The Northern Ireland Strategic Investment Board (SIB) recently hosted a discussion with two key decision-makers from the UK Treasury at a special conference of senior people who play important parts in the shaping and delivery of infrastructure investment, financed from public and private sources.
Lord Deighton, commercial secretary to the Treasury, had a clear message. Northern Ireland should play a more active role in the preparation and delivery of a longer-term infrastructure plan for this region, in the context of the more ambitious plans now being developed for the rest of the UK.
Lord Deighton was followed by Simon Hamilton, Minister of Finance and Personnel, whose department (DFP) is the central player in shaping public spending plans. Simon Hamilton plays a key role in broadening the vision of infrastructure investment, taking account of issues such as the application by the Executive of the £200m each year that Treasury has agreed NI can borrow and the use by the Executive of PPP (Public Private Partnership) contracts for the delivery of new assets, such as the investments by NI Water in the Alpha and Omega water supply schemes.
Two other features of the recent actions by the Treasury have implications for Northern Ireland. First, through DFP, Northern Ireland now has the ability to make loan or equity funds available to local organisations to partially fund new investment outside the public sector through the (oddly named) financial transactions funds. The minister has an approved allocation of £63m in 2014-15 and a further £127m in 2015-16.
The first large allocation announced is for £35m to help the University of Ulster finance the new campus building in the Cathedral Quarter of Belfast.
This pump priming loan will be helpful as a source of matching funds as the University seeks a larger loan from the European Investment Bank. £10m has been allocated to the agri-food schemes initiated from DETI.
The second additional feature linked to Treasury support is the availability of government guarantees for funds available for private sector investments that are assessed to be critically important and which might otherwise have difficulty in raising borrowed funds at competitive rates.
In a tantalising reference, the conference was told that three large local projects were currently being considered for Treasury-based loan guarantees each of which would be important. Local contacts have identified (speculatively) several well developed capital projects affecting transport services, waste disposal and energy provision, but businesses are allowed to keep the existence of a loan guarantee confidential.
From a Northern Ireland perspective, both of these recent developments have the attraction that, as a result, critical infrastructure schemes will take place more quickly than under the older arrangements.
With this leadership from the Treasury, the next steps lie with the ministers in the Executive and with the Strategic Investment Board.
A critical feature of the recently devised Treasury schemes to allow loan funding for additional capital projects and to arrange loan guarantees for some prioritised private sector projects, is that Northern Ireland might take advantage of the provisions in ways which have little or no direct financial cost to the Stormont budget.
There is, however, a more testing question for the minister and the SIB. Does Northern Ireland have an adequately developed and sequenced infrastructure priorities plan to underpin more ambitious proposals? Essentially the Treasury officials, including the chief executive of Infrastructure UK, Geoffrey Spence (who is originally from Northern Ireland) are asking for a more operational local infrastructure plan to take the place of the current document which is more of a non-selective wish-list rather than a stated set of priorities.
These are ambitions that the Executive should be expected to support. In addition, the Executive, armed with a statement of priorities, might try to find ways to release funds from current spending programmes to add funds for a larger capital budget.