The Irish cabinet has approved plans for an open-ended scheme that will pay up to 70% of builders’ construction costs. These must be related to inflation and made in line with Central Statistics Office figures. However, builders can backdate qualifying claims to 1 January, 2022.
The scheme is likely to cost millions of euros each month. Furthermore, the estimated bill for the first trimester could total EUR 30-40 m.
Minister for Public Expenditure Michael McGrath said the scheme would not be a “free for all”. Importantly, it will address concerns that crucial public works schemes could come unstuck. This is in the face of diminishing construction profits. Some contractors have already raised concerns about the contract underpinning the current model for major public works schemes.
What’s more, it would manage the potential for significant losses, safeguard projects already underway, and assist the State in delivering the National Development Plan (NDP). NDP expenditure ceilings will contain costs.
The cost pressures in the industry supply chain caused by the war in Ukraine gave impetus to the scheme. This is already a challenge for projects with longer lead-in times, where prices were set by tender or agreed beforehand. There is no end date for the scheme.