To ask the Minister for Infrastructure to detail (i) NI Water’s level of financial reserves relative to the start of the pandemic; and (ii) what action her Department is taking to ensure that NI Water continues to hold sufficient levels of reserves.

I can advise in terms of:

NI Water’s level of financial reserves relative to the start of the pandemic;

According to the company’s most recent published Annual Report and Accounts, NI Water at 31 March 2020 had around £1.1 billion in reserves. Of this, £451m is retained earnings, which represents the sum of profits carried forward from prior years. However these are all paper figures resulting from technical accounting treatment. There is no ‘cash in the bank’ to back this up and much of the value is in the form of water and sewerage assets.

Unlike, for example the Northern Ireland Transport Holding Company, NI Water is not classified as a Public Corporation so it cannot use “reserves” to fund water and sewerage services.

Because of its classification as a Non Departmental Public Body, NI Water can only spend in year to the level of Public Expenditure budget cover which is provided by my department from the Executive. The level of reserves it holds is irrelevant in this sense, as there is no Public Expenditure cover for this quantum.

Even if there were no Public Expenditure budget constraints and NI Water could use its reserves, it does not have cash to back up the paper accounting figures that appear in its balance sheet.

what action her Department is taking to ensure that NI Water continues to hold sufficient levels of reserves.

As described in the answer to part (i), the level of reserves that NI Water holds does not correlate to its ability to spend, so there is nothing that could be described as representing a sufficient level of reserves.

What I have been doing is making representations to Executive colleagues, outlining to them the importance to the whole economy of investing in our water and sewerage infrastructure. The Utility Regulator in PC21 has estimated £2bn is needed from 2021/22 to the end of the next regulatory Price Control (PC21) period in 2027, to finance capital investment in water and wastewater.

I am continuing to make representation to the Minister for Finance on the need for sufficient funding for the water and sewerage sector in the medium to longer term, which is particularly important as we approach the start of the PC21 period (1 April 2021 to 31 March 2027).