In Northern Ireland, as of March 06, 2025, the construction industry is facing significant challenges, particularly following the restoration of the Northern Ireland Executive and the recent agreement on the Programme for Government 2024-2027. The combination of a freshly restored government, delayed infrastructure projects, and historically low housebuilding completions signals several warning bells for the industry’s workload and capacity in 2025. Below are the main concerns based on current conditions, followed by five key action points to address them.

Main Warning Bells for the Construction Industry in 2025

1. Sewage Infrastructure Delays Stalling Housing Development
   Outdated and overstretched sewage systems are a critical bottleneck. NI Water has reported that 19,000 properties cannot be connected to the sewage network due to capacity constraints, affecting construction in 23 towns. This has contributed to housebuilding completions dropping to a 60-year low in 2023 (5,418 homes against a target of 10,000 annually), with wastewater issues delaying approximately 8,450 additional homes worth nearly £1 billion in investment. Without urgent upgrades, this bottleneck will persist into 2025, severely limiting new home approvals and construction starts.
2. Historical Underinvestment in Infrastructure
   Decades of underfunding in water and sewage systems have left NI Water with a £185 million shortfall in 2024/25 alone, against a required £600 million annually for essential upgrades. The cancellation of eight major sewage projects and the abandonment of the £1.9 billion Belfast Living With Water programme signal a lack of immediate capacity to support construction growth, threatening economic and environmental goals for 2025.
3. Slow Implementation of the Programme for Government
   The Programme for Government 2024-2027, agreed on February 27, 2025, includes commitments to facilitate housing growth and protect the environment, but its late adoption—over a year into the Executive’s return—raises doubts about timely delivery. With 2025 already underway, the lack of concrete action plans and funding allocations could delay critical infrastructure projects, leaving the construction industry in limbo.
4. Economic and Workforce Uncertainty
   The construction sector faces potential workforce shortages and economic pressures following years of political instability. While £19.5 million in funding was allocated in December 2024 to connect 2,300 homes, this is a drop in the bucket compared to the 37,000 properties awaiting connections. Without a stable pipeline of projects and incentives to retain or attract workers, the industry may struggle to meet demand in 2025.
5. Environmental and Public Health Risks
   The overloaded sewage system is not only a construction issue but also an environmental and public health crisis, with untreated wastewater spilling into loughs and rivers. This could lead to stricter regulations or public backlash in 2025, further complicating approvals and increasing costs for developers, potentially stalling projects even more.

Five Key Action Points

1. Prioritize and Fast-Track Sewage Infrastructure Investment
   The Executive must allocate significant capital funding—beyond the £19.5 million already committed—to NI Water in the 2025 budget to upgrade wastewater treatment facilities. Targeting high-impact areas like Belfast (where 1,200 homes are slated for connection) and accelerating projects like the Upper Falls wastewater treatment works could unlock thousands of stalled developments quickly.
2. Establish a Strategic Housing and Infrastructure Taskforce
   Create a dedicated taskforce under the Department for Infrastructure to coordinate the Programme for Government’s housing goals with NI Water, developers, and local councils. This body should set statutory timelines for infrastructure approvals and connections, ensuring that sewage delays don’t derail new home approvals in 2025.
3. Secure Alternative Funding Models
   With the Infrastructure Minister ruling out water charges or mutualization of NI Water, the Executive should explore developer contributions, public-private partnerships, or UK government grants to bridge the funding gap. A clear funding strategy by mid-2025 could kickstart deferred projects and signal confidence to the construction sector.
4. Streamline Planning and Approval Processes
   Implement reforms to cut red tape around planning permissions and sewage connection approvals. Drawing from the Programme for Government’s environmental commitments, pre-approval frameworks for sustainable developments could be introduced by Q3 2025, reducing delays and boosting construction starts.
5. Boost Workforce Capacity and Industry Confidence
   Launch a 2025 skills and recruitment campaign targeting construction workers, including incentives to return from abroad, and expand apprenticeships in line with broader UK and Irish goals (e.g., Ireland’s target of 12,500 apprentices annually by 2030). Pair this with a publicized pipeline of infrastructure projects to give firms certainty and encourage investment in capacity.

Addressing the water and sewage investment challenges in Northern Ireland requires innovative funding models that align with global best practices while adapting to the region’s unique political, economic, and social context. As of March 06, 2025, Northern Ireland faces significant infrastructure constraints, particularly with NI Water’s limited budget and reliance on public funding, which has led to delays in sewage upgrades and housing development. Below are five top funding models, drawing from worldwide best practices, tailored to Northern Ireland’s situation, and considering the current refusal to introduce domestic water charges or mutualize NI Water.

1. Public-Private Partnerships (PPPs) with Developer Contributions

• Description: A hybrid model where private companies finance, build, and operate water and sewage infrastructure in collaboration with NI Water, with costs partly offset by contributions from housing developers benefiting from the upgrades.
• Global Best Practice: Scotland’s Scottish Water uses PPPs effectively, such as the £500 million wastewater treatment projects in Glasgow, where private investment supplements public funds. In Northern Ireland, developers could contribute to specific projects (e.g., £15 million pumping stations in Derry) to unlock stalled housing.
• Advantages: Reduces the burden on public expenditure, leverages private sector efficiency, and directly ties funding to development needs. The £1 billion in stalled housing investment could be a starting point.
• Challenges: Requires clear agreements to avoid a “two-tier” system where only large developers benefit, as raised by the Construction Employers Federation. Legislation and oversight must ensure equitable cost-sharing.

2. Green Bonds and Sustainable Financing

• Description: Issuing bonds specifically for environmentally sustainable water and sewage projects, repaid through a mix of government subsidies, utility revenues, and international grants.
• Global Best Practice: The Netherlands’ Dutch Water Authorities issue green bonds to fund climate-resilient infrastructure, raising €1 billion annually. In Northern Ireland, this could fund the £600 million annual need identified by NI Water.
• Advantages: Attracts ethical investors, aligns with the Programme for Government’s environmental goals (e.g., Lough Neagh Action Plan), and spreads costs over decades. Could appeal to EU or UK green funds post-Brexit.
• Challenges: NI Water’s status as a non-departmental public body limits borrowing autonomy, requiring Executive policy changes or Treasury approval for flexibility, as noted in the NI Audit Office report.

3. Ring-Fenced Multi-Year Public Funding (Infrastructure Bank Model)

• Description: A dedicated, multi-year budget allocation for NI Water, insulated from annual public expenditure cuts, potentially backed by a UK-wide infrastructure bank or devolved equivalent.
• Global Best Practice: England’s Highways England benefits from ring-fenced budgets (£27 billion over 2015-2021), ensuring predictable funding. Northern Ireland could emulate this with a £2.5 billion PC21 (2021-2027) commitment.
• Advantages: Provides certainty for long-term projects like the abandoned £1.9 billion Belfast Living With Water programme, addressing the £185 million shortfall in 2024/25. Boosts construction industry confidence.
• Challenges: Competing demands (e.g., transport) within the NI Executive’s Block Grant mean political prioritization is key. Requires HM Treasury agreement for year-end flexibility.

4. Cross-Border Investment Collaboration

• Description: Partnering with the Republic of Ireland’s Uisce Éireann to co-fund shared water and sewage infrastructure, leveraging economies of scale and EU funding opportunities.
• Global Best Practice: The Danube River Basin countries (e.g., Austria, Hungary) pool resources via the International Commission, securing €4 billion for water quality projects. Northern Ireland and Ireland could target cross-border wastewater upgrades (e.g., Lough Foyle).
• Advantages: Shares costs for mutual benefits, taps into Ireland’s €11 billion Strategic Funding Plan (to 2024), and could revive stalled projects like the eight cancelled sewage schemes in NI.
• Challenges: Political sensitivities post-Brexit and differing funding models (Ireland’s partial domestic charges vs. NI’s public-only approach) require careful negotiation.

5. Performance-Based Contracts with Private Operators

• Description: Contracts where private firms upgrade and manage sewage systems, paid based on performance metrics (e.g., reduced spills, homes connected), with initial public seed funding.
• Global Best Practice: Chile’s water sector uses performance-based contracts, improving efficiency in Santiago’s wastewater treatment with private operators like Aguas Andinas, funded initially by government but sustained by tariffs. In NI, this could target the 19,000 properties awaiting connections.
• Advantages: Incentivizes efficiency and innovation, aligns with NI Water’s £2 million weekly investment pattern, and avoids direct domestic charges by using existing subsidies.
• Challenges: Requires robust regulation to prevent cost overruns or service disparities. NI Water’s public status limits full privatization, so contracts must remain government-backed.

Conclusion

These models reflect best practices from regions balancing public oversight with private investment, addressing Northern Ireland’s urgent needs without relying on politically unfeasible water charges. The PPP and developer contribution model offers immediate relief for housing bottlenecks, while green bonds and ring-fenced funding provide long-term stability. Cross-border collaboration and performance contracts add flexibility and efficiency. Implementation would require Executive commitment, legislative tweaks, and stakeholder buy-in—crucial steps to reverse the 60-year low in housebuilding and avert further environmental decline in 2025.

Overall Conclusion

The construction industry in Northern Ireland in 2025 is at a crossroads. Sewage infrastructure delays, compounded by historical underinvestment and a slow-starting Programme for Government, threaten to keep workloads stagnant unless decisive action is taken. By prioritizing infrastructure, streamlining processes, and securing resources, the Executive can turn these warning bells into opportunities for growth, delivering on its promises to boost housing and protect the environment.