Peter Hain challenged loyalist paramilitaries

Peter Hain has announced a series of measures aimed at addressing the problem of alienation in loyalist working class areas.

He said violence and rioting must be left behind "if we are to create a strong and prosperous NI".

Recent rioting, "as well as wasting public money" had shaken international confidence in Northern Ireland he said.

"I accept that there are unionists who are deeply suspicious," said Mr Hain.

"Even after a statement from the IRA that is unusually clear, they wonder whether it will be carried through in action or whether hopes will be dashed once again. I also want to see the IRA deliver on its promises."

The government cannot simply 'mind the shop' awaiting restoration of devolution, but must take the necessary decisions, however difficult and controversial Peter Hain NI secretary

In response to rioting in unionist areas, he warned paramilitaries they faced the full force of the law if they did not abandon violence.

He said: "The choice for loyalist paramilitaries is clear: play the political role that you claim as your motive, or face the rigour of the law as the mafia organisations into which you seem to be degenerated.

"You will not be allowed to terrorise your own community".

He also accepted there were very real social problems in loyalist areas.

DUP leader Ian Paisley said a "raft of measures" were needed to instil confidence in the unionist community.

"The government must work to restore trust between it and the majority community," he said.

In his speech on Wednesday Mr Hain announced a new role for David Hanson, who is already the minister for political and social development.

He is to take charge of a new plan to co-ordinate efforts in loyalist areas, involving intensive talks with elected representatives and civil leaders from the Protestant community.

Mr Hain also accepted there was a perception that public money going to these areas is siphoned off by the loyalist paramilitaries.

The paramilitaries would not get their hands on any money spent, he said.

The secretary of state said the focus of government support and funding must be guided by and through elected representatives, civic and church leaders and established and proven community workers.

Rioting erupted

He said future generations could not be told that the government was "too preoccupied with past or present political disputes to plan ahead for their economic security and social future".

"Unless we can address these problems we will not be in a position to face that future with the purpose and drive required.

"So the government cannot simply 'mind the shop' awaiting restoration of devolution, but must take the necessary decisions, however difficult and controversial."

Mr Hain said there needed to be more investment in education, skills and child care, health, transport, energy, water and communications.

The NI secretary faced protests in Lisburn

"If we want Northern Ireland to be world class, have world class public services - or indeed have even comparable services to England, Scotland and Wales - locally raised contributions must increase.

"This means increasing rates and introducing water charges from April 2007. But it must be done fairly, and it will be - with protection for those on low incomes."

Sinn Fein's Alex Maskey said: "Last week's violence was not about deprivation - it was about a failure to force a sectarian Orange march through a Catholic area."

Meanwhile, Irish Foreign Minister Dermot Ahern has urged industrialists on both sides of the border to consider focusing additional funding on cross-community and social inclusion projects in Northern Ireland, "especially in republican and loyalist interface areas".

"Poverty, unemployment, deprivation and social exclusion can all contribute to sectarianism. As can lack of contact with neighbouring communities and traditions," he said in a speech in Dublin on Wednesday.

"But these factors do not mitigate responsibility for sectarianism; they do not excuse it."

Several days of rioting erupted in Belfast after the Orange Order was prevented from marching down a nationalist section of the Springfield Road.

Police were attacked with petrol bombs, blast bombs and other missiles during the violence. Dozens of vehicles were also hijacked and set on fire.