Official Report: Minutes of Evidence

The Chairperson (Mr Martin): I welcome Kerry, Jonathan, Colin, Alison and Stuart to the Committee. I need to get Committee agreement for this evidence session to be recorded by Hansard. Do I have agreement?

The Chairperson (Mr Martin): I ask the departmental officials to make an opening statement of up to 10 minutes, and, in case you have never been here before, I inform you that there may be questions after that. Kerry, you are in the middle, so it looks as if you are leading off instead of Colin today. Is that right? How refreshing is that? Maybe not; I am not sure. Kerry, you are the one whom I am looking at right in the middle of that significant DFI team. I will hand over to you.

Mrs Kerry Mack (Department for Infrastructure): I will pass to Jonathan McKee to start.

Mr Boylan: Good move, Kerry.

The Chairperson (Mr Martin): A hospital pass from Kerry to Jonathan.

Mr Boylan: There has been a substitution already, Chair.

The Chairperson (Mr Martin): You are about to be hit by a flanker, Jonathan. Away you go.

Mr Jonathan McKee (Department for Infrastructure): Morning, Chair and members.

The Chairperson (Mr Martin): Morning.

Mr McKee: It is nice to see you all again. Most of you will know me from my time in DFI Rivers, where I looked after flood-risk management. I have a slightly broader portfolio now, and finance comes under my remit. That is the reason I am here this morning. We will give a short presentation on the Budget, including our requirements and where we are with the draft Budget. Kerry will do that in a minute.

At this stage, it is worth saying that, when it comes to the budgetary cycle, the equality process has not run its course, and the Minister is not yet in a position to take decisions on Budget allocations. Therefore, it will not be possible to go fully into the impacts of the Budget and outline what we can and possibly cannot do and how that might affect service delivery. The reason that we have a larger team this morning is to allow us to go into the various areas of the Department, whether that be, from Alison's point of view, NI Water (NIW); from Stuart's point of view, Translink; and, from Colin's point of view, transport and roads. I can answer anything about flood risk. I am sure that there will be questions about transformation and funding opportunities.

Without further ado, if your content, Chair, I will pass over to Kerry.

Mrs Mack: Thank you, Jonathan. Thank you, Chair and members. As Jonathan outlined, I will take you through a short presentation, setting out the Department's proposed draft Budget outcome, what the requirements look like, and the shortfalls that will need to be managed.

I will start with the resource position. The draft Budget outcome for the Department increases compared to the opening general resource budget for 2025-26. They range from £4·9 million in the first year to £29 million and £43 million in the second and third years, in comparison to 2025-26. When you compare it to the Department's final 2025-26 resource budget, there is a decrease in the first year, and then it increases again in the latter two years.

While the increases are welcome, the outcome falls short of what the Department identified it wanted to do in delivery. Some of those shortfalls are significant: £108 million in the first year, £110 million in the second and £113 million in the fourth year, when you compare against the requirements. Therefore, the draft Budget outcome requires difficult decisions to be made in managing within that allocation.

The next slide gives an overview of what the Department's proposed draft budget looks like on the resource side. It shows comparisons to the opening and final position for this financial year. The top line is the general allocation for the Department, so it will be for the Minister to decide between competing priorities as to what that money is put to. Then we have ring-fenced allocations for specific spending areas. For the Department on the resource side, that is transformation and the Windsor framework. That gives us the draft opening budget across the three years: you will see the green line of £654 million, £680 million and £694 million.

There was also reference in the Finance Minister's draft budget to indicative budget allocations. They are proposed as £10 million and £6·5 million, to give you an overall proposed budget allocation. The bottom of the table compares that to what the Department has identified that it needs and wants to deliver. The shortfalls are there on the red lines below.

The next slide sets out what the Department has identified in its resource requirements. That shows you the arm's-length bodies (ALBs) at the top, split among the four arm's-length bodies of the Department and their various requirements across the years. The bottom part is the departmental position, highlighted in three groups within that, to give you the total departmental requirements and the overall requirements across those years.

It is useful to point out that those requirements are at a point in time. They have been calculated to inform the Budget information-gathering exercise that went back to DOF in September. The Department is repeatedly analysing those to get the most up-to-date position to inform any final Budget. That is the resource side.

The capital position is fairly similar, as it reflects increases when you compare it to the 2025-26 opening position, with increases across the Budget years. Those range from about £55 million in the first year, £10 million in the second, £5 million in the third and £25 million in the fourth year. The Department has identified requirements for the ring-fenced areas: flagship projects and the city deals scheme. In the draft Budget, they are proposed to be fully met. While the increases are welcome, the draft Budget again falls short of what the Department has identified it wants to do in capital delivery. Therefore, decisions will have to be made on which capital schemes are to be prioritised.

The next slide is the detail of the Department's draft budget outcome. It separates the general and ring-fenced allocations. The ring-fenced allocations include reinvestment and reform initiative (RRI) borrowing, which is earmarked for NI Water, the Windsor framework, Translink and flagship, city deal and EU PEACE PLUS projects. There is a further ring-fenced allocation in the Programme for Government, which is for NI Water.

That gives you the total departmental budget. Like resource, there was reference to indicative allocations; they are noted in the table as £20 million in the second year and £10 million in the fourth year. The bottom of the table compares that to the Department's requirements. It was identified in response to the information-gathering exercise, which will need to be reviewed and revised to give you the shortfall across those years.

This table sets out the Department's actual requirements that it had identified. It is split between the ring-fenced and the general allocations below that. You can see that they rise steadily across the Budget period. They will be impacted by the number and different types of scheme delivered across those years.

I will turn to the next steps. As Jonathan mentioned, there will be an equality consultation exercise to identify the equality impact. The consultation on the Finance Minister's Budget has closed, and the responses will be collated and used to inform the final Budget decision. I have referenced that the requirements are at a point in time and are being reviewed and analysed in the Department. No decisions have yet been taken by the Minister, as that will be subject to equality considerations and confirmation of the final budget position.

The Committee has been provided with a copy of the Department's budget sustainability plan. The plan sets out the historical context for the level of funding that the Department has received over the past number of years since its inception, and it looks at the forward trajectory over the next five years to where the Department wants to go with requirements and delivery. There was no draft Budget when the plan was drafted, so DOF gave us indicative figures, purely for planning purposes. The plan sets out the trajectory, the funding gap and the potential impacts that that might have.

That was a short presentation. I am happy to take any questions.

The Chairperson (Mr Martin): Thank you very much for your presentation, Kerry; that was incredibly useful. I will start off, and then we will work round the Committee. You mentioned difficult decisions and some level of prioritisation. What difficult decisions are you looking at if you have identified that there is a shortfall?

Mrs Mack: The difficult decisions will be for the Minister to take in light of competing priorities across the Department, once we have sight of the equality impacts and the final Budget outcome for the Department.

The Chairperson (Mr Martin): You have referenced difficult decisions, but you are not 100% sure what those are. Has there been no scoping, for example, as to what the decisions might be?

Mr Colin Woods (Department for Infrastructure): I will give you an example from a DFI Roads resource budget perspective, Chair, as to whether to maintain limited services. Unfortunately, that is a decision that comes around every year when there is a shortfall in the budget. Equally, from a capital perspective, it is a question of how much money can be put into the different calls on the capital budget, whether that is for structural maintenance of the network, active travel development or major road schemes. I am sure that colleagues will have the same decisions that the Department is used to making every year and used to advising the Minister on.

The Chairperson (Mr Martin): OK. Is it be fair to say, Colin, that there is a paper circulating somewhere containing a list of difficult decisions and that it is up to the Minister to pick which ones will be progressed?

Mr Woods: It would certainly be up to the Minister to decide on the budget. I do not believe that there is a formal paper. It would be difficult to produce such a paper until you know the numbers that you are dealing with. The advice on impacts and consequences very much depends on the scale of any gap.

Mr McKee: It is fair to say that the estimates of what the Department requires are made at a point in time. As we work through the budgetary process, we will need to take stock and see what those requirements are, right up to the point where the Minister can take those decisions. When you look at the resource requirements against the proposed draft Budget, you are talking roughly about £100 million a year of a shortfall, and that figure is likely to increase.

On the capital side, you are looking at a shortfall of between £400 million and £1·3 billion over the four-year period. Those are significant numbers, which will require difficult decisions. When it comes to service delivery, as Colin says, it is about the standard of service that we can provide. That is not just on the Roads side; we have a budget for flood-risk management that we have to live within. At points in time, we will refresh the figures, which will allow the Minister to make the best decision.

The Chairperson (Mr Martin): OK, I will stay with that for a second. Jonathan, you mentioned that the size of the shortfall on the capital side was between £400 million and £1·3 billion. Do you have a breakdown of what that looks like, either through inescapable or high-priority items? It is pretty standard for a Department to break that down. There will be a list somewhere that details high-priority or inescapable items. Have I described that fairly in terms of the scope between £400 million and £1·3 billion?

Mr McKee: When you look at the long list of capital requirements, you are right: we have a programme identifying inescapable items, high-priority items and then the desirable items. The scale of the pressures that we are talking about will bring into sharp focus whether we will even be able to fund the inescapable pressures. We are not saying, "This is an easy decision. There are some nice-to-do things here, and it will be easy to set those to one side for a year or two". This is getting down to the metal.

The Chairperson (Mr Martin): Does the £1·3 billion take into account inescapable, high-priority and desirable items, or does it represent everything? Is it fair to say that Departments very rarely get past the inescapable items and halfway down the list of high-priority items these days and that desirable items are long gone? Some of your colleagues are smiling.

Mr McKee: A whole range of factors comes into play in how far we can go down the list of what we have to do. Finance is part of it. Another is having the people to administer the contracts to deliver the items. Outside the Department, our consultants and contractors have to have the people to deal with the work that is needed. We have to take all that into account in any proposal that we put to the Minister.

The Chairperson (Mr Martin): That is fine. I will move on to the A5, a very topical item that has been discussed at length by the Committee. The A5 case is sub judice, so I will not go into it. What is the Department's plan if the judgement is that the A5 cannot go ahead?

Mr Woods: The Minister has been very clear that the A5 will go ahead. It will be a matter of looking at the judgement, seeing what it says and working out the most effective way of progressing the scheme. In that context, we are mindful that, as you say, the matter is before the judge in the High Court, and we are waiting for a judgement. I expect that whomever does not win or is not happy with the judgement will wish to have it heard by the Court of Appeal and, potentially, a higher court. Until we have some clarity on the timeline, it is difficult to know exactly what the plan is. We are trying to hold a number of contingencies in our mind so that we know what we will do in different circumstances. All those efforts will be focused on understanding the legal position and the most effective way to progress the scheme.

The Chairperson (Mr Martin): Unless I am wrong, Colin, it is with the Court of Appeal.

Mr Woods: We are waiting for a judgement on the matter that was remitted to the High Court. Those hearings have concluded, and we are waiting for that judgement. As I say, I expect that whomever is not happy with the judgement will likely wish to have the matter heard by the Court of Appeal, which has already heard the two other grounds for appeal that the Department made.

The Chairperson (Mr Martin): OK. That is fair enough. Let me stay with that for a second. You said that it will go ahead. However, unless you know something that I do not, the judgement could be, "This cannot go ahead on these grounds". I quite like the phrase: "Noah built the ark before the flood". I assume that the Department has some plan if the judgement is, "This cannot go ahead on these grounds". What sort of plan is in place?

Mr Woods: You are absolutely right, Chair. We are planning for a range of contingencies. However, I am afraid that, given the status of the legal action, I am not in a position to go into the detail at this time. The Minister has made her position very clear: it will be a matter of looking at the judgement, understanding the legal position and understanding the best way to deliver the scheme.

You are right: the judgement could say a range of things, and it could go from one extreme to the other. We will just have to understand the implications of the judgement, whatever that is, and work on that basis.

The Chairperson (Mr Martin): Colin, could you explain for me how you explaining what the Department's plan would be if the judgement did not go your way would affect the outcome of the case?

Mr Woods: Sorry, I do not understand the question.

The Chairperson (Mr Martin): Essentially, what I am saying reflects your question. I am asking you to explain to me what the Department's plan is if it does not win the case and how that would affect the judgement, which you said you cannot comment on. I am just wondering what your reasoning is.

Mr Woods: I do not believe that it would affect the judgement that we are awaiting, but it would impact on the Department's strategy for dealing with any future cases, be they appeals or any other legal matters.

The Chairperson (Mr Martin): I have a question about RRI borrowing. Your presentation suggests that RRI borrowing is at about £105 million a year over the Budget period. Is that right?

Mrs Mack: Yes.

The Chairperson (Mr Martin): Will DFI be responsible for servicing those borrowing costs, in the first instance?

Mrs Mack: No, they are managed centrally by the Department of Finance.

The Chairperson (Mr Martin): Do you class borrowing £105 million a year as value for money?

Mrs Mack: Yes. The Executive have a borrowing limit, which is £225·7 million. The Executive can borrow that, which increases the capital available for allocation. The repayment of that borrowing is spread over a long time. That is why NI Water benefits: the lifespans of its assets are long, so it has the life of the asset in which to pay that money back. That is managed centrally through DOF.

The Chairperson (Mr Martin): That is what I suspected. Is it a 40-year period? Do you know what the RRI borrowing period is?

Mrs Mack: I am not sure of the exact length of the borrowing period. However, NI Water looks for assets that have a long lifespan to borrow against.

The Chairperson (Mr Martin): Thank you very much. I might have something else at the end, but we will see. There is a long list of members who want to ask questions. We will start with the Deputy Chair.

Mr Stewart: Thank you, Chair, and thanks, folks, for coming along. You paint a pretty bleak financial picture, but I cannot remember the last time that you did not, so nothing has changed except that we are now looking at it from a three-year point of view. I think that it was Colin and I who, in the past, discussed the strategic potential benefits of a three-year Budget. Notwithstanding the financial pressures and underfunding that you are going to see, will you steer me through what you see as being the strategic benefits, be they in roads maintenance or capital projects, across the Department's remit, and where the benefits of a multi-year Budget might come in? Or are we pretty bleak across the board?

Mr McKee: I will give an introduction and you can come in on roads, Colin. The Budget period, whether three or four years, allows us to plan better, financially. Clearly, we will not have the money that we need to do everything that we know we need to do and that society wants us to do. However, when we have some certainty, at least, about what we are proposing to invest, and where, it allows us to gear up our delivery teams, and it allows private industry to understand not only the Department's ambitions but what it can afford.

That applies to our arm's-length bodies as well. It would give them multi-year certainty on what they can invest and where they can invest it. In turn, that allows them to prioritise. That is what it all comes down to. If you do not have enough money, you do the most basic and elementary activity: prioritise where your investment will give you the most return. We in the Department will have to do that, as will our arm's-length bodies.

Mr Stewart: I get that, Jonathan. That has always been the rationale of multi-year Budgets. Where do you see those benefits occurring? Will we see more road schemes? Will we see better and faster delivered capital plans? Can we make those things tangible, rather than have the notion that things will be better? Or is it too early for that?

Mr McKee: It is more than a notion.

Mr Stewart: I am giving you the chance to explain.

Mr McKee: For talk's sake, if we have some certainty on our figures, will we focus on capital investment against resource investment or vice versa? Clarity allows us to reshape prioritisation around our asset types. "Prioritisation" is a word that is used often. When you look at flood-risk infrastructure versus the transport network versus Northern Ireland Water versus public transport, you see that there is no such thing as a relative prioritisation process in which you can start to prioritise one investment type over another. You are, therefore, starting to prioritise in the different asset types. That will be the challenge, but having certainty on budgets would help that process.

Mr Woods: I will offer an illustration of what that looks like from a roads perspective. There are three main amounts of capital within the transport and road asset management (TRAM) budget: structural maintenance; major project delivery; and active travel. Everything else is small enough not to make a huge difference if it is moved in and out of those budget lines. Those are the three amounts that make a difference.

Major projects have their own pace. The other two are standard requirements; they exist all the time. Major projects are different: they happen at a point in time. We can look at the programme for major projects and schedule when they will be in construction. We are, to a degree, in control of when to initiate construction, and, therefore, when to enter into that cost burden. A multi-year Budget allows the Minister to understand what that programme might look like and the different choices that she has on when to initiate a particular scheme. She can then offset the peaks and troughs that that creates by addressing the standard requirements of structural maintenance and active travel.

Knowing that we are going to have a heavy year in the construction of new schemes might reduce the amount of money available for structural maintenance below where we would like it to be, but we also know that, in year 3, that will start to correct itself as the major schemes move through the programme. We might then be able to increase the structural maintenance allocation to compensate a little bit for any relative shortfall in the earlier years. That is from a departmental perspective.

The other big advantage is that everything that I have just talked about relies on contractors, as well as our own staff. The more notice we can give contractors, the more effective they can be at managing their capacity and capability requirements, so that, when money is available, it can be spent in a value-for-money way. That is the other big benefit.

Mr Stewart: That is really useful, Colin. Thank you.

The Chair touched on the A5 capital project, which is a massive scheme. Delays are impacting on the cost of it. To what extent are the additional costs — they are not guesstimates; I am not insulting you in that respect — arising from the delays factored in, and what impact could that have on other capital plans, given the potential for increased costs?

Mr Woods: Delay costs money.

Mr Stewart: Absolutely.

Mr Woods: There is no doubt about that.

Mr Stewart: It is about how that is factored in.

Mr Woods: The larger the scheme, the more is brought about proportionately by the cost of delay. As I have said before, we have a range of planning assumptions for all the major projects. We put our requirement out at a point in time, based on when we think we need to spend the money. One thing for sure is that that will have changed by next week, never mind next month. It is a matter of staying on top of that requirement and working with colleagues in finance and in the Department of Finance, particularly for things that are ring-fenced, such as flagship projects and city deals, in order that that can be managed at Executive level.

Mr Stewart: We could probably talk all day. There are so many issues. York Street interchange is a capital plan that is not in here, but it is an Executive priority, and it has been a national priority for 60 years. Where does that sit? I understand that it is still an Executive and a ministerial priority, but it seems to have been kicked into touch. Does a multi-year Budget provide any more certainty so that the York Street interchange can go from conception to completion any more quickly?

Mr Woods: The short answer is no, unfortunately. From memory, the construction of York Street interchange was to start in 2031 and finish in 2034, which is outside the four-year budget period. There are many challenges, not least the fact that it is currently not funded. We have an idea of what it would cost, but we do not have clarity on whether it will be affordable. The list of schemes already in the portfolio and being actively progressed generally comes with Executive ring-fenced funding. That is one of the reasons why they are affordable. You can see the scale of the pressure on the Department's budget. Anything that the Department has to fund itself is competing with lots of other very worthy things for the same money.

Mr Stewart: Thanks, Colin.

Stuart, over to you; I do not want to keep you out of things. The reserves at Translink are the lowest they have ever been, at about £10 million. That, obviously, is concerning for it, for us, as a Committee, and, I am sure, for you in the Department. What are your concerns in that regard? What ongoing discussions are there with Translink about its reserves and its cash flow? Do you have any concerns about fluctuating fuel costs and the massive impact that those could have on Translink?

Mr Stuart Gilmore (Department for Infrastructure): I will pick up on fuel costs first. Translink has a hedge in place that protects it in the short term. It benefited from that during the most recent fuel spike with the Ukraine incident. I expect it to benefit from that in the coming months as well. It should not see any —.

Mr Stewart: How short term is that short-term protection? I have heard it mentioned before. It is good that it has that. Is it six weeks or six months? How does that normally play out?

Mr Gilmore: It is something that Translink deals with directly. I do not want to give you incorrect —

Mr Stewart: No problem. We can follow that up with Translink.

Mr Gilmore: — specifics. I would rather not give you an exact number, but we can certainly write to you, once we get the specifics. We have been reassured that Translink should not see any major impact from the current spike in the price of oil.

However, I look at Translink's cash reserves every day, and we brief the Minister. Ultimately, we cannot know what will happen with the reserves next year until we have a budget. We need to know the opening position, in conjunction with Translink, to understand where that will take it next year. I cannot really answer the question, but we always talk to Translink about it. The Minister has met Translink, and we regularly engage with it at a senior level. We continually talk to Translink.

Mr Stewart: The Department will concede that it has highlighted for a number of years that Translink has been eating into its cash reserves, due to what it sees as serial underfunding. Eventually, it will run out of reserves, and that is concerning. You said that the conversation is ongoing. Will it be resolved?

Mr Gilmore: That is a decision for the Minister, depending on the allocation that is given to Translink, which stems from the wider departmental budget. Rest assured, we continually discuss with Translink the budget's impact on its services and operations. It does a good job and brought in quite a few efficiencies last year. Translink has had an efficiency programme for a number of years. It will continue to explore that, and we will work closely with it on that. It is about keeping a dialogue open and working together in partnership with Translink. My team is directly responsible for doing that, but the strategic leadership does it too.

Mr Stewart: Are you telling me to hurry up?

The Chairperson (Mr Martin): Yes.

Mr Stewart: I have about five more questions, but I will come back to them. Sorry, Chair.

Mr Dunne: Thank you, folks. It is good to see you all again. We know some of you better than others, and it is good to see you.

We have seen the impact that climate legislation has had and is having on major infrastructure projects, such as the A5, the Enniskillen bypass and the A1 junction improvements. What work has gone on in the past in the Department about that impact, and what is being done on it at present and for the future?

Mr Woods: The answer is the same for most major capital projects that we deliver: we need the courts to understand what the law requires the Department to do to develop and deliver those schemes lawfully. That is at the heart of the judgement as it pertains to the Climate Change Act (Northern Ireland) 2022. Until we know the settled legal position, it is difficult to be more precise about the response. There is a range of possible outcomes from the legal process that will carry different implications for delay or the ability to progress quickly. We need to understand what the law requires; we then need to look at the project and the steps that need to be taken to allow it to proceed lawfully.

Mr Dunne: I appreciate that it is a live legal case. Is there any sense of a time frame for the decisions?

Mr Woods: Unfortunately, that is an open-ended question. We are waiting for a judgement on a matter that is in front of the High Court. I imagine that it will go to the Court of Appeal. We would love to be in a position to do that this side of the summer recess. However, the Court of Appeal will have its hearing and will need time to write a judgement, and, of course, either party could then appeal the issue to the Supreme Court. Unfortunately, I do not know how long that will take.

Mr Dunne: It looks as if we are talking about years, which vindicates the view that interim measures should be put in place along that dangerous road. We have seen tragedies in recent weeks along that section of road, and I know that you are cognisant of that reality. There seems to be little political recognition of the climate legislation's impact. I hope that officials realise the impact that it is having.

How much has been spent on the A5 project to date? There has been confusion with the land vesting, and no tarmac has been laid to date.

Mr Woods: I am sorry. I do not have that number in front of me. I will need to write to you with the figures.

Mr Dunne: There are estimates of around £150 million.

Mr Woods: That figure was in my mind. I cannot recall the precise number, but, yes, something in and around that amount.

Mr Dunne: It highlights the significance of the issue. Local farmers and landowners and over 300 farms are impacted. It is a major issue, and we cannot wait years to see changes being made on that road.

You mentioned, Colin, that the issue of limited service comes up every year. That has been the case for 11 years. Is there any sense of moving beyond that limited level of service and the sticking-plaster approach? We have seen record levels of compensation and record numbers of potholes, with 50,000 reported in the past four months. The £8 million for winter roads recovery is welcome. We recognise the unique challenge presented by the weather that has been around the UK and beyond. It is not just Northern Ireland that has an issue with potholes. You see it reported weekly on the mainland as well. Is there any hope of moving beyond that? The draft maintenance strategy has shortfalls. It ignores the role of utilities and the impact that they have on roads. We are keen to see whether any improvement is coming.

Mr Woods: The short answer is yes. The point of the strategy is to recognise the reality of the financial environment that we are in and that simply rolling a limited service forward every year does not provide enough value to society. The whole point of the strategy is to figure out how to use that money better. I respectfully disagree that the strategy ignores the role of utilities; it absolutely does not. The three pillars of the strategy are designed to encompass every aspect of road maintenance.

Mr Dunne: It is just that the word "utility" was not in the 18 pages of the document.

Mr Woods: Fair enough. I do not wish to argue with you on that. The point of the strategy is to look at all the ways in which maintenance is needed. A key intervention on which a lot of that work is built is the digital twin, which we are close to having completed, of the entire network. That will allow us to be much more precise. A lot of it comes back to the ability to prioritise, as Jonathan said earlier. That is as true of road maintenance as much as it is of capital budgets. It is about prioritising which bits of the roads to invest in to demonstrate the business case for and value for money in investing in different ways, including when utilities have opened a road and left it in a state that we are not happy with. All that is significantly strengthened by having an exponentially better data platform to work with. We are excited about the opportunity that that will bring to us over the next few years.

Mr Dunne: I like your confidence in that, Colin. Hopefully, you will be back soon, and we can look at that again.

Northern Ireland Water is a major issue. NI Water has said that, given that the budget is unconfirmed, it cannot confirm what impact it will have. Where are we now on the waste water issue compared with this time last year? Has progress been made on that, given the constraints that we still see across the country?

Ms Alison Clydesdale (Department for Infrastructure): We are in a position on waste water similar to that last year: significant constraints remain. You have probably had Northern Ireland Water at the Committee in the past telling you that, even if full funding was available, it would take 12 to 18 years and two to three price controls to resolve the waste water issue. We are in the same position on that.

Mr Dunne: That is not a good position.

Ms Clydesdale: It is the position that is currently affordable within the available budget.

Mr Dunne: It is certainly having a major impact on housebuilding and on so many things across the country, including the economy.

Mr Boylan: You are very welcome. Welcome back, to some.

I want to pick up on NIW. The Utility Regulator was before the Committee last week. It is looking at price control (PC) 28. I appreciate what the previous Member said, but we had a good conversation with the regulator about realism in relation to what happened with PC21. We found out that, during that five-year programme, there was a point when NIW could not spend the money. That said, I am not saying that money is not needed for infrastructure. PC28 falls within the middle of this Budget process. How will that impact on it? That is a hard one to answer, because the full figures have not been agreed and the plan is not in, but have you any insight into how that may impact on agreeing the PC? The Utility Regulator will sign off on it. Have you any information about the impact that that may have?

Ms Clydesdale: Yes. As the Utility Regulator explained in its evidence to the Committee last week, it regulates on the basis of need. Northern Ireland Water has estimated its need as being in and around £3·5 billion. That is an indicative figure and still needs the approval of the board of Northern Ireland Water and of the Utility Regulator. The current position on the elements of PC21 that have not been funded because of budget constraints is that they will take longer to complete than we would have expected. Some of those will be deferred to PC28 and subsequent price control periods. There is visibility of all the work that needs to be done, but the scale and pace of delivery of that work will be set on the basis of the available budget.

Mr Boylan: We welcome the multi-year Budget

but there is no doubt that it is a challenge. We had a good conversation with Utility Regulator last week.

How will the multi-year Budget impact on the all-island strategic rail review? There are some priorities there. Do you have an opinion on how that will go forward? Will there be any impacts? Are there any early indications of how that will roll out?

Mr Gilmore: As everyone is aware, the rail review is massive. So much investment is needed in it. I do not want to hide behind saying, "We need to wait and see what the budget allocations are", but, ultimately, that is where we are at. Translink has a massive capital investment programme, as members can see from the slides. That shows its ask, if it were to be fully funded. It has received significant funding over the past couple of years, with about £190 million for the rail review over the four-year period. That £190 million commitment would stretch out to a couple of billion pounds, if you were to look at it over a longer period, so priorities will need to come from the Minister considering where she wants to go with it. She allocated £1 million this year to get the next steps done through feasibillity studies on the four projects that were published towards the end December. That is all part of the considerations, in the round. A significant amount of funding is needed for it.

Mr Boylan: I asked that in the context of having listened to what other members said. While there are challenges, and we do not know what the budget will be, at the end of the day, we have a programme of work that will carry on after this. Things will continue. Things are not going to stop, so we need to look forward and have our plans in place. We all cried out for a multi-year Budget, and this is it, depending on what we get. Government is not going to stop, and the delivery of programmes is not going to stop. It is a big review, and there is a challenge ahead of us, but there are positives from it as well.

Mr Gilmore: Giving Translink sight of what it has over four years allows it to see what it can do. Obviously, it has to keep the network safe and maintain it at a certain level. Having sight of that four-year period allows it to see where further funding can be put and how much, if any, is left over. It comes back to the fact that we need to know what the allocation is. I feel as though I am hiding behind that, but that is where the answer sits, unfortunately.

Mr Boylan: I will leave it to my colleague from South Down to ask about the flooding issue, Jonathan. That is me, Chair.

Mr McHugh: Tá fáilte romhaibh uilig.

I am getting my head around all the figures. I do not envy your task. You seem to be running on empty, year after year. I had intended to raise the issue of the multi-year Budget and so on, but John covered that. It is obvious that having the multi-year Budget should definitely be a high priority — I am hearing that from you, too — and I am sure that that is the same for all our parties. It will ensure that you can do the job that you are expected to do.

We are nearing the end of the financial year, and the arm's-length bodies have not had any sort of indicative figures yet. To what extent does that impact on them and create difficulties for them in working out their programmes?

Mr McKee: There were two questions there, Maolíosa. In answering your questions, I will go back to something that John asked: what is the real advantage of having multi-year budgets? Apologies, John, I did not fully understand your question, and Colin came in with more detail on it.

I will give you an example of what it will look like. Having a multi-year budget allows us to work out what we can do. There will be things that we cannot do, but it really helps us to bear down on that. Let us say that we are working on a year-to-year budget for flood alleviation projects and we think that we will take forward 10 projects. You design them at a point in time, taking climate change guidance into account. Climate change guidance changes, and, if you do not deliver in the year in which you think that you will deliver, you have to go back into the redesign and spend money again on redesigning and reworking proposals. If you have a four-year budget, you can say that you know for certain that two projects will not go, which means that you can focus your attention on the eight that will go. That means that you do not spend money on the two projects, thinking that they will be funded when, ultimately, they will not. That is where you get some of the advantages of your longer-term planning. The arm's-length bodies, like us, are in a position of informing the Minister of their requirements, which allows her to make the best decision that can be made according to the relative needs. It goes back to the discussion that we were having earlier about the importance of prioritisation.

Clarity is great with a multi-year budget. Everybody knows that we have not got enough, whether that is for waste water, the road network or flood risk management. Whatever aspect of infrastructure you look at, if you choose to invest fully in one, that will most definitely be to the disproportionate detriment of the other. Those are the decisions that the Minister will take when we have the information in front of her.

Mr McHugh: I think particularly of the arm's-length bodies, including NI Water. Are decisions taken on the basis of what the arm's-length bodies have identified as their priority projects?

Mr McKee: I will let Stuart and Alison fill in some of the detail on that. I believe that that is the case.

Ms Clydesdale: For Northern Ireland Water, you will be familiar with the price control, which sets out the revenue limits over a six-year period or, in this case, a seven-year period. Every year, Northern Ireland Water submits to the Department an annual operating plan and budget. We have already received its operating plan and budget for this year, and it tells us that it needs £155 million of resource and £412 million of capital, which is similar to this year. It is important to point out that that ask from Northern Ireland Water is below what the price control said. It is based on what it feels it can deliver this year. Indeed, this year, we funded 92% of the capital requirement that it asked us for, and the Minister also found £19 million of additional capital this year for waste water projects, unlocking capacity for housing.

Mr McHugh: That is all the more reason why a multi-year budget for arm's-length bodies is a priority as well.

Ms Clydesdale: Absolutely. For Northern Ireland Water, having the visibility and certainty of a four-year capital budget will allow it perhaps to start multimillion, multi-year projects that, on a one-year budget, it would not even have been able to start. It is about having certainty and visibility of funding in the longer term. That also impacts on the supply chain, because, if the Northern Ireland Water supply chain can see a four-year budget, that is much easier for planning.

Mr Harvey: Thank you all. The A5 project has been mentioned, and I think of it and other road projects that are not yet progressed. What is the current level of expenditure on vesting? In mentioning that, I am thinking of landowners, homeowners and farmers who have had lands vested and have not yet had payment. Is there a budget to pay those people, and when will they be paid?

Mr Woods: Vesting costs are absolutely provided for in the budget that is allocated for the scheme each year. The A5 is in a difficult position, and I recognise absolutely that landowners are experiencing significant delay and uncertainty. The Department really regrets that. We have acted at all times to try to remove that uncertainty and bring certainty over timelines and delivery. We find ourselves in court as a result of legal challenges by others, and that has reintroduced uncertainty, which, I agree, is regrettable.

The budget is there. The legal position is that the Department does not own that land today. When the court made its original ruling on the A5, it quashed the vesting order, so the vesting order is not in effect and that land remains in the ownership of the people who held it before the Department vested it in November 2024. At such time as the quashing of that order is lifted, that position could change again. That must be incredibly frustrating for those landowners. I acknowledge that. It is frustrating for the Department as well. We need to see the completion of the legal process to understand whether the original vesting order goes back into effect or remains quashed, which will then change whether the Department owns the land and is therefore required to pay for it or whether it has to revest it and pay at that point. That brings a lot of complexity and uncertainty, which is unfortunate.

Mr Harvey: There seems to be a lot of uncertainty in the sense that, although the vesting order has been quashed, as you said, some landowners still feel that they do not have access to their own lands. Is that right?

Mr Woods: I am not aware of any specifics. The land is now in the ownership of the people who owned it originally. We have sought to enter into agreements with a number of landowners whereby they would leave the advance works that we had carried out, pending the completion of the legal process. Some landowners have taken up that offer; others have not and are free to use the land. We would like to understand the timeline ahead so that we can communicate what we think will happen from our perspective, but we are always subject to the intervention of others, as we have seen.

Mr Harvey: As you say, if there were a timeline, they would at least know where they are going. Thank you.

Mr McMurray: Mr McKee, I am always brought back to one of the parliamentary excellence talks or lecturettes in which you talked about "an almighty moment", if that makes sense. When you talked about possibly not even being able to fund inescapable costs, I was brought back to this thought: what will "an almighty moment" combined with the non-funding of inescapable pressures mean? Mr Boylan may have somewhat pre-empted my question. I am not thinking of anything specific, but there are a number of flooding issues across the Province. What are your thoughts on that?

Mr McKee: Flood risk is a challenge that we know exists, and it is increasing as a result of climate change. We know that. The Department has well-developed plans on the investment that we need, whether that is resource or capital investment, to manage that risk. The important word is "manage". As you know, we cannot prevent all flooding. One of the challenges is that, when you are delivering a flood alleviation scheme, you have particular design standards to adhere to. You build in a thing called freeboard, which, in simple terms, means that you build the wall a bit higher than your design is telling you to build it, so that you have a margin of error.

However, that is based on current climate change projections. Those projections change every number of years, and it is very unusual for them to go down. They almost always go up, which means that the demand for infrastructure increases. We are cognisant of all that, and we build climate change considerations into our flood risk management plans. Those plans then inform our investment needs, and those figures are factored into our budgetary preparation and our figure work. Projects that are either on the ground or past the point of procurement go into the inescapable envelope, and then there are other high-priority projects that are in the design phase. It is overly simplistic to say that all projects in the inescapable category will be funded and all those in the high-priority category will not. There will be discussions about that, and the Minister will have to make decisions on it.

It is also important to say that, even if we had all the money in the world — let us say that billions of pounds were pumped in and the Department got all the money that it needed — we would not be able to prevent all flooding. If you have a rainfall event that is more than was anticipated or has not been seen heretofore, which is the "almighty event" that we have talked about in the past, even properly designed infrastructure will overtop and could fail, and people's homes could flood through catastrophic failure or just through the sheer volume of water. That means that, in subsequent mandates, we need to move to a position where we start to embrace a concept called "living with flooding".

We have the living with water programme, which you all know about. In many ways, that is a concept for harnessing nature to manage flood risk. However, we need to look more widely to get to the point where we help societies to live with the risk that they face.

I have spoken to communities that have suffered flooding in the past. I have been honest with them and said, "You are living in an area that floods. It is likely to flood again. It is a risk that you need to understand, and we will help you live with that". What I am trying to say is that it is about more than just money. Even though we have well-developed plans, it will go beyond a piece of infrastructure investment and into a societal understanding of flood risk and how we live with it.

Mr McMurray: You touched on the pressures. Obviously, it will be up to the Minister to decide, but what advice is the Department giving to the Minister regarding prioritisation among the Programme for Government commitments?

Furthermore, the Treasury is conducting an open-book exercise. What correspondence or discussions have been going on with the Department of Finance? Does the Department expect that the results of the open-book exercise will direct priorities? What do you expect the outcome to be from the exercise?

Mr McKee: There are a couple of questions there.

Mr McMurray: I appreciate that. Sorry.

Mr McKee: I will let Kerry cover the open-book piece, if that is OK.

Mrs Mack: The Department has submitted its response to Treasury on the open-book review. It looked at last year's position and the pressures, which were the bids that we submitted to the Budget exercise. My understanding is that the Treasury will look at all the responses from Departments and come up with some sort of report, which will inform the Executive in their final Budget decisions.

Mr McMurray: Do you have no indication of the outcome?

Mrs Mack: No, we have no indication at all.

Mr McKee: You asked whether we think that the process will direct where investment is made. We have no sight of that at this point. Our position remains that the Minister will make the financial allocations to the various areas of work in her Department once that allocation is made to her Department.

Mr McMurray: You talked about prioritising roads and about data from roads. Obviously, there are pressures, and we talk about money being found in monitoring rounds. Will the Department ring-fence money for roads maintenance to address the surface issues that we are having? Does the Department envisage that ring-fencing would help with planning? We talk about the need for planning to be more efficient, yet we still have, dare I say it, an ad hoc response at times.

Mr Woods: We get ring-fenced money from the Executive rather than from the Department. The Minister will just take her decisions on how that budget should be allocated, including how much should go to roads. We will sit down with the Minister and talk about the different categories that make up the spend on, for example, structural maintenance, and the Minister will have the option to look at how that money is spent and direct its allocation to the different types of issues that we deal with.

It will always be open to the Minister to change that in response to weather events or other emergencies. Ring-fencing is not quite the word that I would use, but the Minister will have the opportunity to choose what that money goes on.

Mr McMurray: May I ask one last question, Chair?

The Chairperson (Mr Martin): Yes, certainly, Andrew.

Mr McMurray: I am just checking. I do not want to overstep the mark.

The Chairperson (Mr Martin): I am exercising grace.

Mr McMurray: We all need a bit of grace.

My final question is on NI Water. It submitted evidence, and it did not know what its budget would be. The Department for Infrastructure said that, even if it got all the budget, it could not spend it. It seems to be a cycle in which nobody can plan — the Departments cannot plan, you cannot plan, and we seem to be in a worse mess than before.

Can NI Water expect to have sight of what is indicated to it sooner? We can see what money is being allocated in future budgets, and the gap just seems to be getting bigger between what is required and what is allocated. What is the Department's view on that?

Mr McKee: The Department's view is that our budgetary process, and how that is administered, is fairly clear. Kerry and her team are very disciplined on assessment of need and how that, in turn, is communicated to our arm's-length bodies. The Department either has the money that it needs, or it does not. That comes back to the point that we have made a number of times, which is that the need to prioritise comes into view. It is not always the case that the loudest voice has the biggest need. It is important for the Committee to understand that there are big needs in the Department as well, and Colin, in particular, can articulate that. With all of that in view, the Minister will, in turn, make her allocations, and we will get those at the same time as the arm's-length bodies. That, in turn, will allow them to plan.

Mr Woods: I emphasise that Northern Ireland Water's challenges around planning are the same for the Department and, indeed, every other Department. As Jonathan says, I will understand the capital budget that is available for the structural maintenance of the road network on pretty much the same day that Northern Ireland Water understands the budget that is available to it for the year. That is true of all the other Departments for all of the things that they fund as well. That budget process works its way through, and then we go. It is one of the reasons why a multi-year Budget is advantageous to everybody, because everybody is a little bit clearer on what to plan for, and it improves the ability to plan across the board. That would not be unique to any one sector.

Mr McKee: It is also important to say that in any budgetary process, no matter how good it is, there are periods of uncertainty, particularly when you are gathering your figure work in order to determine the actual level of need. There are periods of uncertainty to allow the proper decisions around allocations to be made. We do not just hit the brakes when we come to those periods of uncertainty. There is a level of continuity through those periods, and you take mature decisions to allow that to happen. I am sure that our arm's-length bodies would be in that position as well.

Mr McMurray: Thank you, Chair. Oh, the Chair is not here. Sorry, Chair. [Laughter.]

The Deputy Chairperson (Mr Stewart): I am temporarily in the chair.

Mr McNulty: Thanks, folks. You are very welcome. I am sure that it feels as though you are working with one arm tied behind your back, given the budgetary pressures that you are facing. I wonder how on earth you manage to operate with such extraordinary resource and capital shortfalls on all fronts. I do not envy you your tasks.

That having been said, however, the roads network is deteriorating and dangerous. You drive on the same roads that we drive on, and, as each week goes by, it seems that the potholes are getting worse. Now, patch jobs are happening sporadically, but the efforts do not seem to be very focused. Some £8 million was allocated in the winter to the road recovery budget. Will that be spent before year end?

Mr Woods: Yes.

Mr McNulty: How much of a shortfall does that leave?

Mr Woods: The total amount of capital that is available for structural maintenance will be close to £100 million this year. Ideally, we would have £192 million every year. We spend that every year and have spent that every year in the past 10 years. Obviously, we are some way short of that requirement. However, over the past number of months, the Minister has been able to put in just over £30 million into structural maintenance, and we are working flat out to spend that. It has to be spent this year; it cannot be carried over into next year. Internally and through our contractors, we have people working flat out to make sure that it is well spent.

Mr McNulty: OK. I conducted a little roads survey a number of weeks back. I asked constituents to identify pothole locations in Newry and Armagh, which sits in the council areas with more than 30% of the potholes that exist in the North. In the Newry, Mourne and Down District Council and Armagh City, Banbridge and Craigavon Borough Council areas, 600 people engaged with me and identified 300 pothole locations in Newry and Armagh. They are very keen to know when those potholes will be repaired. I wrote to the Minister on 13 February and 27 February. How soon can my constituents expect a response on when those potholes will be repaired?

Mr Woods: We repair as best we can in order of safety risk, taking things such as traffic volumes, the depth of the defect and so on, into account. Without knowing the specifics of those potholes, it is hard for me to answer that. We are flat out repairing all the defects that meet our standard for intervention. That standard itself is higher than we would like: we have to leave some defects and focus the limited resources that we have on the biggest problems. That can be very frustrating. It can certainly lead to people's perception of the standard of a road being less than they would like to be. You are right: we drive on the same roads, so we share that perception at times.

We will work our way through all the defects that are reported to us. We have somebody who tries to understand the relative priority of different types of defect. If people are reporting defects, I always encourage them to include a photograph, if possible, because it can speed up the assessment process, and it allows the engineers who are assessing the defect to understand the nature of it. Often, when you get a report through the system, you cannot necessarily tell the relative priority of it from the information given, so we need as much information as possible on the depth of the pothole: rather than the surface area of the pothole, it is the depth that really matters to us. Photographs are very helpful and will help us prioritise the things that should be done first.

Mr McNulty: OK. I imagine that claims are mounting. As every week goes by, it seems that you more regularly see cars stopped alongside the road with tyre, wheel or other damage because of the scale and nature of the potholes. How much money has been spent on claims thus far for last year and for this financial year?

Mr Woods: The budget is in the region of £8 million to £9 million for this year. Most claims are for relatively small values, for vehicle damage. Then you get a number of large claims where a personal injury is involved. They can be much more significant. That budget also does not relate to things that happened in this financial year: typically, particularly with larger claims, it can take some years for those to work their way through the legal process. Matching a busy period, such as the one that we are having now, in which I expect a higher-than-normal volume of claims, to the budget impact can be fuzzy until you actually receive the claims and understand whether the Department should pay them immediately or contest them. Each decision is taken based on the facts of the case, as you would expect.

Mr McNulty: You must be overwhelmed. I cannot begin to think how you are coping with the number of claims that must be coming across your desk. What percentage of claims are successful?

Mr Woods: I do not have that figure, I am afraid. I can write to you with it.

Mr McNulty: I want to ask about budgets for major road projects, the A1 junctions and the A5. To go back to questions that were asked earlier, has that money been ring-fenced for those projects or, if it is unspent, where does it go?

Mr Woods: Flagship and city deal ring-fenced money that is unspent by the Department is returned to the Department of Finance and is then available for the Executive to reallocate.

Mr McNulty: OK. What value has been returned to the Executive to be reallocated from the A5 and A1 junctions schemes?

Mr Woods: From the A5, I imagine that we are talking north of £100 million for this year at this point, because we had planned to be in construction close to the start of the financial year. There would have been a full year of extensive construction activity. The initial budget for 2025-26 was in the region of £182 million. We will not spend anything near that, obviously, because we have not been able to start construction work. It is a significant amount of money. Through the year, as the timeline has been adjusted by the legal challenge and the court process, we have adjusted the requirement, and, at every monitoring round, we have made sure that we return what needs to be returned so that it can be reallocated and spent by the Executive.

Mr McNulty: John O'Dowd has another £100 million in his back pocket, and meanwhile, people who travel on the A1 see no progress. You can understand how that would make people quite angry.

Mr Woods: Yes. The Department, the Minister and, I am sure, the Finance Minister who made the original allocation would prefer to see the scheme advance. I absolutely agree with that.

Mr McNulty: It is a startling figure. With climate change, farmers seem to be the focus of attention for pollution, but last year the Department for Infrastructure emptied 200 million tons of raw sewage into our waterways. That is the equivalent of 8,000 Olympic-size swimming pools full of raw sewage being pumped by the Department into our watercourses. What is your view on that.

Ms Clydesdale: Northern Ireland Water publishes spill figures on its website. Upwards of 90% of what is discharged is rainwater. The amount of raw sewage in storm water overflows is quite small — around 1% to 2%. I do not have the exact figures, but I can write to you with them.

Mr McNulty: Do you not think that the figure that I just quoted to you is a fair assessment?

Ms Clydesdale: The percentage of raw sewage in any spill from combined sewer overflows (CSOs) is generally very low and is around 1% to 2%. Most of it is rainwater.

Mr McNulty: I will have to revisit my numbers. I will take your word on that; you are the expert.

We are facing housebuilding challenges. In the South last year, 36,000 houses were built, and, in the North, it was 1,400. The obstacle to housebuilding is obviously water and waste water capacity in the system. How is that going to be resolved? Are we on the right track to move things forward positively? The Minister has the three-pronged approach. I do not know whose idea that was, but it is not making much headway.

Ms Clydesdale: This year, the Minister allocated an additional £90 million through monitoring rounds to unlock capacity for houses. She has unlocked capacity for an additional 5,300 houses, which is more than the price control in force, which estimated 4,500 houses had it been fully funded. The additional pots of money that the Minister was able to allocate has unlocked more capacity.

Mr McNulty: OK, excellent.

Mr McReynolds: Thank you, everyone, for coming. Colin, it is good to see you again. I think that this question is for you. The A5 issue has been kicking around for a while. What assessment has DFI made on the cost of not acting to tackle climate change, given the impact that flooding and extreme heat could have on major infrastructure?

Mr Woods: The Department has taken no decision to not act in response to climate change. The courts have been asked to rule on the extent to which the Department's actions were in compliance with all our environmental obligations, including those in the Climate Change Act. The Department's position would be that that decision was sound. Obviously, others disagreed, and that is why we are where we are.

Mr McReynolds: Has the Department assessed the economic impact of inaction?

Mr Woods: We know the cost of delay and the forgone benefits of the A5 upgrade. Those are set out clearly in the business case for the scheme, and in the departmental statement that accompanied the decision in 2024. The inability to progress the scheme comes at a cost to society. Yes, it means that money that was going to be spent is reallocated, but that is not the better outcome for the large number of people affected.

Mr McReynolds: In the broader context, beyond the A5, has the Department carried out an assessment across all potential infrastructure, including hypothetical infrastructure, on the opportunities from tackling climate change?

Mr Woods: For all major projects, we are mindful of what the law requires us to do with regard to climate change and carbon reduction. One challenge that we have now is that the law is unclear. We are appealing the judgement precisely because we believe that what we did was lawful, and that we did what the law required us to do. If the law requires us to do other things in order to progress other projects, we will have to make sure that those are done. However, we are not sitting staring at those, waiting: we are thinking about how to do that and what that would entail. At the moment, however, the Department's position is that it did comply with the Climate Change Act. Obviously, the disagreement on that is what is at issue.

Mr McReynolds: Where does the Strategic Investment Board fit in, not just with the A5 but with the budget? Is it consulted on the Department's thinking on finance and the prioritisation of projects?

Mr Woods: In TRAM, we have regular engagement with the Strategic Investment Board. A lot of that is focused on the draft investment strategy for Northern Ireland. A committee of the Northern Ireland Civil Service (NICS) board has been put together to help to deliver that and look at the enabling actions designed to take on board the recommendations of the Public Accounts Committee (PAC) and other reports into the delivery of major projects. When the investment strategy is agreed, the Executive will benefit from that prioritised understanding of how the whole system fits together. The Strategic Investment Board is central to the development of that.

Mr McReynolds: The living with water programme in Belfast was paused and stalled. Have there been any conversations about that?

Mr McKee: The projects that made up the programme are taken forward at the pace and scale that budgets allow. The living with water programme allowed us to develop our thinking around sustainable drainage, and that was helpful. Internally, we have had discussions on the concept of living with water and how it needs to be folded into the development of flood alleviation schemes and the management of water. That is something that we are already doing. When we look at a flood alleviation project now, we look at whether there are natural solutions, through which we can live with the water, rather than simply build hard infrastructure to contain it.

You also mentioned climate change. There has been a lot of focus on the mitigation side of things and the Climate Change Act. From an adaptation point of view, the Department has been dealing with climate change for well over a decade. Climate change flood maps have existed for many, many years, and we factor climate change into the designs of our projects. The adaptation piece is well developed, and even though it is not a particular requirement of the Climate Change Act, it is a requirement of the floods directive, for example. Climate change is something that we have been dealing with for a while. We recognise that built, hard infrastructure will not be enough, and that allows the principles that were developed as part of the living with water programme to be looked at and factored into a range of areas, not just in Belfast.

Mr McReynolds: Lastly, I want to touch on something you said, Jonathan. I remember you talking about the maps in GB, many years ago. I think that we are behind GB as regards those maps. Are you saying that they have been enhanced? Are we catching up with regard to being able to mitigate flood risk?

Mr McKee: There is flood risk mapping here and in England, Scotland and Wales, and, at any point, somebody is going to be out of sync because climate change guidance comes out, and the various Administrations process that data and develop their own internal guidance. In turn, that allows us to upgrade our maps. It is not the only thing that drives the upgrade of maps, but it is one of the big drivers. New technical guidance around climate change has been developed. That is with the Minister for her consideration of the implementation. That would allow a further refresh of our mapping, which would take us ahead of England, for a while.

Mr Harvey: Kerry, in your initial presentation, I saw reference to the Driver and Vehicle Agency (DVA). It made me wonder about the budget for and costs of the new MOT centres that are not yet open. Have you anything on that?

Mrs Mack: The capital requirements for the DVA are there, among the requirements for everything that the Department wants to do. Two new test centres are included in those requirements for future years. Again, that is subject to budget outcomes and the Minister's decisions and priorities.

Mr Harvey: I know that there are some complications with equipment, so I was wondering if there were more costs for those. Thank you.

Mr Stewart: I want to ask about one thing that I did not ask about earlier. I do not know who will address this, but scoping exercises have begun on the all-island strategic rail review. Will you give us an update on those scoping exercises and which projects might be taken forward in the medium to long term? I am thinking, in particular, about the Belfast circle line and vital connections to our airports. Is there anything pending or being worked on?

Mr Gilmore: The report was published on 17 December. That is the most recent update. Preceding that was the prioritisation plan, in conjunction with the Department down South, on the wider scope and what the plans were. On whether funding will be allocated, I go back to what was said when I was chatting to Cathal. It depends on the Minister allocating budget. This year, she gave £1 million to do the next steps that are needed for the four studies that are in the December report. The December report gives detail of how much it costs to get to the next stage of the business case. For example, it will cost £50 million or £60 million to get the Portadown-Derry rail link to the next business case. Significant amounts of money are needed. It is all part of the considerations and the budget allocations.

Mr Stewart: Given how strategically important they are for Northern Ireland plc, particularly the connections to our airports, is there any scoping work being done between departmental officials, the Minister and the private sector on securing private-sector funding to pursue key aspects of the rail review and the strategic priorities? Has that been looked at in order to cobble together a cocktail of funding?

Mr Gilmore: I am not aware of anything at this stage with the private sector.

Mr Stewart: OK.

The Chairperson (Mr Martin): Cathal, you had one last question.

Mr Boylan: Thank you for letting me back in to ask a final question. I need to be careful how I ask this, because the Utility Regulator will sign off on the next PC period, and we have had five price controls over the last 20 years. I do not know the Department’s responsibilities on this, but NIW will submit its plan, and there are guesstimates of £3·5 billion. We have engaged with the Utility Regulator to understand its role and remit, and I want to ensure that broader conversations are happening about the broader economic impacts. Is the Department involved in those conversations? The Department will sign off on it, and it may agree on £3·5 billion, and there will be allocations after the Budget. Surely, there have been broader conversations over the five PCs to get a better understanding of the viability. You may not be able to answer that question. It is all right to have an ambition to deliver a target on infrastructure, but that has not been the case over the last couple of price controls.

Ms Clydesdale: The Minister has met with the chairs of both the Utility Regulator and Northern Ireland Water quite a few times and recognises the Utility Regulator's specific role in the statutory duties. While the Minister recognises that, she has made clear to both organisations the need to take account of the public expenditure picture at the moment. The engagement is ongoing. Northern Ireland Water will submit an outline capital submission to the Utility Regulator in April of this year, and that will need to be approved by Northern Ireland Water’s board. The outline capital submission is an estimation of need. Last week, the Utility Regulator told you that it does not take public expenditure into account and regulates on the basis of need. However, every year, Northern Ireland Water puts in an annual operating plan and budget to the Department, which informs the Minister's budget decisions because it is asking for the available budget. Over the past two years, we can see that the amount that Northern Ireland Water asked for in the annual operating plan and budget is well below the price control amount, because it is asking for the amount that it can deliver in year. It is important to understand the regulatory process, and it concentrates on the need. However, the budget position is based on affordability, and that will be reflected through the annual operating plans and budgets that Northern Ireland Water submits.

Mr Boylan: Thank you, Chair.

The Chairperson (Mr Martin): OK, Cathal. I have two final questions, and you will be very glad to know that you will then be free to go. Some 5,300 homes have been unlocked, and the Finance Minister quoted that figure to me in the Chamber last week. Do not get me wrong, that figure is welcome. However, there are currently just shy of 15,000 units in Northern Ireland that have been refused because of the waste water infrastructure, which is three times the figure that you quoted as being held back. Do you think the figure of 15,000 units will rise or fall over the next year?

Ms Clydesdale: The figures that I quoted are for the units that have been unlocked through the funding provided by both Ministers. The 5,300 is the amount that has been unlocked since October 2024, when both Ministers were here. Our Minister has provided an additional £20 million, which has unlocked around 3,000 units. I am aware of the 15,000 figure, and Northern Ireland Water gets that figure from the applications in its system. I do not have sight of how many of those applications are approved with planning permission and water consent discharges. Some of the 15,000 units may be connected through existing developer contributions and stormwater offsetting; others will require upgrades to Northern Ireland Water's infrastructure and will need to await that.

The Chairperson (Mr Martin): Do you think that that figure will go up or down? What is your assessment?

Ms Clydesdale: I do not know that I have enough knowledge of the housing market in Northern Ireland to answer that, but it is likely to go up.

The Chairperson (Mr Martin): This is my final question. The High Court judgement and the views on it have been well circulated at the Committee. I will read a paragraph of Justice McAlinden's judgement:

— that is your statement —

Essentially, Justice McAlinden was saying that you went to court, and, for whatever reasons, key information was not provided by DAERA. Are you aware of what I have just read out? I am not asking you to comment on what is before the courts. This is in the public domain. Are you guys aware of it?

Mr Woods: That matter has been remitted to the High Court. That is at the heart of the hearings that have just concluded, I am afraid.

The Chairperson (Mr Martin): OK. Was it disappointing that DFI lost the initial High Court case?

Mr Woods: Absolutely, it was. The Minister made clear her disappointment on the day that the judgement was handed down. As a team, yes, we were bitterly disappointed.

The Chairperson (Mr Martin): Do you see it as a failure by anybody, either the Departments or —? Who takes responsibility — let me put it that way — for losing the High Court judgement?

Mr Woods: Ultimately, the Department is responsible for its actions, so it is responsible for the outcome of that. There is a reason that the Department appealed the judgement. It is because, respectfully, we disagreed with it, and we thought that the Department's actions were lawful. You are talking about a room full of paperwork that needs to be read through and understood. I do not know that questions about who has failed are for today. We need to wait and see the outcome of the appeal. That will tell us whether or not the Department's actions were lawful.

The Chairperson (Mr Martin): OK. This is not a question but a final comment. I read through the judgement. We could spend three hours at Committee just looking at the things that Justice McAlinden said. One of the small details that struck me in the judgement was the fact that a High Court judge used an exclamation mark so much to vent his frustration at what he read in the evidence. I have never seen a High Court judgement in which an exclamation mark has been placed at the end of a sentence so much. It was startling. It was a small detail, but it was still startling. He was, to a level, venting his frustration at the evidence that was presented to him at the initial hearing.

I hope — I am sure that you will concur with this — that whatever is presented at the review that you mentioned, Colin, in regard to the High Court hearing and any future appeal is stronger, because the decision will affect not only the A5 and whether the upgrade is built but value for money in Northern Ireland. Members referenced the fact that the money was handed back to the centre and that much of it — about £40 million, in fact — was then reallocated to you guys over a short period. However, we have not really touched on the fact that major capital sits behind the A5 judgement. I think that about £1 billion of major capital is sitting in train. If DFI loses the appeal, it does not put an exclamation mark after the case; it puts a massive question mark over where we go next in being able to build infrastructure in Northern Ireland. That is the seriousness of what rests on the judgement. I am sure that you are more than aware of that already.

Thank you very much —. Peter?

Mr McReynolds: Apologies for coming in so last minute. Alison, towards the start of the session, you mentioned a percentage of about 90% in regard to what Northern Ireland Water wanted. What was that figure?

Ms Clydesdale: For 2025-26, Northern Ireland Water, in its operating plan and budget, asked for £405 million to deliver its capital programmes. We have currently funded it to £370 million, which is 92% of the £405 million that it asked for. That is below the amount in the price control, but it is the amount that Northern Ireland Water felt that it could deliver this year.

Mr McReynolds: What is the breakdown of that £490 million figure in terms of resource and capital?

Ms Clydesdale: No, the £405 million is capital.

Mr McReynolds: So, that £405 million is capital, and the remainder is resource. Is that right?

Ms Clydesdale: Resource is £153 million.

The Chairperson (Mr Martin): Justin, you can ask one last question, after which these poor folk will be able to leave.

Mr McNulty: Apologies. What is your view on the Grant Thornton and Turley summary position paper entitled 'Confronting NI's Wastewater Crisis'?

Ms Clydesdale: We have seen that report. The Minister has been clear that she does not support the introduction of an additional charge through rates; she considers that to be water charging.

Mr McNulty: My question is more about the paper's laying out of the challenges, such as the number of houses that cannot be built and how that is holding back our economy in a massive way, to the tune of billions of pounds. It also affects employment. It is having a major detrimental impact on our economy. That is not your challenge, Alison; it is the Minister's. However, it is very stark and startling.

The Chairperson (Mr Martin): Thank you, Stuart, Jonathan, Kerry, Colin and Alison, for coming along. We really appreciate your evidence.