Almost �2bn in additional funds is to be spent on Northern Ireland's roads, schools, hospitals and water service over the next five years.

Direct rule minister Ian Pearson gave details of the budget allocation for the province which will include the extra cash raised from low interest loans from the British Treasury and other sources.

Much of the money will be spent on improvements to Northern Ireland's out-dated infrastructure.

Mr Pearson said people would see "significant improvements" in public services over the next three years.

Ian Pearson: Announced cash boost

On Wednesday, he said the cash boost would mark a major turning point for public services in the province which suffered from decades of under investment during 30 years of the Troubles.

He said: "While we as direct rule ministers will do all we can to make the programme work, the detail of how this goes forward would be much better addressed under the devolved institutions."

Northern Ireland's power-sharing institutions were suspended on 14 October following allegations of continuing IRA activity.

Northern Ireland Office ministers took over the portfolios of those ministers in the suspended executive.

'Improvements'

The government plans to raise the money from public private partnership programmes, from low interest loans and from departmental budgets.

But the public will also have to pay its share. That will come in the form of water charges as well as higher household rates.

Rates will also be introduced on vacant property and industry too will have to pay rates.

Speaking later at a news conference, Mr Pearson said that while some programmes would take longer "you will notice the difference in the next three years in terms of Northern Ireland upgrading the infrastructure".

He said water charges were "absolutely inevitable".

The minister said: "I don't think you can expect water services to be run and financed just through the regional rate, that doesn't have the fairness and transparency of a modern system - water charges are definitely coming."

He said he could not say exactly when but he wanted to dispel the "nonsense" suggestion that rates would be doubled.

"We have no intention of doing that," he said.

The top priorities have already been established - the local water and sewage systems need significant investment to meet European standards, while roads, schools and hospitals also require upgrading.

Ulster Unionist finance spokesman Roy Beggs said he welcomed some parts of the budget but added that he was disappointed it had been drawn up without meaningful consultation with assembly members or its committee representatives.

Sinn Fein's Francie Molloy accused Mr Pearson of playing a "dangerous numbers game" with the future of the people of the province.

The SDLP's Sean Farren, Finance Minister in the suspended administration, accused Mr Pearson of "putting the cart before the horse" in terms of plans for water charges.

Both of Northern Ireland's universities welcomed the late addition to the budget of an extra �10m for each of the next three years to fund their research projects.