Infrastructure fund and rates levy mooted for NI Water

The introduction of a domestic rates levy alongside the creation of a dedicated wastewater infrastructure fund bankrolled by the UK and Irish governments could help solve Northern Ireland Water’s funding crisis and boost residential development, according to reports commissioned by  the region’s chamber of commerce, construction firms and housing associations.

The fund would ensure major capital programmes are sufficiently financed to support house building and industrial development across Northern Ireland, reports from consultancies Grant Thornton and Turley have argued. The consultancies noted that the UK Government had made delivery of new homes a centrepiece of their economic strategy and had set out a series of infrastructure projects across the UK and created a National Wealth Fund and an Infrastructure Bank.

Decades of underinvestment have left publicly-owned NI Water facing a £2bn funding gap over the upcoming price control period (PC28, 2027–2033). Limitations in wastewater capacity have already resulted in an effective halt of all new construction in 23 towns across Northern Ireland.

The reports highlighted a series of models which propose a progressive levy applied to rates to recoup the cost of borrowing over 40 years. Modelling undertaken by Grant Thorton illustrated how the shortfall in investment could be met by the average domestic rate bill increasing by just £101.15 per year.

The current and previous Stormont governments have ruled out any charges for water, despite warnings the only way to fix the infrastructure is to raise a significant amount of revenue.

NI Water has stressed it would welcome a Northern Ireland Executive-led, fully funded, and realistic cross-departmental transition plan to simultaneously meet the administration’s objectives on housing, economic development and the environment: “We remain ready to work with the Department for Infrastructure, in conjunction with the utility regulator, and all relevant stakeholders to help shape and deliver a sustainable, joined-up solution.”

Suzanne Wylie, chief executive of NI Chamber, said: “NI Water’s current funding model means it is unable to effectively upgrade, replace and build the new sewerage infrastructure needed for our towns and cities. We face a stark choice: continue to defer the inevitable or confront it with clarity and a commitment to long-term reform.”

She pointed out that a slew of recent reports had stressed that some form of revenue raising was required. “The NI Executive has made it clear that to date, this is not part of its plan. However, these reports set out mechanisms for keeping any levy to an absolute minimum. One of the models suggests that the cost to the domestic ratepayer could be on average an additional £11.80 per month.”

• Infrastructure minister, Liz Kimmins, has updated the Northern Ireland Assembly on the outcome of forensic accountant PWC’s investigation into the reasons why NI Water was unable to live within its resource budget allocation in the 2024-25 financial year. She said there was “a fundamental flaw in oversight and governance processes” in that the NI Water board “did not base its financial decisions on the budget that it had — in other words, the amount allocated by the Department. Instead, the board based those decisions on the larger amount that it felt was needed, despite not having that money to spend.” She said the starting point for future budgetary decisions must be the amount that has actually been allocated.

The report also identified the reason for budget fluctuations over the year. These included NI Water overestimating need by £25m at the start of the year compared to the outturn, and a recommendation that the organisation work more closely with its suppliers to make savings.

Kimmins said: "I reassure Members that, now that I have an understanding of the issues that have led to the overspend, I am intent on working closely with NI Water to help prevent such an occurrence in future years.”