Official Report: Minutes of Evidence

The Chairperson (Miss McIlveen): I welcome, from Northern Ireland Water, Sara Venning, chief executive; and Ronan Larkin, director of finance and regulation. Sara and Ronan, you are both welcome. Thank you very much for hosting us here this morning; we very much appreciate that. I understand that you will speak to us and that you have a PowerPoint presentation. If you commence with that, members will follow up with questions.

Ms Sara Venning (Northern Ireland Water): Perfect. Thank you all very much for inviting us to the Committee. Looking around the table, I recognise that some of you might have more experience than others of working and interacting with NI Water as an organisation. I will use the time that we have this morning to give you a brief overview of NI Water, some of the achievements that we have delivered to date and an outline of our plans for the future. We have watched some of the previous Committee hearings — you have made for compelling TV — so I am conscious that our presentation follows briefings that you have had from departmental officials. I will try not to dwell on material that they may have already covered, so as not to bore you.

NI Water is responsible for the provision of clean, safe drinking water from source through to your tap and for the treatment of waste water from sink through to the sea. We have a team of about 1,300 colleagues to deliver those services. We are a Go-co, and the Department for Infrastructure is our sole shareholder. Due to how we have been funded, we have been classified as a non-departmental public body (NDPB). You can see in the diagram the links through to our Minister. You can see yourselves in the Committee and right up to the Executive. As well as being a Go-co and an NDPB, we are a regulated utility. In the circles surrounding NI Water at the bottom, you can see the various regulators that interact with us. The Utility Regulator is responsible for the financial regulation of the company, the Northern Ireland Environment Agency (NIEA) is responsible for the environmental regulation, the Drinking Water Inspectorate (DWI) is responsible for drinking water quality, and the Consumer Council is responsible for customer issues. You could say that we work together to deliver a great service for our customers, and we have the customers on that slide as well.

I started by talking about source-to-tap and sink-to-sea. This diagram sets out our organisation on a single page. Over the past number of years, I have talked to lots and lots of people about our investment needs. There are some pretty big numbers in that regard, and the slide helps to set the context that our asset base is extensive. We are right across Northern Ireland, and the asset base that we have stewardship of is valued at in and around £3 billion.

On the water side of the business, on the left-hand side of the slide, there are 45 impounding reservoirs. Those are the ones like Woodburn and Silent Valley that you can walk round with your dog, and they collect and feed raw water into 23 water treatment works. Every day, those 23 water treatment works produce, on average, 575 million litres of treated water. That is pumped or gravitated, as best we can, to over 850,000 homes and businesses through 26,000 kilometres of water pipe. On the waste water side, we collect about 340 million litres per day and take it through almost 16,000 kilometres of sewers. We treat it at our waste water treatment works at over 1,000 different locations before we return the treated effluent safely to the environment.

NI Water is one of Northern Ireland's largest landowners; in fact, we are the second largest landowner in Northern Ireland. We have 11,000 hectares that we look after. If you laid all the water pipes and sewer pipes end to end, they would be one and a half times longer than our road network and would go the whole way round the circumference of the globe. It is a pretty extensive asset base that needs looked after. Every part of the network, be it the pipes, a treatment works or an individual pump, has a finite capacity. A lot of the assets will have been installed some time back and are a legacy to us as an organisation. Over 70% of our water and sewer pipes have been in the ground for more than 50 years.

This year marks my 10-year anniversary with NI Water. I have been CEO for about six of those years. I can say with authority to you as a Committee that NI Water is good at what it does. We deliver. We have been delivering our best-ever drinking water quality, and our waste water compliance remains at near-record levels. Our focus is on efficient performance, building resilience and sustainability across our network. The next slide shows some pictures to bring that to life and to illustrate it.

You will see the scientific-looking guy there. At our labs, we conduct around 470,000 water quality tests per year to make sure that we have clean, safe drinking water for all our homes and businesses. There has been a lot of talk everywhere in society, I suppose, about climate change and the climate emergency. Many people are talking about the need to do more. In Northern Ireland Water, we have always recognised that we have a key role in protecting the natural environment, and you can see some examples here. The picture in the middle, at the top, is Garron plateau. Garron plateau is a bog beside a reservoir that supplies a treatment works in a place called Dungonnell. We had a cross-border, EU-funded partnership to restore the bog. We have used peat, wood and stone to build dams to keep the bog hydrated, and it holds water like a sponge. That slows the path of the water down to what nature intended. It captures carbon. From our perspective, the win is that it improves water colour and turbidity going into the treatment works, which makes for cheaper and improved water treatment. From a nature perspective, it has allowed flora and fauna to flourish, protecting biodiversity. It was a super project, and we are involved in projects like that across our land base.

At the top right of the slide, you will see Clandeboye rainwater garden. Sometimes you hear people talking about sustainable urban drainage systems (SuDS), and Clandeboye Primary School has an example of that. There was a lot of out-of-sewer flooding in that part of Bangor, and houses, streets and the playground were flooded in times of heavy rainfall. We were about to go for a hard engineering solution by storing the water in pipes under the ground, but we stopped. We engaged with the local community, with the school and with our shareholder in the Department, which allocated a modest amount of additional funding that enabled us to build the garden. The storm water goes into a tank. The top of the tank is a dome, so it looks like a turtle in the playground. The water comes out of the turtle's mouth and goes down a little path, which is a duck run, so they put ducks on it, and the ducks run into the pond at the bottom. That has enabled the school to reclaim its playground, and it is an education facility for the teachers and children. The teachers have told us that, with that in their playground, they have seen much better behaviour in the playground as well,so that is another win, working with the community. There is an international Green Apple award for environmental practice and projects, and it has won it in Ireland, the UK and internationally. It is a very successful project.

Below that is what looks like a marshy bogland. That is an integrated constructed wetland, so actually it is a waste water treatment works. It is in Castle Archdale, and it uses ponds so that nature gently carries out the treatment of waste water from the local caravan park. What little power is needed for that treatment process comes from a small solar panel in the corner of the site. It is a low-carbon solution and was put in place with the cooperation of the Environment Agency and the local landowner. People can take their dogs for a walk through that treatment works and not know that it is a waste water treatment works. We have built a couple of those — one in Castle Archdale, near Enniskillen, and one in Stoneyford, near to where I live — and we are in the process of constructing our largest one, in Ballykelly, taking on board the learning from the other two sites.

The picture at the bottom of the slide shows Dunore solar farm, which is beside one of our large water treatment works on the shores of Lough Neagh. Northern Ireland Water is the largest electricity consumer in Northern Ireland; we represent about 3% of the total demand in Northern Ireland. We have always had an eye to renewable energy. We are investing in renewables and are really proud to have built that solar farm. It was a £7 million investment, and there are 24,000 solar panels on a 33-acre site. It is operational and functioning and makes real savings in our electricity bill. We are targeting ourselves to be carbon-neutral in our energy use by 2027.

Finally, the picture at the bottom middle of the slide shows Ballycastle waste water treatment works. We still need to invest in hard engineering and in our assets, and we have invested £7 million in that site to ensure that that works can deal with a fluctuating population. As you know, Ballycastle has more people in the summer than it does in the winter. That site was completed and commissioned in 2018.

The next slide shows two graphics. The first illustrates our overall performance assessment (OPA) score. That is a Programme for Government measure. Since 2007, we have been able to reduce our NI Water staff numbers by almost half and our annual running costs by at least £60 million, but, as the OPA score proves, that has not been to the detriment of our customer service; in fact, our overall performance assessment has continued to improve steadily. The second graph looks at efficiency. It studies the efficiency gap between us and comparator companies. We have closed that efficiency gap between us and England and Wales. It was 49% when Northern Ireland Water was first established and is now within 8% of the upper quartile company. Ronan will talk to you shortly about our business plan for PC21. We recognise that it becomes a lot harder to deliver efficiencies when you have achieved your quick wins, but the business plan sets out an ambition to continue on that efficiency journey. We believe that, by the end of PC21, we will have closed a further 80% of that gap to the frontier companies.

We launched our 25-year strategy for Northern Ireland Water in September, just across the way in the waste water treatment works, which, I hope, you will get to see later. It is a forward-looking strategy, and it recognises the vital role that Northern Ireland Water plays in underpinning almost all of Northern Ireland's ambitions in the Programme for Government. It is not a strategy about a company; it is a strategy about facilitating the ambitions of Northern Ireland and supporting a thriving Northern Ireland. Providing the water for life that we all rely on is our core purpose, and our vision is centred around growing value and trust by being world-class. Long-term planning is required for the intergenerational infrastructure assets that we have — for example, a dam and all the water infrastructure. It is not just about today, it is about tomorrow, and the strategy really supports investment in that vital infrastructure.

Of course, the strategy sets out how we will be judged and measured. There are five strategic objectives against which we will hold ourselves accountable: what we do for customers, water, economy, nature and people. A key thing in the strategy is recognising that water is a valuable resource. That might not be just as readily understood or felt in Northern Ireland. It is scarce in many places, and we are highlighting the need to change how we think about water, whether that is the role that water and waste water play in supporting the economy — we will talk a bit more about how that is really coming to life now — or the need to conserve water and to be really water-efficient. In Northern Ireland, we are not water-efficient; we are very water-inefficient. Each of us uses 150 litres of water per day. In the UK, that might be around 135 litres, and they are really driving towards 100 litres of water per person per day. We face a big challenge to raise that in the public's consciousness. The other thing that we need to think about is the need for greater resilience against climate change, and we are very engaged in that.

Throughout the strategy, sustainability and environmental responsibility play a really big part — that notion that we can work with nature rather than against it and that we will put back more than we take out. Our business plan sets out how we intend to deliver against those objectives. Ronan was a key player in helping us pull all of that together, so I will hand over to him to take you through it.

Mr Ronan Larkin (Northern Ireland Water): On 31 January, we submitted the PC21 business plan to the Utility Regulator. It is a six-year business plan covering the period from April 2021 to March 2027, and it sets out the services we plan to deliver for customers, both through that period and into the future. It sets out the investment in the capital infrastructure assets that we will make during the six-year period to 2027. The plan, we believe, is a strong and ambitious one which continues to improve services for customers while keeping bills stable in real terms. The plan also requires us to continue to deliver our service efficiently, through continued improvements in our operating costs. Sara talked about that gap coming down from 50% to sitting at about 8% today, and our plan has a way to close that gap further and take about 80% of that gap out through the next six-year period.

There will be a step change in the capital investment needed for Northern Ireland to reverse the impact of underinvestment, in particular in the waste water assets, which we think is impacting the economy. That impact will start to grow. It also impacts the environment, and you saw some of the work that we do around environmental stewardship. So those two key fundamentals are in there, and the plan includes the capital investment step change that we need to begin to address that in the next six-year period. PC21 will deliver against the strategy that Sara talked about — it is the first six years of that 25-year strategy — and it will deliver against the Department for Infrastructure's social and environmental guidance as part of what we do, as an organisation, at Northern Ireland Water.

It is a deliverable investment plan, it will meet the established needs and it is affordable from a tariff perspective. We looked carefully at affordability around this as well, because we can put a plan together with a huge tariff for customers but, if customer cannot afford it, it is no good. We looked at delivering against the Utility Regulator's PC21 business plan requirements, including affordability. In putting the plan together, we worked very closely with a range of stakeholders to develop and inform the plan. It is not something that we just do on our own. We have been out on the road, talking and engaging with people. Primary stakeholders include the Department, the Utility Regulator, the Environment Agency, the Drinking Water Inspectorate and the Consumer Council. We have also talked to local councils and looked at their development plans because, again, what we do impacts their development plans. We also talked to business and trade organisations and key employers in Northern Ireland about their plans for growth and so on, and how our infrastructure can impact that positively or negatively. We have also done some survey work with domestic and business customers individually. We have worked with a polling company to talk to customers to find out what they are thinking and what is important to them.

In capital terms, the plan delivers a long list of things. I will read some of them out. For water, we will carry out rehabilitation of 670 kilometres of water mains, which will improve the water network. A further 14 water trunk main large schemes will be delivered. Eighteen water treatment works schemes will be improved and base maintained and enhanced. Four water service reservoirs and clear water tanks will be implemented. Eight hundred and forty properties will be removed from the low-pressure register. People struggle to get water to come through their taps at the right pressure; we will take just under 1,000 properties off that low-pressure register. During all that, we will continue to maintain the serviceability that we have on the network.

On the sewerage side, we will put in 61 kilometres of replaced and renewed sewers. One hundred and twenty-four unsatisfactory sewer overflows will be removed and improved. Those are instances where pollution can happen; areas where we can have a pollution piece. Forty-eight large waste water treatment works upgrades will take place. Sara talked about Ballycastle; we will do 48 of those during PC21. There will be 36 rural waste water treatment works upgraded across Northern Ireland, and 57 internal flooding locations will be resolved. We are told, and we can all understand, that the worst thing that can happen is that your home is internally flooded, not least by sewage. We are looking at ways to take out 57 internal flooding locations or hotspots through our plan. Again, we will look to maintain the serviceability of the current network during all that piece.

PC21 features that large capital investment programme and is a step change, but is there to support existing services to customers and secure those improved services for customers in the future.

Let us think about the investment profile. As I mentioned, it is a large capital investment plan. We are looking for just over £2 billion to deliver the PC21 business plan. It is a step change in the piece. We have to prioritise how we use that money. I will use this diagram briefly. If you start at the left-hand side, at the blue end, you can see that we will carry out planned and reactive maintenance on the core network, so we will maintain what we have today. The next little piece there is the capital programme running costs. That is what we need to run the programme, make it happen, deliver it, and ensure that it is all delivered to quality, cost, time, and so forth. Sara talked about improvements in what we do and efficiencies in the future. We have a work stream in the business plan called "planning for the future", and our management and general costs. Those include the basics down to the fleet that we run, which the guys and girls — the front-line staff — go out in every day, through to the buildings, IT equipment and so on, all the way to some of the niches that we believe it is important for Northern Ireland to start building into. IT is changing; the world of cyber-risk has grown. There is a thing called the "fourth industrial revolution". We are looking at whether our systems are up to speed and whether we can improve them, both for customers and our workforce. That is a piece of the plan.

With regard to water provision, water comes first. Clean, safe drinking water provision for everybody, every day, is a top priority. We do that first. After that, we move on to the sewerage piece. Sometimes that is referred to as the Cinderella part of the service: it gets forgotten about and left behind a little bit. It is our intention that we absolutely put up a flag to boost the investment in Northern Ireland's sewerage service. That large dark block of just over £1 billion is what we talk about when we talk about all those works that we are going to improve, deliver and enhance through PC21. You can see that that is just over £1 billion. That includes the first phase of the Living with Water programme for the greater Belfast and Belfast Lough area. It is a strong, bold, ambitious plan, but one that we believe is well researched and that Northern Ireland needs in order to continue to function as a strong regional economy and a strong sustainable environment.

All of us talk about funding. I know that there has been lots of work and discussion about funding at the Committee. Let us talk about how we are funded. We are a Government-owned company and a non-departmental public body in the Department for Infrastructure. We receive operating and capital budget allocations through the Department via the Northern Ireland block grant. Those are commonly referred to as resource DEL and capital DEL budget allocations. Resource DEL gives the money that we need to run the business every day: running the vans, paying the wages, paying the electricity bill and so forth. The capital DEL budget is the budget that we are allocated to build out the programme: to maintain, build and enhance the assets and put the new pieces in place — some of the things that Sara showed in the slides earlier.

Through work led by the Department with all the stakeholders over the past couple of years, it has been accepted by pretty much all the stakeholders that the current model for funding Northern Ireland Water, whilst it worked up to a point, began to creak a few years ago and is now broken and no longer optimum for Northern Ireland. Northern Ireland's drainage and water provision will not be sustained — will not survive — on the current model. We are at the point now where we need to determine the main options to consider in taking forward the provision of the service every day — clean, safe drinking water for everybody and an efficient, 21st-century sewerage and drainage system that supports our health, the economy and the environment.

In pound notes, where do we get the money to pay the bills when people build a piece of the capital programme for us? We principally finance our capital programme through the capital loan note via the Department for Infrastructure, the Department of Finance and, ultimately, the Treasury. That loan note allows us to draw money down to pay those capital bills. The loan note is in place and we have headroom in it, but in order to use that money we need a capital budget allocation. It is really about the capital budget allocation that we get. The other thing that we have to think about is that we currently look at this on an annual basis. We have a 25-year strategy and we run long-term assets. We look at our budget allocation, and we are granted that, on an annual basis, but what Northern Ireland needs for that is a medium-term financial settlement. To have a one-year allocation and then stop and think about where we go next is not appropriate for this. We need to have a medium-term financial settlement to underpin the PC21 business plan.

The impact of the constraints on our infrastructure is beginning to be felt in Northern Ireland. We have waste water capacity issues, and I am sure that most of you are familiar with those in some area or another in Northern Ireland. Those are a direct result of what is recognised as historical underinvestment in the waste water network and the waste water treatment works. We estimate that there are currently 116 areas with significant waste water capacity issues. It could be that the works itself is too small, or it could be the pipework or the network that gets the waste to the works. You will all have seen examples where someone wants to build a small development of new houses. There was one in Saintfield a couple of years ago; I think 20 houses were proposed to be built. We said that we could not connect it to the sewerage network because Saintfield works could not take the additional capacity waste and it would cause issues in Saintfield village. We think that those 116 areas are there already, and we probably anticipate that there could be up to another 30 constrained areas that will fall into that category during PC21. We aim to address 49 of the current 116, so the plan will take out just under half of what is there today, but there are more coming in. PC21 sees us beginning to think our way into how we do that, but PC21 will not cure it in the six-year period. This is a longer-term project, for 2021 to 2027 and the six years beyond that. By the time we get to 2027, we will probably still have about 100 of those economically constrained areas. The risk is that they hold up development, whether it is private housing, social housing, small industrial units or foreign direct investment projects, right across the Province.

The measles maps here really show where that is — the left-hand side shows where we are today, and on the right-hand side, the green dots show where we will make PC21 investment available to improve the network and its capacity. We will start to solve some of those, but not all of them, during the PC21 period. We have spoken to the councils about these investments as well. We are looking at planning consents and so on — we are a statutory consultee on planning consents — and we are working closely with the councils on what this means for their development plans as well as Northern Ireland's wider economy. We are conscious that this will be a big economic constraint on the local economy in Northern Ireland, as well as being an environmental issue.

Thinking about the size and scale of that programme, how do we prioritise? What we are trying to illustrate in the next slide is the PC21 capital development plan. If some of that is cut and the funding is not made available in PC21 for some of it or even a small piece of it, that means that we will have to go back to the database to look at what schemes should be prioritised out of the current plan. That starts with waste water. Clean, safe drinking water remains in the plan because that is the number-one priority for us as a water company. That is protected. However, that takes us straight back to looking at which waste water schemes we should cut and reprioritise until PC27. What we have tried to do on the slide is illustrate what would happen if £50 million was cut out. If we got to the point where we were told, "You cannot get £2 billion, you will have to take a hit of £50 million", that, in context, sounds like a smaller-order number out of £2 billion. However, if £50 million was to come out, each scheme along the green bars on the slide would be directly impacted on, and we would have to remove them and reprioritise them into PC27.

Something like 21 schemes are represented by those green bars. A £50 million shortfall would take 21 schemes out, and the people in those locales would have to wait until PC27 for a viable waste water treatment network or works in those areas. Capital funding, if it were to be constrained, will be a further issue.

We are sometimes asked, "Why can't you use just the amount you had when you did PC15 — the current price control?". If capital spend is kept similar to PC15, almost no waste water treatment works will be developed and delivered during PC21; we will maintain what we have, but we will not be able to upgrade, rebase, maintain and address the issues outside of some basic maintenance. That work will have to be deferred until PC27.

In regard to a timeline for PC21, we are now in March, and our plan was submitted in January. The planning process is under way and is a great opportunity to get this issue right for Northern Ireland. We need investment in key infrastructure. Our regulator will determine our plan and give us a draft determination at the end of June before making a final determination on the plan in December. Having a secured budget and a mechanism in place to allow the final plan to be delivered is key.

We begin delivery of PC21 in 12 months; 12 months from now, we will be in delivery mode. We have already started pre-delivery planning, which is essential for a programme of this size and scale. We are getting delivery-ready and thinking about how we structure our teams and looking at our supply chain and so on. The water stakeholder group and all of us together, including the Committee, do not have a day to lose on this; we have to find a way to make sure that this gets funded.

Ms Venning: Before we finish, I will talk briefly about the Living with Water programme. Ronan indicated that Living with Water is a significant investment programme. It was born out of the need to address flooding issues and the quality of the receiving watercourses in the region. I recognise that the Living with Water programme manager, Simon Richardson from the Department, has already given the Committee an update on the project, so I will just focus on a few things that NI Water has been tasked with.

On the slide, you can see Belfast lough, and the little black rectangles are the six waste water treatment works that discharge into the lough. The waste water is collected from six catchments, we treat it and the effluent gets discharged to the lough via the little black pipes, which we call "long sea outfalls". That is an extensive programme of work; Living with Water is a huge programme that requires approximately £1 billion of investment, which is planned to be delivered over 12 years. We have commenced some of the background studies that you have to do in advance so that you can specify the detailed design of what you want to do in the waste water treatment works.

I draw your attention to the photograph to the side of the slide. What you can see there is an image of the men who built the long sea outfall at Belfast. That work commenced in 1913; it was interrupted by world war, so it did not finish until 1932. What is notable about the photograph? The first thing that I noticed was that the men all went to work in suits and flat caps — they were building an outfall — but that is not what is notable. What is notable is that, when you look at that photograph, there is nothing but water. You can see only water in front of them; there is no development, no film studios, no landfill site and no motorways. All those things are there today. Since that outfall was built, Belfast, as a city, has grown and developed, land has been reclaimed and the population has increased. That means that the sewers are undersized, our networks overflow into the watercourses under normal operating conditions, and, essentially, demand has exceeded capacity at a number of those works. Those long sea outfalls are no longer a long way out to sea; in some cases, they are actually on a shoreline. I will illustrate that a little bit more.

In the next slide, the various coloured sections on the map show the land that has been reclaimed around Belfast lough, starting with the yellow, which, I think, is the 1930s, right up to the blue, which is the present day. Those yellow, green, purple and blue shaded areas are all now land, but they used to be water. The long sea outfalls are the blue lines. You can see the blue line at the bottom, which is Belfast, where we are. On the top right, there is a little blue line in the pink area, which is Whitehouse. Not only is the outfall from that treatment works not in the lough but it is on the shore. The one at Belfast, where we are now, is much closer to the shore than it ever was before. What happens is that, because you are closer in to the shore, that big pipe is filling up with silt and is not effective; it is not doing its job of taking effluent out into deep water and dispersing it.

That underinvestment is historical in nature. As the years went by and the land was reclaimed and investment made, nobody put their hand up and said, "You actually need to fix the waste water infrastructure around that". That historical underinvestment has gone back decades, which means that the Living with Water programme needs to be funded outside of a water tariff. In other words, the customers of today and tomorrow, from a water perspective, cannot be the people who pay for that investment. That is why the Living with Water programme board decided that that needed to be funded via some form of grant-funding mechanism. That is its present working assumption; it does not sit within a water tariff.

The next slide is a photograph of the site of the Belfast waste water treatment works. The building that we are in today is on the edge of that site. Belfast waste water treatment works is Northern Ireland's largest such works. The red star on the photograph marks the building that we are in. The site is extensive — it is a very big site — but it is also at capacity. When it was built in the 1980s, it was designed to treat the waste — we describe waste treatment as something called "population equivalent" — for a population equivalent of 290,000. The current loading in the works is in the region of 400,000 population equivalent, which is 40% above design capacity. In order to be able to treat that size of load coming into the works, we now have no redundancy or spare capacity in our works. That means that we cannot take any part out for maintenance. It also means that, if you had a failure, essentially, it would be catastrophic and could have a significant impact, not least on the environment. The works needs to be upgraded to create additional capacity. The stark warning is that, if we fail to do that and say, "Just leave it", it could start to prevent development right across the city. It could impact on some of the projects in the city deal. It could result in environmental damage or, indeed, out-of-sewer flooding in people's homes.

I have been very encouraged by the widespread support for the work that we are talking about in the Living with Water programme. The challenge that we face is in securing the funding to enable us to get on and deliver that work. You will get a chance to go around the works and see what we are talking about when we say that the engine of the works is at capacity; you will see all the lanes at full flow.

Thank you very much for your time and attention this morning. I hope that the presentation has been informative and helpful. In summary, the highest risk on Northern Ireland Water's risk register is the lack of funding to deliver the investment that we need. Although that is a company risk, it extends much further than Northern Ireland Water; it is a Northern Ireland plc risk. The ambitions right across the Programme for Government and the private sector rely on the provision of 21st-century infrastructure to support them.

Ronan said earlier that the current governance regime for Northern Ireland Water is no longer fit for purpose. It cannot support the investment that is needed for the infrastructure that is in place. It can stymie the delivery of innovation and efficiency, and that impact is now being felt in 116 economically constrained towns across Northern Ireland. Further funding constraints will damage not only the economy but the environment.

The concluding thought that I will leave with you is that NI Water could be a key enabler for the ambitions of the Executive. We have a well-thought-through strategy. It is underpinned by a comprehensive business plan and a work programme that will deliver the outcomes that Northern Ireland needs. If we find the money, I think that there is some optimism.

Thank you very much. I am happy to take questions.

The Chairperson (Miss McIlveen): Thank you very much, Sara and Ronan, for the presentation. The point that you made at the beginning is that we do not value water in the way that we should. As a society, because we live in Northern Ireland and have lots of rainfall, there is an assumption that it is free, yet no real consideration is given to the processes that go into making it healthy to drink. We very freely turn on our taps with no consideration. We flush our toilets without any real consideration as to where that waste goes to. As an organisation, you have worked incredibly hard to make the systems work with the limited funding that you have.

We met the Construction Employers Federation yesterday, and it made the very same points that you made about the drains and the cranes and the connection there. To make Northern Ireland profitable, we need to have good infrastructure.

You made a point about the current model not being fit for purpose in relation to funding, which will be an Executive decision. It is very much a political decision as to how that changes, but what discussions have you had with the Minister for Infrastructure and other Ministers about the situation that your organisation finds itself in.

Ms Venning: The Minister is acutely aware of the need for the funding to underpin the business plan and has been very supportive. She said that she understands that this investment is important for the whole of Northern Ireland, and she believes that it is important for the delivery of the Programme for Government ambitions. She said that she is working with her Executive colleagues to try to understand how best she can secure that medium-term financial settlement.

You are absolutely right: from our perspective, the "how" is a political matter. Our ask is around having the freedom to be able to run a large capital programme and a large delivery organisation so that (a) we can be efficient, and (b) we have some certainty of funding. If the regulator says to us, "Here is your six-year price control. This is how much we believe you should deliver, and this is what the tariffs should be", we are able to get on and do that. We have not been in any way prescriptive about the "how" but, rather, about the outcome that needs to be achieved, and we understand that achieving that outcome is a political matter.

The Chairperson (Miss McIlveen): You showed us a map of Northern Ireland and the areas of economic constraints. As constituency representatives, we will all be aware of that in our own areas and the challenges that that presents, and there are moratoriums on development. Should that have been looked at in advance of getting to a critical stage where there were opportunities to speak to planners and councils when planning was being granted for large-scale domestic and commercial developments? Perhaps there should have been greater development contributions into various schemes much earlier.

Ms Venning: It is at a higher level than developers. As we submitted our PC15 business plan, we were very clear with the Committee and with lots of stakeholders that, if that business plan resulted in an investment in waste water at that time of £990 million, it would result in development constraints in economically constrained areas because, quite simply, it was an underinvestment. The need — the total need — at that time was over £2 billion. Six years ago, we said that we could deliver a £1·7 billion programme, but the Government at the time decided that they wanted to invest £990 million and gave us an instruction to design a £990 million programme. If we made a mistake, it was that we designed a £990 million programme. We did that with the caveat that, if we went ahead with it, there would be areas that have waste water constraints. Perhaps we should have said, "No. Here is our programme for what Northern Ireland needs". That is what we have done this time around. We have resisted the invitation to design a programme that is in line with what we have spent to date. We have said that the effects are being felt, and we have designed a programme for what Northern Ireland needs.

The blame does not lie at the door of planners or developers. It was the result of investment not being made in this very large asset base. Therein lies the rub: you have to have the infrastructure to support the economy of Northern Ireland, and the economy of Northern Ireland needs to be able to grow.

The Chairperson (Miss McIlveen): OK. I have another question about pollution and leakage incidents. Historically, that has been a problem for you, How have you addressed that?

Ms Venning: We have a great record on pollution events and have driven them down year-on-year, with a real focus on what the drivers are for that. We are coming to the point at which we know that the driver for an awful lot of pollution events is what people put down their toilets. We have had lots of campaigns, and you have probably seen billboards about the three Ps. You will see it when you visit the works. Wipes, cotton buds or anything else should not go down toilets. When they do, they cause blockages, which cause pollution incidents.

Leakage is a big challenge for us, and we have invested heavily in it. We have made some strides, but, in a water network that is 26,000 kilometres long, you get something called the "natural rate of rise" of leakage. If we did nothing, our leakage rate would go up by 100 million litres per year. We are constantly fighting to tackle leakage in our water network. While our leakage performance in a league table would not be too bad, we have not hit our leakage targets for the past two years, and it remains a big challenge for us. We are looking at all sorts of innovations in leakage, such as using satellite technology to help us to find leaks. We are also investing additional resources in our leakage programme, but it is a big challenge for us.

Mr Boylan: Thank you very much for your presentation. It is a long time ago that we started to talk about the Go-co; it was way back in 2007. We have made some progress, but we have a long way to go.

I want to pick up on a few key points. I know that some parties are in favour of water charges; we are definitely not in favour of them. Were water charges part of your discussions with the Minister on the funding model?

Ms Venning: When we talk about funding, we are not talking about water charging; we are talking about a funded investment programme. Our ask is for a medium-term funding settlement. We do not raise or discuss water charges in any shape or fashion. I simply ask that, if I have a £2 billion investment programme over six years and it runs anywhere between £280 million and £400 million in a year, I know that that money is coming in and that I am allowed to spend it.

Mr Boylan: It is not about whether you are in favour of water charges; it is whether they were part of the discussions. Your presentation states:

Ms Venning: Yes.

Mr Boylan: Right. Obviously, the regulator has a big part to play in all that. I ask the question in that context, because we are saying that we have not invested. Is there a question mark over whether there is a breach of contract or commitment or is it solely within the governance model that we are trying to answer that question?

Mr Larkin: That is a good question, Cathal. Stakeholders have worked really hard since 2007 when Northern Ireland Water was formed to make what we had work. You said that it was a Go-co. Any notion of charging was suspended when the Assembly came back in 2007, and we were reclassified as an NDPB, with all our allocations of money, outside of what we charge businesses, coming from the block grant. The stakeholders have worked tremendously hard to make all of that work, and you guys as a Committee and in your previous incarnation as a Committee, and you, Michelle, as Minister at one point, worked to make what we had as a model work. The stakeholders, including the regulator, have recognised over the past number of years that the model began to creak and is now no longer fit for purpose.

Our role is to put in a business plan that we believe Northern Ireland needs. On 31 January, we put our PC21 six-year business plan in, along with the 25-year strategy. The regulator's role is then to examine our plan in detail, and right now it is ripping through our plan and understanding how we composed it and what it is made up of. We are lifting questions from the regulator and working with it on answering any queries and questions that it has. It has its own team, as well as expertise, examining the plan, and it will give us what is known as a draft determination. In June, it will give us a view on what it thinks of the plan, with maybe some adjustments and tweaks and recommendations. We will respond to that draft determination by September, with a final view of what we think our plan might be. The regulator will set out its final determination on Northern Ireland Water's plan and what Northern Ireland needs to be invested in during the six-year period.

We then have to decide whether we can accept that plan. If we thought that there was something fundamentally wrong with the regulator's determination, we would put our hand up and say that. We would be very open with all the stakeholders, particularly the regulator, in saying that. If its determination was broadly fair and equitable and contained challenge points, and we thought that we should get on with it, at that point, we would have to say yes or no. If we were to say yes, the regulator should expect that plan to be funded. That takes you back to the question of where the funding comes from, and, as Sara said, we have not been sharing discussions about a charging model for domestic customers in Northern Ireland. In fact, domestic customers have been told that there will not be a charge but that they will have a good service.

In the past couple of years, what we are starting to see now, and if it continues, is an accelerating deterioration in some of those services and an accelerating deterioration in being able to connect into those services. That is the real issue. Consumers do not know that. Developers do not know that yet, so if the current model does not work inside the block grant, how can Northern Ireland access capital budget for Northern Ireland Water outside of the block grant? What can it do to enhance that in any way, shape or form so that the business plan — the final determination by the regulator, when it is determined — can be funded and be committed to through the medium term, and Northern Ireland Water can get on with delivering what is necessary for domestic and business customers and all the other organisations, including hospitals and schools, and continue to underpin Northern Ireland's regional economy? That is what is needed.

Mr Boylan: One document referred to lack of flexibility in the funding year. Obviously, New Decade, New Approach is talking about multi-year budgets, and that is clearly needed. Can you expand a bit on that?

Under the Irish model, in 2018, 73% of its funding was subsidised by borrowing money. Are there any discussions around that or do you have any comments on options for borrowing? Clearly, you are subsidised and cannot borrow.

Mr Larkin: On flexibility within year, there are pretty strict guidelines on underspending and overspending within any capital budget in Northern Ireland. Ours is a big multi-year programme and is quite complex. It involves planning and land acquisition and getting schemes under way, completed, tested, commissioned and handed over. We describe what we have to do as trying, every year, to land on the deck of a very small boat as it is bobbing about in the sea. We need to get the number landed just within the tolerance. That can put pressure on a capital programme, and it means that we might have to stop a piece of work in February or March and begin it again only in April. With something that we would ideally like, and are ready, to start, and maybe a contractor is ready to start, and which would be good to get under way, we have to hold it back until we get the next year's budget allocation.

End-year flexibility is recognised in the industry as an issue, and it is exacerbated in Northern Ireland because there are rules that could be examined and tested to see whether further flexibility can be granted within those rules. Things chop and change in a programme. We have a good, strong record of using the money that we get. I think that there has been one year since 2007 where we had to return a small amount of money to the Department of Finance and maybe, ultimately, the Treasury. That is one year out of the 13 years that we have been in existence, so we have a pretty good track record that, when we get money, we get it into the ground, invested and used for the greater good. We want to continue that strong record. If flexibility could be examined around end of year, we would support that. We would lend our support to the understanding and research of that work with the Committee, the Minister, the Department or anyone else.

The second part of your question was about financing. We borrow money off a Treasury loan note that comes through the Department. We are in our second incarnation of that. I think that we have a £600 million loan note and have used about £260 million of it so far, so we have a fair bit of headroom left.

The problem is not so much the loan note. I signed documents last week that drew down a further tranche of £5 million or £10 million of that loan to pay bills in March. The constraining factor is the capital DEL allocation. When the block grant is given, it is resource DEL and capital DEL. That capital DEL has to be shared among all the competing needs in Northern Ireland, so schools, hospitals, roads, infrastructure, potholes, transport and all kinds of things. We get an allocation from that.

The Department works hard to give us a fair allocation from the capital amount in the block grant, but it is not sufficient any more to deliver what is needed. There is a legacy of underinvestment and near-term underinvestment. We have to find a way to increase that capital block grant allocation budget or bring more money into it at the top end so it can be shared out differently at the bottom end.

We make good use of the money. We have efficiency targets to go after with the regulator, and we have met those. We simply need more money to deliver the programme that is in the PC21 plan.

Mr Boylan: You are a big consumer of electricity. What are your renewable energy market targets? That is a big generator of finance.

Ms Venning: We have done a lot of work on that. We constructed a solar farm. We have solar installations at over 20 of our sites. For resilience purposes, our big treatment works have generators so that, if the power goes off, you still have water, and we can still treat your waste. We use those generators to provide grid services, and we generate an income from that.

There is an opportunity to do more to support the grid. We are keen to play our part as part of the public service to support the grid as it moves towards more renewables coming on board. We believe that we will have a big role to play in supporting the grid in that. We can take our load off when renewables need to come on, or we could use battery storage to take wind energy when it is cheap and supply back into the grid when needed.

There are huge opportunities for us as a large power consumer with distributed electricity connections across the grid to play our part in helping Northern Ireland on its journey to net carbon zero. We are very much up for that, and the Minister is supportive.

Mr Hilditch: Thanks for the presentation. Are the urgently required capital works within PC21?

Ms Venning: We have a list of priorities. The thermometer diagram shows that £1 billion is set aside for waste water investment.

Mr Hilditch: Does that include all that urgent stuff at the end of the day?

Ms Venning: Yes, the most urgent stuff will be within that. However, if you look at the map that shows dots turning green, there are still some areas that will require further investment. That is why Ronan said that this will not be fixed within six years. Investment will need to continue at a significant level in the six years until 2027, in the period after that and probably in the period after that again.

Government have a water and waste water company. It is a huge asset base, and it requires huge investment.

Mr Hilditch: The document indicates that there are still two years to go with PC15 and a potential shortfall of £362 million. Is there any news on that? Has any money been forthcoming recently to tidy up or do better for PC15?

Ms Venning: PC15 will end. We are really in the last year of PC15.

Mr Hilditch: There were 70 projects, but only 19 had been completed when this document was written.

Ms Venning: What document are you talking about, sorry?

Mr Hilditch: It is on page 100 of our pack:

However, there were 70 waste-water treatment works.

Ms Venning: That is what I was explaining, when I said that we, initially, could have delivered £1·7 billion-worth of work, but government decided that we should build a plan for £990 million. Then, actually, when we built the plan for £990 million, government said, "We still do not have that money." They said, "Take 10% less in your first year, and we will catch it up by the end year".

Mr Hilditch: And that did not happen.

Ms Venning: That has never happened. You are looking at an under-invested final determination of PC15, which was constrained in the first instance.

The key message goes back to the diagram. If we put in a £2 billion investment programme, it would be very easy for someone to say, "Look, £50 million of a reduction is not much". What scared me about this, when I saw it, was that all those green bars are places with works. Some of them are places where there is development ongoing and about which people are making representations. They are the first 20 places that will get cut, for such a small reduction in a big programme. If you were to fund NI Water only to the level that you have done in this price control, so that the black arrow goes down, you really would not do anything in waste water. That is untenable. We really cannot —.

Mr Hilditch: You are really on the back foot, starting out in PC21.

Ms Venning: We are.

We are working very hard internally. I have set up a team that will work with developers, innovate and try to do all that it can to allow development to continue. However, the long and the short of it is that we will have to build our way out of some of this. It will not all be done by innovation.

Mr Hilditch: That is a bit of a picture of worry, to be honest, as to how we get back on track again.

You indicated that staff numbers have been cut in half over time. Does that include the staff of the contractors? You seem to operate with a large number of contractors in place. How many were your direct staff, and how many belonged to your contractors, when you were talking about having cut the staff in half?

Ms Venning: Some of our services are provided to us by contract. Very few of the services that we provide that used to be in-house are now provided by contract. We did not achieve that reduction in staff by taking the same amount of work and outsourcing it. That reduction in staff was achieved by changes in ways of working and more efficient processes, for the most part.

We have some very large contracts, and we are big supporter of the economy. The University of Ulster did some work that said, for every pound that we invest, Northern Ireland benefits to the tune of at least £2·50. That is an indication of the size of our supply chain. That supply chain will provide us with services. For example, we do not dig up the road — well, sometimes we do — but we do not do that if there is a burst pipe. That is an outsourced service, whereby a contract partner will go out, dig up the road, find that burst pipe and fix it.

Our role, at the water company, is to re-zone, make sure that customers are kept in supply as best we can and facilitate that digging work. We saw that that digging was not our specialism. We are water and waste water providers. We also have contractors to do some work around our mechanical and electrical needs. They may come in and out of our water and waste water sites. Equally, we have a big body of fitters and electricians. So there is a mix. We have some external contracts, and some of those are quite extensive.

Mr Hilditch: I understand. Do you find it difficult to engage tradesmen when there are vacancies? Perhaps the going rate for a man working on his own does not compare to what can be paid by NI Water. I understand that there is a better pension scheme than there used to be. Is it an attractive job, considering your call-out charge on various things? Do you find any difficulty in engaging workers?

Ms Venning: We look at what the employee of the future will want from an employer. There is that balance. We are a very responsible employer, and we have a super pension scheme. I count myself in that. I remember when I first started work, I said, "I do not care about pension". They used to say to me, "You have a great pension scheme", and I used to think, "No, I want the money in my pocket". To be fair, we do hear that. I have to tell you that, now, I am very pleased that I have a good pension scheme.

It is a balance, and we get that tension around the fact that we have to invest in our pension scheme, and it costs quite a bit. We think that our total remuneration package is good, but people will make up their own minds as to whether they would rather have cash in their hand or cash in a pension. That is a challenge for us as we think our way into the future. We will want to make sure that we have pay and reward that attracts the right workforce. It goes back to Cathal's question about when you say that the model is broken. I am constrained and held by a public-sector pay policy, and that does not work for a 24/7 business. It does not work for a 24/7 business because it is slow and I do not get to pay my people on time. I do not get to pay them on their pay anniversary date, which I am very discontented about. I would like to see changes in that regard, because they work 24/7 and deliver a key service.

Mr Hilditch: They do indeed, and fair play to them for that. I turn to the present situation with coronavirus. Some treatment plants are operated by four, five or six men. Say a number of treatment plants were to have someone who is infected and everybody ends up in isolation; what plans have you made for that? Would you be able to cope? Have you considered those issues?

Ms Venning: Very much so.

Mr Hilditch: I suppose that the big freeze was the last incident where things came to a head.

Ms Venning: Because we are an essential service provider and the owner of critical national infrastructure, before coronavirus was ever imagined, there was a requirement for us to have what is known as a pandemic contingency plan. We had that in place, so we had already started thinking about how you run an essential service when there is a pandemic. We have taken that pandemic contingency plan and asked how it relates to the coronavirus. We are looking right across our business at things like what will happen if we lose x% of our workforce. We are looking at your very valid point that water-treatment works are provided by core groups of small numbers of people and at what happens if we lose everyone in a certain area. We are working our way through how we do that, what we can access remotely and who has knowledge of the various plants. So, there is a significant programme. I have formed an incident-management team. I am running it like a major incident, and we are working our way through a series of plans. The key thing is that we had a very good base from which to start, because we have not just started to think about it; we have thought about it in the past.

Ms Anderson: Thank you for the presentation. I found it and the information that we received beforehand very useful. I draw your attention to page 46 — you had it up there — which showed economic constrained areas, serious development restriction and PC21 investment. I am conscious of what you said about the Living with Water programme, and I want to state my support for that and the city deals. I am conscious of the city deal in Derry, which I just throw in because, when I look at this map, I reflect back to the flooding in the Sperrins in recent years. Those were described as the worst floods in living memory. Sheep, cattle and other animals lay dead all over the area. Worse still, people's homes were destroyed. The stories of devastation are still being recounted today. I think of the Sperrins, Glenelly valley and areas around Omagh. I then look at the PC21 investment on that slide and see that Derry has nothing green, Strabane has nothing green, and Omagh has nothing green. I look at Limavady, Coleraine, Ballymena, Antrim, Portadown and Newry — you can see for yourself.

Let us talk about the decisions that are taken to try to deal with the devastation that is caused. You said, for instance, that, if you did not have the Living with Water programme in Belfast, things like the city deal and all the investment that is needed would not be able to go ahead. Compare that to the absolute devastation that has happened in those other areas. What decisions were taken that have led to Derry, Strabane and Omagh, for instance, not having been identified at all for this phase of PC21 investment?

Ms Venning: I can give you some comfort that there will be investment. There is investment in every council area. If we break it down to council areas, Derry and Strabane council area will absolutely have significant investment during the PC21 plan. The fact that a red dot has not turned to green on the map would suggest that, in relation to waste water treatment works and networks, that prioritisation of where the money needs to go first is not done by NI Water in isolation. The Environment Agency has a big part to play here. It sets out a prioritisation matrix, so, in other words, it says that if a works is already at capacity and at risk of polluting the environment, it goes to the top of the list, and the agency works its way down the list. So, we have set out that there is a need for £3·3 billion of investment to do absolutely everything. When you cut that back to £2 billion, that means £1·3 billion of investment cannot be made. However, that decision and the order in which it is set out does not sit with me. Ronan talked about deep stakeholder engagement, so the Utility Regulator, the Department and, fundamentally, the environmental regulator have a big role to play in how investment is prioritised and what is at the top of the list and the order of things on that list. So, we take the money that is given and we deliver it as best we can and as efficiently as we can.

Ms Anderson: I am absolutely aware and conscious of the limitations that you are working under, with the hole in the Executive's Budget of £600 million. The elephant in the room that no one wants to discuss is how there can be another way to fund these through the reunification of this country, as identified in a report by the university in Vancouver. That conversation will come, but, now, people want to try and deal with the cost of partition and the implications that that is having for this island and for our water.

You talked about the NI Environment Agency. We were dealing with it at that stage too, around the Sperrins and the implications for water because of the flooding. Farmers were told that they could move material in their fields without waste authorisation. There was all sorts of confusion about what would happen when that was going outside of the fields, because they could not control it. That is probably something that we need to talk to NI Water about, but you can imagine how people living in those areas —.

Mr Beggs: Madam Chair, is that a Rivers Agency or a waste issue rather than a Northern Ireland Water issue?

Ms Anderson: Excuse me; I did not interrupt you. I will not interrupt you and I would prefer it if you do not interrupt me. The Chair will do that. As I said, when people look at this map, they can see the context of what they were dealing with because sewage was a big factor in the devastation that was caused in that area.

Ms Venning: It probably goes back to climate change and the steps that all of us will take in relation to mitigating and adapting to climate change.

Ms Anderson: That is why you can anticipate those kinds of reactions when people have gone through such devastation and they look at those maps.

The Chair mentioned the cost of the leakage. In your report, you talk about using:

I was surprised at that language, because it then went on to say:

I want to get a sense of what all that means. It refers to satellite imagery, drones and even sniffer dogs. I am conscious that there is sometimes conversation about potential water charges, and people are concerned about that.

To be clear, that will not happen on Sinn Féin's watch — not now, not ever. I know that that is not why you want the freedom that you talked about. I just want to avoid any uncertainty and make sure that people are clear about our party's position on water charges.

You said that the cost of fixing leakages outweighs the benefits. Perhaps you could give us some more information about that.

Ms Venning: Yes. "Sustainable economic level of leakage" is a key term in the water industry. You will hear it across the water industry. It points to the fact that there is a cost to producing water. There is a cost because you put chemicals in, you use electricity, you have staff and you have water treatment works.

Equally, there is a cost to identifying leakages. We have 26,000 kilometres of pipes. A year or two ago, I dealt with some correspondence stating that the pipework in north Belfast dated back to the 1800s. I thought, "Somebody has made a mistake. I am not sending this out to an MLA; I will check it." Actually, the area manager came back and said no, it was true. We have 26,000 kilometres of water pipes, some of which can be over 100 years old. They are not continuous, so they have joints, and they will suffer from leaks. Our challenge is to find leaks and fix them.

Some of those leaks can be very small and very difficult to find. How do we do it? Manpower is a key part of that, and we invest in manpower. I have talked about how we use technology, and we have been working with universities and technology providers to understand how technology can help us. That is where the balance comes in around a sustainable economic level of leakage. There comes a point, when you are faced with 116 areas of Northern Ireland that are economically constrained and you have £2 billion to invest, where you have to balance where you invest your money. Under our strategic water objective in PC21, we have set out that we will achieve the economic level of leakage. That is what we are driving towards, and we are putting all our brain power behind that.

The other promises are these: we have to provide clean and tasty water; the water has to be safe and there has to be enough for all; it has to be there when you need it; and we need greater interconnectivity between zones. Those are the kinds of things that we are investing in on the water side of our business. If we look again at the thermometer on the slide that we showed you, we always prioritise water, and there is almost £340 million of investment going into water.

Ms Anderson: Yes. You do not want to be investing in the way that you are having to do. That is, obviously, absolutely necessary when you look at the money leaking out because of the extent of the leakage from the pipes.

You said that each of us uses 150 litres of water a day. The EU average is 144 litres a day, so I am just mentioning that in the context of leakage. If it can be reduced, that is obviously something that I would support.

It is my understanding that — I would be interested if you could elaborate on it — there is currently a wider capacity study being carried out at Culmore. We were told that that was going to be made available in January 2020, but it is still not available. I want to get a sense of whether the capacity associated with that will, in any way, be decoupled.

I am dealing with a number of issues in my constituency — I am sure that other MLAs are doing the same — where planning applications are being put on hold because of the issue of capacity. I know that, for instance, some developers have been approached to consider waste water plants. I do not know whether other MLAs are hearing the same thing, but I am being told that there is not clarity around the specifications for waste water plants. If NI Water adopts those and maintains them in the time ahead, there may be a little bit of discomfort there because NI Water would prefer, in the first instance, to put in its own waste water plants to its own specifications. The developers are saying that either a contribution needs to be made towards building those waste water plants or that there is clarity between you, us, and the developers on the specifications so that we know what adaptations will be made. I would like to get a sense of when that capacity study will be made available.

Ms Venning: You make a number of good points. It brings that measle map to life. People need to build houses; we recognise that. Developers are problem-solvers, and they are saying, "If you can't take the waste into your works, what if I build one?". I remember coming to the Committee in the past. The issue arises if lots of people start to build waste water infrastructure in an uncontrolled fashion. We know that estates exist where people are not served or are served by waste water infrastructure that is not maintained. Such situations can result in waste water in people's homes.

The people at NI Water, including myself, have worked hard to make us a company that has moved from being 49% less efficient than those in England and Wales to being within 8% of the frontier, and we are going to close that gap by the end of this price control. If we start to allow lots of tiny works all over Northern Ireland, and we have to look after them, we will needs lots more people, and that is not efficient.

Internally, there is a workshop with the Environment Agency coming up shortly, and we have set up a team amongst ourselves to look at how we can liaise with developers to try to find a way through this. You made an interesting point about the developers being willing to make contributions, and we need to ask how best use can be made of their contributions to ensure that they get to build houses and Northern Ireland ends up with a waste water infrastructure that can be looked after in an efficient manner. That is the goal that I am trying to achieve.

You asked about a study, and you mentioned Culmore, which is our waste water treatment works. I am not sure if it is a drainage area plan — I suspect it might be — but drainage area plans are very complex and intricate models that require a very long time to deliver. They are not always the answer. All they do is look at all of the flows in and out of a housing estate, for instance, and say whether the network can take the capacity. We have to get past everybody waiting for a study and get people working together.

In some instances, we have been able to tell developers to take storm water out of the system, which buys some capacity. We have good examples of that, but it will not work where a waste water treatment works is at capacity. Taking the storm water out will not make it any better. That is where you have to invest money.

A lot of this comes back to this: investment is necessary, not for NI Water but for the people of Northern Ireland.

Ms Anderson: The specifications need to be authorised by yourselves, because we cannot have much-needed social housing being put on hold —

Ms Venning: I agree.

Ms Anderson: — particularly when we are dealing with housing inequality across the North. We need to be able to resolve this one way or another. We are forecasting down the road. We know that there is a problem, and we need to find a solution to that problem. Developers are saying that the issue with the waste water plants has been going on for many years, and the questions of whether they can build them, or who will build them, have been asked. The specifications should be there so that people are competent and compliant with that.

Mr Larkin: The other party in that specification conversation is the Environment Agency, because it sets out the requirement and the standards. We have to bring them into the conversation between ourselves and the housing associations.

Ms Anderson: Yes, joined-up government.

The Chairperson (Miss McIlveen): I am conscious of time and the fact that five other members still have to ask questions, and, obviously, we want to do our tour.

Mr Muir: Thank you for all the information you have provided. We are acutely aware of the funding pressures that Northern Ireland Water is experiencing. Obviously, we do not know what Barnett consequentials will come from the Budget, which will be announced very soon. Unfortunately I have to leave before that. The consequentials may help things, but a fundamental conversation has to occur here about how we fund our water and sewerage infrastructure. Putting our heads in the sand over the issue is not going to resolve that. Do you have a view on the benefits of mutualisation and how that could benefit the funding position for Northern Ireland Water?

Mr Larkin: Mutualisation is a model that has been used in Wales: Welsh Water is a mutual company. Any surplus of profit at the end of any year is redistributed back to the customers through the form of a reduction in the next year's bill. It seems to work very well in Wales. Where does the money come from? Where does the debt finance or capital finance come from in a mutualised company? Welsh Water borrows money from the bond markets; it draws that money down, uses it and then repays that and services that debt as it goes.

The other key difference between Welsh Water and Northern Ireland Water is that, in Wales, they have a domestic tariff, which is charged directly to customers, and a non-domestic tariff. In Northern Ireland, we have a non-domestic tariff that is charged, and the decision has been taken not to introduce a domestic charge here.

As Sara said earlier, we do not opine on that; we live with that and seek to provide the service. However, outside of a charge-or-no-charge conversation, we have to find a way to have a step change in the capital funding budget allocation for Northern Ireland Water 12 months from now. We have to find the solution this year — in this 12 months — so that we can begin the PC21 12 months from now. If we do not, we will end up having the same conversations around housing associations, capacity, not being able to build and so on. We will not be able to develop our economy or protect our environment in the way in which all of us in Northern Ireland would want.

The debt finance for a mutual company comes from the markets and is serviced and paid back through the tariff mechanism. In the very immediate term, we need to concentrate on whether we can find other methods to introduce additional capital allocation to Northern Ireland through the current model. That is where we have to be. If we can do that, we can draw the pound-notes money off our loan, as I described, to pay the contractors that build our capital schemes. It is about looking at whether we, working with Treasury and others, can improve and increase the capital budget allocation to Northern Ireland Water.

Mr Muir: If you do not get that — it is not certain — how do you feel about fulfilling your legal obligations around preventing pollution incidents, particularly in the context of directives that have been transposed from the European Union?

Mr Larkin: We are a statutory company that is governed by law: the Companies Act. Our board of directors will take a very strong stance on that legal piece. It will point out that we, as a company, will examine that and make all the stakeholders, including the Committee, the Department and others, aware of the impact on legal obligations. We have a legal obligation not to pollute. We will not take steps to further exacerbate that.

Mr Muir: Is that a concern that you have already raised with the Department and the Minister?

Mr Larkin: That concern has been raised a number of times during the last five or six years.

Ms Venning: Yes.

Mr Larkin: We have had conversations about that. That is a real risk. It is a risk to the environment, customers and people who live in Northern Ireland. Nobody wants to live in a dirty environment. Equally, it is a risk to the company. The board of directors has statutory obligations, one of which is to work within the law. One of those things is not to pollute; we would be breaching the law if we were to, almost, "deliberately", create a situation in which we were polluting.

Mr Muir: It is useful to know that, and that it has been raised with the Department and the Minister. Whatever we do, we need to ensure that we do not pollute our —.

Mr Larkin: The Department may have raised that with the current Minister. We have talked about it with previous Ministers. It is absolutely key. One big difference is that, when we were not Northern Ireland Water, back in 2006, we had crown immunity, so we could not be prosecuted in the same way as we can be today. Today, a company and its board of directors can be prosecuted. That crown immunity was removed when the new model was put in place; it has gone. However, the funding is not there to underpin the things that, legally, we have to do.

The Chairperson (Miss McIlveen): Thank you for your brevity, Mr Muir.

Mr K Buchanan: Ronan, I will rattle through my points because I am conscious of everybody else's time; I will try to keep them relevant to this Committee. Ballycastle waste water treatment plant is operating; you spent £7 million on it. You talked about population equivalent. What capacity do you have for future expansion? Will that waste water treatment plant be satisfactory for 10, 20 or 30 years? How far do you look in advance? What capacity is it running at now?

Ms Venning: I do not have all the specifics of Ballycastle. If you had asked me six or 12 months ago, when we did the opening, I would have had it in my head, but I do not right now. Ballycastle is a bit different from elsewhere because its population almost doubles in the summer. It has been built with the capacity and the ability to treat for that doubling in the summer and to allow for growth. When we build a waste water treatment works, we build it with a degree of headroom; we look at a growth profile over a number of years. In PC21, we looked to Northern Ireland Statistics and Research Agency (NISRA) statistics to try to understand what the growth profile might be. We build in a degree of headroom to try to future-proof it.

Belfast is absolutely now at capacity. Its infrastructure in its current guise was built in the 1980s and has done us since then, so we have got a good 40 years out of it.

Mr K Buchanan: You spent £7 million on your solar panel site. What is your payback on that?

Ms Venning: Our payback on that could be in the region of 10 to 12 years. We have made savings of at least £600,000 in the past year on the site. It is a real success.

Mr Larkin: It is providing renewable energy to the largest water treatment works in Northern Ireland, so the payback is there today. As carbon starts to become a bigger issue and if you roll carbon neutrality into that business case, your payback with carbon as a factor will be significantly enhanced.

Ms Venning: It also depends on what the grid price of electricity becomes.

Mr K Buchanan: Yes, fair enough. You talked about generating. Are you feeding back into the grid through what I used to know as the peak-lopping system for the peak times between 4.00 pm and 7.00 pm?

Ms Venning: We can do. The bigger generator-distributed services are more about running your generator and being there as a support to the grid. That is called spinning reserve. So, it is more grid services that we are providing and getting income on. We do have the capacity to peak-lop if we decide. Moreover, not as an income generator but to protect our sites, when we get a storm warning and we believe that there might be some fluctuation in the power system, we will often put our sites on to generator to make sure that there is no interruption to supply.

Mr K Buchanan: Are you running generators to save money or are you running generators based on NIE, we will call it, or your power supplier, calling you to run generators?

Ms Venning: It is not NIE; it comes from the system operator. If the system operator calls on us to run our generators up, we have an agreement in place, and we will run them up.

Mr K Buchanan: So, you are getting a financial benefit from the system operator calling you.

Ms Venning: Yes, from having generators that we have to have anyway.

Mr K Buchanan: You talked about taking 1,000 homes off the low-pressure register. What percentage of houses, properties and buildings are registered as low pressure?

Mr Larkin: I do not have the number with me, but we can share it with the Committee if that is helpful. The PC21 plan is to take 840 more customers off the low-pressure register to improve the water pressure for 840 households.

Mr K Buchanan: Finally, if you get the money for PC21, what are you planning to increase the capacity by at this site?

Ms Venning: It has not been completely specified. If you recall, I said that modelling is happening at the minute, and that modelling is looking at all the waste that goes into Belfast Lough and at what impact NI Water is having on the water quality in Belfast Lough. On the back of that, we design the treatment process that we have to put in place. I can come back to you with our outline thinking on the exact population equivalent (PE) that we think we are going to design to. However, it will be a significant increase in capacity because, at the end of the day, this is our key site for Belfast, so we have to be able to take all the growth associated with Belfast and its catchments.

Mr K Buchanan: Finally, you said that in Northern Ireland we use 150 litres per person per day, while the figure for the UK is 130 litres. How much money do you spend, approximately, to drive that message? How are you driving that message, and is it getting through?

Ms Venning: Our head of communications is here, and I have to say that he would tell me that we spend a very modest amount on that. We have a very modest of money to spend on PR, and we certainly have a very limited amount to spend on advertising-type campaigns. What we do have is an education bus. It is a double-decker bus with two educators that we send round all the schools in Northern Ireland. Any school can get itself on the waiting list for a visit, and we do a big education campaign that way. As we have prepared our PC21 business plan, I genuinely think, from an environmental perspective, that we need to drive down our water usage not just for the sake of driving down our water usage but because it requires electricity and chemicals and all sorts of things to treat water.

From a carbon perspective, we need to drive down our water usage. You will see that coming from us. We recognise our role in making sure that people understand that every time you brush your teeth and leave the tap running, that is the equivalent to whatever it is in carbon or in trees. We have great ambition in our role for the environment. There will be a step change in our role as communicators. Certainly, in this constrained PC15 business, when the business plan was cut back, the money for communications was significantly reduced. We have been doing a lot with what we have, but you will see more.

Ms Kimmins: Thank you for the presentation. A lot of what I was going to ask has been covered. I was going to ask about leakage, for example.

There are just a couple of small points. NI Water indicated that we need in excess of £500 million to address the waste-water capacity issues in PC21. I am conscious that you mentioned the backlog from PC15 and how that is where we are starting off.

Is that for everywhere except Belfast? In the New Decade, New Approach deal, that commitment is very much focused on Belfast. Is that for everywhere else? I am quite pleased to see that my constituency of Newry is included, because it is one that I have been harping on about for a number of weeks now. [Laughter.]

Is that what we are talking about?

Mr Larkin: In answer to your question, look at the graphic and you will see that billion pounds of:

That large dark block is of just over £1 billion. Some £450 million to £500 million of that is phase 1 of Living With Water in Belfast; therefore, the rest of it is Province-wide, it is right across Northern Ireland. It will include Derry, which Martina mentioned, pieces of Ballygowan, Ards north and Newry, and so forth, right across the Province. There really is not an area that we will not be investing in, so bear with us when you see the roadworks signage going up. Remember to tell your constituents that, "That is a good news story", because it means that we are improving the infrastructure.

Ms Kimmins: That is great. Thank you, Ronan. The other thing that I want to ask about is the cost of clearing blockages from sewers. We are all aware of the campaign, and it is a very good one. Have you seen any improvement in blockages since the campaign was launched? Are people being a wee bit more responsible?

Ms Venning: Do you know what we do? Here is the thing. Anything that you can do to help is appreciated. When we target it, we see a lift. When we go into an area and work with community groups, we leaflet and talk to people in fast-food outlets, householders and mother-and-toddler groups, we see an improvement. However, eight weeks after we leave, old habits start to come back.

Ms Kimmins: Complacency?

Ms Venning: What we have to achieve is behavioural shift and a change in mindset. We recognise that that may be a longer-term burn. When you get a constituent coming in with a blockage issue, that is what is happening. We have been very heartened by the response and support that we get. Quite often, we answer the phone and say, "Yes, we have been out and cleaned this up, but we found the root cause, and it is fats, oils, greases or inappropriate materials in the sewers". It makes a difference, but it is nearly having to be constant, and you cannot keep up with that.

Ms Kimmins: Thank you.

The Chairperson (Miss McIlveen): Do you want to ask something on that point, Mr Hilditch?

Mr Hilditch: No, sorry.

Mrs D Kelly: I am sorry that I was late. I put my satnav on and it took me to the other Duncrue Street. [Laughter.]

However, I read the report, and it is nice to see you again. I have a couple of smaller questions. I am conscious that there is a lot of discussion about water charges. The fact is that people pay a contribution in their rates towards water charges, but it is not distinctly captured when you get your household bills.

Ms Venning: I remember a household rates bill that had a little pie chart that showed what percentage went to each Department. On the pie chart that I got, it said that 1% went to infrastructure, and infrastructure covered roads, transport and water. One per cent of £1,000 rates bill is £10.

When we work out how much it costs to provide water, and we do a domestic cost, it is just over £400, so there is less than a quarter of that cost in the rates.

Mrs D Kelly: When I was a councillor, people often wondered what their rates bought. The council then included a pie chart or graphic in its newsletter, stating, "Well, this is what your rates buy". That helps psychologically. It underscores the point, perhaps from an Executive point of view, of just how little goes to infrastructure.

A previous Infrastructure Minister installed water meters outside households. That was in 2007 or 2008.

Mr Boylan: We have addressed this issue already.

Mrs D Kelly: There is no harm in repeating it; it is a good story.

You made a lot of comparisons. People buy bottled water in supermarkets. I am not advocating water charges, by the way, but I am interested in responsible water use and climate change challenges. I have always been the type to turn the tap off, but I know that other family members do not. It is about changing behaviours. Whilst your education bit is good, it has, as you said, very limited impact.

Ms Venning: When we work out our tariffs, government is paying us £420 per year on behalf of every domestic customer. That is just over £1 per day. If you were in an airport and bought a litre of water, it would cost you probably £2.

Mrs D Kelly: One pound eighty-five pence.

Ms Venning: Well, £2 for one litre of water. For just over £1 per day we are providing 150 litres of water per person and all the waste removal and treatment. You can see what good value for money it is to have a water company.

Mrs D Kelly: Yes, and in recent studies, the water coming out of our taps was purer than bottled water.

Ms Venning: That is right.

Mrs D Kelly: The responsibility for you as an organisation, and for us as public representatives, is to get those messages out more clearly.

You touched on offenders and stuff going down the loo, but there are never any fines. If you mix your recycling, for example, and put the wrong stuff in the bins, some councils seal them and refuse to lift them. Sometimes, people have to be incentivised with a stick and a carrot.

Ms Venning: If you think about traders and fats, oils and greases, we work with council environmental health officers where we have persistent problems. We spent a lot of money on the Dublin Road clearing a fatberg. A lot of work was done with the traders in that area, and they could see, "Oh, my goodness, there's a dirty big tanker at the end of the road". We showed camera images of what was found down there.

It is difficult insofar as you cannot tell which house it came from. It does not come with a label.

Mrs D Kelly: I know. That is it.

Ms Venning: That is why we work across houses and enlist the help of MLAs when they are talking to people. We do quite a bit in that regard, meeting community groups, mother-and-toddler groups and schools.

Yes, you are absolutely right: we do not have any sanction. It is difficult to prove that you were the person who flushed down the toilet the wipe that caused the blockage. I suppose it is more about good citizenship.

Mrs D Kelly: Well, it is. There are opportunities to teach citizenship. It is usually the older members of the household who are the culprits. I know that many other questions have been asked, particularly on regional disparities. However, I will leave it at that, because others want to get in.

Mr Beggs: You indicated that not all the PC15 targets had been met and that all you were hoping to do had not been delivered because the infrastructure investment did not come. Would I be right in saying that any PC21 discussion between you and the Utility Regulator cannot be finalised in any meaningful way without a clear direction as to what infrastructure funding is coming during that period?

Mr Larkin: The regulator is independent. Our shareholder is the Department for Infrastructure. Imagine there was another shareholder listed on the Stock Exchange or a fund or bank. We put our plan in place, and the regulator is going through the process of giving a final determination on it in December.

In other parts of the UK, where the shareholder is not necessarily government — Welsh Water, for example — when the regulator gives their view on the plan and says, "There's your final determination. That's what we think you should deliver. That's what the costs should be. That's what the charge to customers should be" — in our case, for non-domestics — "and those are your output targets", the regulator in the UK does not, at that point, take into account that that shareholder, bank or fund might be having a tricky time.

It says, "You are the licence holder, and you have an obligation under your licence to ensure that the company that is licensed is funded properly". The regulator in the UK asks to see your funding plan as part of the process. That is really the role of an independent regulator.

Mr Beggs: Does that happen here?

Mr Larkin: We think that it is a dimension that could be amplified a bit more here; more needs to be done on it. The regulator's core job is to examine our plan and determine on it, but, alongside that, the regulator in the UK, and the company, has an obligation to see, first, whether the plan and determination can be financed, and, secondly, if it can be financed, whether there are financiers willing to invest in it. The regulator wants to know how that financing plan looks and whether it is coherent and sustainable.

Mr Beggs: It seems obvious that it needs to be part of the plan.

Mr Larkin: It needs to be part of the conversation. Earlier, we made the point about the timeline and timetable. We are almost in April 2020, and PC21 goes live in April 2021. You do not start that conversation in March 2021; you start that conversation today. The conversation about funding at the Committee has to happen now. If you wait until 2021, when the plan is ready to go, you will miss entirely the first, and possibly the second, year of the plan. Northern Ireland will be further back in delivering clean, safe drinking water and improved drainage infrastructure right across the region.

Mr Beggs: You said that the system in Belfast is operating at capacity. However, I have seen in the slides that it is actually operating at 140%, which is way over capacity.

Ms Venning: Yes.

Mr Beggs: If it is over capacity, does that mean that sewage is not being treated as it should be?

Ms Venning: It is. As I said, it is a testament to the great Victorian engineers who built the sewers in London; they were built and some of them endured. The system is working at 140% of capacity; however, it continues to meet standards. A waste-water treatment works is judged on the effluent that it puts out. So far, the team that works here has managed to keep the plant running and has met the consent standards for effluent. They tell us that the system is right at the limit of what it can take. Part of it has aerator lanes, where they put oxygen in and bugs eat the waste matter. All lanes are now operating. It used to be, when it was at design, that there might have been four lanes working. Then, we moved to five lanes. Now, all six lanes are working. You cannot really take a lane out to change the heads that bubble the oxygen up, because that is when you would start to fail consents.

Mr Beggs: So, at some point, you will have a maintenance problem.

Ms Venning: Exactly.

Mr Larkin: We could have it today.

Ms Venning: We have that problem. We have identified that we need immediate investment of £10 million to build another aeration lane to enable a bit of flexibility in the works. That is an early start to that big programme; we have already identified that. We know what we want to do, and that is why next year's funding is so important. There needs to be money next year to start construction.

Mr Beggs: You indicated originally that it was built for a capacity of 290,000 but that it is operating at 400,000 equivalent households.

Ms Venning: Yes.

Mr Beggs: Belfast has not grown to that extent during that period. Where is the extra material coming from? What has happened? What has changed?

Ms Venning: There are two sides to it. It might not all be from people. One factory or industrial site could produce a large amount: one industrial site could be 1,000, 2,000 or 3,000 PE. That is one customer. That is a large population equivalent, depending on the strength of the effluent that they put out.

The second thing that the team has been doing is fixing sewers, so we have been collecting a lot more waste along the way. We have closed off discharge that might otherwise have gone into watercourses but which is now being collected and taken to the treatment works. It is a combination of both those things.

Mr Beggs: One of the problems that you mentioned related to your outfalls, which no longer go out far enough.

Ms Venning: Yes.

Mr Beggs: You indicated that part of the problem was land capture —

Ms Venning: Yes.

Mr Beggs: — which has benefited the Belfast Harbour Commissioners. Why do Belfast Harbour Commissioners not pay for the difficulty that they have caused for Belfast sewerage? After all, they have benefited financially from the additional land and created a problem.

Mr Larkin: There is a bigger question, of which the Belfast Harbour Commissioners are a part: "Why is that the legacy?" Over the last 40 or 50 years, the new motorway, the railways, Jordanstown and all those places around the lough were built, including the redeveloped land in the Titanic Quarter. You asked where the extra population equivalent load has come from, and, if you think about it, Titanic Belfast, the Waterfront Hall, the Hilton hotel have all gone up over the last 20 or 30 years or even before that. Rather than singling out one group, such as the Belfast Harbour Commissioners, we must accept that the legacy exists and ask how we deal with it today and make it equitable and fair for everyone.

Mr Beggs: I am looking at the proposed extension. Why does the developer who will benefit not contribute to solving the problem that they are creating?

Ms Venning: It is not the developer who benefits; it is the people of Belfast. The extension enables development to happen in any part of Belfast, so it does not facilitate —

Mr Beggs: I am talking about the proposed extension to land.

Ms Venning: It is not for me to answer for the Belfast Harbour Commissioners, but I am sure that they would say that they are bringing economic benefit for the whole of Northern Ireland. Getting more cruise ships helps everyone, not just the Belfast Harbour Commissioners.

Mr Beggs: One final question. When the Assembly came back in 2007, 37% of water was leaking, which was way above the then economic leakage level. What is deemed to be the economic leakage level, and what is it at present?

Ms Venning: The economic level of leakage is measured in megalitres per day, and it is currently 150. On the percentage of water leakage, we are in the lower twenties.

Mr Beggs: What is your economic level of leakage?

Ms Venning: It is 150 million litres of water per day. As to what that is as a percentage, it depends on how much water you are putting in.

Mr Beggs: Are we at it or not?

Ms Venning: No, we are definitely not.

Mr Beggs: So, it is economically efficient to invest in identifying further leaks?

Mr Larkin: Yes.

Ms Venning: Yes.

Mr Beggs: OK.

Mr Larkin: That is exactly right; it requires further investment. In England and Wales, they are going a whole stage further because they are recognising the carbon agenda more. Companies in England and Wales are being targeted and incentivised to invest more money below the economic level.

Mr Beggs: You are saying that if you had the freedom to make a business decision, it would be to invest in identifying more leaks because you will save money and get a return on your investment.

Mr Larkin: Yes.

Ms Venning: Yes.

Mr Larkin: The constraining factor for us will always be affordability for customers. We measure things by tariffs — both domestic and non-domestic — which are barometers for what a customer should reasonably be paying, whether it is a form of subsidy or a direct bill to a non-domestic customer. That is the constraining factor.

The Chairperson (Miss McIlveen): Two short questions; one from Mr Boylan and one from Mr Hilditch.

Mr Boylan: Thanks for letting me in again, Chair. On a point that my colleague raised, the spec tanks — for want of a better term — or specific tanks that developers are putting in beside 20 or 30 houses. I do not think that we should be adopting 100 of them over the next 20 years. Is there an opportunity when you are talking to the NIEA to discuss a temporary solution? That may be about the specification. I do not know what the solution is, but we need to look for some temporary solutions.

Mr Larkin: Ultimately, a temporary solution has to work for the people who will live in a housing development. As Sara said, sometimes tanks did not work and people were having issues in the back gardens and sometimes in their homes. Whatever solution is put in place and is specified by ourselves, the developer, and the Environment Agency, it has to work. It has to have a design life: it has to work for more than a year after the houses are built, because you do not know when it will be replaced with further investment in the wider network and waste-water works. So, it has to be a robust solution that can be sustained and maintained. If we have to adopt it at some point, we have to be able to stand over its future functionality.

Mr Boylan: I asked it in that respect, because then the developer contribution is not working properly. Even if they put in what you call a "robust" system and you adopt it, in 15 years' time NIW could be putting in an overall system to address all the issues. That is a conversation that we should be having.

Ms Venning: Yes, and that is why there is a process. The current process has article 161s, where you try to design something with the developer that you can later adopt. In the current hiatus, where we are between knowing what our investment will be and knowing that we have constraints, I have set up a task force in NI Water. That is what I am calling it. It is a task force whose raison d'être is to create a number of task-and-finish workstreams. One of them is to find out how we can liaise with developers to come up with solutions that enable them to build houses while enabling us to have confidence in the infrastructure. I think that that is some of what you are talking about.

Mr Boylan: Yes. Thank you.

Mr Hilditch: I have a question about landownership. You said that NI Water is the second biggest landowner in Northern Ireland.

Ms Venning: Yes.

Mr Hilditch: It was just about how it could work. You have some of the most beautiful and scenic sites in Northern Ireland. From a tourism point of view, or physical activities, is there no diversity that the company or Department could look at to bring people together to make money from the situation? People look at Lake Windermere and places across the water and see boats there, but we cannot put motorised boats in, and all that sort of thing. I know that different agencies are involved. Is it something that you would look at?

Ms Venning: The jewel in our crown at the moment, under the current regime and auspices, is Silent Valley. Potentially, we will get a visit to the Silent Valley Mountain Park. It is a tourist facility that people can visit. We are not on the lake, but we have great walks, a café, a bus that runs up to the upper reservoir. We run fun days there, a couple of days a year when we open it up and have jazz festivals. In answer to your question, yes, we have worked with the Tourist Board, the Mourne Heritage Trust and the local council to secure whatever grant funding we could to improve the tourist amenities. We have established paths, built seats and picnic areas and that sort of thing.

Mr Hilditch: Certain areas are afflicted by antisocial behaviour, because the right people are not coming in.

Ms Venning: Yes.

Mr Hilditch: How would you improve finances for those areas?

Ms Venning: The key thing here is that a company that is adequately funded, has security of funding and knows that it is doing the right thing for its customers in its core business — water and waste water — could absolutely focus a wee bit more of its time and expertise on value added.

We have to get water and waste water right. We have a visitor and education centre in the Silent Valley, but we do not have plans for further sites. Some of our reservoirs, like Woodburn, you can walk around. They are beautiful, and I commend them to you. We have a recreational policy, so we work with people on marathons and various events, as well as with the community. However, you are right: it is a huge opportunity untapped, and there is lots more potential there.

Mr Hilditch: Thank you.

The Chairperson (Miss McIlveen): Finally, we have discussed this in the past, but can you just talk to us about what you do with your waste and residue from the processes?

Ms Venning: Yes. When you do the tour, you will find that we have two sides: clean water and waste water. The waste-water sludge, as we call it, is highly calorific, so it is a fantastic energy resource. We are moving towards a circular economy, which is what happens with sludge at the minute. We are in a contractual arrangement whereby all the sludge in Northern Ireland comes to Belfast. It is de-watered and goes into an incineration process. That is how it is disposed of; it gets burnt. We are working with the contractor who has that large contract. A proportion of it generates electricity, but there is great potential for even more energy to be generated from sludge. That is something that we have an ambition to achieve. That is what happens on the waste-water side.

On the clean water side, there is no calorific value to the sludge, so it cannot be used as an energy source. It is disposed of in landfill. We have been working with partners in Queen's to see what other uses it can be put to, and there are other uses that we are taking forward through an innovation programme to see how we can help with that. However, it gets disposed of in landfill at the minute.

The Chairperson (Miss McIlveen): Thank you very much. No one else has indicated that they want to ask questions. Thank you for your presentation and the time that you have taken to answer questions.

Ms Venning: Thank you very much for your questions.