CONSTRUCTION: The high level of inflation in the construction sector has eroded output under the National Development Plan, the Minister for Finance has said. But Mr McCreevy said spending provisions for the plan would not be exceeded this year, despite calls from the construction sector for increases in certain areas.

Official figures pointed to an inflation rate of 12.5 per cent in construction in 1999 and 2000, with a lower rate estimated for 2001, well above inflation elsewhere in the economy, said Mr McCreevy. "The taxpayer cannot . . . be expected to write a blank cheque to meet exorbitant cost increases generated within the construction sector," he added. But the Construction Industry Federation said the 2002 roads allocation fell "well short" of what was needed to maintain the momentum of new project starts this year.

While it admitted that construction cost inflation was a factor in driving up costs, it said there were also other factors. It suggested that original cost estimates for the programme were too low, that additional projects were added after original estimates were undertaken and that certain projects had their specifications raised at the detailed design stage.

In addition, land acquisition costs had risen while ecological, architectural, environmental, legal, planning and design costs were also higher. Mr McCreevy said he was satisfied with the implementation of the plan to date overall.

"Contrary to some misinformed comment, there has been an excellent rollout of the NDP infrastructure programme, with €10 billion (£7.9 billion) invested and with targets being met over the first two years of the plan," Mr McCreevy told a Regional Assembly meeting in Portlaoise yesterday.