NI Wa­ter’s on the right track, but fund­ing is hold­ing it back

Belfast Telegraph - Business Telegraph - - News - with John Simp­son @bel­tel_busi­ness

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, chris­tine@di­ver­, or visit www. di­ver­

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

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