Our struggling building sector needs some help from Executive
John Armstrong, the managing director of the Construction Employers Federation, wants support
The headline of a recent article in the Belfast Telegraph read, 'Building activity up but outlook still bleak'. Having read the first three words of the title I knew at once that this article was not about Northern Ireland. It turned out that the article was referring to construction activity in the UK and reported on another survey showing growth in the sector over the last 12 months. The report reinforced the increasing divergence in the fortunes of the construction industry in Great Britain and Northern Ireland.
An equivalent headline about construction activity in Northern Ireland might have read, 'Construction in freefall, who cares?'
In the 2010/11 financial year construction output was £2.421bn. This is £344m less than the previous year and represents a 12% fall. That comes on the back of three straight years of decline. In total, annual construction output in Northern Ireland is now £1bn less than its peak in 2006/07. Perhaps the most concerning fact is that the pace of decline has been accelerating and indications are that 2012 will be no less bleak.
The social and economic impact of this downward spiral in the local construction industry has been profound. Between 25,000 and 30,000 construction workers have already lost jobs, thousands have been forced to emigrate and youth unemployment has increased alarmingly. Due to construction's unique multiplier effect the wider local economy is being dragged down by the lack of activity. To compound this, the shortfall in investment in infrastructure continues to hamper Northern Ireland's long-term prospects for economic growth.
Few would doubt that the rapid and sustained fall in construction output is creating serious problems for Northern Ireland both in the short and long-term, but can anything be done about it - is it just one of the inevitable consequences of difficult economic times?
While the Northern Ireland Executive can not influence global economic trends, it does have at its disposal a range of powers that can address these social and economic problems in a meaningful way.
The Executive has already taken a few commendable steps including the transfer of some revenue funding into capital funding. However, more radical measures are required and they are required urgently.
Fundamentally, the Executive needs to substantially increase funds available for the building and maintenance of public buildings and infrastructure in Northern Ireland.
This can be achieved by using alternative finance, producing a credible plan for the disposal of assets to realise an appropriate level of capital receipts, redistributing funds from cuts in other areas and linking that redistribution to tangible positive outcomes, modestly increasing social housing rents and justifying the rise by undertaking a programme of improvements to the social housing stock, taking measures to allow borrowing against Northern Ireland Housing Executive (NIHE) stock and, introducing new charges or securing tax raising powers.
In parallel with increased funds, I believe the Executive must produce a meaningful and detailed investment strategy that provides clarity about which construction projects will proceed, when they will commence and what approximate budget they will be allocated.
Finally, I believe the Executive should agree a plan with the local construction industry to radically improve the energy efficiency of existing privately owned housing stock thus both reducing carbon emissions and reducing home heating costs for citizens.
The local construction industry is currently in a freefall that is damaging the economic and social wellbeing of the people of Northern Ireland. It is time for the Northern Ireland Executive to take decisive action and show that it cares.