Ratepayers in Northern Ireland may have to fork out more on water charges in an effort to raise extra revenue for public services it has emerged.

With ministers claiming Gordon Brown’s 2002 Budget allocation for Northern Ireland does not go far enough, sources expect the Treasury to demand that homeowners here will have to contribute more to fund public services.

Chancellor Gordon Brown is giving Northern Ireland almost £2.7 billion as its share of Budget money being provided to improve the health service.

Speaking to the Confederation of British Industry annual dinner on Thursday evening Dr Sean Farren, Minister of Finance and Personnel, said: “These are very large increases and very welcome, but when we look below the headlines, what stands out is that our share will fall short of what we need to match the growth in English spending in health.”

Mr Farren said the Budget emphasised “very starkly the difficulties we have with the Barnett formula", which is used by the Treasury to determine how much the executive receives.

“What this means is that if we were to add only the Barnett share to the health budget here, the amount would be insufficient to meet the needs of the health service locally,” he said.

“The chancellor has allocated enough for real improvements to services in England, which we will simply not be able to match.

“Indeed, the objective reality is that if we allocate only the additional amounts we receive under Barnett, we will struggle to maintain the health service in its present highly unsatisfactory state.

“If we are to make real progress in building a service fit for the 21st Century and keep pace with the service improvements planned in England we will need £1 billion more over the next five years than we have received in this Budget.

“It would be churlish not to welcome the new money but it will leave us a long way short of delivering a world class health service, not least because we have been told that the Barnett formula is not designed to squeeze our expenditure in such a damaging way.

“We cannot accept this situation and we will be pressing the Treasury for more in the forthcoming Spending Review. But challenging Barnett is not something we will undertake lightly, and it is not, as I have said before, a "no risk" option. We can be sure that any challenge will lead to strong pressure from the Treasury that we should pay our own way more fully. This will mean looking hard at the rates and at the financing of our water and sewerage services.

“While it may be unpalatable, we may also have to accept that if we want better public services here we will have to pay more for them," Dr Farren added. (AMcE)