Minister on “solo run with enormous financial implications” without Executive approval

What to make of the Northern Ireland Regional Development Minister, Sinn Fein’s Conor Murphy’s, apparent declaration of intent over NI Water?

Some would argue that the stated objective, of ‘re-nationalisation’ [within Northern Ireland] of the Water Service NI Water, was the main reason behind the ongoing saga.

From the BBC report

Finance Minister Sammy Wilson criticised Mr Murphy’s proposals as “expensive and unrealistic”.

“Bringing Northern Ireland Water back, and he has admitted this himself, into full public ownership would have revenue consequences, making the delivery of water services to Northern Ireland dearer,” he said.

“Secondly, it would make it much more difficult to draw in some private investment for the huge capital infrastructure investment which is still required.

“That’s somewhere in the region of £2,000m.”

Mr Cobain accused the minister of going on a “solo run with enormous financial implications” while SDLP Regional Development spokesman, Conall McDevitt, claimed Mr Murphy had announced “a complete u-turn on his own policy”.

Mr Murphy spoke of the governance failures at NIW and the controversy that has ensued.

He said he expected robust scrutiny from Stormont’s Public Accounts Committee, and also spoke of a disciplinary process at NIW that was “taking longer than expected”.

He said the NIW chief executive, Laurence McKenzie, was progressing matters in relation to disciplining staff.

But the “extensive legislation” the minister acknowledged is required to achieve his declared objective has yet to be presented to the NI Executive, never mind being given their support.

Which makes it more likely that this is just another entry in the category of stamping their little feet all the way to the next election…

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  • Pete, the Minister’s statement [pdf file] is already online.

  • William Markfelt

    ‘But the “extensive legislation” the minister acknowledged is required to achieve his declared objective has yet to be presented to the NI Executive,’

    It’s a distraction from the main story. A kite flying exercise going nowhere, There’s no intention to nationalise (in the state-let?), just a clumsy attempt to draw the sting out of the fact that his department (much more than himself) and NIW have fucked up, big style.

  • William Markfelt

    General support for the actions he took?

    Where and when did this occur Nevin?

  • Members thanked the Minister for his statement on March 15; perhaps he misread that as support.

  • William, the Minister has been at the heart of this tussle since at least September 2, 2009, when he, MacKenzie and a few others had ‘lunch and beverages’ during the course of a meeting which included a discussion on Crystal Alliance/Steria related problems and the need for NIW to deliver (further) efficiencies.

    “It was established that the Alliance contract was giving some smaller contractors cause for concern. Laurence MacKenzie acknowledged that NIW must deliver efficiencies but said that a balance needed to be made with regard to timeframes if this was to be done correctly.” .. ET minutes September 8.

  • slug

    Privatisation worked well in England and Wales – they should do that instead.

  • Boglover

    From whose point of view, slug? The customers are paying several times more than they did before. The shareholders are getting good dividends. The Government are seeing private investment, rather than having to pay for it themselves. Which of those are relevant to the oddball model used in NI? None yet, but the customers will paying more regardless of outcome.

  • medillen

    Its funny how Executive approval suddenly becomes required for a ministerial statement, I have heard many objectionable comments and descisions by DUP, UUP and SDLP ministers without the need for Executive approval beforehand.

  • no offence but….

    I’m not an expert, but i’m not sure about “extensive legislation” being required to bring NI Water back within the NICS. The Water and Sewerage Services (Northern Ireland) Order 2006 sets out the framework for NI Water to be formed as its own company owned by government. Surely that legislation would only need to be repealed?

    In my own opinion, ‘renationislation’ of NI Water is a backward step. From the rest of the UK we can see that privatisation brings in the investment needed to bring water and sewerage services up to the standard with the very best in the world.

    Having said all that, perhaps the public in NI don’t want that level of service. The majority would be happy with a basic water and sewerage provision if it kept charges away.

  • Mick Fealty

    To be clear, this is what Conall is referring to:

    Mr McDevitt: With regard to all the problems that Northern Ireland Water faces, does the Minister rule out any possibility that he will re-integrate Northern Ireland Water as a corporate body directly into the Department for Regional Development?

    The Minister for Regional Development: All options are being considered in relation to the future of NIW. It is now operating as a hybrid — between a Go-co and a non-departmental public body — as far as accountability is concerned. However, there are implications in bringing NIW back into the Department and those have to be considered.

    It would have an impact on the Executive’s financial situation, and there would be possible financial risks around VAT and asset valuation.

    There would be constraints in the public expenditure system on issues such as efficiency, customer focus and long-term planning to maximise return on investment. We are considering the course of action to take to secure the best governance of NIW, but whatever we do will have implications.

    +++++++++++++

    Now to be fair to the Minister it is not clear that he has proposed re-nationalisation of NI Water. He knows as well as Sammy Wilson that that track is effectively cut off on cost grounds.

    This is a steady as she goes statement. Move on, not much to see here. Sammy’s simply flagging up the levels of cost in putting things back the way they were.

    It cost 46 mill to set it up, and will probably cost more to untangle it. Who really wants to bring NI Water’s liability back into a budgetary situation which is going to be under constant attack from Whitehall?

    I am pretty sure that had Hain not left his little political death trap, NI Water would be bumbling along as it always did. But he did and now, to reference back to Brian’s post on the importance of developing a coherent policy market, what we need is solutions that lessen the burden of NI Water to the local share of the tax take, without necessarily giving it away to a private sector player who might strip it down to the bare minimum.

    It’s not that recriminations aren’t fun and entertaining. But they are besides the point. Doing nothing but extending the complicated status quo (ie increasing tightening of Departmental control, and paying for water improvements out of the common pot) should not be an option.

    But without some fresh new policy initiative (mutualisation has been talked about), things are unlikely to get better. To quote the Minister in June:

    “There would be constraints in the public expenditure system on issues such as efficiency, customer focus and long-term planning to maximise return on investment.”

    Otherwise, how many closed schools/hospitals/public health initiatives is all this going to cost?

    This looks to me like a steady as she goes intervention until next year’s election statement (when some other poor bugger can have this thankless job)…

  • William Markfelt

    Please try to keep up.

    Executive Approval is not required for a ministerial ‘statement’. It’s the legislation related to his proposals that would require Executive approval. It’s also how it’s done in proper democracies, as well as in Disneymont.

  • William Markfelt

    ‘This looks to me like a steady as she goes intervention until next year’s election statement (when some other poor bugger can have this thankless job)…’

    Yes, Mick. Conor’s flying a kite. Nothing wrong with that, it happens all the time, but it’s a nuisance and a distraction.

    Typically, the likes of Wilson and Cobain have jumped in to comment (probably fairly accurately), while missing the real core of the ongoing saga here, buried deep in the statement.

    The real meat on the bones here is NIW’s disciplinary procedures. Who is being disciplined, why are they being disciplined, why is it taking longer than expected (convenience until the Minister gets his statement over?) and…er….can the disciplinary committee be regarded as ‘independent’ if being overseen by Laurence McKenzie?

    Our interest needs to focus on that element of the tale, because it would be very interesting to see if McKenzie’s seal cull continues in order to emerge as some sort of heroic hunter. Is this disciplinary procedure going to result in more blood on the tracks?

    The statement is largely piffle. Simply a good, pointless statement in which to bury more important elements of the ongoing saga.

  • Mick Fealty

    William:

    “The real meat on the bones here is NIW’s disciplinary procedures. Who is being disciplined, why are they being disciplined, why is it taking longer than expected (convenience until the Minister gets his statement over?) and…er….can the disciplinary committee be regarded as ‘independent’ if being overseen by Laurence McKenzie?”

    Absolutely!!!

  • Cynic

    So more goats have been tethered then.

    The interesting bits will be who signed off the disputed contracts. Isn’t there a rule that all consultancy contracts over a certain amount (£50 k I think) must be approved by a Minister? That used to be the the situation under direct rule so has the Executive not maintained that control? if they did was it broken at NIW? If so, why did the auditors not spot it?

  • Mick Fealty

    The exact same goats they have had tethered since March. I would say they are having to be extremely careful not to breach employment law on this.

    MacK himself would be also in a very personal sticky position if a second investigation by the Information Commissioner were to get underway…

  • inpursuitoftheinedible

    Renationalisation by the Minister is the typical knee-jerk reaction to his perceived lack of control over the on-going issues at NIW. If we can’t cover it up why not drag it back into our complete control (read dark cave) like it was some delinquent child that needed remediation. It shows some lack of maturity in the Minister if not Sinn Fein policy thinking. Not so long ago the policy was to decentralise control and devolve but now the seats of power are filled of course the tide flows the other way…

    Re-nationalisation is a mistake. The last few months have clearly demonstrated that government departments are incapable of delivery private sector efficiency by the very nature of their structure and leadership. There are a couple of government agencies that are making a mess on a grander scale than NIW (certainly in financial terms) but their issues will not come to the fore because they are wholly within government control (read vested interests) and as a result the waste will never come to light…

    Water production is a process that naturally lends itself to efficient production by the very nature of economy of scale. Why it is constantly turned into a political football would make a book in itself, suffice to say that water production should be burdened only with economic objectives and not political agenda’s. The outcome always is that we will pay more than we should have to.

    As for Laurence running the disciplinary hearings well that is a bit rich for me! Talk about the pot calling the kettle black! The hearings are probably taking ‘longer than expected’ because they can’t manufacture the damaging evidence quite as fast they were able to before perhaps. Or perhaps NIW’s leader lacks certain credibility in educated circles. The double standard here is simply stunning! We all have to wait for a gap in Sir John’s diary to have a hearing for Mr Priestly (on a laughably narrow scope) but will Laurence “axeman” MacKenzie please get a move on and waste the last remaining witnesses to a travesty of legacy issues involving poor leadership at NIW so that we can get on with business as usual. I hope the lawyers representing the individuals are reading your article Pete/Mick because it seems to me the Minister has certainly queered the pitch if there were any real wrong doings. No possibility of a fair hearing now. Another process corrupted by his unnecessary involvement, no doubt in undying support of his boy, Laurence “get used to it” MacKenzie.

  • Just in from CPANI:

    “As previously discussed we recently received the following FOI request from another source.

    Request for all documents (emails/minutes of meetings / letters etc) between the Commissioner for Public Appointments and Department for Regional Development in relation to the appointment process of the New Non Exec Directors to NI Water.

    All items related to the process as held by CPANI have been released. Copies are available on our website later today.

    The only redactions relate to names or signatures below Grade 7 and the redactions have been applied consistently.”

  • slug

    The NI government will get £££ if they sell NI Water – this can be used fo pay for infrastructure investment.

    Private sector investment in water would mean the taxpayer would not need to finance sewers investment. And yes the customer pays but the costs have to be covered in the present system anyway so its not like we’re having a free lunch.

    The private sector also runs the water companies with less waste – one of the things that people who know NI water will tell you is that it’s woefully overstaffed. This is easier for private sector to tix than public – as the experience in England and Wales showed.

  • Welsh Water is a mutual company, IIRC a style of company recommended in the Hillyard Strand 2 report in January 2008. Its managing director is an Ulsterman, a former pupil of Coleraine Inst. Perhaps Dewi could do a piece on Welsh Water.

    CPANI’s Felicity Huston retired a few months ago as a NED from our local MutualEnergy dot com company where she had been a founding director. NI is a small place!!

  • slug

    I would be very sympathetic to this idea.

  • My memory is a bit off 🙂

    Hillyard recommended a Company Limited by Guarantee (CLG)

    ” It would have the advantage that technically, under Treasury rules, it would be considered a private company.
    Consequently, it could potentially achieve a significantly lower cost of capital than would be possible within the constraints imposed by the Treasury on the state sector.

    3.10 Unlike the GoCo, the CLG would have no shareholders but would be owned by its members: it would not pay dividends. The members’ legal liability would be limited to their guarantee, usually £1, in the event of insolvency. They and the directors would be appointed independently of government”

    Oh, dear, no scope for ministerial patronage 🙁

  • billy

    Just waiting for one of the Bedsit Army here to link Murphy with Claudy and Aine Tyrell.

    The impotent keyboard ravings of the politically – and no doubt socially – irrelevant become more deranged by the day here.

  • quality

    “I will bring proposals to the Executive. The governance arrangements should be based on water and sewerage services being delivered by a body that is clearly within the public service, subject to public service controls and standards and not set up to introduce separate water charges for households or be privatised.”

    “There is a time frame between now and the end of this mandate, during which I intend to bring a paper to the Executive so that we can have a clear discussion on the way forward.”

    Suggests nationalisation no? And a move from Murphy at some point in the next 8 months?

  • William Markfelt

    ‘Copies are available on our website later today.’

    How much later Nevin? They’re aren’t knocking their asses out of joint to get it up there.

  • William Markfelt

    ‘The impotent keyboard ravings of the politically – and no doubt socially – irrelevant become more deranged by the day here.’

    Yeah. We read your post.

  • There might be a short delay, William. I rang earlier and pointed out some inherent risks associated with electronic redaction and Google cache.

  • Mick Fealty

    It does imply that, surely. He’d be a brave man to go into an election promising to bring NI Water back onto the public accounts. But I’ll wait to see what he brings up when he brings it up before commenting further.

  • quality

    Being brave doesn’t really come into it, Murphy has been elected at every Assembly election since 1998 in Newry & Armagh with an ever increasing slice of the vote. He could promise the moon and not have to worry too much about re-election.

    That said, this is just meaningless populism (SF’s favourite), booo water charges, yay nationalisation, we’re left-wing, honestly. Nothing will come of it, I fully expect water charges to (rightly) be implemented in NI soon enough.

  • William, CPANI is having some technical problems so I’ve copied some of the FOI material and links to NALIL blog.

  • malairt

    The Alliance contract referred to here might not be Crystal Alliance as that phrase was falling into disuse as the Alliance met its demise with the departure of Steria on 3rd July 2009.

    I would hazard a guess that the phrase refers to the Engineering Alliance which was being formed at that time, with tenders out to see who would be interested in bidding. There was a great deal of concern being voiced that small contractors would be squeezed out of directly contracting with NIW and only winning work at reduced margins as subbies to the prime contractors, if at all.

  • McKavanaghs

    “the customer pays but the costs have to be covered in the present system anyway”

    So would you support that money being given back to the tax payer should there be the introduction of a separate water bill from a private owner?

    “The private sector also runs the water companies with less waste”

    Clearly you haven’t heard of Thames Water.

    “people who know NI water will tell you is that it’s woefully overstaffed.”

    Yes at certain grades, ie Level 3 and 2, but overall its worth noting that NIW have practically halved their workforce since 2007.

  • McKavanaghs

    “NI Water would be bumbling along as it always did.”

    Dont you mean Water Service .. as NI Water is its post Hain title.

    Also would you accept that at least a noticible percentage of Water Service staff did the best they could with what they had, or where given? (as do a noticible percentage of NI Water staff).

    No offence intended Mick, but I think it does a serious disservice to to imply otherwise.