Review:  BBC Spotlight examines the water crisis 

JM Thorn

14 February 2011

The last episode (8 Feb) of the BBC NI current affairs programme Spotlight was an investigation into the water crisis that affected the north over the Christmas/New Year period.  It was presented by the reporter Julian O’Nell, and was built around interviews and statements from a number of the people closely associated with the crisis.

While the programme addressed the most recent and most serious problem of water supply disruption, it did so by putting this debacle within the broader perspective of NI Water’s short but troubled history.  So we had an introduction by O’Neill that sketched the scale of the water crisis, noting the tens of thousands of homes that had been off supply and the attention that this “civil emergency” received from the world’s media.  The impact of the disruption was emphasised by a number of interviews with people who had been badly affected – one man describes how he was off the mains water supply for ten days.  The political dimension of the crisis is also covered with footage of Peter Robinson and Martin McGuinness making criticisms of how it was handled by the management of NI Water. O’Neill notes that much of the criticism was directed at chief executive Laurence MacKenzie, who was ultimately forced to resign over the debacle. 

Following this brief summary of the water crisis, O’Neill goes on to trace the period leading up to it.  He also covers the problems that have dogged NI Water since its creation, which have included boardroom sackings, the suspension of a senior civil servant and persistent questions over running of the company.  This section of the programme concentrates on the figure of the former chief executive Laurence MacKenzie, asking whether the problems at NI Water can all be the fault of one man.  We are told that when MacKanzie joined the company in July 2009 he had no previous experience of the water industry, but came with a reputation as a cost cutter.  The former company chairman Chris Mellor admits that Mackenzie’s “good track record in reducing costs” was the main reason that he was appointed to the post. In his assessment of MacKenzie, former board member Martin O’Muilleior describes a person who was “good on the figures” but “deeply challenged on communication”.   It is mentioned that under Mackenzie there had been a number of major investment programmes, such as the £120 million Belfast sewers project. The company had been praised by the Utility regulator, although there were also criticisms, one of which related to the problems it experienced during freezing weather conditions.  It is revealed that the Dept for Regional Development (DRD), which has responsibility for water and sewage, asked for confirmation that NI Water had a detailed action plan for freezing temperatures this year.   The chief executive of the Consumer Council also claims that it was given assurances that the company had a contingency plan.  We now know that this plan totally failed and that MacKenzie had to resign.

What we may not have known, and this is where the programme goes into more depth about what was going on within senior management at NI Water and the Dept., was that Mackenzie had offered to resign 13 months earlier.  This was related to a dispute within the board over savings and procurement contacts.  The DRD, which had responsibility for the appointment of the chief executive and the board of the company, was faced with the decision of who to back.  O’Neill suggests that faced with the prospect of losing a third chief executive in as many years, the Dept took the decision to back Mackenzie and sack the directors.  This action followed on from the publication of a report by an independent panel set up by the Dept to review procurement processes at the company.  It is claimed that when the report was completed (though not published) Mackenzie withdrew his resignation threat.  It is also claimed that DRD officials were already preparing the sacking of directors before the official release of the report.  One of the sacked board members suggests that the review was a merely device to remove them.  This impression is strengthened by the actual contents of the report.   While it did identify £23 million of procurement irregularities it found no fraud or serious breakdown in governance, neither did it recommend the dismissal of directors. Moreover, half the contracts that contained irregularities were drawn up before NI Water had come into existence 

All this suggests some form of collusion.  Suspicions were heightened when it was revealed that one of the members of the review panel (Phoenix Gas chief executive Peter Dixon) had links to Mackenzie.  When this was put to him by members of the Assembly’s Public Accounts Committee (PAC) Dixon responded by writing a letter to the committee objecting to their line of questioning.  It was later revealed that his letter of complaint was drafted by the DRD permanent secretary Paul Priestly.  So not only is the Dept’s most senior official responsible for engineering the removal of NI Water board members, but also of scuppering the attempts of an Assembly committee to investigate that matter.  Priestley was suspended from his post and is under investigation.  In a leaked draft report of the investigation obtained by Spotlight Priestly is accused of acting  “disgracefully” and of exacerbating divisions within the board of NI Water.  Despite this Regional Development minister Conor Murphy continues to stand over the sackings, insisting they were linked to procurement. 

In the final part of programme O'Niell comes back to the water supply crisis, and the failure of the new board (appointed by Murphy) to deal with it.  It is noted that Murphy’s own appointees (former IDA chief Padraig White, Belfast Media Group executive, former/prospective future Sinn Fein councillor Martin O’Muilleior and ICTU’s Peter Bunting) had no experience in the water industry.  DRD officials met NI Water on Dec 15th to confirm that a plan was in place to cope with forecast snow.  The board met on 20th Dec, just one week before the crisis. Despite receiving forecasts an action plan for freezing temperatures was not on the agenda.  When the crisis came there was chaos, with the company’s communications system breaking down completely. Questioned over his responsibility for the crisis Conor Murphy was defensive, saying that NI Water was “operationally independent” and that he had accepted its assurances. 

The Spotlight programme provided a useful summary of the problems associated with NI Water.  However, it limited itself to a description of those problems rather than providing a credible explanation.   The reporting also had a tendency to get caught up in the bureaucratic manoeuvring within the company, and between the company and the Dept.  When the reporter does make an attempt an explanation – suggesting that Sinn Fein’s opposition to privatisation was holding back improvements  - he is both wrong and reactionary.  Firstly, Sinn Fein are not opposed to privatisation.  While they may sometimes use anti-privatisation rhetoric their record in government is one of promoting privatisation.  NI Water is actually a good example of this. Though the company is nominally under the control of a Sinn Fein minister privitisation has advanced quite far, mainly through the use of private contractors and PFIs.  The fact that this has happened demonstrates that Sinn Fein is not a block on privatisation. It also shows that increasing privatisation will not necessarily result in an improved performance by the company. 

The second flaw in this explanation is the assumption that Sinn Fein is in control. The evidence in the programme itself, which shows clearly that officials are taking the initiative, refutes this.   Murphy is either rubber-stamping their actions or is unaware of what is going on in his own Dept.  But is not just Murphy or Sinn Fein.  Despite claims that devolution would shake up government in the north all the ministers drawn from the local parties have proved to be putty in the hands of civil servants and have settled into the role of defenders of the status quo.  If anything the political settlement has actually reinforced the hold of the state by adding more layers of bureaucracy.

Another explanation hinted at by the reporter is that the problems at NI Water are a result of it not being funded adequately.  Again this refuted by the evidence presented in the programme itself, with a spokesperson for UK Water (the umbrella group for water companies) admitting that investment in water and sewage is at a similar level to other parts of the UK, albeit over a shorter period of time.  This backs up the report by water expert Prof David Hall published some years ago which suggested that while there had been a legacy of under investment major funding was now being committed.  Of course the question of water charges always comes up in relation to funding and was hinted at again in the programme.  The argument is a familiar one - if you want a better water and sewage system you have to pay water charges. But the fact is we are already paying water charges.  It is not obvious because they are coming out of the general public spending pot rather than being charged to individual households.   The introduction a separate water charge would therefore not increase the level of investment but shift the burden of payment from the state to the householder.  A separate water charge would also help facilitate the full privatisation of NI Water by creating an independent income stream for the company. 

There is an argument that the process of upgrading the north’s water and sewage system should be accelerated.  But again this does not necessarily require the introduction of water charges.  The extra money required could be raised through the rates system or through NI Water issuing a corporate bond.  David Hall has made the point that a publicly owned company could do this more effectively as the cost to it of borrowing capital would be less than for a company under private ownership.  These are not particularly radical solutions and are already in place in many parts of the world.  Even within capitalism there are a range of options. But it beyond the innate conservatism of the political class in the north to even consider them. As the Assembly member Dawn Purvis rightly points out – there is “no vision of how water and sewage services are to be delivered”.  This is the most pertinent statement made in the whole Spotlight programme.

Unfortunately this conservatism and lack of vision also permeates into the working class.  It is particularly strong within the trade union movement, which most often takes the position of defending the status quo.  In the case of NI Water, the ambition of the trade unions didn’t go beyond having one of its officials sitting on the board.   More generally, and it certainly the case in the north where the state sector is so dominant and in which trade unions have most of their membership, it doesn’t go beyond a blanket defence of public services.   This is despite the fact that many of those “public services” serve the working class very poorly.  Not a day goes by without some report of waste, neglect or outright corruption within the state sector.  This does not mean that workers should not defend these services when they are under attack, but they should also fight to transform them.  This is what is needed to bring real improvements not only in water and sewage but also across the board.