Grants to Water and Sewerage Undertakers Order (Northern Ireland) 2017

Executive Committee Business – in the Northern Ireland Assembly at 7:45 pm on 23 January 2017.

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Photo of Christopher Hazzard Christopher Hazzard Sinn Féin 7:45, 23 January 2017

I beg to move

That the draft Grants to Water and Sewerage Undertakers Order (Northern Ireland) 2017 be approved.

The order I am bringing forward extends the power for my Department to pay a grant to NI Water in lieu of domestic water charges. The current powers to pay a grant will expire on 31 March 2017, and the Water and Sewerage Services Act 2016, which was passed by the Assembly in January last year, provided the power to extend that date by an order laid before and approved by resolution of the Assembly.

The Assembly will be aware of the commitment of the Executive to not bring in water charging. It is the intention of the Executive to continue to bear the cost of water charges on behalf of domestic customers for the next five years. My Department had a timetable for implementing this order that would have enabled it to complete the draft affirmative resolution process in adequate time prior to the expiry date of 31 March 2017. However, the imminent dissolution of the Assembly means I have decided to bring the draft order here today.

The grant provides NI Water with the funding to enable it to maintain drinking water supplies and deliver sewerage services. Without funding, NI Water would quickly run out of cash and those services, which are fundamental to public health, economic growth and environmental protection would be put at risk.

I commend the motion to the Assembly and ask that it approve the order.

(Madam Principal Deputy Speaker [Ms Ruane] in the Chair)

Photo of Declan McAleer Declan McAleer Sinn Féin

I take this opportunity to commend the motion to the House this evening. This is a good news story, and it is certainly in line with our party's position of opposing domestic charges in the North and, indeed, across the island.

It is particular good news for the thousands of householders who would otherwise be faced with an average bill of £400 for water, which they already pay for in their rates. Indeed, as a result of the grant to NI Water, they also pay for it in their taxes.

Our party position is that access to water is a basic right. We welcome the continuation of the policy against water charges. As I said previously, it will be particularly welcomed by hard-pressed families struggling to make ends meet.

In commending the motion, I state that we as a party are fully committed to opposing and resisting water charges. By bringing the legislation to the House this evening, along with his decision prior to Christmas to cease the practice of installing meters in new homes, the Minister has demonstrated his commitment and, indeed, our commitment to the implementation of the policy against domestic water charges.

Photo of Stephen Farry Stephen Farry Alliance

It is a shame that this debate is coming quite late in the evening after the renewable heat initiative, because the consequences of the decisions that the Assembly takes this evening may be as deep and far-reaching as the need to have mitigation measures for RHI; indeed, they may go further.

This is being presented as a good news story by Sinn Féin, which is keen to get the order rushed through ahead of an election campaign. I fear, however, that they are not fully thinking this through and are making a commitment that may not stand up to wider scrutiny or be a wise one to make. I will make a number of points in that regard. First, Sinn Féin claims that it is trying to give certainty over water charges. That raises the question of why they want to go as far as 2022, especially when I am not sure — I would welcome any clarification to the contrary on it — that there has been formal Executive approval of this. Certainly, this commitment has been made ahead of the formal agreement of never mind a one-year Budget but what should be a three- or four-year Budget on the part of the Executive. The Minister is potentially making a long-term financial commitment on how resources are to be used by the Executive. It may well be that most parties are perfectly comfortable with that, but there are consequences that flow from it. There is also the issue of the extent to which the Minister has the capacity to bind future Assemblies — I stress that I mean multiple Assemblies — given the potential risk of elections into the future.

The main points that I make concern the substance of the order. There are probably three aspects that the Minister needs to address properly before the Assembly, and they really relate to what other options he has. Great play has been made that we do not want to pass on additional domestic charges to people and we do not want them to pay water charges per se. It may well be that we do not want to raise any additional revenue from people, but, if we were simply to shift resource that we currently raise through the regional rate and instead raise that through a water charge entirely on a revenue-neutral basis and if that were linked to a change in the governance nature of NI Water, it would have the capacity, based on the collection of a water charge, to move onto a stronger footing to borrow commercially. In turn, that would open up the potential for further investment in our infrastructure at no further revenue cost to the Northern Ireland block grant. I fear therefore that we are forgoing a major opportunity to bring in additional resource to invest in our crumbling water and sewerage infrastructure across Northern Ireland. We are conscious that, in Belfast, there is a major issue with the sustainability of the infrastructure — something that may inhibit our ability to attract inward investment in coming years.

The approach that the Minister has taken — it builds on what has happened previously — of treating Northern Ireland Water as essentially a non-departmental public body stands in contrast to the concern that has rightly been voiced about the potential reclassification of housing associations by the Office for National Statistics and the consequence that will flow from that in terms of their restricted ability to borrow.

Therefore, we get a sense that, on the one hand, this is a big deal for housing associations in that it is important that people who are trying to a do a public good by building houses should have the maximum ability to borrow money but that, on the other hand, for Northern Ireland Water, for the political reason that water charges are a massive taboo that no one is prepared to take on, we are forgoing the ability to look at the governance issue around Northern Ireland Water and allow it the ability to borrow commercially.

Potentially, we have an opportunity cost in resource per annum that is on a much greater scale than the current liability from the overcommitment from the renewable heat incentive scheme. That is to put that point into context. If people want to go out and make a big fuss about what we are doing about renewable heat and cracking down on corruption and the waste of resources, they need to be consistent about that and look at something that stands right before us.

Leaving aside the opportunity that flows from a potential reclassification of how we raise the same amount of money, there are also issues that the Minister needs to address around the approach that we take to VAT treatment, which may leave us open to tens of millions of pounds of additional charges to the block grant from HMRC. I appreciate that we are on schedule to leave the European Union, but, like the Minister, I am determined that we should do our best to remain and seek some form of special status. However, there is a running risk of infraction proceedings to Northern Ireland from our failure to adopt a different approach to how people pay for water.

There are three major substantive issues that I do not believe have been properly aired on this: VAT; European Commission infraction proceedings; and, most important, the opportunity foregone to revisit the classification of Northern Ireland Water and the ability, through a separate water charge, to allow it to borrow commercially and therefore have a much greater resource that can be reinvested in improving our infrastructure. In making those three points, I re-emphasise that all of that can be done without our having to incur any additional revenue in net terms from households. It can be done by shifting the same buck that we raise through the regional rate but instead raising that buck through a water charge. In essence, we get a bigger bang for our buck if we are prepared to be creative. The Finance Minister was here previously, and he in particular has made great play of his willingness to be creative and to push all the boundaries to make the best use of the resources available to the Northern Ireland Executive. Particularly in these straitened times when we have to squeeze out the maximum efficiency from every pound and every penny, I am slightly confused and bewildered about why, for superficial political reasons, we are not prepared to be a little more creative and innovative about how we manage our money.

Photo of William Humphrey William Humphrey DUP 8:00, 23 January 2017

I welcome the opportunity to speak as Chair of the Committee for Infrastructure on the statutory rule relating to the draft Grants to Water and Sewerage Undertakers Order (Northern Ireland) 2017. The purpose of the rule is to extend the period during which the Department will pay a subsidy to Northern Ireland Water in lieu of domestic water charging. The Committee considered the proposal for the statutory rule at its meeting on 12 October 2016 and agreed the proposal, with the dissent of one member, Mrs Kellie Armstrong. The Department for Infrastructure wrote to the Committee on 10 January 2017 requesting that the rule be considered by the Committee as a matter of urgency in order to facilitate the scheduling of a debate in the Chamber. The letter stated:

“Due to the uncertainty around the restoration of the Assembly, it is important to get this legislation through the Assembly process urgently to ensure that NI Water can carry out its functions from 1st April 2017”.

On 10 January 2017, the Examiner of Statutory Rules considered the order and indicated to the Committee on 11 January 2017, just before the Committee meeting commenced, that she had no issues to raise.

In light of this, the Committee considered the statutory rule on 11 January and, again, agreed the rule. Again, with the dissension of only one member, Mrs Armstrong.

Photo of Christopher Hazzard Christopher Hazzard Sinn Féin

I thank those Members who have commented on the motion this evening. Some general issues and several specific points have been raised.

I will turn first to Mr Farry's question: why, for the period of time? Members will be aware, obviously — we have made a public statement about this — that the Executive have made a commitment not to introduce water charges in the current mandate for domestic customers and this time was due to run out in 2021. The extension to 2022 was required to give the new Executive time to consider that position on water charging. In addition, NI Water estimates that it would require two to three years from any change in the position before it could introduce a charging system for domestic customers; but that will not be happening.

The second point that Mr Farry raised was around governance issues and the way forward. They are all issues that I have given thought to and that, I have no doubt, would have featured in the mandate in the time ahead, but we are not at that point today. The Assembly is about to be dissolved. The measures that we are taking here tonight are to ensure that NI Water does not dissolve in front of our very eyes too and that customers are then asked to pick up the burden for that decision. So, that is the position that we are at. I am more than happy to state that we will not be introducing domestic water charging.

Photo of Raymond McCartney Raymond McCartney Sinn Féin

The Minister has alluded to the fact that the Assembly is about to dissolve, and we will all go to the doors in the coming weeks. I commend the Minister. Certainly, when we go to the doors, many issues will be raised, and it will be good for us, as Assembly Members, to be able to say to people, "No water tax". That was a guarantee given over many years and one that is being delivered yet again.

Photo of Christopher Hazzard Christopher Hazzard Sinn Féin

I welcome the comments. I am not sure if the Alliance Party members are upfront and honest with the people on the doors when they say, "We are against all of this, but, at the end of the day, do you know that we also want to introduce water charges?". I am pretty sure it is something that they keep off their election trifolds.

Photo of Stephen Farry Stephen Farry Alliance

The Member will be aware that all the points I just read out were, essentially, in our Assembly manifesto last year. Indeed, I answered the questions around that in quite considerable detail on 'The Stephen Nolan Show'. I do not want to bring back memories to the Minister of 'The Stephen Nolan Show' on elections.

While I have the Floor, I just want to clarify something with the Minister. He is saying two different things. He is saying that he appreciates that there is a need to look at the issue of governance, and, if that is the case, I would accept him perhaps extending the current subsidy to NI Water for a year or two years while he or his successor conducts a review around governance. However, that is at odds with giving an extension through to 2022, which, essentially, means maintaining the status quo for another five or six years and forgoes the opportunity to have that wider review of governance, which, I stress, if done properly, could bring in tens of millions of pounds every year beyond what we currently have to allow us to invest in our infrastructure.

Photo of Christopher Hazzard Christopher Hazzard Sinn Féin

I am delighted that the Alliance argument around water charges does not chime with more of the electorate and that the particular reason does not hold sway, because this Executive certainly are not for turning on this issue. There will be no water charges for domestic customers, and we have ensured that.

I am very aware that article 9 of the water framework directive requires member states to have water pricing policies that provide adequate incentives for users to use water resources efficiently. NI Water already charges non-domestic users. Also, a proportion of the domestic rates contributes towards the cost of domestic water charges. The Executive have undertaken not to introduce household charges, and I believe that runs in tandem to that. I believe that this order will reinforce the Executive's commitment not to bring in water charging for households, and I thank the Members for their support.

In conclusion, I would also like to thank the Examiner of Statutory Rules, the Committee for Infrastructure for its speedy consideration of this order and the Business Committee for its assistance in enabling me to bring this important legislation to the Assembly today. I ask the Assembly to approve the order.

Question put and agreed to. Resolved:

That the draft Grants to Water and Sewerage Undertakers Order (Northern Ireland) 2017 be approved.