NI Water: How Murphy’s sackings left MacKenzie accountable directly to DRD

Fed up with drinking copious amounts of Northern Ireland Water stories on Slugger? Not as fed up as I am writing them. We kicked off back in July after that PAC when no one but the Belfast Telegraph (who have taken a ‘MacKenzie loyalist’ line throughout), whilst an industrious Jamie Delargy was working on it  sub rosa at UTV was giving it anything more than a cursory glance.

Six months later, a Chief Executive has gone and Regional Development, has the lost their Permanent Secretary (for the first time in Northern Irish history), after taking the kudos of sacking a largely industry competent Non Executive Directors. “Act in haste, repent in leisure”, as an old lady of close aquantence of mine used to say. If there was a cunning plan, it’s not looking so clever now.

Now, despite the fact that we have a good idea what the problems are (DRD have spent stupid money looking at this and other problems in the past), the Minister, knowing his own department cannot be trusted on the matter, is giving the job of the review to a Utilities Regulator’s Office that proposed driving down some of the investment costs in NI Water:

NI Water ’s Business Plan asked for £1,190m to run its business over the next three years. Our draft determination shows that through efficiency and other savings its revenue requirement could be reduced by 11% which would provide a saving of £136m. While we have assumed that domestic charges will not be levied during this period of price control, it is useful to look at the impact these savings would have on the average notional household charge. This would fall by £22 from £391 in 2009/10 to £369 in 2012/13. All non-domestic customers would also see reduced tariffs over the PC10 period.

That was from the PC10 plan, published in September 2009. It was the first of several rifts with senior executive staff (some of whom argued with MacKenzie that NI Water could not make those cuts and remain fit for purpose), and more crucially now for Mr MacKenzie, his Board who also argued the company could not take cuts backs at those rates.

Now Mr Murphy is proposing to pull in that same office (although the regulator himself is new) to conduct another round of expensive navel gazing. You can see why Antoinette McKeown said this morning on Good Morning Ulster that there was a significant conflict of interest in this course of action. Note, it still has to gain approval from the Executive.

But it gets worse. MacKenzie has effectively appointed, through the acquiescence of the Murphy appointed Board, a respectable senior manager (notwithstanding) who has zero Board level experience as Chief Executive from Saturday.

Whatever happens on Monday with the proposed no confidence motion, this is not a competent showing from a Minister whose prime motivation in this appears to have been to avoid bad headlines. And in persistently avoiding them he’s only made himself look incompetent, whatever the truth of the matter.

Muddling through till the May election seems to be Mr Murphy’s plan. That may do well enough for him, but someone needs to take some tough decisions and create the opportunity for NI Water to have a new start and get back on track. It will take at least a year to undo this tangled mess.

The Belfast Telegraph this morning has this to say about the matter:

He is the third chief executive to take the hot seat there in as many years, indicating an organisation with deep-seated problems.

You’d certainly think so. But the truth is that Mr MacKenzie, the sacked Board and even the GoCo’s first Chief Executive Kathryne Bryant have all struggled with the political stasis of a Minster who wanted to dispose of that GoCo, but did not have to direct means to do so.

By any objective means Northern Ireland Water is far from perfect. But its biggest problem has been the political antipathy of the Minister. His poor decision in sacking a competent board and putting in its place a group of people whilst well disposed to his anti-privatisation stance nevertheless have proved useless to an inexperienced CEO in a crisis.

And further, in sacking the four non executives back in March, Conor Murphy left MacKenzie sufficiently unfettered so that he was able to cut the communications budget by some 64% with no opposition either from what was left of the Board (ie one non executive director, and the rest employees) or his own shareholder unit at DRD.

After all of this corporate vandalism and strategic drift, Murphy will struggle to convince anyone worth their salt to take on the job – that’s surely reflected in the situation where the CEO designate has no Board experience – until, one way or the other, Mr Murphy leaves the job.

, , ,

  • joeCanuck

    It will take at least a year to undo this tangled mess.

    Mick,
    That might be true for sorting out the governance but it will take much longer to restore staff morale (thinking of the report you linked for me yesterday). Even more so that they have all, through no fault of their own, now been held up to public ridicule. There must be a stronger word than “mess” which you could use.

  • malairt

    I would guess Mr. Haslett is seen as a safe pair of hands that can keep the show on the road until an experienced CEO is appointed. Although who would want to pick up this poisoned chalice is a mystery – as you’ve correctly pointed out Mick, the Minister is not a believer. Whatever, I wish Trevor the best of luck and a safe landing.

    I wonder why Sara Venning, George Butler or Ronan Larkin (the current Exec Board members) weren’t appointed as interim CEO? Are they going to have a run themselves? Too closely associated with MacKenzie?

    MacKenzie was scathing about the private sector experience of NIW in front of the PAC. Katherine Bryan had carefully put together an Exec team with a mix of public and private sector backgrounds, recognising that full blown capitalism wasn’t going to work in the NI environement. Ironically, many if them had more private sector experience than MacKenzie, who spent his working life in a regulated industry with no competition. In NIE he didn’t even generate power.

    The September 09 Draft Determination was a kick in the teeth for NIW. The carefully crafted arguments put forward by NIW, supported by both Board and Exec team, were just brushed aside. How the Regulator that produced that determination can be considered to be an appropriate agency to investigate NIW’s recent performance is beyond me. This is the same organisation whose boss stated that he would set direction for NIW (and cut the numbers substantially) but it was not for him to tell NIW how to manage its business.

  • Sean Og

    I wish some members of the Regional Development Committee would read your posts Mick.

    Their attempts to hold to account the NIW trio yesterday were pathetic.

  • edgeoftheunion
  • Jo

    It seems an AQ might usefully be asked:

    What was the Shareholder Unit response to the proposal to cut the comms budget?

    It seems this cut was indeed responsible for many of the failures in recent weeks, for which the CEO has paid with his job. However, DRD Shareholder Unit’s failure to point out the implications of the cut at the time it was made was a serious mistake and damaged the shareholding interest in the company as well as the lives of many thousands of people.

    As DRD had (and has) a responsibility to the company and us as shareholders and customers, this is how it could most meaningfully have been manifest. What does the record say?

  • Pigeon Toes

    “Is this the same “major asset” that mackenzie dragged through a prolonged disciplinary process this year? ”

    Looking back at tribunal notes, that’s rather familiar. Do ye think DRD give them a script?

  • McKavanaghs

    I can assure you all that Venning does not have the confidence of senior NIW management and most of NIW staff.

    So, would it have made sense to promote her to the position of interim CEO?

    Personally, I think not.

  • H/T a friend

    SUMMARY OF THE WEEKLY BUSINESS REVIEW (WBR) MEETING

    http://goo.gl/pT0si

    MONDAY 20 DECEMBER 2010

    Present:
    Geoff Allister, Chief Executive, Roads Service
    Doreen Brown, Deputy Secretary, Regional Planning and Transportation
    Lian Patterson, Deputy Secretary, Senior Finance Director
    Brendan Devlin, North South, Equality Policy Co-ordination, Directorate

    Apologies:
    Dr Malcolm McKibbin, Permanent Secretary
    Anne Armstrong, Principal Information Officer

    “6.2 WBR considered the potential impacts of the severe weather on Departmental operations, including anticipated issues that may arise from a thaw, such as burst pipes, potholes. This included the Department’s state of readiness over the Christmas period. Geoff provided a detailed update on the work being undertaken by Roads Service to keep major roads open. An approach had been made by the National Roads Authority (NRA) for grit supplies and Road Service had agreed to provide some limited supplies. Briefing had been prepared for the First Minister for an expected telephone discussion with the Prime Minister on the impact of the severe weather conditions on the region”

    So there apparently was no one there to provide a detailed update on the state of readiness of NIW to deal with bursts.

    Was the Permanent Secretary also on holiday during the course of the Emergency?

  • William Markfelt

    ‘Perhaps the PAC can ask him when it questions him “at a later date” – something he has promised to do (I’ll not hold my breath)’

    A ‘stress related illness’ looms.

    Mick has already alluded to him being ‘under considerable pressure’.

    PAC will get a sicknote.