Debate contribution: Northern Ireland Water Budget Position 2024-25

Debate contribution by Ms Liz Kimmins on 25 March 2025.

MLA

Ms Liz Kimmins

Party at the time

Sinn Féin

Date

25 March 2025

Type

Debate contribution (made as a minister)

Business

Ministerial Statement

Heading

Northern Ireland Water Budget Position 2024-25

Assembly identifier

Official Report component 4866259

Read the official Assembly record

Text

Go raibh maith agat, a Cheann Comhairle

for the opportunity to address the Assembly. My statement is on my decision to start the process of engaging forensic accounting services to investigate why NI Water has been unable to live within its resource budget allocation this year. Members are fully aware of the budgetary challenges that my Department faces following years of underfunding by the British Government. In the current financial year, my predecessor was required to take difficult decisions in order to balance the budget while maintaining the range of essential services that are delivered by my Department. Those essential services include maintaining our road network, providing public transport and delivering essential water and waste water services. Opening capital and resource budgets were provided to fund those essential services, which included allocations to the Department's arm's-length bodies (ALBs). It was recognised that, in all cases, those allocations fell short of the need that had been identified and meant that further difficult decisions and prioritisation by the ALBs would be required. NI Water was allocated an opening resource budget of some £137 million, which represented almost one quarter of the total resource allocation available to my Department. Recognising the importance of water and waste water services, bids were submitted for additional funding for NI Water as part of the in-year monitoring process. An additional £11·5 million of resource was secured for NI Water in-year. In addition, £2·9 million was provided to deal with the aftermath of storm Éowyn, bringing the current allocation to just over £152 million.

Following the October 2024 monitoring round, it was made clear to NI Water that it was required to live within the increased resource allocation, as it was unlikely that any further funding would become available. Unfortunately, in recent weeks, NI Water's board has indicated in writing that it is minded to instruct NI Water to overspend unless additional budget is made available. It is estimated that any potential overspend could be in the region of £3 million, although the exact quantum of that remains subject to cost variations between now and the year-end close. Protecting public funds is of the utmost importance, particularly in light of the wider pressures that are being faced not only by my Department but across all areas of our public services. Difficult decisions are having to be made across all Departments and arm's-length bodies; therefore, it is essential that I fully understand the budgetary management decisions that NI Water has taken this year, which have led to NI Water's board proposing this unprecedented and disappointing course of action. I was, therefore, faced with a number of options, given the serious nature of the board's intention to instruct NI Water to incur a potential budget overspend and, in particular, the wider implications for other key essential services that my Department funds. I have considered those options carefully, and my decision to appoint a forensic accountant is a necessary step that takes a measured approach to help us to work in partnership with NI Water and to enable better planning going forward in these times of constrained budgets. I wish to reassure Members that I am taking the possibility of an overspend very seriously, while adopting a pragmatic approach to understanding how we have ended up in this situation so close to the financial year-end. I hope that any learning from this investigation will be useful for both parties and will help to prevent such an occurrence in future years. In line with my decision to proceed, I have instructed my officials to put in place the necessary steps to urgently appoint suitably qualified forensic accountants to progress this investigation as quickly and thoroughly as possible. Members will appreciate that, because this will be a live investigation, I do not propose to comment further until such times as the investigation is complete. In closing, I very much hope that my decision will help us to move forward together in partnership. These are difficult times for us all, and we must ensure that we do the best that we can with the resources that are available.

Without going into the detail of the investigation at this stage, I hope that, ideally, it will help us to see exactly what position NI Water is in from a budgetary perspective. This is an opportunity for us to cross-reference the information that has been provided to us so that we can agree a proactive way forward. The Member and others have asked questions in the Chamber about my confidence in the figures that we have been provided with to date. This investigation should be seen as a pragmatic approach that will affect how we move forward with funding. As I said before, however, the funding model that is in place is the best one, but we have to look at how that money is being managed internally by NI Water and whether it is being used in the most effective and efficient way to allow it to deliver what we need it to do.

We have had frequent engagement with NI Water throughout the year. We have engaged with NI Water regularly since I came into post. We gave it as many opportunities as possible to ensure that it did everything that it could to live within its budget. That was made clear not only by me but by my permanent secretary, officials and my predecessor, John O'Dowd. This is not the first year in which it has happened. I hope that the fact that it has happened close to the end of the financial year indicates how hard everyone has been working to get us to a point where we did not have to take those steps. However, in the past number of days, NI Water indicated that it is still looking at an overspend of close to £3 million. It is therefore incumbent on me to make a decision. For me, the investigation is not about undermining the work of the Utility Regulator. It is an opportunity to look as thoroughly as possible at the issue and at where there are any gaps or things that could be done internally. If there are not, it will strengthen the case for additional funding, and I can bring that to Executive colleagues at a later stage, but it is very important that we do the investigation at this stage.

It is not an issue of having confidence in the board. It is hugely disappointing to me that, despite ongoing engagement with the chair on the need to live within budget, the NI Water board decided not to take action to do so. I hope that everyone recognises that my decision to appoint a forensic accountant is a necessary step that takes a measured approach. A number of options were available to me, and that is the best way forward: it will help us to work in partnership with NI Water and, going forward, to plan better in a time of constrained budgets.

Yes. I hope that I will be able to provide feedback to the Committee and the Assembly. At the end of the day, that is one of the key reasons why I took the decision. I am very mindful that I am accountable to the Assembly and that we need to be sure that public funding is spent in the right way. I am happy to provide an update once the investigation concludes.

As I said, the challenge is the fact that there are significant challenges across my Department on many competing priorities, and Members will be fully aware of that. My predecessor was required to take difficult decisions to balance the overall departmental budget while maintaining the essential services that the Department delivers. Opening capital and resource budgets were provided to fund essential services, including allocations to NI Water and other ALBs. It was recognised that, in all cases, those fell short of what had been identified as being needed and that further difficult decisions needed to be taken. For the Department to provide additional funding to regularise NI Water's budget, I will have to take and redirect money from other essential services. There is a consequence of every action related to this, and I have been mindful of that. That also led me to make the decision, because we cannot continue to operate on such a trajectory. We need to find a way forward so that NI Water and any other ALBs do not find themselves in a position where they are frequently required to overspend on their budget.

As I said earlier, the Department has worked throughout the year with NI Water on its budget allocation. The chair of NI Water wrote to me on 11 March to advise that, in the event of no further resource funding being made available or the overspend not being regularised, the board of NI Water had determined that the appropriate course of action was to issue a directive to the chief executive to overspend by something in the region of £5 million. As I said, it is hugely disappointing that, despite ongoing engagement with the chair on the need to live within budget, the board decided not to take action to do so. We have had numerous engagements on the issue. The overall amount has reduced in recent days, but, unfortunately, given the fact that we are so close to the end of the financial year, I was required to take these steps.

I thank the Member for his question. In making my decision, when I was considering the steps, the time that the process would take was really important. I want the work to be done not only as thoroughly but as effectively and efficiently as possible. We hope that it will be concluded in about six weeks, with it starting in the next week or so. We are trying to do a short and sharp investigation, but we hope that it will be as thorough as possible. The next steps will depend on the outcome of the investigation. I intend to update Members, particularly those on the Committee, on that.

The issue was raised at Committee, and, as it was my first appearance, we were not clear what was and was not made public. At that stage, it was my assumption that the documents were public, but we gave a commitment to go back and provide the information, which we have done. The reports that have been provided are in the public domain. That tells me that the others are not, for whatever reason. We can get information about why that is the case and provide it to the Member.

No. I understand that, in December 2023, when the Assembly was down, and in the absence of local Ministers, NI Water highlighted a potential overspend of over £30 million in its capital budget. NI Water resolved that at the time by slowing down elements of its capital spend to ensure that it remained within budget. In recent years, NI Water's resource pressures have been reduced in-year or addressed through in-year allocations, meaning that it has lived within budget.

NI Water received a letter early this morning, as we were working on the matter right up until late last night. I hope that that indicates how seriously I have been taking the issue and the consideration that has been given to taking these steps. We have had frequent engagement with NI Water throughout the process. As part of that, I have offered to meet NI Water's board to discuss the next steps. I hope that we can do that in the near future. Members have raised a number of questions on a possible fraud investigation, and responses have been provided. I cannot comment on the detail of the investigation, as we will not know that until we do the investigation. It would not be fair to make any further comment at this point.

1,991 words. Text as published by the Northern Ireland Assembly.

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