Northern Ireland

CEF says draft budget 'threatens growth'

A construction worker laying bricks Image copyright PA
Image caption The Construction Employers Federation said that if the draft budget is passed in its current form, the budget would "threaten the foundations of economic growth"

An organisation representing Northern Ireland's construction industry has strongly criticised the draft budget.

The Construction Employers Federation (CEF) said if passed in its current form, the budget would "threaten the foundations of economic growth".

It is concerned by a fall in the capital budget - money for building and maintaining infrastructure, like roads.

Finance Minister Simon Hamilton has said he was extremely disappointed by the CEF response to the draft budget.

He said it had had failed to recognise that the amount of capital investment that can be undertaken by the executive is largely dictated by the funding received from the Treasury.

The CEF has used figures from the Department of Finance to calculate that the capital budget will fall from £1.31bn this year to £1.17bn next year.

It is also worried that a steep fall in conventional capital spending is being partially offset by a rise in Financial Transactions Capital (FTC).

FTC differs from normal capital spending, taking the form of a loan or investment in a private sector project.

'Pressures'

Stormont departments have had difficulty finding suitable FTC projects and by October this year the budget was underspent by £35m.

John Armstrong, CEF Managing Director said: "Our detailed analysis of the draft budget shows that conventional gross capital investment in public buildings and infrastructure is due to fall by over 20% in real terms next year."

In contrast the FTC budget is due to more than treble, but Mr Armstrong said this would not fill the gap.

"FTC funding can only be used to provide loans to the private sector which must be repaid. The government has also struggled to allocate FTC funding," he added.

He also criticised the executive's intention to use money intended for capital budgets to deal with short-term pressures.

He said: "The current plan to divert capital funding away from delivering infrastructure in order to pay off the £100m short term treasury loan and the £100m redundancy scheme is a step too far."

However, Mr Hamilton said: "The executive, through its draft budget, is seeking to maximise capital receipts next year to help boost investment and is maximising its capacity to borrow under the Reinvestment and Reform Initiative (RRI).

"Furthermore my officials have, for several months now, been pressing bodies such as the CEF to come forward with ideas to deliver capital projects through financial transactions capital funding - funding that would go directly to private sector bodies - but there has been a noticeable paucity of CEF ideas."

He added: "In contrast to what the CEF has stated, this executive has a strong record of supporting capital investment when compared to other UK regions and our commitment to that is set to continue not only through conventional capital investment but through creation of the Northern Ireland Investment Fund."

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