Government pays up to 70% of inflation-related construction costs for builders

The government will pay up to 70 percent of the contractor’s inflation-related construction costs in an open-ended scheme set at a monthly cost of millions of euros.

On Tuesday, the Cabinet approved plans for a plan brought to the government by Minister of Public Expenditure Michael McGrath.

The minister said the plan was needed to mitigate the risk of “significant losses” and protect projects already under construction.

McGrath, who told post-Cabinet reporters, said the plan wouldn’t be “free for everyone,” a public works plan that was important to lowering the profit margins of builders and making them unsustainable. He added that it was introduced with concerns that it could fail.

He said the contractor has already expressed concern about the current model of major public projects and the contracts that underpin them.

He said it would be difficult to spend on the plan, but the charges for the first three months of the year were estimated to be between 30 and 40 million euros.

There was no deadline at the moment because there was too much uncertainty, he said.

He said the immediate impetus for the project was the cost pressure on the construction supply chain caused by the war in Ukraine, especially for long-term implementation period projects that were agreed to bid prices before the current pressure. It will lead to “real difficulties”. Appeared.

Costs are included in the National Development Plan (NDP) spending cap.

He said the “cooperation framework” would allow the parties to engage free of charge to deal with the impact of inflation on costs.

Costs are created with reference to CSO figures and must be related to inflation. However, you can make a retroactive request for payments made after January 1st. He said the state’s ability to provide NDP needs to be secured.

Elsewhere, the Cabinet has approved a 9% VAT rate for the hospitality sector to be implemented by the end of February (a six-month extension) at a cost of € 250 million annually.

Treasury Minister Paschal Donohoe said the future of the tourism and hospitality sector needs to be protected during the summer and throughout the “shoulder season” and Christmas time.

He said the end of wage subsidies in the coming weeks would be a particular risk to the sector, which is the largest beneficiary. Asked about the difficulty of abolishing tax incentives — the last incarnation took eight years to return to the original tax rate — he said he would act on it at the right time, he was the Minister of Finance. Someone who did so before pointing out that there is.

Tourism Minister Catherine Martin, who expressed concern about transparency related to the National Maternity Hospital (NMH) project last week, said she would like to allow Health Minister Stephen Donnelly to appear before the Health Commission on this issue. , Said not to “preempt”. result. She said the decision to postpone the approval of the Cabinet was a “right decision” and a “cautious measure.”

Martin said the NMH project “should be transparent at (that) center.” It “needs parliamentary scrutiny and deserves parliamentary scrutiny.”

“I hope Minister Donnelly will give those reassurances tomorrow,” she said. Government pays up to 70% of inflation-related construction costs for builders

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