Construction Sector: Economic Performance

Oral Answers to Questions — Finance and Personnel – in the Northern Ireland Assembly at 3:00 pm on 12th May 2015.

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Photo of Alex Easton Alex Easton DUP 3:00 pm, 12th May 2015

I also congratulate the Minister on her new position.

Photo of Alex Easton Alex Easton DUP

6. Mr Easton asked the Minister of Finance and Personnel for her assessment of the current economic performance of the local construction sector. (AQO 8166/11-15)

Photo of Arlene Foster Arlene Foster DUP

Thanks to the Member and, indeed, to all the other Members who expressed congratulations.

There are positive signs of growth in the Northern Ireland construction sector, with an overall increase of 3·9% in output over the last three months of 2014. Housing output increased by 8·5% in that quarter and infrastructure increased by 3·6%. That is the highest level of growth reported for over two years and, overall, marks a 7% increase compared with the last quarter of 2013. The construction industry's turnover in the 12 months to 31 December 2014 was almost £2·2 billion, with over 53,000 people employed in the sector. Our local construction industry has demonstrated great versatility and resilience over the last eight years, with many firms winning major projects in Great Britain and beyond. Approximately 60% of the turnover of the top 20 locally based contractors was generated in Great Britain in quarter 4 of 2013. For the top five contractors, that figure was closer to 90%.

The ability of local firms to compete for and win work outside Northern Ireland is evidence of the quality of the local construction industry. That said, I recognise the challenges that the construction industry has faced in recent years. The positive signs in these latest statistics are welcome, but continued government investment in infrastructure and rises in public-sector expenditure will clearly be important. I note that the Executive's capital budget for 2015-16 is £1·16 billion, and a number of major construction projects are under way. The Omagh hospital, Altnagelvin radiotherapy unit and the Ulster Hospital generic ward block are three such examples.

Photo of Alex Easton Alex Easton DUP

What measures have been taken to ensure that the procurement pipeline for government infrastructure projects is available to the construction industry?

Photo of Arlene Foster Arlene Foster DUP

That is a very important issue and one that has been raised with me in my former position as Minister of Enterprise, Trade and Investment. It is very important that the construction industry has early visibility of forthcoming procurements to allow it to get ready and, indeed, to work with other companies so that they can make a good bid in terms of the procurement. Central Procurement Directorate published guidelines on 16 April this year mandating publication of information on the system by Departments for the appropriate infrastructure projects. That is a really good step forward. It will allow small and large companies to see what is coming down the line, and they can then work together to bid into the procurement. I think that that will be very helpful.

Photo of Seán Rogers Seán Rogers Social Democratic and Labour Party

I, too, congratulate the Minister on her new position.

Minister, what extra can be done to support and stimulate the SME construction companies? I appreciate that you are only into the job, but this is more of a suggestion than anything else. Given that VAT is zero on new builds, would you consider a reduction in VAT to, say, 5% on home improvements that are, say, under £15,000? That would unlock a lot of capital and do a lot for the smaller companies in the construction industry, but, in the long term, the Exchequer would still get the same money back.

Photo of Arlene Foster Arlene Foster DUP

I only wish that the Executive got the VAT receipts back, but we do not. VAT is a reserved matter dealt with by Westminster, so it would have to be considered in that context. I am sure that the 14 MPs who actually go to Westminster would like to raise it with their colleagues over there.

On what more we can do for small businesses, particularly in the procurement arena, I know, from my former job, that the InterTradeIreland project Go-2-Tender is a very powerful tool that allows companies to bid not only in this jurisdiction but in the Republic of Ireland so that they can get involved in government procurement. That has been really helpful, and it allows companies to network with each other so that they can see opportunities to work together and make that successful bid. That, I think, will grow, and I am sure that the Minister of Enterprise, Trade and Investment will want to continue to support that very powerful InterTradeIreland project.