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Statement on review of water and sewerage services: Executive response to strand one report

22 October, 2007

Sinn Féin Regional Development Minister, Newry Armagh MLA Conor Murphy in a statement to the Assembly has set out the response of the Executive to the 'Hillyard' Report on water and sewerage services.

Mr Murphy said:

"Thank you Mr Speaker, I wish to make a statement on the review of water and sewerage services, in particular the Independent Review Panel's Strand 1 report.

On 11 June I announced the terms of reference for the review of water and sewerage services following the Executive's decision not to impose the Direct Rule water charges in 2007/08 and to conduct an independent review of those services. The terms of reference set out a two strand approach. The first strand, to report in Autumn, concerned the costs and funding of water and sewerage services. The second strand of the review, concerning the structures and governance necessary to deliver water and sewerage services, will report in December.

Following receipt of the Independent Panel's Strand 1 report on 1 October I consulted with the Regional Development Committee and other statutory partners and briefed trade union representatives. I am grateful to all those to whom I spoke for their constructive comments and for the speed with which they made written contributions. I must pay particular tribute to the Chair and Vice chair, and all the members of the Regional Development Committee for their constructive approach.

The report, and comments by consultees, was discussed in the Sub-committee established by the Executive to oversee this process. The Sub-committee, comprising myself and the Finance, Employment and Learning and Social Development Ministers, met on 15 October. A further discussion with the full Executive took place on 18 October.

Before turning to what has been decided I must also pay tribute to Paddy Hillyard who has Chaired the Independent Panel with great commitment and integrity. He has been admirably supported by Joan Whiteside, Charles Coulthard and Professor John Fitzgerald. Through the collective application of their knowledge and experience they have produced a Report which offers us an opportunity to reform our water and sewerage services in a better way than direct rule ministers were proposing.

The Panel has taken great care in their work and their report bears careful reading.

Mr Speaker, I would particularly want to draw attention to Paddy Hillyard's foreword. Referring to the floods that caused so much hardship in June he concludes:

"We need to reduce our carbon footprint and develop sustainable ways of delivering clean water and disposing of our sewerage. As a society we will have to pay more in the short term to achieve these objectives: but we must do so for the sake of future generations."

This is an important message and one we must not, and cannot, duck. We were elected because our people have had enough of being governed from a distance. We were elected because our people had confidence in our ability to take hard decisions on their behalf.

Mr Speaker, now that we have been elected we must repay that trust by having the courage and commitment to make those hard choices.

Turning to the Report, the Executive has welcomed the finding that Ratepayers have paid a substantial annual contribution towards the costs of the Water Service. They have found no evidence that the change in the rules in 1998 which removed the direct link between the Regional Rate and water and sewerage services was ever properly explained to the public. This vindicates the position all local parties held during direct rule.

The Executive has accepted the recommendation that, from 2008/09, there should be full recognition that domestic regional rates revenue makes a contribution to the funding of water and sewerage services. The Panel has estimated this amount, based on an uplift to today's prices of the 1998 position, at around £109million.

The Panel has calculated that this equates to an average household contribution of around £160. This figure is consistent with the Finance Minister's own projections of what domestic rate payers are contributing to the funding of water and sewerage services. In 2008/09, this will be households' only contribution to the services; the balance will be paid from the NI Block. This represents the Executive's commitment to tackling the inequity of double charging.

The review report has however noted that, "The revenue from the regional rate did not cover the full costs of the Water Service." To deal with this the report proposes that consumers should make an increased contribution to cover the costs of water and sewerage services. The report makes the case that without the uplift in what people currently contribute, other public services would be deprived of funding. The Executive has recognised this and agreed that from 2009/10 there will need to be additional contributions from householders.

The Panel has suggested that these additional contributions should come in effect in full for domestic households from 2009/10. We have concluded instead that these additional contributions should be phased in with domestic households paying two thirds of their full liability in 2009/10 and full liability the year after. However the amount due to be collected from domestic households will be reduced by the amount of the contribution that households are already making via the rates (£109m or an average of £160 per rates bill). This means there will be no double payment.

The Executive has noted the proposal that a single bill should be issued to consumers with rates and water and sewerage charges separately identified. Further analysis by the Regional Development and Finance departments will be necessary to determine how this might be done and to assess the implications for existing billing arrangements and contracts.

Mr Speaker, the Executive has also noted the Panel's recommendations on the way in which payments for services should be made in the future but reserved its final decision on this until the Panel has completed its 2nd Strand Report.

The Panel will have more to say in its second report on the detail of affordability arrangements for vulnerable groups. All that has been agreed now is that additional contributions from households will be necessary from 2009/10 but that there will be robust arrangements to protect the vulnerable in our society from hardship and water poverty.

The proposals put forward by the Direct Rule administration entailed the extension of water charges to all non-domestic customers, the phasing out of the current domestic allowance and the introduction of sewerage charges for all non-domestic customers. For 2008/09 this would have entailed charges at 2/3 of the full level. However the Executive recognises the challenges and difficulties faced by the non-domestic sector and has decided to phase in the new charges more slowly at 50% of the full charge in 2008/09 and 100% in 2009/10.

The Executive will also be endeavouring to reduce the burden on the consumer, both domestic and non-domestic through delivering efficiencies and by attracting further revenue sources.

Mr Speaker, in conclusion, the Executive has been committed to no privatisation of our water and sewerage services and to tackling the injustice of double taxation. On behalf of the Executive, I am happy to reiterate that commitment today and to confirm that it was from this standpoint that we have considered the report from the Independent Panel.

The position I am outlining today on behalf of the Executive provides a firm basis for delivering a better deal for all water customers than the Direct Rule administration. However there is still a great deal of work to be done by the Executive, the Independent Panel, the Regional Development Committee and all the stakeholders. With goodwill and commitment by all parties I am confident we will achieve our goal of better services at an affordable cost." ENDS

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