Reinvestment and Reform: Improving Northern Ireland's Public Infrastructure

07 December 2006

Reinvestment and Reform: Improving Northern Ireland's Public Infrastructure

Report to the House of Commons by the Comptroller and Auditor General for Northern Ireland (HC79)

The Reinvestment and Reform Initiative is a major step towards putting in place a coordinated and sustainable approach to improving Northern Ireland’s public infrastructure and addressing a backlog of investment. An integral part of this is the Investment Strategy for Northern Ireland, published in December 2005, which sets out a 10 year potential investment programme of up to £16 billion over the period 2005-2015.

Although implementation of the Investment Strategy is at an early stage, today’s report by John Dowdall CB, Comptroller and Auditor General (C&AG) makes a number of recommendations aimed at improving delivery and securing increased transparency through full public awareness as to the application of the available funding.

On the Reinvestment and Reform Initiative and role of the Strategic Investment Board Limited (SIB) (Part 1 of the Report):

The report found that SIB is adding a professional dimension to planning and delivering government capital programmes and the Investment Strategy, with its focus on outputs, is a good initial approach in trying to secure long-term value for money. However, while SIB has made significant progress in developing its relationship with departments, getting projects to market and in publishing the Investment Strategy, the Audit Office considers that it needs to develop more objective-related performance management systems to enhance its accountability and performance management.

On Investment Plans (Part 2 of the Report):

The report considers that the planned review of the current Investment Strategy in 2007, offers an opportunity to strengthen infrastructure investment planning and delivery processes across government. Going forward, the Audit Office considers it important that investment plans are developed for each sector to show, as part of the justification for an investment, a clear link between a programme or project and its anticipated contribution to the delivery of priority outputs and outcomes in Public Service Agreements and other strategic documents. The report recommends that departmental investment plans are published and incorporated into the respective departmental business plans to increase clarity and accountability for the delivery of public services.

On delivering the Investment Strategy (Part 3 of the Report):

Delivering the Investment Strategy is dependent on developing capability, increasing competition and improving long-term capacity planning. The report records that a capacity study of the construction industry found the Investment Strategy to be a major challenge for the local construction industry, particularly in relation to the availability of an appropriately skilled workforce, a qualified supply of construction professionals and the availability of skilled and experienced managers to deliver complex projects. To address the private sector’s concerns, the report recommends that the development and publication of the Investment Strategy, complemented by more detailed investment plans for each sector, together with longer term (five-year) funding and programme planning, would help create more certainty in the market.

The report also notes that the private sector has concerns about the public sector’s capacity and ability to implement the Strategy within the required timescale, particularly at the same time as it is experiencing major structural reform, and the constraints associated with the planning process. An internal review of the skills base and capacity within the public sector is currently underway.

In addition, the report highlights that user involvement in design will be key to the success of many of the Investment Strategy projects, particularly in the health and education sectors.

On funding the Investment Strategy (Part 4 of the Report):

The Audit Office report highlights the scope for improving the information provided to Parliament/Northern Ireland Assembly on the Reinvestment and Reform Initiative, particularly in relation to borrowings and use of PFI. It recommends that commitments arising from the use of PFI and borrowings should be reported together. In addition, the report recommends that undrawn borrowings, currently £114m, should be reported annually to Parliament/Northern Ireland Assembly.

The report highlights the importance of minimizing the cost to taxpayers through carefully considering and monitoring borrowing. It notes that, despite a history of significant departmental capital under spending, the Department of Finance and Personnel (DFP) has borrowed £411 million up to the end of 2005-06. The Audit Office concluded that, if more effective Investment Plans and systems for managing and planning capital investment programmes had been in place, a significant proportion of this borrowing under the initiative could have been avoided. Should DFP access the full £2 billion borrowing available, repayments are likely to peak at approximately £137 million a year. Based on a current Northern Ireland population of 1.7 million, this equates to potentially £80 a year per head of population. In addition, the report records that the future cost of meeting commitments arising from signed PFI deals is just over £1.5billion.