What’s on Minister for Finance’s wish list?

Too early for Christmas wish lists? Not according to the North's Finance Minister who has a new £1 billion (€1.25 billion) investment fund at the top of his. Simon Hamilton wants to create the first Northern Ireland Investment Fund to inject millions of pounds into communities and create local business opportunities and new jobs. Hamilton and his officials from the Department of Finance are in discussions with the European Investment Bank (EIB) to secure funding for the proposed fund.

EIB has a track record of financing this type of proposal - just last month it lent its support to a new £1 billion social and urban investment fund for London.

The EIB will provide £500 million of support in the form of loans which will be matched by financing from the London Green Fund and borough councils in the city.

Hamilton wants to get a similar fund going in the North. He is hopeful that could happen by next spring. Given recent local budget woes he is keen to stress that it will not cost Northern Ireland anything or take money from already over-stretched budgets.

Going to waste

Instead the fund will leverage money that is already there and which some would say is going to waste. There is roughly £35 million sitting idly in – for want of a better description – an account that only the North’s Executive can access.

It is not money that can be diverted into the likes of health, education or policing budgets. It is a pot of cash that the NI Executive gets from the UK Treasury called Financial Transactions Capital (FTC).

The money can only be spent on specific projects. This year the main beneficiaries have been the University of Ulster’s Belfast campus redevelopment and a scheme that provides secured loans for small agricultural businesses.

But because of a lack of projects to spend its FTC budget on, the Executive could effectively be forced to hand back about £35 million to the UK treasury this year with a possibly option of carrying just 10 per cent over into next year’s budget. Hamilton says it is not a good position for Northern Ireland to be in.

“I realised we needed to create a vehicle that would use this money more effectively, it is available, it is there and we need to think up new ways in which that money can be spent.

“It has been utilised to support a number of successful projects, for example the Northern Ireland Science Park, a range of housing schemes and also provide loans to GPs and dental surgeries to purchase medical equipment and modernise their surgeries.

“But we do need to be able to identify much bigger projects – like for example the University of Ulster’s Belfast campus [which received £35 million of loan funding],” the Minister said.

He says that creating a dedicated Northern Ireland Investment Fund will help to attract more finance to support larger projects and could create opportunities to bring larger international investors on board.

Hamilton says the fund would deliver a major boost to the local construction sector which would in turn lift the entire economy.

Ripple effect

The

Construction Employers Federation

says the ripple effect could be far reaching as every £1 invested in construction generates a knock-on £2.84 in the wider community.

Managing director of the CEF John Armstrong said its message to the Executive is "spend what you have".

Armstrong says this alone could save some companies from going out of business.

But the proposed Investment Fund could according to Hamilton play a much wider role than financing infrastructure projects from social housing to high-tech business parks. It could also be harnessed to create new schemes to provide lending facilities for small to medium-sized businesses rather like the EIB’s €400 million support package for the Strategic Banking Corporation of Ireland launched in Dublin last month.

Hamilton says there is cross-party support in the North to set aside an allocated £12.1 million of the FTC budget to provide an initial balance for the Investment Fund.

“It is an exciting opportunity – one that could really make a difference which would be beneficial for everyone,” he says.