Northern Ireland Water to hand £20 Million back to the department

Confirmed by Liam Mullholland on Nolan just now… John Simpson on the same show doesn’t think it is relevant to the current problems. Rather he suggests,  “they are showing they can do what they need to do with less money”… That begs a question better answered when we find out just why the NI Water system appears to have collapsed…

Courtesy of outter edge of the union, here’s the view of the Institute of Civil Engineers on the matter:

“NIW (and Water Service) has had a programme of staff downsizing over a number of years to reduce overheads and running costs. The number of professional staff, with experience in the capital delivery of water and sewerage projects and in the operation and maintenance of the assets, has reduced considerably over recent years.
The acquired knowledge of professional and technical staff is an asset to be cherished in a customer service organisation. ICE is concerned that without recruitment, retention and succession planning NIW’s intelligent client status will be lost.”

It’s worth reading davenewman’s post here and in particular the dissenter’s counterfactual insight here:

The problem with a CEO appointed to deal with a bloated public service is that the focus is on cuts rather than specifically operational effieciency. Get the process right and the costs fall out; cut costs and the operations muddle through. Murphy focused on costs not operations because he believes in water as a ‘public service’ rather than a service to the public and ultimately perfectly suited to the private sector where (as with examples elsewhere on Slugger) has responded admirably.

Adds: Phil Taylor, Peter Hain’s former right hand man and drafter in chief of most legislation in that time, noted (also on Nolan) that Northern Ireland is enduring cuts of 40% in capital spend imposed from Westminster, and that the Minister’s reluctance to proceed with water charging has left NI Water vulnerable at a time when it least needs it.

  • Turgon

    I had not noticed the dissenter’s comment and it is particularly apposite.

    This is a political crisis for Conor Murphy for a series of reasons.

    Clearly he is not responsible for the weather.

    The chronic under investment in the infrastructure of Northern Ireland is indeed in part his responsibility. A significant part (though not the whole) reason for the long term underinvestment is the result of the terrorist campaign carried on by Murphy et al for 30 years here in Northern Ireland. However, if one is insistent that the past is the past and irrelevant (except when it is convenient to republicans for the past to be relevant) then maybe that is also not Murphy’s fault.

    NI Water is an arms length company owned by the government but not run by it. As such if it was truly separate Murphy would have some validity in claiming that it is not his responsibility.

    This argument, however, falls down when one remembers that very recently Murphy sacked the board of NI Water over what seems to have been relatively minor irregularities in tendering. Murphy trumpeted his involvement in NI Water at that time. It then transpired that in actual fact this had been done incorrectly and those dismissed should not have been. For Murphy now to try to pretend that he should not take ultimate responsibility for this debacle sits extremely ill beside his prior close involvement with NI Water. Murphy has made his bed: it is far from unreasonable to suggest that he lie in it.

  • joeCanuck

    Quite correct, Turgon.
    To claim that the buck stops below him is disingenuous of Murphy, to say the least.
    Some people, especially the Minister who refuses to raise the money for infrastructure improvements, don’t seem to understand the difference between operational costs and capital investment.

  • Zig70

    I see this as an engineered crisis, lowest temperatures for over a hundred years, sure the system is going to crack. I’m just surprised at the surprise.
    It’s not a time for cheap political point scoring but it’s what those leeches do.
    I’m more concerned there is a pumped story here propably by whitehall. Someone has seen the opportunity to presell privatisation and has done a very good job. All the journo’s have duly obliged again. So now we’ll spend a fortune on infrastructure, sell it cheap and pay a premium with no reduction in rates.
    I’m not in favour of privatisation when in only adds cost to my family bill. The problem with public run companies is that the egos in public life can’t let business men/engineers alone to run the business. The ego’s need to be cut loose.
    If this was a private company the publicity would be handled better and the unit price would go up.

  • eejitssotheyare

    This £20m under spend is undoubtedly a red herring in relation to the recent NIW problems. If the inference is that this money would somehow have helped to alleviate the recent water supply problems this is not the case. The £20m is from NIW’s capital budget i.e. to be spent on the delivery of new infrastructure such as pipelines, treatment works, pumping stations etc. It is therefore unrelated to any operational, maintenance, repair or emergency planning provisions which are all pertinent to the current problems.

    The underspend is most likely due to delays in statutory processes such as planning consents. Or to put it more accurately the length of time taken by certain consultees to consider NIW proposals for capital projects and respond to Planning Service in order that a recommendation to approve or reject can be made. To give some idea, typical periods for approval would be 12 – 18 months. Add to this other problems associated with land acquisition and the involvement of local councils in ratifying Planning Service recommendations a £20m underspend is hardly surprising nor should it be considered a major problem. To keep it in perspective, it is approximately a 10% underspend some of which will be attributable to efficiencies and the reduced costs of construction in the current competitive market.

    In relation to the comments by the Institution of Civil Engineers, they are spot on. Unforunately our politicians are facilitating the decline in the standards of service by only looking at short term cost savings rather than the efficiencies insightfully stated in the davenewman post extract. In my view this would involve full privatisation of NIW, only this will provide the necessary incentive to deliver an efficient cost effective service. We need only look across the water where private water companies have been in existence since the 1990’s to see how far behind we are.

  • Mick Fealty

    @Zig70,

    Nice conspiracy theory, but all it does is absolve the minister of any political responsibility for the policy stasis, which is the context for what in anybody’s language is a real crisis.

    The reason I suspect for the amplification of the story nationally and internationally is that a) nothing much else is happening during the holidays and b) Nothing like this scale of crisis is happening elsewhere in the UK.

    And privatisation is not the only way forward. The mutual model is working *passably* well in Wales for instance. But the crisis has crystalised a problem Mr Murphy and his Executive colleagues have been sitting on since May 2007: the introduction of Water Charges.

    I don’t see how else NI Water is going to get and protect the investment it needs to bring its service up to date.

  • The Raven

    “I’m not in favour of privatisation when in only adds cost to my family bill.”

    And this is where the direction and effort of future fight now needs to be focused. The quick wins are the snapping at the heels of the Minister, and the rolling of senior executives’ heads.

    The big push is needed in terms of regrouping people’s anger in an effective way. There IS a GoCo in place – let us ensure that our elected representatives get that house in order, so that the extra expenditure which *will* be levied on us in the near future is entirely spent on providing a stable, strong, publicly-owned service.

    As I keep saying – better to pay £150 a year now, and see it rise to £250 for a public service, than £500 a year to see the same problems happen in ten years, but accompanied by a slicker press release, a fancier website, and a shareholder’s ever-increasing wallet.

  • “reluctance to proceed with water charging”

    Then there’s the VAT issue brought on by the reclassification of NIW:

    DRD have confirmed that: Additional VAT costs could be up to £60m in 2009/10 if the existing agreement (with HMRC) no longer remains in place. Up to £130m would be involved if HMRC sought to recover VAT payments for 2007/08 and 2008/09.

    DRD has also stated that: We cannot predict what view HMRC may take on any given situation. However, we are not yet in a position to engage with HMRC until the Executive has decided on its long term approach. Source [pdf file].

  • DC

    Raven,

    In terms of the GoCo – firstly – do you think Stormont has a dynamic and effective enough government system to do the ‘Go’ bit properly and secondly is the ‘Co’ bit not just a dysfunctional company that has sprung out of a somewhat dysfunctional government – and been tinkered and meddled with by the minister after its creation?

  • Cynic2

    ” Phil Taylor, Peter Hain’s former right hand man and drafter in chief of most legislation in that time, noted (also on Nolan) that Northern Ireland is enduring cuts of 40% in capital spend imposed from Westminster” ……..

    ……. as a resultt of the crisis caused by the gross financial mismanagement of his former bosses political party (and the Cabinet of which said boss was a leading member)

    He may also have mentioned that some of the decisions that led us to this point were taken when said Boss was Secretary of State

  • Cynic2

    “I’m not in favour of privatisation when in only adds cost to my family bill.”

    Me too. I much prefer that the fairies pay for it

  • Cynic2

    “Murphy trumpeted his involvement in NI Water at that time.”

    ….. indeed, on Tuesday wasn’t he at NIW HQs issuing directions and taking charge (as he told us)

  • DC
  • dwatch

    I have just heard that Minister for Regional Development Conor Murphy SF in trying to overcome the recent water problem has proposed to the assembly (seconded by Environment Minister Edwin Poots DUP) that the NI water board consider starting beginner classes for Norn Iron wimin between the ages of 14 and 64. These classes will teach local wimin how females in african and eastern countries carry (by balancing water jars on their heads) from local rivers to their homes. Their husbands can at the same time be taught at special classes how to make water jars out of local Irish clay to help lower unemployment.

  • It wouldn’t take much to allow NIW to carry over the £20m into the next financial year, an agreed change to the Financial Memorandum (or its equivalent) between the Department and NIW,or if necessary a minor change to the legislation. Now that’s a positive contribution to the fiasco that the Executive could have agreed upon. But no, let’s continue with the scapegoating.

  • The Raven

    DC

    Well, we’ll see after 6 May, won’t we…

  • JAH

    However much I’ve loathed privatisation, the reality is that Govt won’t invest sufficient funds in infrastructure hence the only option is privatisation. I’d point out the obvious fact that nowhere else in UK have the problems been as severe as in NI and nowhere else has such an antiquated water infrastructure. Or isn’t privatised.

    Like it or not, someone needs to come clean and admit they’ll have to flog it off if we don’t want this becoming an annual event.

    For Murphy I think it’s time to bow out and live to fight another day. He has no credibility in solving this problem. A bit silly if McG continues to cover for him.

  • The dissenter is correct. Every “efficiency drive” I have ever seen in the public service has been about costs, not efficiency and process.

    As such, I suspect very strongly that we are never going to achieve any form of better efficiency unless we are prepared to put money in. Without reopening the water charges debate (and I do have to remind everyone that it is politically unacceptable to bring them in without reducing the regional rate – few have forgotten that the water rates were absorbed into the regional rate years ago!), there is a fundamental lack of understanding of how to reduce costs without reducing quality of service – even the SSA’s much-vaunted “Customer First” project, which aims to do this, has never pretended to be about anything other than reducing costs. Whether it delivers a better service to the public remains to be seen.

  • Comrade Stalin

    and I do have to remind everyone that it is politically unacceptable to bring them in without reducing the regional rate

    Unless the government makes clear that it is doing this as a revenue-raising move, not as a revenue-neutral change.

    We’re going to have to get over the idea that raising tax to a limited extent is politically unacceptable and start getting used to the idea that we’re going to have to pay to have services at the standards we all expect. Parties in other parts of the country, and indeed the world (with the notable exception of the USA), seem to have no problems going to people and saying “look, things are bad, we’re going to have to put taxes up to fix it” – why can’t we do it here ?

  • Comrade Stalin

    JAH:

    However much I’ve loathed privatisation, the reality is that Govt won’t invest sufficient funds in infrastructure hence the only option is privatisation.

    This isn’t a good justification, and rather sounds like an uncritical regurgitation of Torynomics. Why can’t the government just make the required investment ? Should we privatize the police and fire service as well so that they get the right investment ? Hospitals ? Schools ? And do we know that automatically, without fail, the private sector will always cough up ?

    Plenty of cases where privatization has led to increased costs but no corresponding increased investment. Eircom in the RoI is a case in point.

    I’d point out the obvious fact that nowhere else in UK have the problems been as severe as in NI and nowhere else has such an antiquated water infrastructure. Or isn’t privatised.

    Scottish Water is in public hands, but hell, don’t let the facts get in the way.