Debate contribution: NI Water: Update on the Investigation into Potential Unauthorised Resource Budget Overspend

Debate contribution by Ms Liz Kimmins on 24 June 2025.

MLA

Ms Liz Kimmins

Party at the time

Sinn Féin

Date

24 June 2025

Type

Debate contribution (made as a minister)

Business

Ministerial Statement

Heading

NI Water: Update on the Investigation into Potential Unauthorised Resource Budget Overspend

Assembly identifier

Official Report component 5046526

Read the official Assembly record

Text

Go raibh maith agat, a Cheann Comhairle,

and I thank you for the opportunity to address the Assembly. This statement will update the Assembly on the outcome of the forensic accountant's investigation into the reasons why NI Water was unable to live within its resource budget allocation in the 2024-25 financial year. My decision to appoint a forensic accountant in March was taken because protecting public funds is of the utmost importance, particularly in light of the ongoing wider pressures faced not only in my Department but across all public services. My intention remains that any learning from this investigation will be useful for all parties and help to prevent such an occurrence in future. NI Water, as a non-departmental public body (NDPB), is required to live within its budget, just as all NDPBs are required to do. Whilst I recognise that the budget allocation fell short of what was originally identified as needed, the fact remains that, as an NDPB, NI Water should have prioritised its budget accordingly. Turning to the report, first, I thank PricewaterhouseCoopers (PwC) for completing its work within a challenging time frame and NI Water for its cooperation during the process. The report is being prepared for publication and will be published on my Department's website in the next few days. I have reviewed its content and am now in a position to share the findings with Members. The report sets out that any direction by the board of NI Water to overspend without the prior agreement of the Department is technically a breach of 'Managing Public Money NI' (MPMNI). Had I not taken my decision on 27 March to allocate an additional £3 million to NI Water, just four days before the end of the financial year, NI Water would most definitely have incurred such a breach of MPMNI.

Put simply, had I not come to the company's aid, it would have overspent.

It is also worth highlighting the fact that the report highlighted a lot of movement in budget estimates during the last six weeks of the financial year. The potential overspend at NI Water varied from £7 million in February to £3 million at the end of the financial year, which was just a matter of weeks later, and then declined further to £1·4 million after the year-end close. The lack of certainty at that late stage in the financial year clearly shows a need for better budgetary control. What is also clear from the report is that the NI Water board did not base its financial decisions on the budget that it had — in other words, the amount allocated by the Department. Instead, the board based those decisions on the larger amount that it felt was needed, despite not having that money to spend. PwC describes that as a "significant limitation". I find it difficult to understand how a board can monitor operating costs when its budget is not aligned to the allocation from the Department. That is clearly a fundamental flaw in oversight and governance processes. Going forward, to avoid future overspend, it is clear that the starting point for budgetary decisions and the monitoring of spend is that they should be based on the amount that has actually been allocated rather than on a higher figure that has not. While I appreciate that NI Water has a large number of variable costs that depend on issues outside its control, the report clearly highlights several issues relating to the fluctuations that could have been better controlled throughout the 2024-25 financial year. First, the report points to overestimations of need at the start of the year, based upon eventualities that did not materialise. The scale of the overestimation meant that what NI Water thought that it needed at the start of the year was considerably higher than what was required. Indeed, the report indicates that that pattern of overestimating need has persisted for each of the past three years. What that has meant is that, in 2024-25, there was a £25 million variance between what NI Water said that it needed at the start of the year and its final out-turn — and, as it turns out, a variance of over £80 million across the most recent three-year period. Going forward, it is clearly essential for NI Water to consider recalibrating its costs to take account of fluctuations throughout the financial year, rather than relying on, as PwC has put it, "the passage of time". Furthermore, NI Water, like any other arm's-length body (ALB), must shape its services to live within the budget available. As Members will agree, that is not a unique concept in the public sector, as all other ALBs are expected to ground their budgets in reality. Secondly, the report points to the need to work closely with suppliers to make savings. For example, if NI Water had been able to negotiate even an illustrative 5% savings in other costs, including goods and services procured through suppliers, that would have, coincidentally, almost equalled the amount of the overspend. PwC's financial analysis of the top five suppliers suggests that certain costs incurred were, arguably, optional, and NI Water could have chosen to not incur the cost. That suggests that there is room for additional cost savings, even if the saving is small and will not immediately close any budget gap that exists. That is a further example of how spend could have been controlled better. Thirdly, the report states that the pay award could have been better managed. For example, as highlighted above, if NI Water had negotiated savings, it could have planned better and made the necessary pay award within its allocated budget. I reassure Members that, now that I have an understanding of the issues that have led to the overspend, I am intent on working closely with NI Water to help prevent such an occurrence in future years. I am determined that the learning from this investigation will be useful for both parties, but it is essential that NI Water, like every other ALB, takes every opportunity, where it can, to live within its budget. The board needs to factor in affordability to all its decisions, alongside careful financial profiling, just as the Department and other public bodies have to do. Looking ahead, as I have said, I want to work closely with NI Water to ensure that we deliver services that the public need in line with the budget available. In recent weeks, there have been a number of opportunities for working more closely together. I welcome that and am keen to build on it in the future. I will continue to have regular discussions with the chair of NI Water to identify opportunities for improvement in the way in which the budget is managed going forward. The report also points to further work, which I will take time to consider over the weeks ahead. In closing, I very much hope that the outcome of the report will help us to continue to move forward in partnership. These are difficult times for all of us, particularly Ministers, and we must ensure that we do the best that we can with the resources that are available.

1,201 words. Text as published by the Northern Ireland Assembly.

Assessment

Not flagged

Jev’s structured answers

Assessed 21 October 2026 at 12:52 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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