the Government singling out the region for harsh treatment, and said there were no proposals to change the basis on which the overall sums given to it were determined.

But Mr Mates warned that difficult and unpopular decisions lay ahead. In a reference to forthcoming cutbacks, he said: 'The Government believes such decisions are essential in the fight against inflation, which in turn is essential to provide a basis for strong and sustainable economic growth, and we in Northern Ireland cannot be excused our share of this misery.'

The fact that some 40 per cent of employees now work in the public sector has led to criticisms about a 'dependency culture'.

Northern Ireland's private sector, which was never strong, has been significantly affected by the violence and its peripheral position. Unemployment is the highest in the UK.

Former Northern Ireland ministers and other sources have said privately that public expenditure in the province has traditionally not been subjected to intense scrutiny, it being generally accepted that the violence and its geographical position are enough to explain the high spending levels.

The Secretary of State for Northern Ireland holds the power to distribute the block grant from Westminster. This seems likely to remain the case, but the overall sum despatched from London to Belfast is now expected to be substantially reduced.