MLAs ‘shocked’ at cost of water charge deferral
30 May 2007
When Ian Paisley and Gerry Adams announced that they reached an agreement on the establishment of a power sharing executive they rounded off their joint press conference by calling for the introduction of water charges to be deferred. Their request was immediately granted. This hardly came as a surprise as Peter Hain had been holding out the prospect of a deferral as an incentive to the parties to agree. The British Treasury had already allocated £75 million (part of Gordon Brown’s “peace dividend”) to facilitate this. The deferral was a popular measure designed to smooth the way towards the power sharing and create the impression that local politicians now had such matters in their own hands. This impression was reinforced when one of the first acts of the Stormont executive was to announce a review into the financing of the water system. The minister for regional development, Conor Murphy, claimed that everything would be on the table, including the water charge and the structure of the water service.
However, even before the review had begun the local parties were already backtracking. They (Sinn Fein in particular) deliberately shifted the debate onto the issue of “double taxation”, saying that householders should only pay for the service they received; a formula that allows for a separate water charge (just don’t call it tax) and the movement of the water service towards privatisation. The backtracking continued at the first meeting of the Assembly's Regional Development committee when MLAs were briefed on the future of the water service by senior civil servants. They went into a state of shock when it was revealed that the cost of deferring water charges in three years time would be £265 million. The DUP’s Jim Wells said that the figures were "not encouraging". However, he and the other committe members could hardly have been surprised. The costs of upgrading and maintaining the north’s water and sewage system has been on record for some time. Also, given that it cost £75 million to defer the first bill (which was only a third of the full bill as they were being phased in over three years), it was not difficult to calculate what the full bill in the third year would be. All they had to do was multiply £75 million by three, factoring in the rise in inflation. This would have produced a figure not far off £265 million. The shock of MLAs at that figure can therefore be taken with a pinch of salt. They are feigning surprise in order to prepare the way for the introduction of water charges next year. Arguments are already being made that a further delay in their introduction would mean diverting resources away from heath and education. Local politicians want to present themselves as having had the decision to introduce water charges reluctantly forced upon them.
Although acceptance of water charges has not been publicly acknowledged, it is implicit in the discussion over the future of the water service. This focuses on getting “value for money”. The assumption here is that squeezing more out of the water services’ capital assets and workforce can mitigate water charges. This fits perfectly with the privatisation agenda and demands that the water service become more “efficient”. The chairman of the Assembly committee, Fred Cobain, expressed concern that NI Water may not be able to get the cost savings set out in their business plan if trade unions did not accept compulsory redundancies. This plan envisions cutting the workforce by a third by 2010. The management of NI Water claim that the trade unions have accepted the plan, though the unions themselves have denied it. Given the poor record of the trade union movement in opposing privatisation it would be surprising if they were telling the truth. They have already facilitated the reduction of the workforce by three hundred. Most of those involved transfers to other areas of the civil service. The complaints from unions about the latest round of redundancies may be because the establishment of NI Water as a separate company removes this safety net. However, this does not amount to real opposition, it is just a plea to politicians. It is a plea that is likely to be ignored given that the politicians are at one with the management of NI Water on the need to reduce costs.
Another way of mitigating water charges being contemplated by MLAs is the sale of surplus land. Civil servants claimed that NI Water was in possession of surplus land with £20 million pounds, though this is probably a gross undervaluation. With the planned closure of pumping sites and other facilities, the value of surplus land could rise to £2 billion. It was also confirmed that, despite NI Water being a government owned company, the executive would have no say over the disposal of its assets. Also, the executive would have no call on money raised through land sales. Even if money was raised in this way there is no guarantee that it will be used to upgrade the water and sewage system and thereby reduce water charges. The most likely scenario is that it will be used by the company to build up a capital surplus to make it attractive to private investors. Once it is privatised this capital can be pocketed by shareholders. Water charges will be brought in anyway as the owners will not just want a windfall but a continuous revenue stream.
The early stages of the review into the financing of the water and sewage system by the Assembly demonstrate that there is no political will to stop water charges. They have been accepted as inevitable by local politicians. The most they are aiming for is a mitigation of the charges in the form of an expanded relief scheme. There is no opposition to privatisation. Indeed, some of the arguments being used actually support privatisation.
The secret weapon in the privatisation debate has been the general belief that the populism of the DUP and Sinn Fein represents a willingness to protect the interests of their working class vote. Overcoming this belief is a necessary step in building a working class opposition.