Economic Pact capital plans
Northern Ireland receives favourable treatment in the Economic Pact but the shared campus plans are likely to exceed their budget.
In one of the first steps to implement the Downing Street Economic Pact, the Commercial Secretary to the Treasury will visit Northern Ireland this autumn for a seminar on increasing private sector investment in infrastructure.
Lord (Paul) Deighton took up the post in January. He was previously Chief Executive of LOCOG – organisers of the London 2012 Olympics – and Chief Operating Officer of Goldman Sachs in Europe.
The Economic Pact announced support for focusses on three specific proposals on infrastructure:
• 10 shared educational campuses in five years;
• 10 shared neighbourhood developments; and
• including Northern Ireland in the Infrastructure Guarantee Scheme.
The Lisanelly project in Omagh is viewed as a “valuable model” but the project only received planning permission in 2013 after several years of legal action. Lisanelly will bring six schools together on one site and is now expected to cost £126.5 million (up from an initial £100 million). On that basis, 10 replicated shared campuses would cost between £1 billion and £1.3 billion.
The Department of Education’s current capital budget and extra borrowing under the pact would release a maximum spend of £391 million up to 2016. In reality, the allocation will be much lower due to other commitments and another £600-800 million would be needed to close the gap. The next education budget will be under increased pressure from spending cuts. agendaNi put the figures to the Department of Education but officials declined to respond.
Shared neighbourhood schemes encourage good relations in existing areas of mixed housing. Forty-six of these schemes have been set up since 2006. Funding and timescales for the new schemes have not been set out.
The Government is also considering a gift or transfer of up to 350 Ministry of Defence houses over the next year. This is subject to “funding considerations” and the MoD’s own operational requirements.
The Economic Pact gives Northern Ireland special treatment by allowing the Executive to apply for the UK Government’s Infrastructure Guarantee Scheme. Officially known as UK Guarantees, the scheme aims to speed up projects which are being held back by poor credit conditions.
Under existing legislation – the Infrastructure (Financial Assistance) Act 2012 – UK Guarantees can be used to support investment in utilities, transport, health, education, court facilities, prisons and housing.
Northern Ireland projects must be submitted by the Executive “as soon as practicable”. Projects will be firstly tested for whether they are eligible for support (prequalified), depending on their financial credibility, stage of development, need, significance and value for money.
After that stage, the sponsor and the Treasury will enter into due diligence discussions. Projects will then be put through an internal Treasury risk committee before being submitted to the Chancellor for approval.
Aside from the shared future plans, other infrastructure projects could include investment in the electricity grid, the extension of the gas network and the construction of new prison buildings. The Executive will continue to consider the future status of the Port of Belfast with the Government sharing best practice from trust ports in Great Britain.
