THE Thatcher government pumped millions of pounds of taxpayers' money into the doomed De Lorean car plant in west Belfast because scrapping the project would have made it difficult to justify continued support for the state owned British Leyland and the Harland & Wolff shipyard.

Ministers were also petrified that pulling the plug on the £70 million venture would be seen as an act of "betrayal" by Northern Ireland's nationalist community and serve as a recruitment drive for the Provisional IRA.

The extraordinary political machinations that lay behind the Callaghan government's decision to launch the project and the Thatcher administration's desperate attempts to keep it alive emerge from the first full examination of hitherto secret Cabinet papers and affidavits made public last week by a New York judge.

The southern district court of New York ruled that 250 separate documents, from cabinet minutes and confidential memoranda to depositions from witnesses including Baroness Thatcher, the former prime minister, should be made public as part of the legal action being brought by the British government against De Lorean's auditors, Arthur Andersen.

In a memorandum to the Cabinet's economic affairs committee dated February 2nd, 1981 - 12 months before De Lorean's collapse the then Northern Ireland Secretary, Mr Humphrey Atkins, said: "To let this project go now would be seen, particularly by the minority community, as betrayal in the one area, economic development, where the government could act positively.

Referring to a request from De Lorean for the government to guarantee a £10 million bank loan, Mr Atkins went on: "Purely commercial considerations would suggest that the case for putting more assistance into De Lorean is, at best, doubtful. But we cannot settle this on commercial grounds only. The De Lorean venture has become something of a symbol for HMG's economic commitment to Northern Ireland and especially to the minority community there."

Approval for public funds to build the extravagant gull winged car was given at a crucial meeting of the Callaghan Cabinet on July 26th, 1978, at which the then Northern Ireland Secretary, Mr Roy Mason, argued strongly in its favour.

The largely Catholic west Belfast had 35-40 per cent male unemployment and was in "real danger of degenerating into a ghetto". The best counter to the influence of the IRA in the area was to provide new jobs. "It was therefore of the utmost political, social and psychological importance that the project should go ahead. This would be a hammer blow to the IRA. Indirectly, it would save soldiers' lives," he said.

Mr John Banham, then a consultant for McKinseys and later to be knighted after serving as the CBI's director general, took a different view. In a 13 page report submitted just eight days earlier, he warned the Cabinet that it was "an extraordinarily risky venture" and "ambitious to say the least".

Baroness Thatcher had her forebodings as well although initially her reaction was positive. But she soon became suspicious: "If anyone comes to me for money again and again and again and again I begin to question the wisdom of the original decision.".

De Lorean had already soaked up £50 million by the time the first demand for an extra £21 million landed in July, 1980. Over the subsequent year further loans totalling £15 million were approved.

By early 1992, De Lorean's financial position had deteriorated to an alarming degree. On January 21st, 1982, Mr Jim Prior, then Northern Ireland secretary, told the cabinet that without a farther injection of £47 million De Lorean would have to cease trading in eight days. A month later, De Lorean was put into receivership.