ECONOMIC DEVELOPMENT FORUM:  INFRASTRUCTURE SUB-GROUP

 

Meeting held on 13 January 2006 at 10.30 am in Clarence Court, Belfast

 

Present:

Jim McCusker (Chairman)

Peter McNaney

Michael Brennan

Doreen Brown

 

In attendance:

Tony Doran, Construction Employers’ Federation

Philip Irwin, Strategic Investment Board

 

 

1.      Apologies

1.1.            Apologies were received from John Gilliland and Richard Sterling.

2.      Minutes

2.1.            The minutes of the meeting held on 10 November were agreed.

2.2.            The visit to NI by Sir Rod Eddington’s team had taken place on 2 December; as yet there had been no feedback or indication of the timing or content of the report to DfT and HMT.

3.      Investment Strategy for NI

3.1.            The Chairman welcomed Tony Doran and Philip Irwin to the meeting.  The sub-group was keen to explore, in the light of the recently published Investment Strategy for Northern Ireland, the capacity of the private sector, and public sector, to cope with the capital investment proposals contained in the Strategy.  The capital schemes were envisaged as coming on stream during a period when growth in the RoI economy was continuing to draw considerable numbers into construction, and when preparations for the London Olympics would also be making demands on finite skills and labour.

3.2.            Philip Irwin referred to two studies currently underway:  the first to assess the capacity of the private sector; the second looking at the public sector.  The ISNI represented a step change in levels of capital investment, with a 40% uplift over a 4-year period, and specific actions were likely to be needed to meet that scale of demand.

3.3.            Tony Doran set out a number of points in relation to context and capacity:

·         Output and employment levels in the construction sector had been low until 1995, but in the RoI had then grown from 90,000 in construction employment to 240,000; this was expected to decrease to 200,000 in the medium term.  In NI, employment had reached 60,000;

·         Migrant labour was an important factor in increasing the labour supply; about 5% of those coming through training systems had been born outside the UK;

·         NI had been slow to bring in new procurement practices, eg, PPP, and partnering arrangements.  But from 1995 onwards there had been an increase in private sector clients who brought with them established experience of operating modern procurement methods.  Also the NI construction industry had begun to look for, and pick up, significant volumes of work outside NI.  An export group had been competing successfully with exports rising by 40% in the last two years;

·         Roads and Water had extensive investments arising from the RDS and RTS, and were using best procurement practices.  This area was beginning to level off, and health and education were becoming the growth areas, but with some problems of bureaucracy in the delivery process;

·         NI contractors had been gearing up for ISNI and had significant spare capacity;

·         There had been an aggregation and consolidation of contractors; there were some issues facing smaller contractors;

·         NI private sector capacity had risen by 50%; public sector capacity was unchanged – although the modernisation of procurement methods was an important positive element – and there were doubts about Departments’ ability to do what they said they planned to do;

·         A problem area was Planning, and the tortuous delivery processes used; the system was unable to deliver.

3.4.            In the ensuing discussion, the following points were covered:

·         Tony Doran’s view was that international companies were more likely to focus on London than on NI;

·         Improvements in procurement resulted in a lower need for labour for projects;

·         Better trained staff were more productive;

·         NI could create a base of tradeable services in construction, finance, etc, both to service NI needs and to be exportable;

·         Labour followed the market for opportunities and wages; significant numbers would return to NI for similar wages to those they were already receiving elsewhere, eg, in London, RoI, abroad.  In the mid-90s, the RoI had put together an aggressive programme to get Irish abroad to return home;

·         There needed to be a coming together of the ISNI and the long-term economic vision for NI, and a link between ISNI and the Skills Taskforce;

·         The private sector did not see a need for new mechanisms or structures, or reliance on outsiders; but was concerned that NI companies could not compete if the packages of schemes produced were unduly large;

·         Even if PPP packages excluded NI, it would be NI contractors who would be used to actually carry out the work;

·         The private sector could identify a number of important actions:

§         Introduce modern procurement methods;

§         Use clear processes;

§         Establish certainty in relation to the schemes being taken forward;

§         Establish programmes which have planning permission and clear commitments in terms of timing;

§         Improve the quality of training of the workforce – both existing and new intake;

·         There was already action in hand to increase the scale of the supply of labour;

·         Care should be taken to avoid overheating the local industry; schemes should be brought on-stream in a controlled way.

3.5.            SIB confirmed that the report on private sector capacity should be completed at the end of January and would be followed in due course by a report on public sector capacity and the need to get appropriate professional skills in place.

3.6.            As regards the Planning process, a problem was the response time of statutory consultees; while Roads and Water could improve, the main area of concern was the EHS where response times were getting worse.

4.      Regional Economic Strategy

4.1.            Mike Brennan updated the sub-group on work on the Regional Economic Strategy, which would be discussed at EDF on 7 March.

4.2.            The EDF Secretariat had suggested that sub-groups should discuss the strategy early in February and feed in views to EDF.

5.      Planning Issues

5.1.            EDF wished to consider problems in relation to the planning process at a plenary session.  These issues had been raised by the Infrastructure Sub-Group and by Lord Rana at the last EDF meeting.

5.2.            A paper was needed to capture the main issues and then to explore how that could be used to help the Planning Service, for example, to secure better responses from its statutory consultees.

5.3.            EDF should be asked to confirm the range of issues they wished to explore and the way in which they wished to do that; they would either remit the matter to an existing sub-group or set up a further group specifically for that purpose.  The next step after that might be to engage the Chief Executive of the Planning Service in constructive discussion.

5.4.            The EDF Secretariat would be asked to advise on handling.

6.      Co-option of Members

6.1.            The sub-group agreed to explore the scope to co-opt a further member, possibly from the area of Sustainable Development.

7.      Next Meeting

7.1.            A meeting of the sub-group would be held in mid-February to cover a range of issues;

·         The draft Regional Economic Strategy;

·         The latest position on the reports on private sector and public sector capacity to cope with ISNI;

·         Prioritisation of actions recommended in the last report from the sub-group to EDF.