Official Report: Minutes of Evidence

The Chairperson (Mr Martin): We are hearing this morning from Dr Sara Venning, Dr Gary Curran and Ronan Larkin, from Northern Ireland Water (NIW).

Mr Ronan Larkin (Northern Ireland Water): Good morning.

The Chairperson (Mr Martin): Good morning. With so many doctors in attendance, we should be OK if anyone falls ill. [Laughter.]

Are members content that the evidence session be recorded by Hansard?

The Chairperson (Mr Martin): You have been here before. I invite you to make an opening statement of up to 10 minutes, after which, of course, you will expect Committee members to ask questions.

Dr Sara Venning (Northern Ireland Water): Thank you very much for inviting us to provide this update to the Committee on NI Water, with a focus on the impact of the constrained budget for price control (PC) 21 and beyond. We have provided the Committee with a supporting paper that sets out the operational and financial realities that we face and, indeed, the challenges around connecting new properties to the public waste water system.

Next spring, our PC28 business plan will set out the capital investments that will be needed to meet the Programme for Government priorities and statutory obligations that we are required to deliver against. The reality is pretty stark. Even the minimum plan for PC28 — the period between 2028 and 2033 — will require nearly double the level of today's capital investment. Only with such investment can we begin to reverse the years of underinvestment. It is worth bearing in mind that that significantly increased funding is what our peers across the UK and the Republic of Ireland are already starting to invest.

All of us in this room recognise the pressures on public finances in Northern Ireland. The work that the Committee is doing now will provide some of the clarity around the fact that, without proper investment in the publicly owned water and waste water infrastructure, Northern Ireland risks insufficient drinking water during hotter, drier periods and a continued stop on applications for waste water connections for housing and for economic growth. The waste water system in Northern Ireland will continue to pollute for the reason that, when existing connections exceed the capacity of the network, pollution is inevitable because we cannot stop receiving that waste water.

I hope that the paper has outlined how NI Water's responsibility goes beyond the provision of day-to-day services. We are central to delivering three Programme for Government priorities: more housing, a growing economy and an improved environment. Those priorities are interconnected, and our regulatory framework reflects that. The Utility Regulator's 2021 settlement set out what was needed to enable growth and to protect the environment. Funding has not matched the regulator's analysis or the scale of the challenge ahead of all of us.

Across the six-year price control, we estimate that NI Water will be underfunded by £470 million against the regulator's determination for PC21. The result of that is that a quarter of the work that was deemed essential will not happen and around 100 towns and villages will remain constrained, unable to grow without risking further environmental damage. Through innovation and collaboration, we have enabled some housing development, but there has been no real progress on the structural environmental deficit; in fact, it could be said that we are going backwards. The £1·4 billion Living with Water plan for Belfast has stalled, and, without it, Belfast lough risks becoming the next Lough Neagh, except that, in Belfast lough, sewage is the primary pollutant, which is a direct result of underinvestment. NI Water aspires to the day when we no longer need legal protection from prosecution for pollution incidents, but aspiration alone is not enough. Only investment and collective action will fix it. We will continue to innovate and stretch the ageing assets that we run, but that is not a solution to systemic issues, such as Belfast lough and the ageing infrastructure.

The Programme for Government (PFG) does not take a siloed approach, and neither can we. Housing, the environment and the economy need to advance together. Our submission for next spring will set out what is needed for capital investment and for day-to-day operations. This year's operating budget for day-to-day operations is £18 million below what, the regulator deemed, an efficient company would need to provide the services that we provide.

Northern Ireland is on a knife edge in how water and waste water services are provided each day. Last year was just about manageable for us because the weather was benign and rainfall was low, particularly through the autumn and winter. If conditions turn against us this year, we face some risk in relation to our operating costs.

As a public body, NI Water takes its responsibility seriously to deliver services efficiently and to be transparent about the challenges ahead. We hope that we have done that this morning and will continue to do so. We are happy to pause now and pick up on any questions that the Committee might have.

The Chairperson (Mr Martin): Thank you very much, Sara, for your presentation this morning. I will kick off, if that is OK. It is not in the stuff that we have here, but, in your last briefing that we got, I read through your annual report, and I will quote something that your chair, Jo Aston, said in her introduction regarding that. It struck me at the time that I had never read such lines from a chair before, but she said:

Do you concur with the first line of what the chair said? Is that how serious it is?

Dr Venning: It is. That has also been validated by external auditors who review the accounts after they are prepared. That material uncertainty is a result of the fact that the budget allocated to NI Water in respect of resource departmental expenditure limit (RDEL) for its operating costs and capital departmental expenditure limit (CDEL) for its capital investment programme falls short of what has been allowed for in the regulatory settlement. We are being held to account to deliver a regulatory settlement for which we do not have sufficient money. There are outputs, deliverables and investments included in PC21 that, we now know, we will not be able to deliver. Yet, we have a regulatory contract, if you like, with the Utility Regulator that says that we will do that. That creates a material uncertainty.

Mr Larkin: It is worth making the point that, because Northern Ireland Water is a government-owned company and a publicly owned entity, it is also a Companies Act company, so the standards to which we have to report are against the Companies Act and the various Financial Reporting Council standards and so on. That opinion is echoed by the opinion of KPMG in its independent auditor's report.

The Chairperson (Mr Martin): Just picking up on that, you are a non-departmental public body (NDPB).

Mr Larkin: Yes.

The Chairperson (Mr Martin): Is your spend counted against DFI accounts? Forgive me, I should know the answer to that.

Mr Larkin: We get consolidated into the broader —

The Chairperson (Mr Martin): Which, I would imagine, is a bit of an issue as well.

Mr Larkin: It can be, and you have different reporting requirements. The one for the board in the annual report and accounts is that we go through an external audit by an independent auditor, which is KPMG, in our case. It looks at the reporting and the factors that test how it would then set about coming to an opinion. Its opinion is mirrored in the chair's statement.

The Chairperson (Mr Martin): The Minister's three-pronged approach is talked about at length in the Committee. On 11 February, the Department issued a press release entitled:

In the second line, she blames the British Government for underinvestment, which is not unusual in this place. In the second paragraph, she states:

What is your view on the Minister's three-pronged approach?

Dr Venning: In the first instance, funding, innovative thinking and working in partnership are excellent endeavours; they absolutely hold the key to solving the issues here. The three-pronged approach looks at funding, sustainable drainage and developer contributions. All three things will help. What is increasingly clear from the material that we share with you is that funding is the most significant of the three prongs that will enable us to make significant advances in the ambitions of the Programme for Government for housing, environmental betterment and economic growth.

The Chairperson (Mr Martin): How is prong 1 going with Northern Ireland Water?

Dr Venning: In relation to funding?

The Chairperson (Mr Martin): Yes.

Dr Venning: We remain underfunded with regard to the Utility Regulator's final determination, and, certainly for the remainder of the current price control period, we have no line of sight of increases in that funding. We are starting our work on the next price control, which we call "PC28". We will talk to lots of people to explain what you can expect from that price control and the price tag associated with it. There is more progress to be made on funding.

The Chairperson (Mr Martin): Allow me to stay with funding for a second. If you were Mystic Meg, looking towards PC28 — I imagine that the interest for you will be about capital at Executive level and that you have a fair understanding of the capital pressures that exist at Executive level — how confident are you that the Department will be able to deliver the capital that will enable you to provide us with clean drinking water, rivers that are not polluted and that sort of thing? It is about the connection between your read of the funding package that you are currently getting as you look to PC28 and the capital pressures that exist at Executive level. How confident are you that you will get the capital that you require from the Minister to deliver what you want to deliver?

Dr Venning: That is a great question. It is not just about capital: everyday running costs are as significant a challenge for us. As we sit here, they are a real challenge. If you do not have enough running costs, you start to introduce all sorts of risk into your business. Your running costs are as simple as, just like in all our houses, the ability to pay your electricity bill and your rates. Those are inescapable. We are a large organisation. We have closed an efficiency gap to within 5% of the most efficient company, which is a notional and made-up company. We have done well. Northern Ireland has done well for a publicly owned utility to have done that. RDEL and operating costs are a big concern for us.

You need to double the capital that you are investing in your water and waste water infrastructure in order to assure the public that drinking water is clean and safe and that waste water can be treated and returned to the environment in a way that is not detrimental to it. What we have looked at is very much aligned with other water companies, where the scale of investment that is required is such that those levels of investment will need to continue for 10 to 15 years. This is a large endeavour that needs to be taken on.

You asked about the Department's ability to fund that: it is much bigger than the Department. It is a matter for the Assembly and for the wider Executive to look at those plans and ask how they fit with the Programme for Government and how they wish to prioritise them. We can set out the cost. We can set out what you get for your money, and you can take an assurance that that is all tested to make sure that it is as efficient as possible and provides as much value for money as possible. We are publicly owned, and it is a matter for the wider Executive to decide how they wish to allocate their money, but we hear the mood music around constrained capital. We cannot make it cheaper to run a water and waste water company. That is the price of owning a water and waste water company.

The Chairperson (Mr Martin): I have several other questions, but I will ask one more because I am conscious that other Committee members are waiting patiently to come in.

In your submission, you provided us with information under the heading "Locations". I want to understand the thinking behind this. Your paper states:

What does that mean? From reading it through, I was not sure what you were talking about in that paragraph.

Dr Venning: Gary will take that.

Dr Gary Curran (Northern Ireland Water): That is really to do with the interaction that we have between our developers and our developer services team. There has been a lot of really good work to identify where capacity exists. If the opportunity arises, there is an alternative to wanting to connect in an area of constraint so that that is done in an area where there is capacity. That has been beneficial in changing some of the opportunities that we have had. In previous years, we knew of about 37,000 potential applications, and that was split 50:50 between what could be connected and what could not. This year, we believe that that is in the order of 55,000, and that split has moved to about two thirds where connections could be made. Part of that is the ability to look at areas where there is opportunity currently without the need for further investment.

The Chairperson (Mr Martin): Gary, to be clear on that point, you are saying that, where a developer wants to build some houses at Massey Avenue, you might say that that developer cannot do so because there are no connections on Massey Avenue, so you would ask them whether they would think about putting them at Belmont Road instead. Is that a fair summary of what you are saying?

Dr Curran: It would be on a much broader scale. We would look at catchments and, I suppose, the individual roads, but, yes, the principle is the same.

Dr Venning: It is more about working with the developers. They might say that they have land in place A, and we might say that we have no capacity in place A. They might then say that they have land in place B, and we will say that we have capacity in place B so they might want to progress that scheme first. If we had a funded investment programme, the theory is that, by the time the developer had finished place B, we might have the investment done in place A and the developer could move on to there. That is the approach that we were designing to take with developers to try to keep their work programmes running.

The Chairperson (Mr Martin): That sounds quite expansive. Place A could be in Ards and North Down and place B could be in Belfast or Mid Ulster: is that right?

Dr Curran: They could be.

The Chairperson (Mr Martin): That is fine. I had more questions, but I do not want to hold up colleagues.

Mr Stewart: Thanks, folks, for coming along. This is maybe the seventh or eighth time that you have been in front of the Committee in the mandate. We thank you for continuing to come forward, and you are always forthright, as we would expect you to be.

Sadly, for me, this is probably the starkest information that we have heard. It reflects two tragic realities: the underinvestment that Northern Ireland Water has faced and the crisis that you have outlined, Sara. When you say things such as, "Delivering fresh drinking water could be at risk" and "We are looking at the next Lough Neagh in Belfast lough due to the lack of waste capacity", those are absolutely tragic statements and a sad indictment of the situation that we face.

First of all, I want to hear more about the waste capacity issue and the risk to Lough Neagh. How much raw sewage is being pumped into Lough Neagh as a result of the lack of capacity due to underfunding? How much will that increase in the years ahead if we do not see any of the investment that is required?

Dr Venning: I will pass over to Gary. I will preface this by saying that, in fact, the challenge with Lough Neagh is probably more about drinking water and the ability to treat drinking water to remove any taste and odour associated with the water in its current state than about having to make interventions on the waste water network. The nutrients that are causing the problems in Lough Neagh are not, for the most part, coming from NI Water assets. I will let Gary pick up on that.

Mr Stewart: I said "Lough Neagh", but I meant Belfast lough. Sorry: I meant around Belfast. I meant that Belfast lough would be the next Lough Neagh. How much is being pumped into Belfast lough currently, and how much is that set to increase given the issues with the lack of capacity?

Dr Venning: Gary, do you feel comfortable picking up on that?

Dr Curran: I do not have a figure specifically for Belfast lough at the moment, but, generally, we have a lot of really detailed modelling that will estimate the figures that will go in, because we do not have monitors in all the locations. Overall, depending on the weather, we treat about 102 million cubic metres of water per year, the vast majority of which is treated in a good manner and returned to the lough as per the standards. In Belfast lough, the issue is predominantly due to water overflowing from our networks, and, through the Living with Water programme in Belfast, we were looking to address that. As you know, that programme has now been paused.

The issue in Belfast is more to do with the networks. At the moment, our works are adhering to the standards that are laid out, but, if we want to expand and if the standards that are imposed on us are tightened, there will need to be significantly more investment in our waste water treatment works in Belfast lough.

Dr Venning: I did not properly answer your question there. I refer you to the story of Belfast lough on our website. That is a publicly available document, and you will find most of the —

Mr Stewart: Just keen to get that on the record.

Dr Venning: — facts and figures that you seek in that document. That document sets it out that the majority of the pollution in Belfast lough is a result of waste water assets. We understand that, and we have plans that we would have invested in to increase the capacity of the Belfast waste water treatment works by 2027. That will not happen. We would have done work in Sydenham pumping station — again, substantially started by 2027. That will not happen. We would have been working in Kinnegar waste water treatment works during this price control period. That is not happening. In those areas, we are doing base maintenance to make the most of the money that we have been allocated, and I appreciate that £350 million of capital is a lot of money. We are maintaining those assets to try to hold their condition as it currently is, but we are not getting any growth or additional capacity in that, and that does not allow us to deal with new standards that are coming in. Belfast lough is a significant issue, and, again, I do not have the specific figures for Belfast on what housing is being held up as a result of the Living with Water programme being paused or stalled.

Mr Stewart: It is 3,200 according to the —.

Dr Curran: It is about 3,200, yes. The issue is that the opportunities to do anything in Belfast are limited.The only opportunity, potentially, is like for like. For example, if you have a building that has been demolished — a brownfield site or something like that — that is the only opportunity in the greater Belfast area.

Mr Stewart: OK. You have been very helpful, and we will refer people to that document as well. To summarise what you have said, Belfast lough, from the current trajectory, could be the next Lough Neagh, which is an environmental crisis created solely by the lack of investment in our waste water capacity, and it will get worse year-on-year until something is done about it. That is an undeniable reality, and it will get worse until that investment is there.

I firmly agree with you, Dr Venning, that it is an Executive priority. The buck sits with the Minister for Infrastructure, and not enough is being done to address the problem. However, the entire Programme for Government is predicated on our need for waste water capacity. We cannot build schools, houses, economic opportunities or new health facilities unless the capacity is there, and people need to get real about that. I note that you accept that, so I am preaching to the choir in that respect.

To move on, the current funding capital gap in PC21 is to increase from 11% to 18%. That is my understanding from your presentation.

Dr Venning: Yes.

Mr Stewart: Among the schemes affected by that are the Belfast Living with Water schemes, and I think you set out a couple more. Were they specific parts of that, and what else is due to be impacted? I know that you said the assets were being maintained as best as possible but they are ageing. At what stage do we run into a standstill in maintaining them, while underinvestment increases costs over time, if that makes sense?

Dr Venning: Yes. With regard to the gap in PC21, the larger schemes are the Living with Water schemes, but all parts of Northern Ireland are affected, and, for the most part, it is the waste water enhancement that is curtailed. Some water mains refurbishment has also been curtailed as part of the measures to live within the allocation. It is not solely Belfast. We have pivoted to say how, with the capital we have, we can target the investment. Some of the targeted investments that we have been able to make have enabled new connections to the waste water network. We have done that with the money that the Minister allocated for those purposes.

You also mentioned that the underfunding leads to the need for even more investment. That is the point to make. Take, for example, the Living with Water programme. It came under some scrutiny because we went through a period of inflation and costs went up, so the overall cost of that programme went up. A review was carried out, and a decision was reached that the programme would not be funded any further. Those costs are only going up. The pausing of the programme for three to five years, as has currently happened, just means that, if it restarts in 2028, everything will be more expensive. Nothing will have got cheaper, and we will have invested capital in those five years. It is imperative that, to recognise the Programme for Government, we find a way to kick-start the programme of investment.

Mr Stewart: I have a final point to make. I could ask about 50 questions — it is a massive topic — but I am conscious of time.

There are 19,000-ish properties being held back by the lack of capacity — 18,000-plus homes and over 200 commercial properties — and it could take up to £5 billion over a concerted time to make the network big enough even to expand to that. How do you go about triaging the geographical areas and the waste water capacity centres to expand the network, given that it cannot all be done at once? Has a programme of work been undertaken on what could be done and in what order? How long would that realistically take to bring the capacity up, should the money be handed to you tomorrow?

Dr Venning: Gary, do you want to take that question?

Dr Curran: With regard to triaging, specifically for the applications, we look at those and do a lot of work with the developers to see what can and cannot be done. With regard to the investment across the Province, that is in the price control period, and we will look at all of our assets in a standard format to see what investment is required and when it can be done.

Certainly, the next period will require significant investment across the Province, with a particular focus on Belfast lough. One of the consequences of the lack of investment that you talked about is a knock-on effect on maintenance costs. If you do not keep investing in and improving your assets, maintenance costs will increase and start using up even more capital.

Mr Stewart: We know that the cost of doing business and delivering infrastructure projects is increasing by up to 10% per year on average, so, without that investment, £5 billion could be £5·5 billion by next year and £6 billion by the year after. When was £5 billion assessed as being the amount needed to do the infrastructure works, and, given that costs are increasing year-on-year, how much could that rise to if it is not delivered imminently to start the works?

Dr Curran: That is the estimate for the work that we are doing at the minute and for the standards that we know about at this moment in time.

Mr Larkin: For PC21, we evaluated all the investment need, almost by scheme. That examined which inflation indices should be used. We take them from the Office for Budget Responsibility (OBR) stats and so on; we do not make up our own. Figures pre- and post inflation were calculated, which set out a good base for what the cost should look like. That was then assessed independently by the Utility Regulator, whom you have had before the Committee. Since then, the Utility Regulator has, on a number of occasions, endorsed the PC21 capital programme and said that there is nothing in it that is surplus to requirements. Those things need to be done for Northern Ireland: the regulator has independently assessed the plan and determined that those schemes have to be done. There is a good bedrock of assessment and independent scrutiny to allow those schemes to go forward. As Sara said, a lot of them have stalled.

Dr Venning: To address your point about how schemes are picked, the starter for 10 is always the social and environmental guidance. That is the Executive's document and sets out their priorities. That provides the framework for any of us to say, "OK, what needs to be done?". NI Water works with the Northern Ireland Environment Agency (NIEA), the drinking water inspectorate, the Consumer Council, the Department and the regulator and says, "On the basis of our statutory obligations and the levels of the service that we need to deliver, here are all the things that, we think, need to be done". We then take cognisance of the priorities and the social and environmental guidance. There are working groups, which is how the things at the top of the list get prioritised.

It has to be affordable. That is why it will take 10 to 15 years to address all of this. Northern Ireland could not withstand the disruption to roads or the general disruption that would be involved, and there would not be enough contractors to do all the work in five years. You therefore programme the work. I assure everyone that the Northern Ireland Environment Agency, the drinking water inspectorate, the Consumer Council and, indeed, the Department all have a say in how schemes get prioritised in a price control.

Mr Stewart: Thank you very much for your time. I may come back in later.

The Chairperson (Mr Martin): Sara, I want to pick up on your last point, which leads on from the last question that John asked. Northern Ireland Water was provided with £30 million through the October 2024 and June 2025 monitoring rounds. That enabled you to connect 5,000 properties of the 19,000 that you needed to connect. To be clear, in the provision of that £30 million, was there any suggestion from DFI as to where that money should be used?

Dr Venning: No. DFI was keen that we used it to facilitate connections to the waste water network. The schemes that were progressed were the determining factor. We had the PC21 plan, which was a plan to deliver all our work over six years. We were at the start of that plan. Schemes that had been through the planning process were at the front of the queue, as we knew what work needed to be done and may have had contracts to get it done. The money that became available was monitoring round money, which meant that we only had months to invest it. The schemes that were ready to be delivered were the ones that were given consideration. There was no preference or direction given on the basis of geography: the preference and direction given was, "We would like this money to be invested to support connections to the waste water network".

The Chairperson (Mr Martin): That is great. Thank you very much.

Mr Dunne: It is good to see you all again. On the point about the monitoring round, we are hopeful that there will be one soonish. I am keen to hear about any engagement that there has been at ministerial level on the upcoming monitoring round and whether there is any hope of NI Water benefiting from it?

Dr Venning: As the Chair said, the Minister has always been supportive and has recognised that additional investment is required in water and waste water. She has been supportive, and her officials have asked us what our need is. When we initially made a bid, we said that, in any monitoring round, we could usefully invest between £10 million and £20 million, bearing in mind the time that we have left to deliver. However, we find ourselves almost in December, so we have revised that to £10 million, because the time for a £20 million investment has passed. It is not that the need is not there, but the ability to deliver it in the necessary time frame is not. The Minister has been supportive and has asked what we can do, and we have provided figures.

Mr Larkin: Alongside the £10 million capital bid, we put in a bid for £5 million to meet the much-needed resource DEL operating costs for running the business each day.

Mr Dunne: OK. No problem.

The reports this week have again brought Belfast lough to people's attention. It is causing significant concern across the country, including in my consistency. There is the Living with Water programme, which we talked about last week with senior DFI officials, and there is the Kinnegar upgrade, of which, I know, you are well aware, Sara. Given the financial situation today, what you have seen over the last number of years and the pretty gloomy direction of travel, is major work being done to separate those plans so that you can do what you can when you can? Is that still the plan?

Dr Venning: As I say, we are doing basic maintenance, and I suppose that that constitutes doing what you can where you can. However, that does not address the environmental need for those works. We have taken the likes of Kinnegar, Belfast, and, I think, Whitehouse to the outline business case stage. We are, therefore, able to say about those schemes, "This is the design. This is the amount of money that is required. This is how it would be done". However, for a scheme that costs in excess of, let us say, £100 million, you cannot say, "I can do £5 million in this six months" and then wait another 18 to 24 months to spend another £5 million. Once you start, you are committed. The difficulty at the minute is that nobody can give us the nod to start because those projects are so large, but they are inescapable investments, and we will have to find a way to start them.

Mr Larkin: There is strong evidence that, when you take — if this is the wrong term, forgive me — a stop-start approach to a project, it inevitably becomes much more expensive to deliver.

Mr Dunne: I appreciate that.

In your briefing paper, there is a table that shows how many units are unable to connect in the 11 council areas. In my council area of Ards and North Down, 3,350 units are unable to connect. Two paragraphs above the table, the paper states that some areas are unsuitable for developer-led solutions. Earlier in the year, you confirmed that developer-led solutions are not a silver bullet. However, that is one of the few things that the Minister is coming forward with, which is cause for concern. For clarity, are the units listed in the table not suitable for developer-led solutions? Is that correct?

Dr Venning: No.

Dr Curran: The figure for the Ards and North Down area is skewed by one particularly large development that needs significant capital investment.

Given its scale, it is not something that a developer could undertake. There are elements in that that a developer can address to help reduce unwanted water. That is something that we are working on it. Lining up with your last question, if money subsequently becomes available, we are working to have that ready so that it can be addressed, but the majority of that number is skewed by one large development.

Mr Dunne: OK. It states that a further six areas will close to new connections. I presume that that number will keep growing. Can you give any more detail about those six areas?

Dr Curran: Do you mean the overall numbers?

Dr Venning: The paper references the number of areas, which covers 23 towns, that are closed to new connections and states that that number will increase.

Dr Curran: As we get more information from across Northern Ireland, the number will increase. As we get better information and understand better what is happening in our network, the constraints will become clearer.

Mr Dunne: This is my final point. In July, the Minister announced an innovative waste water approach that would unlock economic growth in Newry, which just happens to be in her constituency. That led to 400 new properties being connected. Can that be replicated across the country, or is it a solution that is unique to that area? I am just trying to —.

Dr Venning: I do not mind answering that question in the first instance. I will then hand over to Gary, because he initiated the approach.

The scheme is a pilot. It became apparent to NI Water that capital was becoming a problem. As we looked across the water, we could see the scale of investment in waste water infrastructure and the scale of work that will be needed to deal with climate change. It is not affordable to continue with building waste water solutions that involve pouring lots of concrete, which is the way that we have always done things. We started to ask ourselves how we could look at things differently.

Newry was a catchment with a waste water treatment system, and it was getting more and more expensive to remediate its problems. In NI Water, we realised that we were not going to be able to progress the Newry scheme within PC21. We thought that Newry was an excellent catchment for a new and innovative approach, because it had a waste water treatment works that needed an increase in capacity; a lot of its capacity being used by industrial trade; and a significant network and difficulties in that. We started looking at that around 24 months ago. The current Minister was not the Minister then, so the fact that she is from the area is completely unrelated. We were taking a different approach to assessing waste water improvements by looking at the entire catchment. It is very much a pilot, and we think that we will get good results from it. Could it work in other places? With the limited money that we have, we are starting to look at other areas to see whether the approach can be replicated. It cannot solve our large investment problem, but, in some instances, it could give people five years.

Mr Dunne: In layman's terms or for someone from a non-engineering background, what does that look like? What is the difference in that approach that works?

Dr Venning: Instead of saying, "There is a works and it is out of capacity. Fix the works", it says, "What feeds into the works? A whole catchment. What is in that catchment? Let us be innovative, get sensors that did not exist in the past and put them in the sewers. Let us analyse the signals from those sensors with computers. What do they tell us?". In some instances, the signals from those sensors tell us that unwanted water — groundwater — is getting into the sewer. When you see that, you ask, "How can I stop that and create capacity?". We also work with traders in the area to understand how much of the capacity of the works is taken up with treating trade effluent. What contribution could those traders make to remove load?

It is about preventing unwanted water; understanding more about what is going into the network; working in partnership and collaboration with the traders; and looking at the works and asking, "How can I optimise the process? How can I invest in the existing assets to make the works more efficient and create capacity?". The combination of all those things — the whole may be greater than the sum of the parts — has meant that we have been able to open a closed catchment. That is what has happened in that area. It will not work everywhere, because there might not be unwanted water getting in and there may not be trader involvement. However, it might work in some places, so we feel that we should try to replicate it. We have been talking to the public-sector transformation board about that because we believe that it is a truly innovative piece of work.

Mr Dunne: OK. Thank you, folks.

Mr Larkin: I will not comment on the Newry pilot because I live in the area.

The Chairperson (Mr Martin): OK. Thanks, Stephen.

Mr McMurray: Thank you for coming in, despite the news that you are once again having to give to us. Turning back to where we find ourselves with Belfast lough, can you articulate your frustration at the current situation? You referenced your work, and it was two years ago that we were talking about the problem and the fact that it was approaching business-critical. That is now coming to pass. How frustrating is that for you as the directors of this operation?

Dr Venning: For the staff of NI Water, who work tirelessly day in and day out to make the most of the waste water networks, it is incredibly difficult. Those people see assets ageing and know that investment is required but is not being received. It is difficult. With regard to Belfast lough and the Living with Water programme, I would say that that process started in 2010. For large infrastructure schemes, that is the process; it takes a long time. However, in 2010, there was recognition that, because that was such a large programme of work, a holistic approach was needed and we should involve DFI Rivers, the local council and the Department for Infrastructure in coming up with an integrated plan, which led to the adoption of the Living with Water programme. That was an innovative approach to dealing with drainage in a city, and it has been adopted across the UK. The frustrating part is that other cities across the UK have gone ahead and implemented the approach, whereas we continue to talk about it.

Mr McMurray: Thank you. That is startling, given the gravity of what we see in Belfast lough.

In your introduction, you mentioned doubling today's investment in order to meet a minimum plan. Your paper states that current cost-saving measures are:

It goes on to say:

What service interruptions and policy changes to service will NI Water propose to DFI, and how would you expect them to be carried out? What would be the trigger point for saying, "You need to instigate this"?

Dr Venning: You are referring to our operating costs for the current year. There has been some discussion about that at the Committee in the past. For this financial year, taking on board the learnings from last year, NI Water put forward a budget for operating costs based on a best-case weather scenario. You probably had presentations from the Department that proposed to do things in that way. We have put forward the best-case scenario.

The paper only calls out that there is risk in the numbers if the best-case weather scenario does not materialise. That risk will have to be dealt with. It can be dealt with in a number of ways. The best way for customers and citizens will be for any additional required funding to be found. I am not saying that additional funding is required; all we are signalling is that there is inherent risk in the forecast. The Department has said again that, should a risk materialise due to a severe weather event, it would bid for the funding to meet that risk. One way to deal with it is to find the funding. If funding is not available and you find that you have a budget shortfall, that is where the conversation will have to be. Invariably, when we look at that — we have spoken about it in the past — our main controllable cost is power, so it would be a case of not operating something, which would have a knock-on service impact. It is about operating costs and, really, all that we are signalling is that inherent in the current budget is more risk this year than there was in other years.

Mr Larkin: We have seen some interesting weather patterns recently, and there is a winter weather risk. To make the current number, we are likely to need benign winter weather like we had last year. I could not guess what the weather will look like in the next four or five months — you probably could not either — so we are in the lap of the gods with that. That probably does not give you the best way to operate a critical service like a waste water company. We had always done some good historical analysis of the cost base, the power loads and that kind of thing. We would not have called that a "worst-case scenario"; we would have called it a "real-world scenario". There was discussion on the positive impact that a best-case scenario would have on your forecast. With that, however, there is risk that has to sit somewhere. There has been discussion around whether that risk would then sit with the Department, which may find a way of dealing with it.

Mr McMurray: Thank you. I have a couple more points. You have mentioned a couple of times — you are right — that it is an Executive decision, although, on one level, responsibility obviously still sits the Minister. When you ask the Finance Minister — formerly the Infrastructure Minister — "What are you doing?", he throws out that £500 million was given to you guys. Where does the focus need to be? It always seems that there is no correlation between him saying, "We are giving NI Water x amount of money", and you guys coming in and saying, "Well, actually, we are very efficient". Yet, we are not even running to stand still: we are running to go backwards. I cannot get my head around that.

Dr Venning: The numbers are big, so, of course, the Finance Minister will say, "NI Water gets £500 million. That is a lot of money". It is a lot of money. There is a neat solution. You own a regulated water company, in the same way that there is a regulated electricity company in Northern Ireland. That company should go through a process with the regulator to set out its operating costs and capital costs. That way, as I start to look to the next price control period, I will be able to set out what you get for your investment, including the infrastructure that enables houses to connect; the ability to build x social houses; the ability to drive forward your economy; and, importantly, a programme that can deliver environmental betterment. That will be a five-year package, and that is what needs to be analysed.

The Executive have decided that the company is publicly owned and funded. The five-year package of work will need to be funded from the outset. There should not be an annual debate about, "How much do I get?" or, "Should I bid in the monitoring round?". There should be certainty for a five-year programme of work because then I can say to our capital teams, "I have certainty on this programme of work. You will start in Belfast, and you will be working there for three years. After Belfast, you are going to north Down, and you will be working there for two years". I will also be able to say, "Buy your diggers, because it is cheaper".

That keeps people here. Some parts of our supply chain are working in the ROI and the UK, but they could be working here. They would probably prefer to be working here if they had certainty of work.

That is the neat way to do things if the Executive want the outcomes that come with the package of work. If they do not want that, they can say, "Well, actually we do not want those four things". Again, the package of work can be cheaper, and we will get on and deliver that. That would be the most efficient way. We can be held accountable for delivery against budget and all the extras that we can deliver. The extras that we can deliver are around climate change, climate resilience and helping to support other parts of the public sector with some of the infrastructure that we install. I think it is a real win.

Mr McMurray: Thank your laying that out quite clearly. I promise that this is my final point, Chair. It seems to me, sometimes, that this is about drinking water versus waste water. Is it like that? Do we need to disentangle those two things in the public's perception? The general public will say, "Turn the tap on, there is the water, happy days", but as is our human nature, we do not want to think about the foul end of things. We talk about the social, environmental and economic impacts, but it all seems to hinge on the waste water end of things, and we seem to tangle the two things up. I have been in your big operations room and I have seen all the lights flashing. Are we at the stage where, given the revenue pressures, we have to prioritise fresh water over waste water because we simply must keep the taps running, in the same way that we must keep the lights on? What is your take on that?

Dr Venning: Up until now, fresh water has been prioritised. Your drinking water is clean and safe and is tested thoroughly to ensure that it remains so. When capital funding has been reduced, the brunt of the impact of that has been borne by the waste water enhancement programmes. Part of what we are trying to signal now is that the levels of investment going forward, even in our clean water, mean that if you maintain the status quo — that is, how much you spend today — in the early years of PC28, there will not be sufficient money to invest in some of the clean water investments that need to be made. That is where, as I said, there is a potential risk to the provision of water during hotter, drier periods. When your system is stressed and you need to push more water out, if we are not investing, we will not be able to do that, and people will start to feel the impact of the underinvestment in their drinking water supply as well as in their waste water supply.

Mr Larkin: That is a capacity issue, but it is also about asset resilience and the ability to deal with high demand. You have to be able to switch them up during periods of prolonged hot weather. If the assets are not resilient, there is more chance of them failing during peak demand.

Mr McMurray: Thank you.

Mr Harvey: Thank you all very much. I will start with drinking water. Did you say that there has been an increase in the use of drinking water in the past few years?

Dr Venning: Yes. Our demand for drinking water is now in and around 605 million litres a day. That is what we treat and put into distribution every single day. In the past, and certainly when I started in NI Water, it was below 600 million litres. We might have been around 585 or 590 million litres a day. Consistently now, however, we are over 600 million litres a day. When we get into periods of high demand — those happen when it is hot, but also when it is very cold — we can see that level go up as high as in excess of 700 million litres of water a day that we are treating. When we get to those levels, the car is shaking. We are at stress, and it is difficult to maintain that for any sustained period.

Mr Harvey: OK. Is that divvied up into use per head of population? Roughly how much does each person use?

Dr Venning: It is. We calculate our water consumption on a per capita basis. We have been running with a figure of about 160, maybe165 — litres of water per person per day. That is higher than in some areas. Areas of the UK that have water meters might drive that down as low as 140 litres of water per person per day. Companies in areas where there are water shortages drive that further by asking, "How can we get that down to 100 litres of water per person per day?"

Mr Harvey: My next question leads on from that. There are lots of houses and businesses that cannot be built because of water issues. I cannot understand. If we have so many people, it does not matter where people live, whether that is in your house, my house or another house, because, if they are in the same area, the same amount of water goes down literally the same pipe. There should not be a block on the building of so many new houses, because the usage of water in and out is per person rather than per building. Whether you are in this place or that place, you use the same amount of water.

Dr Venning: There are two parts to that. First, where you are is very important. You might be upstream of a combined sewer overflow (CSO) that is polluting, in which case anything that you put into the sewer increases pollution, and therefore you cannot be connected. Secondly, in developing our long-term water strategy —. We look 25 years ahead and think about population growth and demand for water. People now tend towards having smaller families, and maybe they do not have children. However, a two-adult household probably does as much washing and showering as a bigger household, Maybe they run the washing machine every day and the dishwasher more often than that. It is actually not per person; a significant amount of water is used in a house because people are now living together in smaller numbers. That has an impact as well.

Mr Harvey: I still argue that it is the same amount per person whether —.

Dr Venning: What I am saying is that it is more.

Mr Harvey: Maybe slightly.

Dr Venning: A household of two people will use more water per person than a household of six.

Mr Harvey: Yes. Maybe a dishwasher being switched on when it is not full, for example, would contribute to that.

Long term, and at a higher level, will you ever be looking at needing to dam more waters in Northern Ireland?

Dr Venning: The long-term work that we have done —. I remember we had a conversation about this in the summer before the first algal bloom in Lough Neagh. We employed some consultants who had worked across the UK and advised water companies in water-stressed areas. They said, "You are very lucky in Northern Ireland, because you have this big source of fresh water in the centre of Northern Ireland that is Lough Neagh, and, because you have that, you don't need to think about new reservoirs". Hence the importance of respecting Lough Neagh and ensuring that, as 40% to 50% of our drinking water comes from there, our treatment processes and the plants around Lough Neagh are robust. Even with constrained capital investment, we have been investing in filtration at those plants. In the past 12 months, we have invested significantly in that.

Mr Larkin: We have accelerated some of that investment to get better filtration.

Mr Harvey: What about dormant dams? Are there many dams that were used in the past but are not in use at present?

Dr Venning: We will come back to you with figures on that. We have reservoirs that are not operational, but those that are in our ownership are looked after to exactly the same standard as the ones that are operational.

Mr Harvey: They could be used again.

Dr Venning: The assurance that I am giving is one of safety. There is a lot of work and investment in looking after those reservoirs to make sure that they are safe and that the people who live downstream from them are safe.

Mr McHugh: Tá fáilte romhaibh uilig. Bhí sibh anseo roimhe.

You have been here before, ach seo é mo chéad lá anseo

Many of the questions that I was thinking about have already been asked to this point. Just on the budget, you talked about £151 million against £156 million, yet you also mentioned another figure of £18 million.

Dr Venning: Yes, that relates to the price control. When the Utility Regulator looked at what we need to provide water and waste water services in Northern Ireland, it said that we should have circa £170 million for this year, based on all of the things that we have to do. However, Northern Ireland is in a very constrained funding situation, and the Department was not able to meet the level of funding for what the regulator said should be done. Therefore, we have had to drive cuts into our business in order to reduce our costs — things like maintenance in our waste water sites, ground maintenance, and looking at any area in which you can do less, which might mean not sending contractors out to something, or delaying work. All of those things were done to drive down the operating costs to a level that could fit within the available budget. That £18 million is the gap between what we are getting and what the regulator has deemed that an efficient water company should get to provide the level of service that it says that we should provide. What you are seeing now is more risk and lower levels of service.

Mr McHugh: You expressed the view earlier that you are getting good support from the Minister when it comes to competing for that budget in the Executive.

Dr Venning: Yes, the Minister has repeatedly said that she understands that more investment is needed, and she makes that case. As the person who has to say no to the people asking for investment in their sites, I would like to see the investment. The intention is very good, her support is excellent and we will continue to work with her, but there remains a shortfall.

Mr McHugh: Stephen asked whether the innovative pilot scheme in Newry could be rolled out. I come from Castlederg, which is probably the town furthest to the west in the North of Ireland. There is an issue of capacity in our rural communities and small villages. Can the rolling out of new technologies and so on apply only in more urbanised areas, such as cities and very large towns, as opposed to more rural areas, such as my constituency of West Tyrone?

Dr Venning: There may be more opportunity in the larger areas to remove unwanted water, if it has gotten in. There may be more traders in urban areas that do not exist in rural areas, but that is not to say that we are closed to innovation in any capacity. Derg water treatment works is probably not too far away from you. We have invested significantly in the filtration in that works to make sure that the water is clean, safe and plentiful. It is an example of investment. I know that that is not the same thing as waste water capacity, but something being in the country does not mean that NI Water will not look at it to see whether we can innovate. We absolutely will. If we take a learning from something such as the efficiency of pumps or how we can operate our works better, we will apply that anywhere.

Mr McHugh: I appreciate the development at Derg water treatment works. The River Derg was highly polluted at one stage. At the same time, there is a capacity issue in much smaller hamlets in close proximity when it comes to building. What are the strategies on the part of NI Water to ensure greater capacity in places like Douglas Bridge, which is a very small hamlet and one of the areas that was confronted with that problem?

Dr Venning: The strategy is the price control. A price control is a holistic package of work that will look at large and small areas. If you have a water company and you let it work through a series of price controls, they catch up and are able to facilitate development, whether that is in large urban areas or small rural areas. That is the strategy, and that is the goal that we should all be jointly pursuing to try to get back up on the books, because there is not a piecemeal win for this.

Mr McNulty: Thank you, Sara, Ronan and Gary, for your evidence. UK water companies all operate on a five-year asset management plan. To what degree does the current reality of one-year budgets for NI Water, one-year planning and one-year progress stymie your ability to get to grips with the challenges that you are facing?

Dr Venning: NI Water works to a five-year asset management plan as well. That is the good news. We apply the same level of rigour and standards as is seen in the UK companies. The difference is that, in the price control that we are talking —. In the same way as those companies produce a plan of work, we produce a plan of work. A quarter of the things in our plan of work for this price control will not be delivered. That is the impact of the underinvestment.

Mr Larkin: To add to that, Justin, our local regulator here, the Utility Regulator, will determine our current six-year — the next one is five years — plan and will monitor measure us against the outcomes and outputs of the plan. Regardless of what the funding is, they will still say, "Did you get three quarters of the schemes done or 100% of the schemes done?" It is done on that five-year basis, and we are measured and monitored across the five-year plan.

Mr McNulty: OK. Thank you. You painted a picture, Sara, from a funding perspective, that you need double the level of funding. That does not give us any confidence that we are going to get to grips with the challenges faced from a pollution perspective. You mentioned that economy, environment and housing need to advance together. They cannot really advance together if the funding model is not there. Where are the solutions forthcoming on that front from the Minister and the Department in order to cross that chasm? It is one thing to say, "This is the scale of the problem", but how will it be solved?

Dr Venning: I do not know whether that is a rhetorical question. [Laughter.]

I am not sure that I am the person who is best placed to answer that. We are an arm's-length body and a non-departmental public body, and we are set up to deliver on the Executive's ambitions and within the Executive's funding envelope. At the minute, we are delivering against the funding envelope that we have been given. I am making the case and stating that it is imperative that that funding envelope be widened and ring-fenced.

Mr McNulty: Right. It does not give the Committee any confidence that these things are actually going to progress, given the scale of the chasm. You can take that as a rhetorical point if you wish. When it comes to the Minister's three-pronged approach, which prongs have the most chance of delivering success?

Dr Venning: I think that all the prongs will deliver success. The one with the biggest impact will be the funding prong, and the Minister has alluded to that.

Mr McNulty: Well, the funding prong is the biggest obstacle, according to you.

Dr Venning: It is the biggest obstacle and it is the biggest opportunity.

Mr McNulty: In Newry, industrial trade effluent was received by your treatment plant. How innovative is it to have had a sensor in place to establish that that was the case? Why has that been characterised as being innovative? Is it innovative for treatment plants to have sensors to understand what effluent is incoming?

Dr Venning: Some of the innovations in sensor technology are able to see what is coming down a pipeline, and they are able to see the difference between domestic sewage and trade sewage. In many respects in relation to sewage, it is innovative. Those sensors and that technology did not exist in the past. In the past, all that the operators of the works will have known is, "There is a lot coming to my works. My works is out of capacity", especially in the area of unwanted water.

In the north-west, we had a pumping station where power costs were getting bigger and bigger and bigger and bigger, and that was being put down to there being a lot more demand going through that pumping station. When we put the sensors in and could see the time of day when that water was coming in and we overlaid that with the tides, it became apparent that tidal water was getting into the system and eating into capacity. That is intelligence that did not exist in the past, and the computing power of being able to overlay lots and lots of different inputs, whether that be weather data, tidal data, pumping, electricity consumption data or flow data, means that you can make interventions now that you could not have made in the past and that you would not have known about in the past. There have been some pretty good advances in technology, and there has been very good work with companies that are bringing innovation to the marketplace, helping them to develop their innovation to such an extent that they can go ahead and sell that to other parts of the water industry.

Dr Curran: Just to expand on the sensor technology, we ran a small business research initiative (SBRI) programme that opened up the opportunity for people who were manufacturing sensors anywhere in the world to come forward. The successful company that we used in Newry came from Florida, and it was the use of technology linked to AI and the ability to record samples on a real-time basis that really was a bit of a game changer. Linked to the good working relationship, that built up with better understanding with the trade effluent customer.

Mr McNulty: Forgive me; I take my comments back. That demonstrates massive innovation. Credit to the engineers involved, credit to NI Water and credit to the Minister and the Department for exploring that and for discovering the capacity that was available based on that innovation.

Is there a surcharge for industry when companies are dischargimg trade effluents into the system to cover the cost of treating that? How is industry charged?

Dr Curran: For industry, we operate a trade effluent charging regime. We look at both the quantity of trade effluent that is coming in and the strength, and that is broken down into various areas. A calculation is done that will then charge the customer for what they put back into the system. Obviously, the more pre-treatment that they can do, the lower the overall charge.

Mr Larkin: There is an established industry-wide formula in the UK, and probably in Ireland now, for calculating and assessing what charges should go against different elements of a trader's effluent to produce the bill.

Mr McNulty: Going back to funding and budgets, you mentioned the cost to build the infrastructure necessary to facilitate development and to protect the environment. There are some costs. Forgive the pun on that front. What are the costs of not building? Has there been an audit of that? You talked about allying economics on that front. Has there been an audit, Sara, conducted by your Department, or in tandem with the Department for the Economy, on the cost to the economy of not building? No drains, no cranes — we know that well-known phrase now. What is the cost to the economy of not building?

Mr Larkin: I will maybe pick up on a couple of things, but we can come back to the Committee on trying to get some sort of number on that one. A number of pieces of work have been carried out. First, the Northern Ireland Audit Office produced a report about the current funding model for Northern Ireland Water. It touched on the possible societal costs of not building out the assets. It did not recommend a huge list of things, but one key recommendation was that there really needs to be a new, independent, expert-led review of the optimum way to fund Northern Ireland Water so that those kinds of costs do not exist in our local economy.

Another piece of work that is available to all of us, including the Committee, is the recent report by the Fiscal Council for Northern Ireland. That report talks about some of the possible economic fallout of not having the investment made. It also talks about not just the economic but the societal fallout — things like the holding back in the housing market and so on. Those are probably two pieces of strong, independent work that Northern Ireland Water would point to for the Committee to examine, because they give some of the details. If it is helpful, we will maybe take a look back through those and come back with an overview of some of that.

Mr McNulty: Absolutely; that would be very interesting and helpful.

My last question is about the report this morning that NI Water's head of investment management, Stephen Blockwell, said that he would not swim in waters where there has been a discharge. He was speaking about Warrenpoint and the cold water swimmers and bathers — brave folk, and I admire their tenacity to go out on cold days — who swim in Carlingford lough. That obviously applies to places like Lough Neagh and Belfast lough. Is it not pretty damning that a high-profile figure from NI Water is advising people not to swim in our water bodies?

Dr Curran: I will maybe take that. The detail behind what Steve said was that his recommendation was not to go swimming after heavy periods of rainfall close to discharges, which would be the typical advice that we would give. Particularly after heavy rainfall, you are likely to get discharges coming into those areas of water. However, I think we also need to reflect on the recent bathing water results, which showed very positive news on the standards of our bathing water around Northern Ireland and the positive impact that the waste water treatment is having on those designated waste water bathing areas. Some areas are not designated and may not be appropriate for swimming, for a range of reasons.

Dr Venning: But you are right. The whole conversation that we are having is that we should have a joined-up approach, whereby an investment programme is applied to the waste water network that facilitates growth, housing, economic growth and environmental betterment. Doing that in a holistic manner would enable Northern Ireland, over time, to make improvements and step forward. If we do not start, we will never get there. We should start by funding the price controls.

Mr McNulty: Thank you, folks, for your evidence, and good luck. Travel well. I do not envy your task.

Dr Venning: Thank you.

The Chairperson (Mr Martin): I will make a comment, and then I have one more question, which is a technical question. If I do not summarise your evidence today correctly, you can highlight that. Essentially, you are saying, "Look, we have this much money, and this is what can deliver with that envelope of money. If you want this, you need to give us more money to enable us to do that". That is some of the PC21/PC28 stuff that we are talking about. Is that a fair summary of where Northern Ireland Water is?

Dr Venning: I think so, yes.

The Chairperson (Mr Martin): OK. I have a slightly technical question. Again, forgive me. I am new to the Committee, so I am getting my head around a range of issues, including PC21s and PC28s. Your report, 'Price Control for Northern Ireland Water 2021-2027: Mid-Term Review Final Determination', which came out in September 2024, states:

Do you know what stage that is at? Obviously, I do not know whether it has been completed or not. Has there been engagement with the regulator, and where are you in that process?

Dr Venning: I will let Ronan answer, but I am pleased that you raised that.

The Chairperson (Mr Martin): Oh, good.

Dr Venning: It is an important piece of work to be followed up on after the mid-term review because it will have a big impact on the amount of base maintenance that we will be able to do going into the future. Ronan is the link person with the regulator.

Mr Larkin: It is a good question and thank you for it, Chair. PC21 is a six-year price control, and at the beginning of that price control, the regulator said, "We will carry out a mid-term review to check where you are at the midpoint and what needs to happen next". The regulator examined that, and the first thing it said was, "Your cost base is going up". That was primarily due to inflation. If you think about COVID and the beginning of the Russian/Ukrainian war, you will remember that inflation hit its highest point since 1948, and that fed all the way through the supply chain with regard to capital costs.

The blue line on the graph in the paper that we submitted shows clearly the mid-term review capital programme needs over the six years. There is a red line showing the current allocations, and there is a widening gap, which means that we cannot get those things built. The regulator took a close look at the capital programme and was able to opine and say that it recognised that a block of costs had definitely gone up, and that needed funding. The regulator took a number of other costs of some of the schemes, and said, "We want to take a closer look at that, and we will work with Northern Ireland Water to come back around to that at the end of the end of the price control", so we are still in dialogue with the regulator on that.

It is important to point out that when the Utility Regulator looked at the resource DEL, it said that our resource DEL costs had gone up because of inflation despite our best efforts on efficiency and the efficiency targets that it had given us and that there had been an increase in need. For instance, employers' National Insurance contributions have gone up since then, and we have had to reflect that through our payroll costs. However, we know that there is constraint in the budget, back at the £151 million release that you spoke about earlier. This year, our budget estimate probably starts at £170 million, and we have managed to grind that all the way back down, although sometimes not covering all the areas that we should be covering. We really have to pick and choose what we do. We managed to take it down to about £156 million. We probably cannot sustain that reduction and continuing reduction to that level. We will start to have to miss out things that we ought to be doing.

Dr Venning: As for the mid-term review, what the sentence beneath by the blue line on the graph is saying is that there is a basket of work that has become more expensive, and we are going to see how much more expensive it has become. There is line in it that states that, for sure, our capital need is higher than that found in the mid-term review. When you take the block of money that they were going to reassess, there would be additional costs required. We would be recovering those through the tariffs, and continuing to do the work would be the theory of how that would work.

The Chairperson (Mr Martin): That is great. That is really useful. I am slowly but inevitably getting my head around all this stuff.

Folks, thank you so much for your time. It was comprehensive questioning by the Committee. We always welcome witnesses so that we learn a wee bit more about where we are in one of the most critical areas that the Committee is considering.