The City and Growth Deals in Northern Ireland are facing a significant challenge: inflation is eroding their value by over £35 million annually. This is a critical issue that demands attention, as these deals are meant to be transformative investments with a 15-year lifespan. The deals, worth over £1.5 billion, are a collaboration between central and local governments, with a focus on regeneration and growth. However, the slow progress and the impact of inflation are raising concerns about their long-term sustainability and the potential benefits they could bring.
One of the key challenges is the fixed nature of the funding. The longer it takes to spend the money, the more its real value is diminished by inflation. This is a critical issue that needs to be addressed, as it could potentially place the funding at risk. The NI Audit Office has warned that inflation is a "challenge to the successful management of ongoing deal project development and delivery."
The deals cover construction and set-up costs, but the project promoters, typically local councils, must underwrite future operational and maintenance costs. This raises a strategic risk that these long-term financial commitments may become unsustainable. The Auditor General, Dorinnia Carville, has expressed concern that "continued delays are eroding the value of this potentially transformative investment."
The Mourne Mountains Gateway project, for example, was expected to cost £44 million, with £30 million coming from the Belfast Region City Deal. However, the project has faced numerous setbacks, including the refusal of the National Trust to grant a lease and the Department of Agriculture, Environment and Rural Affairs' decision not to allow the council to use land it controls. This has led to a delay in the project and a loss of confidence in its viability.
The slow progress and the impact of inflation are not isolated incidents. A report from Derry City and Strabane District Council has raised concerns over two city deal projects. Ulster University has paused the appointment of a design team for a new School of Medicine building, citing budget and funding concerns. The proposed digital innovation hub is also in "considerable delay."
The government has acknowledged the challenges and has committed to ensuring the benefits of the City Deals are felt as soon as possible. However, the question remains: can these deals overcome the obstacles and deliver the promised transformation? The answer lies in the ability to address the challenges of inflation, slow progress, and long-term financial sustainability. It will require a concerted effort from all stakeholders involved, including the NI Executive, local councils, and the UK government, to ensure that these deals are not just a collection of promises but a reality that brings positive change to Northern Ireland.
