To ask the Minister for Infrastructure for her assessment of the current funding model for Northern Ireland Water.

Ms Kimmins (The Minister for Infrastructure)

Under the current funding model, my Department fully funded NI Water for the first three years of the current price control (PC) period to the level that the Utility Regulator deemed necessary. We all recognise that there is a need for additional funding for all public services, and NI Water is not immune. Water and sewage infrastructure has suffered from years of historical underinvestment as a result of the austerity policies that the British Government implemented, and we are dealing with the legacy of those policies. My Department has provided NI Water with a budget allocation of almost £0·5 billion in this financial year, which is just under 40% of the total non-ring-fenced budget that is available for the entire Department. Furthermore, my predecessor provided NI Water with an additional £32 million of public money in the recent October monitoring round, of which £19·5 million was to fund targeted action to release waste water constraints. In partnership with the Executive, I will be continuing my Department's three-pronged approach by working with colleagues to try to increase waste water investment, by reviewing the policy and legislation for developer contributions, with a view to launching a consultation later this month, and by securing Executive agreement for a water, flooding and sustainable drainage Bill to be introduced in the Assembly. My Department has reviewed water utility company structures across Britain and Ireland for best practice, including the mutualisation model, in which I know the Member is interested. The privatisation and mutualisation models that are favoured in England and Wales require charges to be paid by domestic water customers, however, so they are essentially water charges by the back door. Furthermore, recent evidence has demonstrated that those governance models do not necessarily provide the better levels of services that people expect and can lead to higher levels of debt and to increasing costs. I am keen to see the delivery of improvements to our waste water infrastructure in order to facilitate housing growth and economic development, as well as to help improve water quality. I will continue to work in partnership with NI Water to ensure that we make the most of the funding that we have available for essential public services. I will also continue to work with my Executive colleagues.

Ms Kimmins

A mutualisation model would result in the relinquishing of Executive oversight, which in itself would be concerning. Given that we have seen examples across the water of where mutualisation has not worked well, achieving it here would require domestic water customers to pay charges. There is no ambiguity about that. NI Water would also be required to secure debt and financing on quite a significant scale. To do that, it would be required to borrow large amounts of money that would have to be financed in some way. For me, mutualisation is just another way of dressing up the introduction of water charges for domestic customers. I am committed to ensuring that we do not place an additional financial pressure on people who are already struggling with the cost of living and everything else that we hear about day and daily.

Mr Boylan

I welcome the Minister to her first Question Time. For clarity, because there seems to be some confusion, will she clearly explain why she believes that mutualisation leads to water charges?

Ms Kimmins

As I said, I believe that mutualisation is essentially water charges by the back door. A mutualisation model would require the Executive to relinquish oversight, which is not the direction in which we want to go. We want to ensure that we have that level of governance over how water is treated and how the waste water system is working. I therefore do not think that mutualisation is a positive option. We have seen that it has not worked well across the water. I want to ensure that we can continue to provide the highest standards of waste water infrastructure while ensuring that we are not creating additional costs for domestic customers.

Mr Gaston

The Minister for Communities has announced the building of 100,000 new houses by 2039, while the Programme for Government (PFG) commits to 5,850 new social houses being started by 2027.

The current waste water infrastructure could not support those developments. What conversations have you had with the Minister for Communities? Have you given him a commitment that you will support him, through funding Northern Ireland Water, to ensure that he can provide the houses that he outlined in those announcements?

Ms Kimmins

I thank the Member for his question. It is important to outline that waste water infrastructure underpins quite a lot of the priorities in the Programme for Government. There is a commitment not just by me as the Minister but across the Executive to deliver on those priorities. As I said in previous answers today, I will continue to work on my three-pronged approach, which involves working closely with all Executive colleagues to deliver the funding needed. The reality, as the Member will know, is that the overall Executive Budget would not be enough to deliver the required waste water upgrades. However, that does not mean that we do nothing. I will continue to work to the best of my ability with all Executive colleagues to do as much as we can to deliver on our waste water infrastructure and ensure that the homes that we have committed to build are built at the earliest possible stage.

Mr Allen

Minister, in a recent engagement with the Committee for Communities on housing, Northern Ireland Water highlighted a requirement of £1·8 billion, which has been highlighted repeatedly, but there is no funding for that. At what stage will the Department for Infrastructure accept that the current funding model really is not working?

Ms Kimmins

I do not believe that the current funding model is not working. The problem is that we do not have enough funding. I have given answers today on options that Members put forward such as mutualisation and privatisation. There is a concerted effort to push us in the direction of implementing water charges: that will not happen; I am committed to not doing that. The Member is shaking his head. Just to be clear: I am not suggesting that that is what he was saying. What I am saying is that I am looking at all available options. Things have been done. In the October monitoring round, my predecessor, John O'Dowd, provided £19·5 million, which will help to unlock capacity that will build 2,300 homes. When we put our heads together, it can happen. I will continue to do that, working with all colleagues around the table.

Mr Dunne

Given the severe impact of the water capacity crisis on domestic and commercial development, and our ever-growing housing waiting lists, what innovative engineering solutions are being considered? Is best practice across the world being fully explored to try to solve the crisis, which is not new?

Ms Kimmins

I thank the Member for his question. The Finance Minister announced today a funding allocation through the transformation fund that includes £15 million for urban drainage. That is one way of looking at the innovation that is available to treat rain water, which, as NI Water has said, forms a large part of the water going through treatment systems. At Committee last week, we had a discussion about global practice. We are committed to looking at best practice not just across these islands but across Europe and globally. As I said at Committee, I rule nothing in and nothing out. It is important to recognise, however, that we have a good funding model. We have options that we are considering and working through in the three-pronged approach. We will continue to look at all options that can help to deliver on waste water.

Mr Durkan

The Minister said that she is not ruling anything in or anything out, but has she, in effect, ruled out the expert-led review of the funding and governance of Northern Ireland Water, which was recommended by the Audit Office? She said that she does not believe that there is anything wrong with the funding model, and I share her concerns about some of the solutions that are being mooted by others. However, if there is nothing wrong with the funding model, is the Minister confident that the governance of Northern Ireland Water is everything that it should be?

Ms Kimmins

At Committee last week, we also talked about the NI Audit Office report, which was published last year. The Department has already undertaken six reviews of funding and the status of NI Water. After all that, we have come to the conclusion that it is best to continue with the existing funding model. The outcome of that work is for the Assembly to consider. It is for the Assembly to choose whether it wants to change NI Water's form or funding model, but that would require the introduction of domestic water charges. No matter how many times we talk about it, that would be the ultimate outcome if we were to change. What I am saying is that we will look at all the suggestions put forward. My priority is to ensure that we do not put an additional burden on hard-working families and people right across the North who are already struggling with the cost of living. We need to find sustainable solutions. I take on board what the Member said, but it is important that any changes —. On the other point about changing the funding model or how we currently operate, that would require further delays to the progress on our waste water infrastructure. At this time, I am committed to doing as much as I can. That may require taking a phased approach to doing things and basing that on the funding that is available to me. I will make sure that I continue to work with all partners, including NI Water, to ensure that, when more money becomes available, we are ready to use it.

Mr Speaker

Mr Sheehan is not in his place.