Standing Orders 10(2) to 10(4): Suspension — Grants to Water and Sewerage Undertakers Order (Northern Ireland) 2022

Executive Committee Business – in the Northern Ireland Assembly at 1:15 pm on 24th January 2022.

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Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party 1:15 pm, 24th January 2022

Just by way of information, the Minister for Infrastructure will join us by StarLeaf. She is trying to get on to StarLeaf, but there seem to be some technical difficulties. We will iron those out and then move to the item of business.

Members, I think that we have overcome the technical difficulties. Glaoim ar an Aire an rún a mholadh. I call the Minister for Infrastructure to move the motion.

Photo of Nichola Mallon Nichola Mallon Social Democratic and Labour Party 1:30 pm, 24th January 2022

I beg to move

That the draft Grants to Water and Sewerage Undertakers Order (Northern Ireland) 2022 be approved.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party

The Business Committee has agreed that there should be no time limit on the debate.

Photo of Nichola Mallon Nichola Mallon Social Democratic and Labour Party

The order that I am bringing forward today extends the power for my Department to pay a grant to Northern Ireland Water in lieu of domestic water charges. Members will be aware that it is the Executive's policy and, indeed, that of previous Executives that domestic consumers should not pay a separate charge for water and sewerage services. Such services are instead funded through a subsidy paid by my Department to the water and sewerage undertaker, which is Northern Ireland Water.

The subsidy is paid to Northern Ireland Water under article 213 of the Water and Sewerage Services (Northern Ireland) Order 2006, as amended by the Water and Sewerage Services Act (Northern Ireland) 2016, which has an end date of 31 March 2022. On 7 October 2021, the Executive agreed to the continuation of the policy of not implementing water charging for domestic use. To give effect to the Executive's decision to continue to bear the cost of water charges on behalf of domestic customers for the next five years, a new statutory rule is required.

I am therefore bringing forward the draft Grants to Water and Sewerage Undertakers Order (Northern Ireland) 2022, which proposes to extend the period during which a subsidy may be paid to Northern Ireland Water to 31 March 2027. The order is subject to the draft affirmative resolution procedure — the purpose of the debate today. The five-year extension to 31 March 2027 gives the next Executive time to consider how the future of our water and sewerage services should be funded.

Northern Ireland Water is regulated by the Utility Regulator and operates according to its licence. The regulator sets prices through its price control processes, which ensure that Northern Ireland Water has the funding to maintain high-quality drinking water supplies and to deliver environmental and customer services at the lowest reasonable overall cost.

The Utility Regulator has determined that Northern Ireland Water will require investment of about £2 billion in water and waste water services over the six-year price control (PC) period from 2021 to 2027. Sustained and secure levels of investment by the Executive over multiple price control periods will be required.

This financial year is the first in many years in which Northern Ireland Water has been fully funded in line with the price control. I stress the importance of the need for Northern Ireland Water to continue to be fully funded in future years in order to improve the water and waste water infrastructure here. Clearly, a lack of funding would see those critical services become suboptimal, risking public health, curtailing economic growth and putting our environment at risk of pollution

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

Photo of Jonathan Buckley Jonathan Buckley DUP

On behalf of the Committee, I wish the Minister a speedy recovery.

As Chairperson of the Committee for Infrastructure, I wish to take the opportunity to speak on the draft Grants to Water and Sewerage Undertakers Order (Northern Ireland) 2022. The purpose of the rule is to extend the period during which the Department will pay a subsidy to NI Water in lieu of domestic water charging. The Minister has adequately provided a detailed explanation of the content of the statutory rule, and I do not propose to repeat that.

The Department made the Committee aware of the proposal for the statutory rule on 18 October 2021, and it was considered by the Committee at its meeting on 24 November 2021, with a briefing from departmental officials. As Members are aware, the subsidy in lieu of water charges is an Executive policy, and the Committee supports the statutory rule. In line with their scrutiny role, however, and with due diligence, Committee members were rigorous in their engagement with officials on the detail of the rule.

I will now briefly outline the Committee's considerations. The Committee sought assurances from departmental officials about the rationale for the five-year subsidy period. The officials explained, to the satisfaction of the Committee, that the five-year time period is so that it ties in with the Assembly's election cycle and gives the Department and, ultimately, the Executive time in the next mandate to instigate the necessary work to consider alternatives to the subsidy and to bring forward legislation, should that be considered appropriate.

The Committee sought clarification regarding how the amount of the subsidy is calculated. The officials advised the Committee that the subsidy is calculated in agreement with Northern Ireland Water and the Utility Regulator through the price control process. The Committee was content that the subsidy, which was drafted between the Department and Northern Ireland Water with the agreement of the Utility Regulator, is based on a clear methodology and in regulation. Furthermore, the Committee was satisfied to hear that the subsidy methodology is based on what is affordable for customers and what is necessary in order to deliver water and sewerage services in an efficient way. The officials advised the Committee that no consultation had been carried out on the legislation as there is no change to policy.

One of the Committee's major concerns was the impact of current increases in energy prices. Members may be aware that Northern Ireland Water is Northern Ireland's largest consumer of electricity. The Committee asked the officials about the impact of recent energy price increases and were advised that the subsidy was calculated before prices started to spike. The Committee explored with the officials and in writing what actions Northern Ireland Water can undertake to reduce its energy consumption.

The Committee has been advised that NI Water has delivered a number of energy-efficient and cost-reduction projects over the PC15 period and continues to develop and implement opportunities for improvement within the current regulatory time period and price period. Those projects include measures such as time-of-day optimisation in order to avail itself of electricity at off-peak times in order to support the reduction or curtailment of wind energy and to avail itself of cheaper electricity prices. We were advised that NI Water has invested in renewable generation capacity, with 57 solar sites now installed across Northern Ireland, alongside existing hydro capacity and generation of electricity from sludge.

The Committee was pleased to hear that NI Water generates approximately 13 GW of electricity per annum from outside sources and that its energy-related projects have delivered an additional £4·5 million to £5 million of annual recurring benefit from the PC15 period for the business. Northern Ireland Water has advised that energy is identified as a key business improvement focus area, with a range of efficiency measures and revenue-generating opportunities delivered and explored.

The Committee will continue to explore this issue in some detail, given the huge costs involved in the production of clean water. The Committee also sought assurances that greater efforts will be put into raising public awareness of the need to save water, not just during periods of water shortage but all year round.

The funding of NI Water is a live issue. It is one that my Committee is very cognisant of and continues to explore at every opportunity. Next week, the Committee will hear from Northern Ireland Water on its financial situation and will continue to drill down into that budget.

The Committee for Infrastructure supports the statutory rule.

Photo of Cathal Boylan Cathal Boylan Sinn Féin

Ba mhaith liom labhairt ar son an rúin. I speak in favour of the motion on the order.

The purpose of the order is to extend to March 2027 the period during which the Department for Infrastructure may pay a subsidy in place of charges for domestic water and sewerage services.

I reaffirm Sinn Féin's commitment to oppose the imposing of water charges so that homeowners in the North will not be charged for water. This order will ensure the continuation of the policy against water charges. Access to water is a basic right, and we will ensure that water charges continue to be blocked. Sinn Féin will continue to stand up for families and homeowners on this issue, particularly now, when energy costs are rising and many people continue to feel the impact of COVID.

I support the motion and the order.

Photo of Cara Hunter Cara Hunter Social Democratic and Labour Party

I thank the Minister for introducing the motion, and I, too, wish her well with her recovery over the coming days.

I agree with the Minister that water charges must never be allowed here. People already face a number of increased costs, and the Minister shares with me our party position of strong opposition to charging for water. I welcome the fact that the motion puts in place a subsidy to allow a water service to be provided to all our citizens for years to come.

Whilst this is a technical motion, it points to the type of society that we want to be: one that cares for and protects its communities. We recognise the value of and the right to clean, free water for families across the North.

Rightly and responsibly, the Minister has pointed to the need for NI Water to have the correct funding. We know that she has made a case on the basis of the pressures that NI Water has suffered. At the Committee, members from across the political spectrum shared her concerns and supported her efforts to access that vital funding.

As we look forward to the multi-year Budget, we must keep in mind the need to ensure that basic services, including water, that underpin everyday services, such as hospitals and schools, get the correct investment.

I support the motion.

Photo of Andrew Muir Andrew Muir Alliance

At the outset, I wish the Infrastructure Minister a speedy recovery from COVID-19. I also want to put on record my absolute abhorrence at the abuse that I saw yesterday on social media towards Nichola following her diagnosis. Words cannot describe my view on some of the abuse that was directed at her. It is just not acceptable — it really is not.

At present, our water and sewerage system in Northern Ireland is in an incredibly worrying state. Although the current subsidy paid to Northern Ireland Water is over £300 million every year, our waste water infrastructure is outdated and at maximum capacity in many areas. Half a billion pounds is needed to address strategic drainage problems in Belfast alone. There are currently more than 100 areas across Northern Ireland, including 25 cities and main towns, where sewerage and waste water infrastructure has little or no capacity left. It is expected that another 30 towns will reach capacity by 2027.

Towards the end of last year, we were given a clear image of how volatile our water and sewerage systems are. The Minister for Infrastructure warned that the provision of clean drinking water and the processing of waste water could, due to financial uncertainty, be compromised. The allocations in the January monitoring round are welcome, but the concerns remain.

Whilst the Alliance Party is firmly opposed to the privatisation of Northern Ireland Water, the company's funding model is, in our view, unsustainable and needs to change. We need a waste water public service that is fit for purpose and that can borrow to invest in the future. We believe in a shift in resource that is raised through the regional rate on an entirely revenue-neutral basis and coupled with a change in the governance model for Northern Ireland Water, which would provide a stronger footing on which to borrow commercially and, in turn, provide Northern Ireland Water with the vital funds that it so desperately needs.

Northern Ireland is the only UK region where the water utility is not funded to the levels that are required by its independent regulator. By continuing to throttle funding to Northern Ireland Water through its current financial operating model, we are continuing only to drag out an issue that is increasingly becoming a risk to our everyday lives and is inhibiting economic growth. Allowing Northern Ireland Water to borrow by establishing it as a mutual company, as has successfully been done in Wales, would mean that we could transform the state of our water and sewerage systems, bringing them up to date and making them adequate to deliver the resource that we require. What we propose can be done without having to incur any additional net revenue from households. It can be done by shifting the money that we raise through the regional rate. In essence, we will get more for our money if we explore alternative and creative solutions.

Without the willingness to pursue that option, we are presented with the draft Grants to Water and Sewerage Undertakers Order. Failure to approve it will bring serious and severe consequences. We support it, but, again, we call for consideration to be given to the options that I have outlined. We cannot forever kick the can down the road. At some time, we will be forced to face up to mutualisation, hopefully within the lifetime of the order, which will enable us to plan for a more sustainable future.

I note that the last time that the order was passed was in January 2017, days away from when the Assembly collapsed and we were left with no devolved government for three years. It is my strong hope that that does not occur once again. Before and after the election, the people of Northern Ireland deserve to have a government delivering for everyone, not the politics of crisis, stand-off and stalemate.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party 1:45 pm, 24th January 2022

Before I call the next Member to speak, I thank Mr Muir for drawing to our attention the anonymous trolling of the Minister. I was not aware of it yesterday. Mrs Dodds has come through something similar. All of us join in outright condemnation of those despicable anonymous trolls, who people are subject to, irrespective of their party, as are members of the media or other public figures. It is awful and despicable behaviour by cowardly people who keep themselves anonymous and troll people, coming off with some of the most awful comments. Our solidarity is with you, Nichola, as a friend, and I know that we have expressed that to you too, Diane.

Photo of Jim Allister Jim Allister Traditional Unionist Voice

I join in wishing the Minister a full and speedy recovery and in the condemnation of the trolling. Some of the trolls really are more suited to the sewers that Northern Ireland Water has responsibility for. They are beyond description.

The measure today is another stopgap. It just keeps Northern Ireland Water somewhat in limbo through a lack of strategy. When you go to the 25-year strategic plan for Northern Ireland Water, which is supposed to take us up to 2046, you see that it states, amongst other things:

"Our status as both a Government Owned Company and a Non-Departmental Public Body is recognised as less than ideal for a provider of infrastructure investment. We require a sustainable funding model to support delivery of our strategy. There is a growing risk that the levels of service to our customers in Northern Ireland will fall behind the water companies in the rest of the UK, against which we are benchmarked by the Utility Regulator. The current Executive policy is that the funding arrangements will remain in place until 2022."

The date that was given when the strategy was written was 2022. Now, however, the current Executive policy seems to be that it will remain in place until 2027.

This is not just a theoretical problem about what sort of Northern Ireland Water we should have; it is a problem with real, lasting and damaging practical consequences. As I have raised previously with the Minister, there is a series of villages in my constituency of North Antrim where capacity has been reached and where, as a consequence, no new building has been possible for years. In previous replies, the Minister has indicated that the earliest that it might be possible to do something about that for the villages of Armoy, Dervock, Mosside and Stranocum, as well as, I might add, a good part of Ballycastle, is post 2027. That is just not acceptable. It is a consequence of the funding inadequacies and arrangements that affect Northern Ireland Water.

It manifests itself in other day-to-day issues. Last Tuesday and Friday, raw sewage was flowing across the green area behind Maine Park in Galgorm. It is appalling that things are in that state. I say to the House, therefore, that simply replicating this limbo-land for Northern Ireland Water is not forward-looking and is not sufficient to take us to the realistic funding position that we need to get to in order to deal with our substandard infrastructure. In Northern Ireland, there are 100 villages and towns that experience difficulties with waste water capacity. That is an astounding indictment.

Yes, there is no doubt that this statutory instrument will have to be approved as yet another stopgap. Will we, however, simply be back here in five years — if we are here — with another proposition of this nature?

The Minister may be able to cast some light on this point, which is more satiric than anything else. When I looked up www.legislation.gov.uk to look at the 2017 order, I read these words:

"This is a draft item of legislation and has not yet been made as a Northern Ireland Statutory Rule."

Can it be correct that, five years on, it has never been made, or has the very diligent website, www.legislation.gov.uk, got it wrong? Perhaps the Minister can tell us.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party

We are running close to the wire. The next Member to speak is Roy Beggs.

Photo of Roy Beggs Roy Beggs UUP

I, too, send my best wishes to the Minister. I hope that she has a speedy recovery.

On trolling, it is important that we, as an Assembly, condemn trolling, and, ultimately, take what action we can, and encourage action at a higher level if necessary, to unroot and stop that ongoing difficulty.

It is regrettable that we are coming near to the end of this Assembly term without having given any significant consideration to alternatives for Northern Ireland Water's funding. There are more efficient methods of funding. There are too many sewage treatment works. Investment is not occurring, and it is vital for our economy that it happens. It is vital that this draft order passes, otherwise we may face the difficulty of Northern Ireland Water not being able to operate. We have no choice, so I will support the draft order. As I said, it is regrettable that alternative arrangements were not considered by the Executive to ensure that better long-term funding arrangements were in place. I support the order but urge that long-term planning occur in future.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party

Question Time begins at 2.00 pm, so I suggest that the House take its ease until then. The debate will continue after Question Time, when the next Member called to speak will be Gerry Carroll.

The debate stood suspended.

(Mr Speaker in the Chair)