Why the Investment Strategy risks being a spending plan
An Investment Strategy which simply prioritises spending within acknowledged insufficient limits, without exploring options for increasing the investment pool would undermine the aspirations of any future Programme for Government, writes Mark Spence, Chief Executive of the Construction Employers Federation (CEF).
The early months of 2025 will be critical when our Executive decides how we are to fund Northern Ireland’s medium to long-term infrastructure needs.
While the draft Programme for Government (PfG) commitment to provide more social, affordable, and sustainable housing was welcomed – alongside the publication of the Housing Supply Strategy – we at the CEF firmly believe that how to decide to sustainably fund our water and wastewater system is itself more than worthy of being a tenth priority, underpinning and enabling the other nine.
Only with that top-level political commitment do we then believe the Executive could properly and jointly consider the matter of underfunding, that has been largely responsible for a 60–year low of housing completions.
Without such commitment, we believe the Executive’s Investment Strategy (ISNI) will fail to outline a sustainable, realistic path towards delivering the huge uplift in investment into NI Water, that is recognised as necessary.
The new ISNI is expected to detail a spend of £26 billion of capital infrastructure over 10 years. A large number, but, in reality, simply maintaining current levels of capital spending – (at circa £2 billion, the same in cash terms as some 17 years ago in 2007/08) – plus RRI borrowing and a modest inflationary uplift, multiplied by 10. To underpin and enable the social, environment, and economic potential of this place, we must fund NI Water’s PC21 and PC27 business plan requirements (£600m+ per annum) in a committed and sustained fashion.
In that context, we believe significant additional capital funding could be achieved by moving to a mutual/co-operative/public corporation model which, along with other reforms to the existing sub-optimal governance model, would enable NI Water to borrow to their full potential.
CEF fully supports the Northern Ireland Audit Office’s (NIAO) call for the Department for Infrastructure to establish a “comprehensive review of alternative arrangements, led by suitably qualified experts”. The NIAO’s 2024 report, conducted independent of government, would encompass revisiting the 2007 Hillyard report that suggested NI Water could secure a long-term income stream (hypothecated or otherwise) via the rates bill (without, in their scenario, increasing people’s bills), as opposed to a separate, domestic household water charge.
Short of this type of fundamental reform, we fail to see how the Executive can, sustainably, fund NI Water’s needs, and, given how crucial that investment is to wider economic activity such as homebuilding and inward investment, how it can deliver the Programme for Government.
Unless it seriously addresses the needs of infrastructure, the ISNI risks no longer being a ‘strategic investment’ plan but, rather, a ‘tactical spending’ plan. A strategic plan would explore the options for increasing the investment pool to meet needs, rather than focus simply on how to prioritise spend within acknowledged insufficient limits. Such a lack of ambition in the ISNI will not sit easily with the positive aspirations of the Programme for Government.
Hence in this first half of 2025, we call upon the Executive’s 2025/26 Budget to include provision to commence the review of the funding and governance of NI Water that the NIAO recommends.
The publication of the UK Government’s Comprehensive Spending Review through to 2029 will afford the Executive the first chance in over 15 years to set a multi-year budget through the end of this Assembly mandate and beyond. Even if it were still possible for the Treasury to change the fiscal rules to allow for more borrowing, it would be foolish to believe that this, alone, will enable Northern Ireland to meet its infrastructure funding needs. This first multi-year budget must therefore deliver the findings of an independent review into NI Water’s funding and governance to enable the Executive to address the daunting infrastructure deficit that we face.
Taking steps like these requires significant political ambition and determination, however the opportunity cost of not taking these steps will be a severely diminished economic, social and environmental legacy. There is a very short window for the Executive to take the decisive action that is needed to restore the strategy to our investment plan.
