NI Water’s on the right track, but funding is holding it back
THE annual report for 2017-18 published today by Northern Ireland Water (NIW) is a convincing financial success story. Turnover has increased, significant profits (even if slightly lower) have been made and the shareholder (the Government) is being paid a useful dividend.
Improved performance in supplying high-quality drinking water, disposing of wastewater and sewage, and maintaining efficient distribution and collection systems, has been documented.
NIW has published a comprehensive examination of its performance in 2017-18 and the inherited structures and systems in its status as a Government-owned organisation.
Northern Ireland has a financing system for NIW that is subsidised from taxation and relies for capital funding on allocations from the Stormont capital programme.
These organisational and financial relations between NIW and the Government are unusual and do not function in a market-led manner.
To introduce financial discipline to its operations, NIW is subject to organisational review by the Utility Regulator. The Regulator examines the detail of the operational performance of NIW and reaches conclusions on possible efficiencies and the merits of the capital spending proposals. The Regulator also approves a considered financial model that, subject to appeal and reconciliation, gives performance targets to NIW.
The weakness in this system lies in the existence of a further decision-making role for the Government, through the Department for Infrastructure, in deciding the level of operating subsidy to offset the costs of supplying domestic households and in deciding whether the recommended level of capital spending should be provided.
In recent years capital spending allocations have been significantly lower than the amounts approved by the regulator. In practice, this means that, after a professional regulatory assessment of a desirable minimal capital spend, the Government cuts the funding available below the recommendations.
This process is putting NIW into a position where it will not be able to meet aspects of its operational plans. NIW acknowledges these tensions in its annual report, which reads: “Our... business plan started from a constrained capital expenditure position with £990m of public expenditure budget available against a (bid) requirement for £1.7bn. Further public expenditure cuts ... mean that around £55m of projects will not be delivered. These are projects such as new water mains or upgraded wastewater treatment plants needed to connect new houses.”
Behind this warning of inadequate capital spending, there are emerging practical difficulties. Lack of capacity to supply water or lack of capacity to deal with increased levels of wastewater and sewage are factors which can mean that proposed property developments cannot receive planning consents in some areas.
Recently, priority investment projects to treat wastewater have been undertaken in Ballycastle, aiding the expansion of supply caused by the expanding tourism sector; in Dungannon, to meet increased demand from industrial expansion; and in Maghaberry, linked to services to the prison.
There are funding constraints which make NIW unable to deliver extra wastewater treatment capacity arising from growth in demand at Ballyronan, Kilkeel, Beleek and in Larne. This is alongside warnings that additional new housing developments around Saintfield may not be approved.
The present financial arrangements damage sensible planning for these services. Preferably, the operational decision-making for NIW should be closer to commercial logic.
If the Executive wishes to avoid these capacity constraints, then a system which earmarks water charges separately as a defined section of domestic rates bills and then presents (in a single bill) the rates charges with separate water charges, would open the way for NIW to behave commercially and raise its own money to finance the capital programme.
The objective should be to set NIW the trading challenge of setting its own charges, subject to ministerial approval, meeting the costs of borrowing and being answerable to deliver capacity to allow the economy to grow. This could be clear-cut, logical and nearly non-political.
DIVERSITY Mark NI (DMNI) enables organisations of all sizes, from all sectors, to apply for a charter mark which will recognise their commitment to and progress on diversity, namely gender.
Independent assessors give their time freely as they are passionate about being involved in making a positive impact on our economy through diversity.
They bring a robust rigour to the process and are an asset to DMNI. And they come from a range of sectors.
Judith Gillespie, former Deputy Chief Constable, said: “One of the many reasons why I became involved in the Diversity Mark Assessment was to help recognise that despite continuing challenges, many organisations are making real progress in innovative ways to remove cultural and other barriers to full gender integration and equality in Northern Ireland.”
Deb Lange Evens, board member for Invest NI and Belfast Harbour Commission, said: “I am delighted to be an independent assessor for the Women in Business charter mark to help promote the benefits of equality in the workplace to both individual employees and the employers.”
Kieran Harding, managing director of Business in the Community, said: “I very much welcome the opportunity to help raise the bar in terms of gender diversity and recognise examples of best practice in workplaces across Northern Ireland.”
Dianne Foster, director IT service delivery, Baker Mckenzie, said: “As well as simply being ‘ the right thing to do’, I believe that companies that proactively manage gender diversity and have long-term commitment to it can reap crucial competitive benefits.”
For more information, or to sign up to the charter, contact Christine White, firstname.lastname@example.org, or visit www. diversity-mark-ni.co.uk.
From left: Judith Gillespie, former Deputy Chief Constable, PSNI; Dianne Foster, director IT service delivery, Baker Mckenzie; Kieran Harding, managing director of Business in the Community, and Deb Lange Evens, board member, Invest NI and Belfast Harbour Commission. Right: They are joined by Roseann Kelly, CEO of Women in Business