Business Environment

Issues of note impacting the business environment 

Capital Budget

Issue: The capital budget is stagnating, leading to reduced return on investment due to inflation.

Challenges:

• Inflationary Pressures: Over the last 24 months, significant inflation has eroded the value of the capital budget. This has made it increasingly challenging to achieve intended outcomes with the allocated funds.
• Allocation to NI Water: While a substantial portion of the budget is directed towards NI Water, this allocation has implications for the budgets of other government departments, requiring a balanced approach to ensure efficient resource distribution.

Solutions:

• Mutualisation: Implementing the mutualisation of the Housing Executive and NI Water, which would streamline operations, reduce resource consumption, and increase available capital funds.
• Multi-year Capital Budget: Introduce a multi-year capital budget to encourage a longer-term approach, allowing for more effective infrastructure planning and minimising inefficiencies caused by annual budget fluctuations.
• Enhanced end-year flexibility: Negotiate an agreement with the Treasury to enhance end-year flexibility within the annual budget, providing room for adjustments in response to changing economic conditions.
• Maximising RRI Borrowing Facility: Fully utilise the Executive's Resource for Results Investment (RRI) borrowing facility, providing additional financial resources for capital projects.
• Leveraging FTC Money: Explore opportunities to leverage Financial Transaction Capital (FTC) funds more effectively, which can be instrumental in supporting various initiatives, including Co-Ownership Housing.
• Co-Funding with Local Councils: Engage with local councils to participate in co-funding or partially funding NI Executive projects, facilitating more projects.
• Reforming Business Cases: Reform the existing business case structure for capital projects to make budgets more responsive to inflationary pressures, as the current 10% tolerance rules may not suffice in an environment with rapidly changing costs.
• Infrastructure Commission: Establish an independent Infrastructure Commission for Northern Ireland, which can contribute to long-term decision-making and planning, ensuring projects align with broader strategic goals.

Government-Industry Engagement

Issue: The disbandment of the Construction Industry Forum (CIFNI) and the absence of a suitable engagement body

Challenges:

• Lack of Collaboration: The absence of a collaborative forum between the construction industry and the government has hampered effective communication and cooperation.

Solutions:

• Re-establish Engagement Body: Re-establish an engagement body to facilitate communication between government entities (such as CPD and CoPEs) and the construction industry, aiming to foster collaboration and partnership.

• Retain Procurement Board: Maintain the Procurement Board, which plays a pivotal role in public procurement, ensuring that procurement processes remain effective.

Carbon Reduction and Climate Change

Issue: Emerging trends and targets to reach a net zero economy impact and disrupt every sector and will necessitate upskilling and adapting to new technologies and material use.

Challenges:

• Just Transition: The path to net zero needs to be gradual, well-resourced, signposted, and proportionate to enable sectors to reduce emissions and meet targets, ensuring a ‘just transition’ is achieved.
  Investment: An ambitious approach needs to be matched by appropriate investment and coordinated action across government departments.
• Silo Approach: It is imperative that departments work together and share appropriate information to avoid a duplication of efforts and for the avoidance of undue strain being added to industries and businesses across the local economy.

Solutions:

• Collaborative Approach: Collaborating to ensure various strategies from a number of departments knit together to ensure effective and timely progress.
• Passivhaus: Drive forward, through their procurement, the number of new public sector construction projects such as schools and colleges that are built to Passivhaus or equivalent standard.
• Building Regulations: Deliver over the next decade the extensive uplift of Building Regulations detailed in the Energy Strategy.
• Retrofit Strategy: Bring forward an ambitious housing energy efficiency retrofit strategy, co-designed with the construction industry, that includes a combination of loans and grants to incentivise homeowners.
• Retraining: Provide government support for industry retraining programs in new carbon reduction technologies, such as the installation of heat pumps.
  Smart Metering: Take forward a significant program of smart metering installation in our housing stock, given how far behind the rest of these islands we are on this.
  
  

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