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 5046537

Read the official Assembly record

Text

I do not know how many times I have to outline the work that I am doing. We have repeatedly pointed to the approach that the Department has taken to the developer contributions consultation, the sustainable drainage systems (SuDS) Bill and our work with Executive colleagues. This piece of work has helped us to look at other areas for potential improvement, and I am keen to work with NI Water in doing that. If the Member or his party think that they have other solutions that we have missed, please point to them, because I have not heard of any other thing that has been identified as a solution. We are working very hard to find ways to live within the budget that I have to ensure that we can get the investment that is needed for NI Water. It is OK to wax lyrical about all the things that I am not doing, but I have not heard what the solutions are to those issues. I know what the solution is: more money, but where do we get it from? Are the Member and his party suggesting that we introduce water charges? That is the only thing that, as far as I can see, we have not considered, and I do not intend to do that. I would be happy to hear those suggestions.

The Member will not be surprised that I do not agree that the review is a whitewash. It is an important piece of work that has clearly identified areas for improvement. I also think that it has helped to reinforce the challenging budgetary position that is faced not just by NI Water but by all our ALBs and Departments. It points back to the issue that the overall Executive Budget still does not meet the needs of our public services. We all have to look at where we can make efficiencies, and the investigation has clearly identified those areas of work. As I said, I spoke to you, as Chair, and the Deputy Chair this morning ahead of making the statement. I also spoke to the chair of the board of NI Water. I am keen to continue the work to ensure that we are able to address these issues. We are now in a new financial year and working on the budget that we have at the minute, including the indicative budget that NI Water has been provided with. I do not think that the investigation has been a waste of time. It has been a worthwhile piece of work that all ALBs and public bodies could look to to find out how they could do things differently. If we can all make small savings, those savings can accumulate and go a long way. As elected representatives, that is the duty on all of us: to ensure that we get the best value from the public money that we manage.

The report sets out clearly that any direction by the board of NI Water, or, indeed, of any ALB, to overspend without the prior agreement of the Department is technically a breach of 'Managing Public Money NI'. Had I not taken the decision to allocate additional money and bail out NI Water — I have to say that I did so just days before the end of the financial year and that we could have used that money elsewhere, whether mending potholes or something else that we could have done in the public service — the board would, indeed, have incurred a breach of MPMNI.

I was quick to move to ensure that that did not happen, but, given that the board had clearly indicated that it intended to instruct NI Water to overspend, there were consequences. That is why we are where we are, but the situation gives us a good platform from which, through working closely together, we can ensure that that does not happen again.

PwC indicated how the savings could be quantified. As I said in my statement, even a 5% saving on procurement would have equated to the overspend of £1·4 million. Although that sounds like a small amount, if that saving had been made, we would have seen a different outcome and would probably not be in the position that we are in today. We can definitely look at how we can use money better to ensure that the situation does not arise again. You asked about working with other public bodies. You asked two questions, so I hope that I have got this right. I work with everybody to ensure that we move forward and get the best outcome for all our public services. That is what I have told NI Water and what I am keen to do across the board. I intend to do that work.

The report has clearly identified that, over the past three years, NI Water indicated a much greater figure in all opening budgets than what was needed. That figure then went down substantially. Over the past three years, the total variance between its opening budget ask and its closing budget, after it reduced it in-year, was £80 million. I have said clearly that there are a number of variables that have to be taken into account. Those variables can depend on the weather and on energy costs, but there are also controllable costs, and PwC identified how those could be managed better. I have responsibility for doing lots of things. I could say, "I do not have the budget to do that, but I will do it anyway", but that would not be good management of my budget. We all have to live and work within our budget. That is the expectation placed on me and on ALBs. It is challenging, and I do not underestimate the challenge for one second, but, when that expectation is not met, it is important that there be consequences. That is not where any of us wants to be, which is why I want to work with NI Water to ensure that we are not in the same position again and that we work within a realistic operating plan. If and when more money becomes available, I have said that that is what I intend to do. I continually bid for in-year funding in the monitoring rounds to ensure that we can get additional investment so that NI Water can do more with its opening budget. In the next financial year, when we will hopefully have a multi-year budget, we will be in an even better position.

The Department ensures that its investment in NI Water is protected through a robust governance process that is underpinned by a partnership agreement that sets out all the partnership arrangements and the overall governance framework. Officials monitor NI Water's expenditure through a monthly profiling process that indicates whether its spending forecast is in line with its budget allocation. In fact, it was that oversight process that first identified NI Water's inability to live within the approved resource budget and that escalated the risk for further action to be taken. The chief executive of NI Water is required to give the Department a mid-year and end-of-year assurance statement to provide a summary of progress made against the company's annual operating plan and to highlight risks, with a particular focus on financial management. Ultimately, though, it is the chief executive's responsibility to ensure that services are designed and delivered within the approved budget allocation. It is the appointed board's role to act as the eyes and ears of the Minister and the Department to ensure that spending plans are not implemented that are at odds with 'Managing Public Money NI' and public expenditure rules.

A robust governance framework is in place, and officials work closely with NI Water's board and senior leadership. It is clear, however, that we have more work to do, and that is what we will be doing.

No. We are addressing the matter now because NI Water's board had directed NI Water to overspend. As I said, that would have resulted in a breach of MPMNI. That is why I instructed PwC to carry out the investigation. In the past, work was done to ensure that NI Water continued to live within its budget. The £80 million variance was between the amount that NI Water had set out that it needed to do the work that it did and the figure at the end of the year. That figure came down substantially by year-end in each of those three years, however, but, overall, the variance totalled £80 million. The opening budget that NI Water set out has significantly reduced in-year to meet the budget that it was allocated. This year, however, we saw that, had the Department not stepped in, there was potential for NI Water to overspend.

The Member's interpretation of the Fiscal Council's report varies slightly from mine. The report is welcome because it confirms what I and my predecessor have consistently said about alternative funding models for NI Water. The Fiscal Council stated very clearly that any alternative will lead to the introduction of water charges for households here. The report also stated that not only would it lead to water charges, but that those charges are not the best option, because, as we have seen in Britain, they do necessarily achieve what you are trying to achieve. It is worth noting that it has been widely acknowledged that many of the alternative models are failing. Our existing funding model works, but it needs significant additional investment. Again, I ask the Member to tell me whether I have missed something, or whether there is another solution that does not include domestic water charges. If there is, I am willing to hear about it, because I have not been presented with any alternative other than the options that lead to water charges. It is important to go back to the point on water charges because of what that would mean for household budgets. At Question Time yesterday, I mentioned that a figure of around £590 per household was quoted in the report. That may seem insignificant to many in the Chamber, but it is very significant for many households. If you add that on to the average household rate of £1,180 per annum, you are talking about an average annual bill of approximately £1,800. That is quite a lot of money for households that are already struggling. It also means that people will have to make choices about where and how they spend their money. Just last week, the Consumer Council reported that food costs account for almost a quarter of households' basic spending. For the avoidance of doubt, I will not be introducing water charges that will add a financial burden on households. I am more than willing to look at alternatives that have real benefits, but I have yet to see them. The Fiscal Council's report has clearly stated that the only alternative to the existing model will lead to the introduction of domestic water charges. I keep saying this: if there are other alternatives that we have missed, I am happy to look at them.

As that investigation is ongoing, it is important to let it take its course. I want to make sure that we do not conflate the two. However, both are extremely important, and we will look at the outcome of that investigation once it has been finalised. It is important to say that this report was not related to the whistle-blowing investigation. It would be unfair to suggest that they are related when they are not. The whistle-blowing report looks into allegations of fraud in the contract management processes and the quality of work undertaken by suppliers, which obviously gives rise to concerns. This report, however, shows clearly that the board's actions led to a potential breach of MPMNI. There were opportunities for things to be done to control costs, and we need to look at that and base financial decisions on a budget that actually exists as opposed to a larger amount that, a body thinks, it should have. Alongside that, it is important to say that NI Water has appointed an independent electrical engineer to provide a technical opinion of the quality of suppliers' work. That will be completed in July. Given those two serious issues, I am determined that the learning from this investigation and anything that comes out of the further work on the whistle-blowing case can only serve NI Water in bringing forward improvements to its processes and ensuring that it takes every opportunity that it can to live within its budget. It is imperative that the board continue to drive forward that required behavioural change in order to ensure that affordability is factored into all decisions, just as the Department has to do.

2,143 words. Text as published by the Northern Ireland Assembly.

Assessment

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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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