Official Report: Minutes of Evidence

The Chairperson (Mrs Erskine): We welcome to the Committee Ms Colette Kane, director of the Northern Ireland Audit Office; and Mr Michael Heery, audit manager at the Northern Ireland Audit Office. You are welcome to the Committee today. We appreciate your time. Thank you for coming.

Mr Boylan: I declare an interest, Chair. I am a member of the Public Accounts Committee (PAC).

The Chairperson (Mrs Erskine): Perfect. No problem.

Mr Stewart: I was a member of the PAC when the report was published.

The Chairperson (Mrs Erskine): Perfect. Thank you.

As usual, we have the report, and I am sure that members went through it when it was first published. We have it in our packs today. If you do not mind, I will let you make a brief opening statement of five minutes, and I will then move to members' questions. Thank you.

Ms Colette Kane (Northern Ireland Audit Office): No problem. Thank you. I will start and then pass over to Michael.

Thank you very much for the invitation. We are aware that the subject remains one of constant focus for the Committee, the wider Executive and the public. We published the report in March 2024, just over a year ago. I must point out that the statistics in the report are somewhat dated at this point, but we believe that the overall key issues are the same.

The report is not the usual form of value-for-money report that we normally produce; rather, it is a landscape review of how investment in water infrastructure has been managed over the last two decades. The report is a factual account of how water, sewerage and waste water infrastructure investment is managed in the current policy context.

There are a couple of points that I want to highlight to the Committee in respect of the context of our report. First, the legislation that establishes the role of the Comptroller and Auditor General (C&AG) does not permit her to question the policy objectives of any Department. Therefore, the report has looked at the impact of the policy decisions that have been made. Michael will highlight those for you. Secondly, I advise the Committee that we are not the auditors of NI Water, but we are, obviously, the statutory auditors of the Department.

Members will note that, whilst we do not raise any formal recommendations in the report, we have identified two key matters. First, in the report and in other reports that our office has produced, we recognise the need for better coordination and management of infrastructure investment. Members may be aware of other reports that touch on that area: for example, the 'Major Capital Projects' report. Therefore, we think that it is critical that all relevant stakeholders work towards establishing arrangements to make that more effective.

Secondly and perhaps more specifically to this report, we call for the Department and NI Water to complete a comprehensive review of the alternative funding and governance arrangements led by suitably qualified experts. That call comes on the basis of the report's findings, which clearly show a system under significant strain due to inadequate investment in water infrastructure over a number of years.

I ask Michael to highlight key parts of the report.

Mr Michael Heery (Northern Ireland Audit Office): Thank you. I intend to draw the Committee's attention to three particular areas of the report.

The first area is the issues that the report identifies as originating and arising from the establishment of NI Water and which created legacy problems since then. In the report, we describe the process by which the proposal to establish NI Water as a company was formed and the process by which the original proposals, made by the direct rule Administration, were amended. We also draw attention to the work of the Independent Water Review Panel and its recommendations about how water infrastructure should be self-financing and the risks that it identified to the long-term sustainability of the arrangements that were being set up in 2007. That key issue relates to the subsidy paid on behalf of domestic users, which creates a certain legal status for NI Water and has had implications through the years since.

The second key area of the report is its overview of the price control (PC) and the development and maturation of the price control process in Northern Ireland since 2007. The report highlights the fact that there were three price controls whereby, essentially, the process got up and running fully. There were initially preparatory price controls. Then price control 15 (PC15) was the first major price control that covered a six-year period and set outputs for NI Water that were to be delivered within a specific cost envelope. When we looked at PC21, we highlighted the significant increase in ambition evident in it compared with the previous price control. Figure 6 provides a neat illustration of the scale of the ambition of the Department, NI Water and the Utility Regulator to ramp up the delivery of the water infrastructure. That graphic also highlights the huge challenge over the long term for all decision makers in trying to address capacity constraints.

The third area that we want to draw attention to is that the report highlights concerns about the achievability of PC21 over its lifespan and then delivering the sustained level of high investment needed over the following decade. We reported in the third year of PC21 in 2024. In the report, we commend the Department for being able to fund the year-on-year increases evident in the first two years, but we highlighted the pressures that had emerged in year 3, and we understand that those pressures have continued.

Finally, we try to draw out some of the issues that, I am sure, the Committee is well aware of: development, environmental risk and the economic pressures that arise from the failure to address capacity restraints.

That is it, given that there is not a lot of time.

The Chairperson (Mrs Erskine): That is great. Thank you very much. We appreciate it. I am sure that there will be questions that will bring out some elements of the report.

I noted that you say in your report that you:

How frustrated are you that that has not come to be? Who needs to be involved in leading that review? Who are the suitably qualified experts that, you think, could help the Department and NI Water in looking at that?

Ms Kane: In the report, we highlight the six reviews that have taken place. We did not look at those in any real detail. Certainly, we did not quality-review those. We looked at the outcome of those six reviews, and we did not see any tangible outcome from them. Most of those reviews were internally-led by the Department. Looking back to the review that Michael talked about at the outset, the 2007 Independent Water Review Panel, we feel that that review probably set the standard and that some of the conclusions that it came up with are extant today. That review was very much led by academics and by experts in the field around consumers.

We have no real set view about who should be involved. We feel that there needs to be a bit of scoping around that and that it is not for us to do that. We certainly think that people who are well versed in the types of models, particularly funding and governance models, that might have some workable solutions are best placed to be part of it. Could it possibly need to have some civil engineers as well? It is a very complex area, potentially. Overall, we do not have set views but feel that there needs to be the expertise that was partially reflected in the 2007 independent review that was carried out.

The Chairperson (Mrs Erskine): Thank you. You are coming to the Committee at a time when a forensic accountant has been appointed, and the Minister has made an announcement about that. I am interested in your assessment of that in relation to the report that you conducted. Does that point to better governance of water infrastructure, including how it is being funded and how money is being spent?

Ms Kane: As I said at the outset, Chair, we are not the auditors of NI Water, so we do not have an in-depth knowledge of its spending or any of that. We do not carry out those audits. We have used the figures that have been provided to us in the report. I really cannot comment any further than that, to be honest.

The Chairperson (Mrs Erskine): OK.

I noted the efficiency gap. In 2008, the efficiency gap was 48%, compared with 5·7% reported in 2018-19. There has been quite a reduction in the efficiency gap. It would be interesting to see whether that has changed since that time. What efficiencies or inefficiencies were identified?

Mr Heery: The efficiency gap is, essentially, a composite measure of a range of performance indicators applied to NI Water and compared with water companies in England and Wales. There are significant geographical differences, as I understand it, in Northern Ireland that result in its not being a direct like-for-like comparison. It has to be adjusted. The types of measures that go into it are in appendix 1 to the report. The overarching figure in the graph is the high-level gap between the efficiency that is being achieved by NI Water versus comparable companies. It is not a single measure of just one thing. The types of things that are included are throughput of pipes and leakage rates. All those things add up, ultimately, to the overall efficiency of the company.

The Chairperson (Mrs Erskine): It is interesting in the context of that efficiency gap being closed, given the funding, and it still would have been quite stretched funding at that time. Did the importance of closing that efficiency gap come up from an NI Water point of view?

Mr Heery: That is one of the key objectives of the regulatory regime that was introduced then. The role of the Utility Regulator is about pushing NI Water to deliver efficiencies in its output and to use the resource that it is given to deliver against the price controls efficiently. The Independent Water Review Panel and every other stakeholder that we engaged with spoke about the legacy of underinvestment in the decades preceding the establishment of NI Water. The extent of the efficiency gap that we saw in the data made sense in that context. What you have is the establishment of a new regime in which the Utility Regulator plays a role in driving NI Water, as a new company, to improve how it is performing. That made sense within the framework that was created.

The Chairperson (Mrs Erskine): How long did it take you to collate the report? What approach was taken by the Audit Office, and did you encounter any difficulties during the process? I am thinking of the engagement that happens between NI Water and the Department. Was it quite clear that a lot of engagement took place on all aspects of how NI Water conducts its business?

Ms Kane: I will outline the way in which we conduct our reports. We carry out the fieldwork, as we call it, with the different organisations and gather the information. We then go through what is called a clearance process. All our reports are cleared. What usually happens — it happened in this case — is that the Department takes the lead on clearance. The Department took the lead on clearance for this report and collated the NI Water and Utility Regulator responses. It was like a tripartite clearance, if you like, in this case. We received one response to that. The clearance process was slightly elongated because the Department of Finance is also involved in this, and it had some questions about whether we were getting into policy areas. However, we got through that and were content in the end.

The Chairperson (Mrs Erskine): Did the Department apply any caveats or change any elements of the report? The Department has sight of that and is able to provide final clearance. Was the Department pushing to change anything? Funding is a very important element for NI Water. Did the Department indicate anything that it was not happy about in the report?

Ms Kane: No. We got to an agreeable position. In our clearance process, there is always a bit of toing and froing, but there was nothing that the Department was particularly concerned with. We had a number of meetings with the Department. We also try to alert the Department when we come up with our findings along the way. As I said at the outset, this is a very factual report, so we did not expect there to be a huge amount coming out of it.

Mr Stewart: Colette and Michael, thank you for coming along. It is a very comprehensive report; we expect nothing less from the Northern Ireland Audit Office. Thank you so much for the work.

The Chair has covered some of the pretty important points. I do not want to drag you down, because I know that you will not go into the policy framework or anything to do with that, but there has been much discussion about the potential for reform of the framework and the borrowing powers associated with Northern Ireland Water, however that is looked at. If it were to be the case, would an Office for National Statistics (ONS) reclassification be required in order for amendments to both the framework and the borrowing powers of Northern Ireland Water or any similar organisation?

Ms Kane: There is a slight misconception, John, about the borrowing powers of NI Water, because NI Water does have borrowing powers through the Department.

Mr Stewart: Yes, it is just to broaden them, though.

Ms Kane: Obviously, NI Water cannot afford to borrow a huge amount, because it scores against the departmental expenditure limit (DEL) for the Department, as well as being able to service that debt, let us say. It is also able, in its current format, to borrow in capital markets, but, again, that scores against DEL, so it is counter-intuitive. As we understand it, in order for it to make the most of its borrowing powers — there are a number of models out there — the ONS's classification of it as a non-departmental public body (NDPB) would have to change.

Mr Stewart: It was suggested that mutualisation, for example, was not required, but that billing was. However, Northern Ireland ratepayers already pay for Northern Ireland Water through their rates bill. Did the report look, or has the NI Audit Office ever looked, at what a line on a rates bill might look like in terms of a costing or at how practical it would be to put a costing in a rates bill that is ring-fenced for Northern Ireland Water specifically, given that the ratepayers of Northern Ireland are already paying for the service?

Ms Kane: We did not look at that specifically, but the Independent Water Review Panel — I have looked at its report again over the past couple of days — recommended that an additional amount be put into rates bills. I understand that the Fiscal Council is preparing a report that will go into a bit more detail on the different options. I do not know whether it goes right down to the level of detail that you talk about, but it will certainly include the different options around mutualisation and privatisation. Those sorts of options are within its remit. Obviously, it can comment more on policy than we can.

Mr Stewart: Is that Fiscal Council report due in the next quarter — in June or July, potentially?

Ms Kane: Yes, I understand that it is due before June. That is what I have been told.

Mr Stewart: OK. That will be good to know.

The executive summary states:

At what point does the system start to break down? Investment is being thrown at where it is statutorily obligated. Northern Ireland Water has a colossal logistical and infrastructural base that is not being maintained to the level that it needs to be maintained to. That leads to a more costly maintenance programme every year, because the maintenance is not happening. Eventually, the system will break down. The money that is not currently there will not be there next year or the year after, and the cost will be even higher. What is the Northern Ireland Audit Office's assessment of the long-term viability of the system? When will it get to a point at which it is unmanageable?

Ms Kane: We did not look at that specifically, but our understanding of the PC regime is that there are three priorities: the first is water quality, the second is the maintenance of existing assets, and the third is new investment. If there is some money, that is the priority rating.

Mr Heery: I think that what you are referring to is, essentially, a compounding inefficiency.

Mr Stewart: Exactly.

Mr Heery: In figure 6 in the report, the orange lines represent the massive investment that has to be delivered in PC21. What is not delivered will pass into the blue bars over the next decade, push those up and make life harder for all decision makers involved.

Figure 7 shows that, in PC21, even in an environment of totally unconstrained resourcing, there is only so much capacity in construction markets and civil society to tolerate works on the scale needed. I think that £1 billion of what was accepted as being needed could not be delivered anyway in PC21. The compounding effect is that future PCs will be hit with an ever-increasing amount that cannot be delivered, even if you were to secure additional finances that would, theoretically, allow delivery.

Mr Stewart: That is my point, Michael, and you make it really well: if we think that it is bad now, we ain't seen nothing yet, given what it will look like in 10 years' time without that investment. Things are pretty bad now, but, by underinvesting year after year, the cost of just standing still is so much more significant, never mind the development that is required on top of that. Until we realise that, we have a serious problem.

Thank you. That was really useful.

The Chairperson (Mrs Erskine): We have asked the Fiscal Council to come to the Committee. It will take us through its report once it has been published. That will be useful as well.

Mr McReynolds: Thank you for coming in, guys. My first question relates to the elusive internal reports, which I have raised a number of times at Committee. You have had a chance to look at them. Are you able to tell us anything about them? The Minister has told us multiple times that the funding mechanism for Northern Ireland Water has been looked at time and time again, but it feels like the Department proposes internal reports, someone looks at them, marks them and says, "Great job", and the Department moves on and gets another one done a few years later. No one can check its homework. Who prepared the report? What were their findings? Did they come to a positive conclusion on the funding mechanisms?

Ms Kane: We outlined them briefly in the report.

Mr McReynolds: I saw that.

Ms Kane: To be honest, beyond that, we did not quality review them, because we were really looking to see whether there was an outcome. It was about the bottom line and any change that had been made. You can see that, in the report, we said that there had been no substantial or real change to the funding or governance mechanisms.

Our understanding of the reports is as you described them: they are mostly internally generated. Some of them would have been done at the request of a Minister, if a Minister was in place at the time. Beyond that, to be honest, we cannot comment any further. Is that fair enough?

Mr Heery: Yes, the issue is that classification of the organisation comes down to degrees of control and financing sources. Ultimately, there is so much flexibility in current arrangements that reviews have been conducted within that framework.

Mr McReynolds: Has there been any further engagement with the Department to discuss steps that it has taken since the report was published?

Ms Kane: We talked about the suggestions — they were not recommendations — that we made. We specifically asked about the one on completing a comprehensive review, and I will read you what were told:

That is as much as we have been told. I know that it has also been discussed in the House a number of times, and we know that no review has happened, but, beyond that, that is all the discussion that we have had.

Mr McReynolds: I asked that because I am working on a private Member's Bill that is loosely connected to a Northern Ireland Public Services Ombudsman (NIPSO) report on tree protection and tree preservation orders in Northern Ireland. About six months or a year after the NIPSO report was published, nothing really had changed. That was probably the bleakest meeting with officials that I have ever had in my life, because nothing had changed. We are now a year or so further on again, and nothing has changed. My fear with this report, which is fantastic, is that not that much will come from it. Is that your assessment, or are conversations still taking place with the Department on the report?

Ms Kane: The difficulty, and this is why we did not make a recommendation, was that we were very aware of our policy constraints. This very much plays into the policy space and whether the Minister wishes there to be a review that will look at those areas. We had to be very careful about how far we could push things.

Mr McReynolds: I will touch on what the Deputy Chair said about where we could be if we just stood still. Everyone will be aware of the 'Spotlight' programme that was about human waste in Belfast lough and on the roads. Did you look at any positive approaches to water management, perhaps across the UK or in Europe? I have fears, because, in my research, I have not seen anyone do it like we do. We are a bit of an outlier, probably even in Europe. Did you look at any other best practice?

Ms Kane: We outlined some benchmarks across the rest of the UK for funding mechanisms and governance. We captured some of the innovative things that NI Water is trying to do on best practice, albeit that that is in a very constrained funding environment, by using hydrogen and that type of thing.

Mr McReynolds: Lastly, you mentioned, although I cannot remember who you were talking to, that there had been engagement with departmental officials. Was there ever engagement with the Minister or ministerial officials? I am conscious that there was a very narrow window of time for that.

Ms Kane: No, we did not do that. Michael wants to come in on that.

Mr Heery: One point to make about best practice is that Highways England secured with Treasury the ability to flex a certain amount of its capital budget between financial years. That does not solve the overarching problem by any means, but it may help organisations to address some of the inefficiencies that result from the stop-start cycle of financial years and having to give money out the door before the end of the year.

Mr McMurray: On that last comment about Highways England, as I read it, it had ring-fenced, multi-year budgets and year-end financial flexibility. How much of an effect would such an arrangement have with NI Water?

Ms Kane: We have constantly talked about multi-year budgets across a number of organisations and how effective they would be, so that would be very helpful. We are talking about infrastructure projects in particular, and, given the nature of those, which sometimes span two or three years, having that certainty would put that organisation in a very good position to negotiate with and secure contractors to get the best prices.

On the year-end flexibility, you had evidence from NI Water on pausing. That uncertainty creates a huge issue. We highlighted in the report how reliant NI Water has been on in-year allocations. That is not unusual, but it creates uncertainty. In order to create certainty in only that point, it would be helpful to have those two mechanisms.

Mr McMurray: Point 8 relates to:

The inference is that previous reviews have been lacking or not fully fleshed out. Is there an exemplar, a perfect model or good terms of reference that such a review would need to take into consideration?

Ms Kane: The starting point should be the Independent Water Review Panel, which was set up back in the early 2000s. That was quite comprehensive. It was quite well laid and came out with solid recommendations. That would be a starting point. We have moved on 20 years, so we would just need a wee bit more work on how to scope it out properly to make sure that everything is captured that needs to be, including the outcome from the Committee's evidence.

Mr McMurray: Finally, it was interesting to hear about the correspondence between you, NI Water and the Department. You mentioned NI Water, but has there been much more correspondence with the Department on that clearance process? Can you expand on that? How does that process go? That is interesting.

Ms Kane: First of all, when scoping out that report, we had meetings with the Department to talk about the scope of the report and the different elements that we intended to look at. The process for reports is that, along the way, we have various checkpoints with the Department, which are partially about gathering more information and giving it a steer on the findings that we are coming up with. We then enter into a formal clearance process, which is the same for all our reports.

A first draft of the report goes to the Department, which takes the lead in clearance with NI Water and the Utility Regulator, and we get a response from it after some weeks.

We then look at that and decide whether we will accept the changes that it has requested. If there needs to be a bit of discussion, we will have that, and we did that in this case. I mentioned the Department of Finance. The Treasury Officer of Accounts (TOA) is also copied into the process. They can also have a say, if they wish. In this case, they did, because the issues on funding are fundamental to Finance, so they wanted to speak to us about that. Then we issue another draft report. If needs be, we have another clearance process, but, normally, we get to a point where we have a final report that we publish.

Mr McMurray: How does that work for you? I presume that things are said in the first report that get watered down or whittled away. Is that a fair assessment?

Ms Kane: It is in some cases, but not so much in this report. It did not fundamentally change. I should say that, given that it is from the C&AG, it is up to her to decide what goes into a report.

Mr Boylan: Long time, no see. [Laughter.]

You are very welcome. I have a couple of points. I see that benchmarking is mentioned in the report. You may not be able to answer this question, but given the problems and challenges that England and Wales have, should we benchmark against other regions? The Chair talked about efficiencies, so we need to look at best practice models. Is there a need to benchmark against some other regions — we would not be benchmarking against ourselves — to get a more reasonable assessment, given the reports that we are hearing about from England and Wales?

Michael, you said that PC21 was an ambitious programme. You do not have to answer this if you do not want to. It has been going on from 2007, and, all of a sudden, we have a PC21 programme and are pumping money into waste water infrastructure. It may be that they were doing that for the last number of PCs, but it seems as though that was the big target area. Do you think that it was too ambitious? I am not saying that it was not needed; that is not the question. If you cannot answer that, do not. I will put it in a different way: what can we learn going forward to PC27?

Mr Heery: The comparison between PC21 and PC15 is interesting. I do not think that there is a right answer, to be honest. Both approaches have their issues, and any stakeholder could poke holes in either. In PC15, a realistic funding envelope was assessed before you did the plan, and then you created a plan of outputs that you had a high degree of confidence could realistically be delivered. There is a huge gap between what is in that list and what is needed. PC21 comes at the other end. It did not set that funding envelope up front. It created the impression of a more realistic assessment of what was truly needed, but you did not have the cost envelope, so you ran into that issue. Through our fieldwork, we considered whether one was more deficient than the other. There is no objective answer; it is a very subjective assessment. That, hopefully, answers your second question.

Ms Kane: I agree with your point about benchmarking. It goes even wider than looking at water and sewerage services across other nations. We talked about Highways England. If we are looking at funding and governance, we should look at them across different organisations, potentially outside the UK, to see what works best and most effectively.

Mr Boylan: I appreciate that. That is what I am saying. If we are to learn anything from the report, it is that we need to do that.

I have one final question. The Utility Regulator signed off on the programme, but are there any other ways in which we can challenge it, or is it just through that specific role? The Utility Regulator signed off on the £2·1 billion. It was £2·1 billion originally, and it became £2·5 billion after the review. Is there anything that we can learn from that? Clearly, whatever is requested and whatever he signs off on, we take it for granted that that is it. He believed that, in this case, that could have been attained, because he signed off on it. Somebody somewhere has to look after the consumer, which is the Utility Regulator's role. Those questions have to be asked.

Ms Kane: The regulator plays a really important role in this. We understand that, and, obviously, we spoke to the Utility Regulator when we were producing the report. The regulator challenges NI Water on the projects that it puts forward. That element of challenge is really important if it is to realistically prioritise its projects, as we talked about with the Deputy Chair. We understand that it is a continual backwards and forwards between them, particularly when finances are stretched. Regulators have a really important role. There is no other option on the table at the minute, and that seems to be similar to the case across the water.

Mr Boylan: I am not even questioning its role; it is just that the regulator signed off on a programme, and it has turned out that, realistically, the programme will not be achievable. That is all that I am saying. Thank you.

Mr Dunne: Thanks, folks, for your presentation. I have a couple of points to make. The report was completed over a year ago. I am keen to establish whether you feel that you are listened to. There are a lot of recommendations in the report, and the level of engagement since the report was published has been touched on. I know that you had a bit of an update from the Department, so I am trying to tease out whether that was done in advance of your coming to this meeting or whether it is normal practice to have regular follow-up. There is no point in doing all these reports if they are going to go on a shelf, if they are not paid attention to and, ultimately, if each Department takes no action on them.

Ms Kane: During COVID and when the Executive were down, we introduced a system whereby the Departments had to respond to the recommendations in our reports. We have kept that process, so it is current. We asked the Department for an update on what it has done about the recommendations that we made and whether it has implemented them. The Department of Finance and the Comptroller and Auditor General have also agreed that, in future, all recommendations that come out of our reports will be examined by Departments' audit committees. That is part of the monitoring process to see whether Departments have implemented the recommendations.

The other overarching thing in this is the role of the Public Accounts Committee. All our reports go first to the Public Accounts Committee. It has primacy to hold evidence sessions on the reports. It goes into them in much more detail and produces its own report, which makes recommendations. There are, therefore, mechanisms to ensure that reports do not just get left on a shelf and that we do not do them and everybody forgets about them, which is what I think that you are really saying.

Mr Dunne: Yes.

Ms Kane: This report has been extensively signposted by your colleagues in the Executive and the Assembly. It has also been raised in the media, so there has been quite a lot of emphasis on the subject and on our report, which I am pleased about.

Mr Dunne: Yes. There has been a lot of talk on the point of comprehensive review. That is fundamental, and we have seen the issue become greater as time has gone on. It is about making sure that what you do is worthwhile and that, ultimately, action is taken. Do you feel that the Department has your ear on the issue enough? Do you feel that the Department is ultimately prepared to take action to address some of the key points that you have made?

Ms Kane: A review would be the ultimate thing to come from the report. As I said, that is within the Minister's remit. We had really good engagement with the Department and NI Water on the report, so I do not feel as though it has been put to bed and that nobody is looking at it.

Mr Dunne: Did that engagement happen during the production of the report?

Ms Kane: Yes.

Mr Dunne: Do you feel that engagement has been adequate in the past 13 months?

Ms Kane: Not in this specific area.

Mr Dunne: OK, thank you.

The Chairperson (Mrs Erskine): I do not have anybody else on my list, but I see that Nicola has her hand up on the screen.

Miss Brogan: Sorry, Chair. Thank you. I have a quick question. Thank you for your briefing, Colette and Michael. I will continue with Stephen's line of questioning, and Deborah raised this as well. You suggested that the Department carry out a review of funding and governance in NI Water. Do you agree that the announcement last week by Liz Kimmins, the Infrastructure Minister, about starting a forensic audit into NI Water's spending is a good first step in the review? I know that you do not want to go into the detail of what that will entail and that you have not got all the information, but do you think that that is, at least, a welcome first step in this type of review?

Ms Kane: It is a slightly different issue, to be honest, because this report is about the infrastructure. To be honest, I do not really know the detail of, as you say, the forensic examination. In our role, we always welcome enhanced oversight of any NDPBs. It is important that there is a professional challenge between organisations that oversee NDPBs in particular. However, I could not really comment on the forensic examination.

Miss Brogan: That is fair enough. You already said that, but, in my opinion, that would be a good first step for the organisation to show that it is taking the matter seriously and knows that there is work to be done, including the three-pronged approach that John O'Dowd, the former Minister for Infrastructure, launched and that Liz is carrying through. I appreciate that, and thank you.

Mr Durkan: I thank the Audit Office for coming in with the report. Cathal raised the need to look at other regions and models. I think that it is the case that the water is always bluer on the other side, but that expert-led review that you recommended is essential so that we can see what works well where and at what cost. We cannot just do nothing on this issue. We are not even treading water. We are sinking at this stage, and we will be sinking more rapidly without action.

Over the period of your review, there was a significant increase in customer income. Was all that from charges to businesses?

Ms Kane: Yes, that is right. Non-domestic charges, yes.

Mr Durkan: It is worth reflecting on the fact that, when businesses have to pay more, they end up charging more, so that is ultimately passed on to the public. In the same period, there was an increase in the customer subsidy of around 20%. That is just a rough mental calculation; it is actually probably closer to 30%. Do you know how that compares with an increase in the domestic rates that were accumulated over the same period?

Ms Kane: We did not do that analysis, Mark, but I know what you are saying. The rates process that you are talking about is a combination of a number of aspects of funding, so it might be difficult to break that down in some way. We did not try to do that.

Mr Durkan: I just wanted to ascertain that. People are ultimately paying more for water year on year. I was keen to see that. It is work for us. I am just trying to see if you can save me from having to find out what the increase was and what was apportioned from the block grant to Northern Ireland Water in that time.

Thank you for the work that you have done. It would be shameful if the report were shelved, like so much of the work that you do. As I said, we just cannot afford to do nothing on the issue. Thank you.

The Chairperson (Mrs Erskine): Other members here said this, but, on behalf of the Committee, thank you for the work that you did on the report, which is informative and useful for us. As you said, it was talked about in the Chamber and got quite a bit of media coverage. That work is something that we can refer to. It will be interesting to see what the Fiscal Council's report draws out from its analysis of NI Water funding.

Thank you very much for your time today. We really appreciate it.