£1.2 Billion of City Deal Funding Sits Unspent as NI Regeneration Projects Fall Years Behind Schedule
A report from the Northern Ireland Audit Office has found that approximately £1.2 billion of the £1.5 billion allocated to City and Growth Deal regeneration projects across Northern Ireland remained unspent as of March 2026, with major schemes progressing far slower than originally planned. The NIAO has warned that for every year of delay, inflation erodes the real value of the funding package by an estimated £37 million, and has questioned whether the deals will deliver value for money without "decisive action to accelerate delivery."
Background
The City and Growth Deals programme was established by the UK government as a mechanism for delivering targeted investment in regional economies across the United Kingdom. In Northern Ireland, deals were agreed for Belfast, Derry/Londonderry and Strabane, Mid South West, and Causeway Coast and Glens, with a combined allocation of approximately £1.5 billion in public funding. The deals were designed to support a range of projects spanning digital infrastructure, innovation hubs, tourism, skills development, and physical regeneration, with the aim of stimulating private sector investment and creating jobs across the region.
The Belfast Region City Deal, the largest of the four, was signed in 2021 and covers a programme of investment in innovation, digital, and tourism infrastructure across the greater Belfast area, involving Belfast City Council and five partner councils. The Derry City and Strabane District Council deal, signed in 2020, focuses on digital transformation, health innovation, and regeneration in the north-west. The Mid South West and Causeway Coast deals followed subsequently, covering areas including Armagh, Newry, Mourne and Down, and the north coast.
From the outset, there were concerns about the pace of delivery. City deals are complex instruments, requiring the alignment of multiple public bodies, private sector partners, and funding streams. The procurement processes involved are lengthy, and the governance structures required to manage multi-partner programmes add further layers of complexity. In Northern Ireland, these challenges were compounded by the period of political instability at Stormont between 2022 and 2024, during which the absence of a functioning Executive created uncertainty about the regional government's ability to fulfil its commitments under the deals.
Key Developments
The Audit Office report, published in July 2026, found that as of March 2026, approximately £1.2 billion of the total £1.5 billion allocation remained unspent — meaning that only around £300 million, or 20% of the total, had been drawn down and deployed in the five years since the first deals were signed. The report found that most projects are running significantly behind their original delivery timelines, with some schemes that were expected to be operational by now still in the planning or procurement phase.
The NIAO's analysis of the inflation impact is particularly striking. With construction cost inflation running at elevated levels in recent years, the purchasing power of the unspent £1.2 billion is diminishing with each passing year. The Audit Office estimates that the delay is costing the programme approximately £37 million in real terms for every year that passes without the money being spent — a figure that, over a multi-year delay, represents a very significant reduction in what the deals can actually deliver.
The report stops short of attributing blame to any single organisation or individual, but it is clear in its assessment that the current pace of delivery is inadequate and that without significant changes to how the programme is managed, the deals risk failing to achieve their stated objectives. The NIAO has called for "decisive action to accelerate delivery" and has recommended a comprehensive review of project timelines, governance arrangements, and risk management across all four deals.
Why It Matters
The City and Growth Deals represent the most significant programme of public investment in Northern Ireland's regional economy in a generation. The communities that were promised regeneration, innovation hubs, and improved infrastructure have been waiting for years to see tangible results. The revelation that 80% of the funding remains unspent — and that the real value of that funding is being eroded by inflation — will be deeply frustrating for those communities and for the local authorities and councils that have invested considerable time and resources in developing the projects.
There is also a broader political dimension. The deals were presented as a demonstration of the UK government's commitment to levelling up Northern Ireland's economy and addressing the structural disadvantages that have held the region back. If the programme fails to deliver, it will undermine confidence in the levelling-up agenda and raise questions about whether the deal model is the right vehicle for regional investment in a jurisdiction with Northern Ireland's particular governance challenges.
Local Impact
The delays have real consequences for communities across Northern Ireland. In Derry/Londonderry, projects under the City Deal that were expected to transform the city's digital and health innovation capacity are still years from completion. In Belfast, innovation hubs and tourism infrastructure projects that were meant to be generating economic activity by now remain on the drawing board. In the Mid South West and Causeway Coast areas, communities that were promised investment in skills and regeneration are still waiting. The £37 million annual inflation cost is, in effect, money that will never be spent on the projects it was intended for — a hidden tax on delay that falls hardest on the communities that most need the investment.
What's Next
The Stormont Executive's Department for the Economy, which has lead responsibility for the City and Growth Deals programme, is expected to publish a formal response to the Audit Office report within the coming weeks. The Public Accounts Committee at Stormont has indicated that it will hold a dedicated evidence session on the report's findings in September. The UK government's Northern Ireland Office has been asked to comment on whether it intends to review the terms of the deals in light of the delivery delays, and whether any flexibility will be offered on spending timelines to account for the period of political instability at Stormont.
