Failure to reform funding of wastewater infrastructure ‘could be catastrophic’

A failure to reform how Northern Ireland’s water and wastewater infrastructure is funded could be “catastrophic” for the region’s economy, MLAs have been told.

A representative from the construction industry said Northern Ireland is in the middle of a “housing crisis” with a 60-year low in completion of new homes.

Mark Spence, chief executive of the Construction Employers Federation (CEF), told Stormont’s Department for Infrastructure that current wastewater capacity restraints mean that around 19,000 houses in the region are currently unable to proceed.

The committee is investigating how capacity constraints at NI Water, which provides water and sewerage services, is impacting the construction sector.

Water and wastewater infrastructure in the region have been described as in urgent need of upgrade.

A recent Audit Office report found that a lack of capacity in water infrastructure is delaying or halting proposed housing developments and called for a comprehensive review of the current funding arrangements for NI Water.

Mr Spence told the committee that for 15 years only around 50% of the homes required in Northern Ireland had been built.

He said: “That has resulted in a dearth of new supply of housing of all tenure types, exacerbating our social housing waiting lists and the difficulties that many have in moving from home rental to home ownership.

“Earlier this year the CEF conducted a survey of our home builders which made it clear that the current wastewater capacity restraints are holding back some 8,500 homes, which equates to about £1 billion of investment.

“When coupled with the proposals of housing associations and other developers, that figure goes up to around 19,000 homes which are unable today to proceed.

“That figure again doubles to 37,000 if you factor in the number of housing inquiries that NI Water have received.

“This gives us a 60-year low in housing completions in 2023. The figure in 2024 is likely to be even lower.

“We are therefore undoubtedly in the middle of a housing crisis in Northern Ireland.”

Mr Spence said commitments in the Executive’s Programme for Government to provide more social, affordable and sustainable housing are welcome but fall “drastically short”.

He said: “We need the Executive to send a much stronger statement of intent and intervention.”

Mr Spence said there had to be a comprehensive review of how NI Water is funded so that it has a defined income stream.

He said: “We do not believe that this change requires the introduction of individual household bills, water charging, or indeed any uplift in the existing rates bills paid by domestic consumers.

“Rather from the existing rates bills, a direct hypothecated income stream to NI Water could be created, along with additional legislation in respect of their governance model.

“This would enable them to fully borrow against their assets.

“Short of a fundamental reform of this nature, we fail to see how Northern Ireland’s Executive can sustainably fund NI Water’s needs given how crucial that investment is to the wider economic activity.”

Mr Spence added: “The economic consequences of not doing this could be catastrophic to the economy of Northern Ireland.”

Ciaran Fox, director of the Royal Society of Ulster Architects, described the current situation with funding of the wastewater infrastructure as a “fiasco”.

He said: “It really is a case of the good, the bad, and the ugly for architects who are working with developers.

“The good being you could be extremely fortunate in this postcode lottery where you happen to be developing in an area where there is the ability to connect and therefore there is no cost.

“There is the bad which is where you are told, yes you can develop but there is going to be considerable cost to you for that.

“The ugly where you are told it is a black and white no. You are told there will be no development here for X number of years.”