Wednesday, February 27, 2008

Households facing higher water charges after “miscalculation”

A supposed “miscalculation” by NI Water could lead to a 15 per cent or £20 million increase in the domestic water bill this year; resulting in an extra £30 being added to the average household bill.

NI Water claimed that it had overestimated the amount of revenue it would raise from commercial customers. It also pointed to a number of high profile industrial closures, such as the Seagate factory in Limavady, as an additional reason for the shortfall. As a result it had carry out an internal ‘re-balancing' exercise that shifted the burden of liability for water and sewage costs onto householders.

The arguments and figures used by NI Water are very dubious. There is no evidence of a decline in commercial customers so great as to produce a £20 million annual deficit. This is just a smokescreen for shifting the costs of water and sewage from business onto householders. It fits in with the general thrust of Government towards provision of public services - of transferring resources from labour to capital, from one class of people to another. Generally, the main mechanism for this has been privatisation and the introduction of user charges. In the specific case of water it has been the creation of NI Water and the introduction of a separate water charge.

All this was contained in the water reform proposals put forward by the British Government and inherited by the Executive. It was never clear what contribution commercial customers were going to make. Now we know it is going to be less than they paid under the Water Service; and that householders are going to have to pick up the bill.

This revelation also blows a hole in the recommendations of the Independent Review Panel, which were based on the old estimates from NI Water. The Executive hoped that adopting its proposals of delaying charges for a year, reducing slightly the amount people would be charged and extending relief would dampen down any opposition and buy them some time on the issue. This is despite the fact that all the Panel’s proposals were based on the unlikely premise that NI Water could make 40 per cent cost savings. The latest revelation from the company makes delivery on even these meagre concessions impossible.

1 comment:

Anonymous said...

I think youv’e got this one wrong. It seems to me that the company really has made a cock-up rather than been involved in a conspiracy. First the information was leaked – clearly demonstrated by the poor media management=t by Northern Ireland Water Ltd. Second they haven’t even been able to say how much the miscalculation is and whether they have stopped miscalculating! Their excuses really have been pathetic. They have blamed the old Water Service and their shiny new ‘GoCo’ is sorting things out – except they haven’t yet sorted it out despite the millions and millions spent on private consultants. The other rather inconvenient fact is that the nobs at the top, including the Chief Executive and Finance director didn’t beam down from Mars on 1 April when the new company was created. They were in the same roles in the old Water Service.

The dismay of the politicians is genuine precisely because they know they are going to introduce water charges but this potential future price hike will make it a bit more uncomfortable for them. They know they were all elected in opposition to charges but they have bought into running the North essentially the way it is and therefore must introduce them. An additional problem is that they made so much of the recent budget – additional money for Health and housing - by stretching it almost to breaking point and this stretches it even more since the Department of Regional Development will have to bail the company out in some way or other we will probably never find out. Prepare to be told the problem was never that big.

One thing you’re dead right about though. This has focused debate about how much charges for domestic customers might be which means the debate is about how much we will pay – not whether we should pay charges at all. In this way the fighting between the company, politicians, Sinn Fein minister at the DRD and the Consumer Council etc. is all a squabble of those on the same side and by appearing to be about what is fair – and being all the more convincing because they really all are sincere because they don’t see further than the capitalist framework – what has just happened will make the introduction of charges easier not harder without a mass campaign of opposition to take advantage of their mess. This is precisely what the Consumer Council lamented - ‘confidence in the whole process has been dented’ they have said. The failure to build such a campaign has therefore caused us all to miss a real opportunity to weaken the whole process.