Out-Law Analysis | 04 Sep 2012 | 8:00 am | 3 min. read
Northern Ireland seems to be stuck in a rut where not only does there not appear to be a plan for reviving a flagging industry, but there is a damaging lack of transparency about how millions earmarked for infrastructure investment will be spent.
Why does this matter? Because companies have to plan ahead to stay economically viable and without a clear view of what spending is planned, companies have to look for work wherever they can find it. In a lot of cases, that currently means outside of Northern Ireland.
In recent years, Northern Irish contractors have been forced to seek work elsewhere and current levels of output in the Northern Ireland construction industry are around 40% lower than the peak output in 2007. This damages local employment prospects not only in relation to direct labour but also in companies that would otherwise supply local projects with materials and services.
There is an answer, and it is very close to hand – just across the Irish Sea in Scotland, where the Scottish Futures Trust (SFT) has been at the forefront of developing innovative finance initiatives to plug the infrastructure spending gap.
SFT has been supporting a projects portfolio of £9 billion, including 67 new schools, 3 new colleges, multiple health schemes and over 1000 new homes whilst delivering £131.4 million of savings and benefits in 2011- 2012. Given the impact of the construction sector's decline on recent GDP, it can only be assumed that a resurgence will have the inverse effect.
With the innovative approach of the SFT the Scottish construction sector is set to enjoy record levels of investment over the next few years and will grow 20% by 2014.
What the SFT is providing is certainty about the strategic direction of investment and the transparency and clarity that construction companies need if they are going to plan ahead and invest in Scotland.
This is needed now more than ever as previously-announced projects are shelved. The most high-profile example of this has been the collapse of an £800m project to build a road linking Dublin to Londonderry.
The failure of this project shows that the situation in Northern Ireland is complicated and that the Republic of Ireland's woes have an impact on the construction sector north of the border. But this is no reason not to examine what the SFT is doing in a bid to introduce more certainty into the market.
It happened before. In 2004, then finance minister Ian Pearson announced a 10-year framework that was designed to deliver up to £16bn of investment into Northern Ireland's ailing infrastructure after years of under-funding.
This announcement was made at a time when the Strategic Investment Board (SIB) for Northern Ireland - a body developed during the Blair/Brown era - was making significant progress in delivering projects such as DBFO Roads Packages 1 (M1/Westlink and M2) and 2 (A1 and A4), the Alpha water and Omega wastewater Projects - not to mention a number of Belfast schools.
But what was important about that activity was not just that it was funded to a degree unimaginable in the current economic climate, but that the plans were long-term, open, transparent and driven from the centre.
Today we have creaking infrastructure, no pipeline and - it seems to many - no serious plan. Although there are some ongoing public private partnership (PPP) projects in the waste sector and a number of traditional build schemes in the health and accommodation sectors, there is no transparent and centrally driven pipeline.
The SIB should be allowed to formulate a clear and centrally managed pipeline of projects. To achieve this, however, the SIB must have the backing of the government with a serious commitment to infrastructure spending. There was palpable disappointment around the absence of this type of political commitment when the Northern Ireland Executive launched its latest Programme for Government. Without this, the SIB's skills, know how and experience will never be fully utilised.
Our friends across the Irish Sea are getting on the front foot by speaking to investors around the world and develop pioneering models which will, at the very least, mitigate the impact of the economic downturn on contractors. Our own politicians must follow suit and push infrastructure up the political agenda. In terms of politicians considering whether they can afford to invest, there is a growing concern that they may have overlooked the broader question of whether they can afford not to.
Adrian Eakin is an infrastructure specialist in the Belfast office of Pinsent Masons, the law firm behind Out-Law.com. A version of this article previously appeared in Building magazine.