Almost 5,000 civil service jobs are set to disappear in Northern Ireland over the next four years as the government pledged yesterday to invest more resources into front line services.

Finance minister Mr Ian Pearson promised 1,000 new jobs in health and education in an outline of his draft budget.

Over the next three years the civil service is to be slimmed down by 2,300 staff with a further 2,600 transferring into the new Water Service and Agri-Food and Biosciences bodies.

The minister, setting out the British government's strategic vision until 2008, said spending in public services would rise by £1.4 billion (€2 billion) to £9 billion by 2007-8.

This amounted to an increase of 20 per cent in real terms and 36 per cent in cash terms between 2002-03 and 2007-08.

To help finance this, domestic regional rates will increase by 9 per cent in the next two years before the introduction of the new domestic rating system.

In 2007-8 domestic rates will rise by 6 per cent in preparation for the new system.

In the meantime non-domestic rates are to rise by 3.3 per in each of the next three years.

The plan to reduce administration costs are in line with UK chancellor Mr Gordon Brown's target of delivering efficiency gains of 2.5 per cent a year over the next three years.

Mr Pearson, speaking in Belfast, said: "In cash terms we've been able to reinvest additional sums in excess of £100 million, £200 million , and £300 million in priority frontline services over the next three years.

"As I promised in July, every penny that is saved in our efficiency programme will stay in Northern Ireland to be reinvested in the public services that matter most to people."

Out of the 1,000 promised new front line staff, the British government proposes an increase of 500 in the health service and 300 in education.

Plans to reduce the size of the civil service by 4,900 staff (15 per cent) will begin to be implemented immediately.

The hope is that the jobs will go as a result of natural wastage and there will be no need for redundancy schemes.

The minister said that the purpose of the new proposals was to position Northern Ireland as one of the most competitive UK and international regions, to build a fairer and more inclusive society and deliver better public services. Details of the approved budget will be released in December.

The Federation of Small Businesses (FSB) said it was pleased that the government "has begun to tackle the problem of our bloated public sector".

It said that if the Northern Ireland economy was to grow "we must move away from the situation where 32 per cent of all employees in Northern Ireland are from the public sector and expand our private sector".

It said that Mr Pearson's budget had certainly "talked the talk", but questioned whether it could actually deliver the right environment for the economy to grow and for small businesses to expand.

FSB policy chairman Mr Wilfred Mitchell said that the direct rule administration had "done next to nothing for our 60,000 small businesses, given our spiralling insurance, electricity and impending water charges". - (PA)