Private finance initiatives (PFI) in Northern Ireland have in recent years enjoyed (or, more accurately, endured) an unhappy depiction in the local media, ranging from economic criticism to unfortunate allusions to wolves in fairy stories. Hyperbolic tales of mismanagement, sharp practice and drains on the public purse have undoubtedly impacted on the public perception of PFI, at a time when the global credit crunch has fixed a keener, more critical eye on the administration of public expenditure.

All is not, however, doom and gloom. A closer assessment of the horror stories that the Fourth Estate have seized upon to demonise PFI quite quickly shows that the criticism is unfair. The most high profile example is the Balmoral High School PFI Project which came under fire as the school closed some five years into the concession period. However the reality was that the problem lay not in PFI or profiteering, but rather in a problem in predicting school numbers and the demographic backdrop, a problem which has taxed decision-makers in Northern Ireland since time immemorial, and a problem which would almost certainly have put paid to the prospects of success for the school regardless of which procurement method was chosen. It is a salutary lesson for any public authority that there must be a clear need for a project, whether or not the project is being procured under PFI or a more traditional avenue.

In many ways, PFI is synonymous with the changing face of Northern Ireland in the intervening decade since the Good Friday Agreement was concluded. The construction of some of the most eye-catching and innovative buildings dominating the Belfast skyline (including the Invest Northern Ireland headquarters and the Laganside Court complex) and the revitalisation of the major roads and transport media (including Westlink and the M1) have been commissioned under PFI concession contracts. They stand testament to the effectiveness of PFI in Northern Ireland as a means of securing major, and much needed, capital investment which, very likely, would not otherwise have taken place because of constraints on the administration of public finances. The benefits of PFI have been seen right across Northern Ireland and in areas such as skills and education, networks and infrastructure, environmental and waste management initiatives, healthcare and public administration.

The Northern Ireland Executive's Investment Strategy for Northern Ireland 2008-18 evidences a commitment to delivering investment of approximately £6bn in the local infrastructure over the next three years, rising to approximately £20bn in the course of the next ten years. The task of delivering the ambitious and admirable goals and objectives set out in the Investment Strategy has been given to the Strategic Investment Board (SIB) and it is clear that the energy and drive which has characterised that organisation since its establishment will be needed more than ever in the coming months and years if the Investment Strategy for Northern Ireland is to succeed in its aims.

The SIB has long been a positive force in the advancement of PFI and major investment projects, whether in terms of spreading the good news in its role of setting out its strategic vision for the initiative in Northern Ireland or on the shop floor in terms of cutting through the Gordian knot in the nitty-gritty of deal negotiation to get PFI projects across the finishing line. The SIB has at various times in its short history voiced frustration at what it perceived to be a lack of progress in certain areas, on which equally frustrated key players in the local investment market reflected positively, and the prominence of SIB's role in the Investment Strategy for Northern Ireland augurs well for the prospects for success of the strategy.

There has been a clear and uniform message in the announcements made by the public sector in the recent conference season that the focus of the Northern Ireland Executive is to redress what it has termed a "legacy of underinvestment in the past". Aided and abetted in the achievement of that aim by the SIB, there are strong grounds for optimism that this will be another challenge which Northern Ireland can take on and that PFI will be a vital component in that endeavour. The economic reality is that PFI is likely to have a crucial role in delivering the goals and objectives set out in that Investment Strategy. PFI is uniquely suited to the competing needs, interests and challenges faced by government in undertaking infrastructure projects involving significant capital commitments. Grandmothers and their scarlet-clad granddaughters can sleep more easily in their beds – whisper it if needs be, but PFI is more woodcutter than wolf.

Michael Johnston is a partner and Gerard Armstrong is an associate in the projects/PFI team at Carson McDowell.

NIJune2008