Official Report: Minutes of Evidence

The Chairperson (Mr Martin): I welcome Kiera Lloyd, Adele Watters and Alison Clydesdale — a frequent flyer at the Committee — from the Department for Infrastructure. Are members content that the evidence session be recorded by Hansard?

The Chairperson (Mr Martin): I invite the departmental officials to make a brief opening statement of up to 10 minutes, after which you will expect some questions from the Committee. Kiera, we are in your hands.

Ms Kiera Lloyd (Department for Infrastructure): Thank you for the opportunity to provide the Committee with an update on developer contributions for waste water infrastructure. Members will recall the previous briefing late last year when Alison Clydesdale and I attended the Committee to provide an update and answer questions about the outcome of the Department's 2025 consultation on whether a pathway for developer contributions should be introduced. I am here today with Adele Watters, who was involved in that consultation and who, as well as Alison, will be part of the team that takes that work forward.

Today's briefing follows the Minister's statement to the Assembly on 19 March, which confirmed that developer contributions will be introduced on a phased basis, starting with the development of, and legislating for, a scheme to facilitate voluntary contributions, while work will continue on the potential for a waste water infrastructure levy in the future. The voluntary scheme will enable developers, if they so wish, to help narrow the waste water funding gap by contributing directly to upgrading or replacing Northern Ireland Water's waste water infrastructure in areas where capacity constraints are preventing new connections. You will be aware that that work further implements the Minister's three-pronged approach to addressing waste water constraints.

As the Minister advised when she wrote to the Committee immediately following her announcement, our focus now is on scoping and developing the detailed policy, operational procedures, governance arrangements and legislative options required to create the voluntary scheme. We are in the process of putting in place the work streams that will be needed to give effect to the Minister's decision, which, at a very high level, will cover the legislation necessary to introduce voluntary contributions and the associated administrative arrangements and processes to enable the scheme to operate. Those will help determine the appropriate approach and inform delivery timelines.

In addition to working with the Departmental Solicitor's Office (DSO) on developing the legislation, we will establish a developer contributions working group, comprising representatives from Northern Ireland Water, the Utility Regulator and relevant DFI directorates, to develop the operational procedures for how the voluntary contribution scheme will work in practice. As we embark on those work streams, we particularly welcome the Committee's initial insights into the key issues that members would like the Department to consider as the policy develops. We are genuinely keen to hear what members would like us to include.

Chair, I will stop there. We are happy to take members' comments and questions.

The Chairperson (Mr Martin): Thank you very much, Kiera. Hopefully, the Committee will have some insights to provide today. I will start. On the way through your presentation, you mentioned that, on 19 March — I think that we have it here as 13 March — the Minister issued a written ministerial statement on this. Is that right?

Ms Lloyd: Yes.

The Chairperson (Mr Martin): As you noted, this is one of the three prongs of the Minister's waste water strategy. Is that right?

Ms Lloyd: Yes.

The Chairperson (Mr Martin): Given that it is a key prong in addressing one of the biggest challenges that DFI faces, do you not feel that it would have been appropriate for the Minister, in the first instance, to come to the Assembly and make an oral ministerial statement or, in lieu of that, to come before the Committee for a level of scrutiny, rather than sending her grade 5s to the Committee? In saying that, I am probably demoting some of you and promoting others. Given the importance of that prong, do you not feel that, in the first instance, the Minister should have made an oral ministerial statement or at least been here in front of the Committee rather than you?

Ms Lloyd: The developer contribution scheme for waste water infrastructure is at an early stage. There is a lot more work that we need to undertake to scope out the detailed policy, operational procedures, governance arrangements and legislative options required. Making a written ministerial statement was, therefore, a more proportionate and appropriate format for the Minister to announce her decision to progress a voluntary scheme and to continue to explore the potential of a levy.

The Chairperson (Mr Martin): OK. What modelling has been undertaken by the Department to quantify the level of proposed developer contributions and, when the scheme has been developed, what impact those contributions will have on the waste water issue in Northern Ireland?

Ms Lloyd: We have been clear — it has been made clear since the consultation was launched, before the consultation, during the consultation, in the consultation responses report and afterwards by the Minister — that developer contributions are not a panacea. They will not create a significant amount of revenue, and they will not solve the problem of waste water capacity constraints. What they will do is offer an opportunity to help.

When it comes to modelling, as I briefed Ministers when we discussed the consultation itself, we cannot put a figure on it, because it will depend on where the constraints are and what assessment the developers make of the financial viability of creating those houses and the associated costs. They will have to undertake that assessment. What we are doing is setting up the developers' working group to take this forward. Northern Ireland Water will be at the table and will come to us with insights from the developers. One thing that we will look at is how to make it as feasible as possible for people to be engaged and to contribute voluntarily if they choose to do so. It is important to note that the contribution is voluntary. We are simply allowing developers to contribute to unlock housing capacity if they choose.

The Chairperson (Mr Martin): OK. The Committee received a letter from the Minister. What date is on that? It says 2 February. It says:

We asked about the strand — or "prong", as you might say — and the impact that the Minister thought that it would have. On the "Developer Contributions" strand, it has a bullet point that says:

I suppose that that is your evidence today?

Ms Lloyd: Yes.

The Chairperson (Mr Martin): OK. You are saying that you are not really sure what impact the prong or strand will have until you see it in operation.

Ms Lloyd: In essence, we are guessing. In 2025, Northern Ireland Water came and gave you evidence about developer contributions, and its estimate was around £3·5 million. That was a conservative estimate based on Northern Ireland Water's experience of working with developers. It could be more; it could be less. That was not based on anything in particular; it was based on Northern Ireland Water's conversations with some developers. We do not know the figure for sure. As we work through the detail of what the scheme will look like in legislation and in practice, one area that we will look at is whether we should facilitate the pooling of resources so that, if developers have houses in a similar area, they have an opportunity to come together and combine their resources. Some other jurisdictions make provision for that. Those are the sorts of areas that we covered in the consultation document. We got some responses on them, and those will be part of the detailed work as we look at how voluntary contributions might be administered.

The Chairperson (Mr Martin): Thank you for that. I will take you through a few figures. If I get any of them wrong, stop me along the way. Price control 21, which runs from 2021 to 2027, was initially set at £2·1 billion by the regulator and later increased to a nominal £2·4 billion following the regulator's mid-term review, owing to inflation and revised costs. In effect, this is talking about putting in some sewage treatment plants where developers build a small number of new homes. My research has led me to believe that you can cover about 20 homes for a capital outlay of £250,000 around a sewage treatment plant. I was being incredibly optimistic for the Department, as I always am, and thought, if you managed to get 50 of those from the developers' side, that would unlock, say, 1,000 new homes. I did a bit of maths around that, which I have revised because I was not aware or had not remembered that NI Water thought that developer contributions might unlock £3·5 million. Is that right, Kiera?

Ms Lloyd: That was what Northern Ireland Water said at Committee that it thought might be unlocked. It is important to say that Northern Ireland Water wants voluntary contributions to be introduced. That was its response to the consultation. As I said, it is taking part in the group that will work on the procedures and practices to put voluntary contributions in place.

The Chairperson (Mr Martin): I applied some maths to the figures that we have just talked about. I have done some live matchstick maths here on that £3·5 million figure. If voluntary contributions were to work at my very optimistic level of unlocking 1,000 new homes, that would deal with 0·5% of our waste water problems. Using Northern Ireland Water's figures, it would deal with around 0·1% of the waste water infrastructure crisis. You can pick either of those figures. You can go for my very optimistic £12·5 million or Northern Ireland Water's probably more realistic £3·5 million. Notwithstanding the figure that you pick, I am left thinking that this prong is more like a matchstick. Is it even a prong? We are talking about a figure so small as to represent not even 1% of the capital that would be required to sort this out. That leaves me wondering whether it is just a little piece of policy intent. I should phrase that as a question to you. Do you accept the figures that I have just used? Do you further accept that the impact that that prong will have will be so minimal as to be nearly inconsequential?

Ms Lloyd: The figures could vary depending on the year. In essence, all we are talking about doing with voluntary contributions is unblocking people's ability to contribute if they wish to do so. There could be a year in which it rises above that, and there could be another year in which it goes below. It simply allows developers to facilitate the unlocking of capacity if they choose to do so. Given the issues with housing and waste water connections, any capacity released is a benefit —

The Chairperson (Mr Martin): I agree.

Ms Lloyd: — and every house that is released means that someone else can be housed. I think that I said before that we are very clear that this is not a solution to waste water funding.

The Chairperson (Mr Martin): Yes.

Ms Lloyd: There is a big issue with waste water funding. This moves the bar a little bit. It moves the needle a bit and offers something that can be done, but, until we put it in place and see how it operates in practice — until we have had those conversations and the continued financial viability studies are undertaken — we genuinely will not know. We are all guessing. It will be down to where the capacity constraint is and how much funding is required. The cost of upgrading the works that Northern Ireland Water needs to upgrade range from a small amount of money to a significant amount of money; it just depends on how much is unlocked, where it is and the financial viability for the developer. At the minute, developers are simply stymied, in the sense that they cannot do anything to help to unlock capacity other than the developer-led work that they are currently able to do. This simply offers an alternative. If it moves the needle even a little bit, that is still an increase in housing for people who are looking for it.

The Chairperson (Mr Martin): Kiera, I completely agree that any movement of the needle is welcome, especially for someone who is looking for a home. I do not dispute that: I want to be clear that I welcome it. My issue is that this is being held up as a significant plank or prong. Do you accept my figures? If this policy were to be legislated for, it would, to use your analogy, move the needle, optimistically, to a level of 0·5%, or, based on Northern Ireland Water's less optimistic figures, about 0·1% of the problems that we face with building new houses and, behind that, with waste water infrastructure.

Ms Lloyd: We do not know, and we will not know — as I said, I suspect that it will vary year by year, and I do not want to commit to a figure that I pluck out of the air. We have said very clearly — it is in the consultation document five times, I think, and it is in the consultation responses document — that this is not a solution to the scale of the waste water infrastructure funding issues that we have. That has been made incredibly clear, and it is accepted that that is the case. It is one of the things that we can put in place to move that needle.

Ms Alison Clydesdale (Department for Infrastructure): Perhaps I can just add to that, Chair, in the wider context of waste water constraints more generally. Obviously, waste water constraints are happening in the network and at the works. Currently, developers can, as you are aware, do storm water offsetting to allow connections. That is available now and will continue. Storm water offsetting allows developers to connect to the network. Where pumping stations or treatment works need to be updated, this proposal will allow voluntary contributions to that area, which currently cannot be so. It is bringing that new element. As Kiera said, it is demand-led and there is an element of choice. Therefore, it is very difficult to estimate any figures. It is demand-led, so it is up to developers as to whether they go forward with it. The scale of the investment will obviously vary by site. One developer may need to upgrade or contribute to a pumping station; for another developer, it could be something else. Therefore, it is very difficult to make any accurate estimate of what it might bring in.

The Chairperson (Mr Martin): OK. Some of the figures are there. I will not labour the point. We know what the need is. We know what a treatment plant that will service 20 homes costs, and we are only guessing, from then on in, as to whether we go with an incredibly positive estimate of unlocking £12·5 million, or a more conservative NI Water figure of £3·5 million. However, when you apply math to either of those figures, all I simply say is that, in dealing with the problem that we face at this point, it solves between 0·1% and 0·5% of that problem or that needle shift. I will pause there.

Has any long-term economic analysis been done by the Department on the effect on the housing market? I am thinking in particular about the impact on house prices.

Ms Lloyd: Again, this is acknowledged throughout all the documentation. There is an expectation that a developer will pass on to the purchaser of the home the cost of any upgrade or amount that they contribute. It will be down to an economic viability study by each developer as to whether it is financially viable for them and whether the market appetite is sufficient to allow for that flexibility in the price of the housing. That obviously is market economics. The more houses that they build, the more valuable it is to them to contribute or to make a voluntary contribution to upgrading Northern Ireland Water's waste water infrastructure. There will be an increase, but, as I said, we expect, and we were told in consultation, that there would be an impact on housing, but, again, it is demand-led, and it is slightly more for a house. House prices are already rising. It is slightly more for a house or no house.

The Chairperson (Mr Martin): OK. Certainly, the consultation responses agree with your analysis. I will read a couple of them out to you:

Is it your analysis that, effectively, the Minister is bringing through a stealth tax on new houses in order to get them built?

Ms Lloyd: No. If it was a tax, it would be a uniform tax applied across every build. It is not. It is an opportunity for developers to make a financial assessment on whether it is viable for them to contribute and whether the market appetite is sufficient to offset the cost of that, or not to build. It is a binary choice.

The Chairperson (Mr Martin): I see your argument there. Do you accept that, if this scheme applied and, if a developer wanted to unlock a housing development of 20 houses and they could do that by putting in place a sewage treatment plant of £500,000, for example, that would service all that — just following that logic through — that £500,000 would simply be added on to the cost of the houses and, therefore, because of this scheme, house buyers would simply be paying more for those houses, even if, taking your last point, they are doing that on a voluntary basis? Do you accept my point that the houses are costing more because of the scheme?

Ms Lloyd: Again, the scheme is voluntary.

The Chairperson (Mr Martin): Yes.

Ms Lloyd: In the assessment that you have just given, the developer would assess the cost of £500,000 against the cost of building those 20 houses and look at whether the market would sustain that and whether there was sufficient demand for those houses. To come back to the point, however, that is a financial assessment for the developer to make. Let us say that the decision was, yes, people were willing to pay that amount for the houses. Again, that is 20 more houses — or 500 more houses — that were not there before. That is the issue. We are conscious of that, and we raised it in the consultation document. We got responses about that, and we will be dealing with the Housing Executive. We are conscious of the knock-on impact, but it is about unlocking supply, and it is very much based on developers conducting their own assessments and choosing to engage or not to engage.

The Chairperson (Mr Martin): That is OK. I will accept that. You have probably accepted my point. If we contrast not applying the scheme to a development or applying the scheme to a development, if the scheme is applied, there is a cost to developers to do that, market forces notwithstanding. My point, which I hoped that you would accept, is that those houses will simply cost more, because the developer will pass on those costs. It is not the Department that is paying the extra cost; the person who is buying the house will have to absorb that. It would be interesting if you wanted to argue the point that developers will somehow absorb that cost themselves. My point is that they will pass that on to the people who are buying the houses, and those houses will be more expensive.

Ms Lloyd: The assessment will be about whether to build the houses that cost more or not to build them. If you do not build the houses, you are waiting for the capacity to be unlocked at the point when funding becomes available. If the Department could fund it, that would be the area that we would be funding anyway.

Ms Clydesdale: It may be helpful to add that the situation that you have outlined is the current situation, with the current developer contributions. When a developer chooses to implement stormwater offsetting, it is the developer who pays for that in order to enable that capacity to be unlocked. Even in that case, it is likely that they pass on that cost. That situation exists.

The Chairperson (Mr Martin): Yes. That storm water offsetting can be expensive in terms of technical assessments and dyes. I know all about that as a local MLA.

In conclusion, before I go to Stephen, I had a look at how this has been applied in other regions and jurisdictions. It is actually very common across the world to have this sort of stuff. Lots of countries do it, particularly the United States. Most of the research in this area has concluded more or less as we just agreed, Kiera, that it puts the price of houses up. However, I found something really interesting, which I will ask you to comment on, in the 'Journal of Housing Research'. I was looking specifically at when this new system is applied in a first case — when voluntary or compulsory contributions are first introduced in order to create solutions around sewage. The journal concluded that the least successful systems, when these things are adopted, are (a) done on an ad hoc basis, (b) negotiated on a case-by-case basis, or (c) imposed only after infrastructure is already critically overloaded. I suggest that voluntary contributions meet all three of those criteria as currently assessed by the 'Journal of Housing Research'. Given your evidence today, it will be up to individual developers as to whether they go with the scheme. That will also be agreed on a case-by-case basis, I assume, with Northern Ireland Water. I assume that you will also accept the fact that our infrastructure is already critically overloaded. This journal defines that as the least successful system with regard to how it is adopted. I will be able to give you the reference for that should you want to go away and look at it, but I will ask you to comment on that.

Ms Lloyd: Given those scenarios, I would be interested to know what it thought was the most successful approach. Certainly, as part of the working group, we will look at all other available options. At the minute, the two options that we have consulted on are voluntary and compulsory contributions. As I have said, the Minister wanted to go with voluntary contributions. She has made her decision on that basis, but has asked us to continue to keep, or develop further, the option for compulsory contributions, because a lot of consultation responses said that more detail was needed before people could make a really informed decision on that. It may well be that the article that you mentioned would say that, in those circumstances, we should go for a compulsory levy. That would be something that we would factor in. I have not read it, so I do not know, but I am happy to look at it and whatever it suggests as a successful model with those three scenarios in place, because we cannot do anything about the current situation and this is an attempt to mitigate the reasons. If there is a more successful approach, I will certainly be happy — I think that the working group will be happy — to consider that.

The Chairperson (Mr Martin): I cannot remember all the detail. I think that it suggested a system-wide approach. I am not sure whether that is actually compulsory levies. Its other suggestion was that it is nearly a maintenance dosing thing, so you are best doing it before it gets critically overloaded. What it does is it effectively maintains a fairly robust system. I will find the article and send it across.

Ms Lloyd: As I said, we will be very happy to put that on the agenda for the working group and look at that as we go forward.

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

Mr Dunne: Thank you, folks. A total of 62% of almost 300 respondents to the consultation opposed this approach. Were you disappointed with that feedback from the consultation?

Ms Lloyd: Absolutely not. The purpose of going out to consultation is to gather views, listen to people and get ideas and insights. Going for voluntary contributions means that it is not an imposition. The idea of the levy, if that is taken forward in the future, is a bit more complex. That is a different matter. However, if sufficient numbers of developers are interested in pursuing developer contributions, this simply gives them the option to do so. The people who would not like to have to make a voluntary contribution are not obliged to do so at all.

Mr Dunne: It is fair to say that it was not exactly a major vote of confidence in the approach from the Department and the Minister, given that level of negativity around it.

Ms Lloyd: As I say, when you go out to consultation on anything that involves people paying for something, you do not expect that people will overwhelmingly want that to happen. What we are interested in is their insights and rationales, whether there is anything that we can mitigate, and whether anyone is for it and why they are for it. We are looking at all the evidence in the round. As with every policy consultation, we look at what is being said in the responses and we factor that in to how we design going forward.

Mr Dunne: Ultimately, we want to see whether it is effective and whether it will make a positive difference. That is what we want to focus on. I am interested in the level of engagement with the Utility Regulator to date. Has there been much engagement there?

Ms Lloyd: We engaged with the Utility Regulator in advance of the consultation. It did not formally respond to the consultation because of its remit and role. It has agreed to be part of the working group going forward, so it will be at the heart of developing the processes and procedures, helping us and acting as a critical friend as we move forward with putting a voluntary scheme in place.

Mr Dunne: OK, good.

I am keen to hear your thoughts on, I suppose, the potential impact of unintended consequences on social and affordable housing. Is it solely focused on private housing development, or is there scope around commercial and industrial development and even things like agriculture, which is also currently impacted on by the current lack of capacity that is ultimately having an adverse impact on so many other areas of our economy?

Ms Lloyd: On social housing, again, that formed part of the consultation. We acknowledged that there might be an impact on it. The Housing Executive replied to the consultation. I am just looking at its response. It acknowledged that there might be an impact and that mitigations might have to be put in place for social housing, but it was supportive of the introduction of developer contributions. We are aware of that. As we develop the next stages, one of the things that we will be looking for is what that impact will be and what it will look like.

Mr Dunne: What about beyond private housing?

Ms Lloyd: Again, we will look at that as part of the working group. The focus was on housing because the block in legislation is on housing, but the expansion of that, what that looks like and how developers could contribute for developments over and above housing will all be part of the work.

Mr McMurray: You would expect different locations to require different amounts to be spent and that developers will have to spend different amounts, if that makes sense. Do you have any idea of an average amount? Is there one? What do you expect the price range to be? Are there any ballpark figures?

Ms Lloyd: We gave some figures in the consultation. We looked at the easiest and the cheapest, which is widening pipes. That is around £0·5 million, but it can go right the way up to multimillions of pounds for replacements. I will turn to the civil engineer; I do not think that —.

Ms Clydesdale: It is site-specific. Anybody who is looking for a waste water connection has to come to Northern Ireland Water, which undertakes an investigation. All the costs would be determined by the nature of the connection required on the site.

Mr McMurray: If it is £0·5 million in one place and millions of pounds in another, is that not unfair? It does not really seem fair. I am just working it through in my head.

Ms Lloyd: The aim is to unlock capacity. The blockage in one area could be due to the pipes not being wide enough, while the blockage in another area could be because there are too many houses for the current system and so an upgrade to the waste water system is needed. Duncrue needs to be replaced. It depends on where the developer wants to develop and how many developers there are. It may be something that costs £0·5 million and would unlock only 10 houses in a small area, or it could be a multimillion-pound upgrade that would unlock 10,000 houses or 20,000 houses. There is a variety in the numbers that they would unlock. This is based on moving the needle and unlocking some capacity. Any money saved could then be spent in the other areas.

Ms Clydesdale: It will be a commercial decision for the developer. After a developer goes to Northern Ireland Water and gets an indication of what the cost will be, they have to make a commercial decision about whether to proceed.

Mr McMurray: That is an interesting point in itself. Who decides what is relevant? I presume that a developer, because it is an economic decision, will want to do the bare minimum; that NI Water will want to do something to future-proof itself as much as anything else; and that the Department will want to do something for the good of all society, because that is the whole point. Who decides the capacity, if that makes sense?

Ms Clydesdale: Northern Ireland Water is governed by a range of environmental legislation and is required to comply with it. The decisions around getting a connection are based on meeting environmental legislation and requirements.

Mr McMurray: That probably lends itself to the bare minimum's being done.

Ms Clydesdale: Each site is different. It depends on what is required on each site to meet the environmental compliance regulations. On some sites, it might be as simple as storm water offsetting. Other sites might require other changes to the network, such as upgrades to pumping stations, or something at the treatment works. It is entirely site-specific, but the driving factor is the need to meet the environmental regulations. You cannot have a connection that breaches them.

Mr McMurray: You talked about upgrades. I can think of a development where there are issues with a pumping station, which is grand. Hypothetically speaking, you could have another development further down the road that connects to that pumping station.

Ms Clydesdale: You could have.

Mr McMurray: The developer contribution would then be put upon the new builds but would benefit the old builds.

Ms Lloyd: One of the things in the consultation — we sort of flipped it. In the consultation, there was a question about what if someone pays to upgrade, builds the houses, there is more capacity, and someone else comes in and does that. One of the things that we put into the consultation document was whether we should have some form of scheme to consider an offset for that first developer. That will be looked at as part of the work of the working group. Potentially you are correct, and then the question would be whether, practically, something can be done to offset that, or is it just that the developer is taking that forward at risk.

Mr McMurray: It is a first mover/first purchaser penalty.

Ms Lloyd: Yes. We had put that in the consultation document and recognised it as a risk, and that is one of the things that the working group will be looking at when it comes to putting in place the practical arrangements. Again, that will be consulted upon, so there is plenty of opportunity for the Committee to comment on that.

Mr McMurray: There are other areas where that is spread about the place, whereas this is very specifically the case that there will be 10 houses built, certain guys will all pay the add-on from the developer contributions, but the development 200 yards down the road will get the benefit of it as well.

Ms Lloyd: That is what we are saying. That was raised in the consultation document, as in, we wrote it in to say to people, "Do you think that we should put in place something to offset the risk of that happening?" That will be considered by the working group.

Mr McMurray: I want to see it work and all the rest of it. You said that it is not a silver bullet per se but is about moving the dial. Again, like with cycling, it is about marginal gains — you change a wee per cent here and it is all very good. That is great. Is there a case of moving the dial but also just moving the inevitable, if that makes sense? We all know that some of the infrastructure is not in great shape, and all that we are doing is shifting it down a couple of years before we have to cross this bridge again when it comes to waste water infrastructure.

Ms Clydesdale: It is widely documented and widely accepted that it will be a number of price controls before the waste water constraints issue is resolved. At the minute, it will be price control 28 and beyond before that is resolved. While this may shift the dial only a little bit, it is shifting it, which is helpful.

The Chairperson (Mr Martin): We might argue about how much it is shifting the dial, but it is shifting it; I accept that.

Mr McHugh: Tá fáilte romhaibh uilig.

Wearing my economics hat, I have one comment to make. The cost of producing any good does not determine its price. When it comes to new builds and the likes of it, the supply and demand will determine that. The cost of building it will determine the efficiency of builders — in other words, who actually builds it. The most efficient builder will build it. However, the actual price is determined by supply and demand. That is why it is welcome that we have an instrument that, as you say, moves the dial and is creating capacity. That is reflected in the very fact that, when there was another £30 million of capital funding from 2024, that unlocked capacity for 5,300 new properties across the North of Ireland. In that respect, if anything, it shows just how important it is that we have that third element and that we have contributions. I know that Sara Venning has commented that the three prongs are positive, but, at the end of the day, we require additional investment. Whilst this other prong exists — I ask your opinion on this — I think that it will have an impact. It is effective in that respect.

Ms Lloyd: Absolutely. The reason that it was proposed and why it is one of the Minister's three prongs is that it helps. It moves the needle. It offers some potential for developers who are not currently able to build houses. It at least offers them an option and gives them an extra tool in the tool belt, and, as you say, it is for them to make the assessment as to whether it is viable for them to do it. If they contribute and houses are built in one place, it means more money is available to build elsewhere. It adds to what they are able to build, but it also means that Northern Ireland Water is not spending money in that area and can spend it somewhere else.

Mr McHugh: As a result of the consultation and so on, we have heard that, if it is voluntary rather than mandatory, that itself creates a flexibility down the line. Is that the case?

Ms Lloyd: Absolutely.

Mr McHugh: For the Minister and the like, if they need to look at it at any time in the future and decide on what the limits will be as far as voluntary contributions are concerned.

Ms Lloyd: We come back to the point that the Chair made around a system-wide approach possibly being the more suitable option. It sounds like that would be a compulsory levy. That is something that will require more work and a lot more thinking around what we do on whether it will be based on a sliding scale or on square metres. That space — moving to voluntary contributions — is the faster option. It allows us to put it in place, it allows for the dial to be moved and it gives us the space to look at implementing and bringing forward a compulsory levy in the future, because it gives us the time to develop what that might look like, how it will be paid and how it will be calculated, and, considering what the Chair has said, it might be considered by the 'Journal of Housing Research' as being a more substantive approach.

The Chairperson (Mr Martin): The 'Journal of Housing Research' would be right. I am not sure that the developers across Northern Ireland would be so joyous in their welcoming of compulsory contributions. I imagine that they might say that it is for others to sort out waste water infrastructure. They will probably point out that the vires for it lies in the Department for Infrastructure. However, that is an argument for another day.

Mr McNulty: I feel much more at ease now, knowing that we have dealt with the third prong of the three-pronged approach that is going to resolve all our water and waste water infrastructure challenges that are preventing the building of housing, preventing economic development and stymieing our economy to a massive degree. By coincidence, we received a letter of response from the Minister today, through the Committee Clerk. We had asked for a quantifiable assessment of the three prongs and what each of the prongs was going to deliver by way of access to waste water and waste water treatment capacity. Unfortunately, the Minister has failed to give any quantifiable assessment of the third prong, which is the developer contributions. Obviously, you guys have also been unable to give any quantifiable assessment of the third prong. You say that it is going to move the needle, but that is like putting a finger in the wind to see whether it dries, because you do not know for certain that any developer is going to make any contribution to upgrade waste water and waste water infrastructure, given that you cannot foresee economic conditions or what the housing market is going to do. The housing market might plummet, so there would be no further developer contributions and no moving of the needle. What is your assessment of that analysis?

Ms Lloyd: It goes back to the point that was made at the start. By its nature, an opportunity for developers to voluntarily contribute is not capable of being quantified in advance of developers telling us that they are able to, or want to, voluntarily contribute. They would only do that upon assessment from Northern Ireland Water, which would only take place once we had put in place a scheme. It is one of those scenarios where it is not possible for us to tell you that it will raise x amount every year, because we do not know. Even when we develop the scheme, put it in place and remove the legislative block, we will still not know, because it is down to the assessment of the developer. We are putting in place something that will enable a developer to make that decision. At the minute, they cannot make that decision — they cannot do anything. They are stymied; they are stuck; they cannot do it. We are simply putting in place a system where they can. We have moved from cannot to can. That, in and of itself, moves that needle.

Mr McNulty: Potentially. The three-pronged approach obviously does facilitate developer contributions. There is a current system by which developers can contribute with offsetting, which we have already discussed, but you talked about this prong being an early stage in relation to policy, operational procedure and governance. What is the timeline around this?

Ms Lloyd: One of the things that we are doing, where the developer contributions working group is in the process of being set up, is that we now have nominees from the Utility Regulator and Northern Ireland Water. We will be including officials from across the Department. The first meeting of the group will be taking place in the next couple of weeks. We will meet DSO next week to discuss some of the legislative issues. Those are the areas where, as we start to explore this further, we will be able to give a more accurate timeline. It could be a matter of months; it could be a bit longer. That will depend on the legislative timetable and what that takes. Regarding the complexities of the Bill, we have to have a conversation with DSO about how complex the Bill will need to be — whether it is a relatively straightforward one or whether we need to include some elements of the governance and administrative system in the Bill, which makes it more complex. We are working through and will be working through all those things.

Mr McNulty: The second and third prongs are still a long way off and have been portrayed as being the cure-all for our water and waste water infrastructure, which is way below standards. If you were given the strength of the three prongs, which of the three would you say is the most stable and strongest?

Ms Lloyd: It is a three-pronged approach because the Minister is taking forward three different areas of work that come together to facilitate some movement on what is a bad investment situation when it comes to waste water infrastructure.

Mr McNulty: Two of those prongs do not offer a huge amount of confidence around actually tackling the problem to a huge degree. Do you agree with that?

Ms Lloyd: I would say that, combined, they are all doing something on waste water infrastructure.

Ms Clydesdale: On looking at the prongs individually, one of the prongs is to get more funding from the Executive, and, since October 2024, the Minister has been successful in securing an additional £30 million of funding to unlock 5,300 houses. Another prong is the Bill, which is obviously with the Committee at the moment. That is hopefully on track. The third prong is developer contributions, which is now moving ahead. All three prongs have had positive developments and are moving ahead.

Mr McNulty: You mentioned the first prong there. What is the £27 million for the innovative approach for waste water in Newry? What does that specifically relate to?

Ms Clydesdale: That relates to a transformation project to look at a more holistic approach to waste water treatment in the Newry catchment area. Transformation funding from TEO has been applied for and has been successful. That now awaits budget cover.

Mr McNulty: What does "transformation funding" mean? What is the actual scheme costing £27 million that allows that capacity to be freed up?

Ms Clydesdale: Do you mean what are the elements of the scheme? Is that what you mean?

Mr McNulty: I am curious to know what the £27 million is being spent on to improve waste water infrastructure.

Ms Clydesdale: It is looking at a more enhanced project: enhanced maintenance, additional flow recording, industrial loads and, potentially, pre-treating effluent to manage the shocks into the network, so it is looking at a more holistic management of the network from across all the aspects, using modern technology.

Mr McNulty: That is a lot of money.

The Chairperson (Mr Martin): Thank you, Justin. I will stay with Justin's last line there on the Newry project. Is that in fact a transformation fund that comes from the centre that has been bid for and won, and you are waiting for the money? It was not clear.

Ms Clydesdale: There have been two rounds of the transformation fund. You are probably familiar with the first round of projects. The Department was successful in getting a sustainable drainage project in the first round. A second round of transformation projects was announced, and we bid for money under that. My understanding is that that project has been successful but is awaiting another tranche of funding.

The Chairperson (Mr Martin): Yes. That transformation —. Sorry, Alison, is that second one that you mentioned the £27 million?

Ms Clydesdale: Yes. For the Newry project.

The Chairperson (Mr Martin): OK. How much was the sustainable drainage one?

Ms Clydesdale: That was £15 million.

The Chairperson (Mr Martin): Did you say 15 or 50?

Ms Clydesdale: Fifteen.

The Chairperson (Mr Martin): Has that been rolled out?

Ms Clydesdale: That is not my area but, yes, it has started and it has spent all its transformation funding in this year. It is a multi-year project.

The Chairperson (Mr Martin): OK. Where was that funding used? Where was it spent, or how was it spent?

Ms Clydesdale: It is a flow control pilot project. I would have to write to you with more of the detail.

The Chairperson (Mr Martin): Do you know where that pilot project is based?

Ms Clydesdale: As far as I am aware, it is based in the Belfast hills, but we can certainly write to you with more detail.

The Chairperson (Mr Martin): You will get back to me on that? OK. Is the latest transformation money bid — that £27 million that you will, hopefully, be successful on — the head of the Civil Service/TEO/NIO money?

Ms Clydesdale: Yes, the transformation fund.

The Chairperson (Mr Martin): OK. Is that in Newry?

Ms Clydesdale: Yes.

The Chairperson (Mr Martin): OK, so that was bid for. Who delivers that? Is it DFI or Northern Ireland Water?

Ms Clydesdale: It is Northern Ireland Water.

The Chairperson (Mr Martin): OK. Was there a business case that sat behind that in how it was bid for?

Ms Clydesdale: There is a formal bidding process. TEO runs that, and all Departments can bid into that. There is a transformation board that looks after that process.

The Chairperson (Mr Martin): Know that one. Let us go back one step from the transformation board and the bidding process. My understanding is that DFI will submit a bid to the transformation fund. Is that right?

Ms Clydesdale: Yes.

The Chairperson (Mr Martin): Rolling it back one step further, how do you choose what that bid looks like and where it is delivered? Is that you guys who choose that, or is it Northern Ireland Water that chooses what the project is and where it is going to be delivered?

Ms Clydesdale: Northern Ireland Water will have come forward with a proposal.

The Chairperson (Mr Martin): So it is actually an NI Water bid that rolls through the Department for Infrastructure up to transformation funding, so it is really a Northern Ireland Water bid. Did it pick the area and what the bid would look like? Would that be fair to say?

Ms Clydesdale: It brought a proposal to the Department as the shareholder.

The Chairperson (Mr Martin): OK. That is fine.

Ms Lloyd: There are relatively strict parameters for that transformation funding. It is highly sought after, and it is very much based on being transformative, so there is a link to where you can trial something, gathering the baseline and then looking at further roll-out in the future. All of that will have been assessed, as opposed to specifically the place it comes. It is where is the best location to trial something.

The Chairperson (Mr Martin): I am aware of that. Can we see that bid that Northern Ireland Water put forward through DFI to the transformation fund? Is that something that you can send to us?

Ms Clydesdale: I guess that we will have to check with the Minister.

The Chairperson (Mr Martin): OK. The Committee Clerk can scribble that one down. That is useful. Well done on getting the £27 million. I am aware of the nature of transformation funding. It is very sought after, and I know that it has to meet a range of requirements. It would just be interesting to see what Northern Ireland Water's bid looked like. Does that bid need to be cleared by the Minister? Effectively, it is a DFI-supported bid to get transformation funding. Northern Ireland Water comes you to and says, "Look, this will be really, really good. This is for £27 million, and here's the — call it a business case, but here's the package". DFI then takes that and says, "Yeah, that's great", and the Minister signs it off and sends it for assessment for transformation funding. Is that fair enough?

Ms Lloyd: Yes.

The Chairperson (Mr Martin): OK, great. That is fine. Only one more thing from me. We were talking earlier about developer contributions. Justin touched on the timescale, but I was not just 100% clear on the answer. My understanding is that it requires legislation.

Ms Lloyd: Yes, it does.

The Chairperson (Mr Martin): The Minister, helpfully, sent us her legislative programme for the rest of the year, which, no doubt, you will have seen. Obviously, this was not on it, but there are a whole range of other things, including graduated driver licensing, the ports Bill, reservoirs and other stuff around safer journeys to school and pavement parking. You said that you are engaging with DSO. When does the Department think that it will have something back? What is the guess for the timescales on this one?

Ms Lloyd: That is not guessable, because it depends on the complexity. It really does depend on whether it is a relatively straightforward removal of a blocker, which is an easy enough draft because it is only a one- or two-clause thing, or it could be slightly more complex. We could have to look at introducing a power to make regulations for administrative governance purposes. There is just a lot to unpick with DSO and then with the working group that we are setting up. When we get into the meat of it over the summer and start to have the conversations, we will have a better sense of it. [Interruption.]

Ms Lloyd: However, we do not know at this point.

The Chairperson (Mr Martin): OK. I always love it when officials are made to smile at the end, and Justin managed to do that. Would it be fair to say that it will not happen in this mandate?

Ms Lloyd: It depends on the complexities and the legislative timetable. If it is relatively straightforward, it could potentially happen, but it will depend on the legislative timetable for the Assembly, which we have no control over. [Interruption.]

The Chairperson (Mr Martin): Can someone tell Justin that he is not on mute?

Would it be fair to say that, if the Minister thought that the legislation would come through in this mandate, she might have said that in her letter to the Committee, even if it was only an inkling?

Ms Lloyd: No. Again, we are not in a position to say at this point. It might be something that can be slotted in or it might not. At this point, it would be premature to commit to a timeline without a conversation with the Business Office and our departmental Assembly liaison officer.

The Chairperson (Mr Martin): In conclusion, there is a three-pronged approach. As you have illustrated, there is a prong of the Minister trying to get some more money from the Executive, although I note that she often references the British Treasury in her press releases. Would it be fair to say that the other two prongs of the strategy are contingent on legislation? That legislation has not yet made its way through the Assembly. Would it be fair to say that, effectively, we have one prong with a possible two other prongs, one of which should be implemented in the course of this mandate, with the possibility of a second prong being implemented?

Ms Lloyd: Yes.

The Chairperson (Mr Martin): OK. That is great. Alison, Kiera and Adele, thank you for coming along today. The evidence was good. Alison, you should get some sort of attendance fee, like a Brucie bonus from the Minister, for consistently taking flak from Committee members.

Mr McMurray: A cuddly toy.

The Chairperson (Mr Martin): A cuddly toy — didn't she do well? Thank you for coming. We appreciate it.