NI Water based decisions on a budget allocation it did not have
Responding to the report, an NI Water spokesperson said it will study the report findings in detail when it is published.
Stormont Infrastructure Minister Liz Kimmins (Liam McBurney/PA)
They said that the report 'must be viewed in the context of a 27% funding gap compared to the level independently assessed as essential by the Utility Regulator as necessary to meet the Department for Infrastructure's Social and Environmental Guidance'.
'NI Water recognises the financial pressures facing DfI. However, if the proposed budget cannot be met, the Department and Utility Regulator must agree on what is realistically deliverable,' they added.
Speaking in the Assembly on Tuesday, Ms Kimmins said it is clear from the report, produced by PricewaterhouseCoopers (PwC), that the NI Water board 'did not base its financial decisions on the budget that it had'.
'In other words, the amount allocated by the department. Instead, the board based those decisions on the larger amount that it felt was needed, despite not having that money to spend. PwC describes that as a 'significant limitation',' she told MLAs.
'I find it difficult to understand how a board can monitor operating costs when its budget is not aligned to the allocation from the department.
'That is clearly a fundamental flaw in oversight and governance processes.'
She added: 'While I appreciate that NI Water has a large number of variable costs that depend on issues outside its control, the report clearly highlights several issues relating to the fluctuations that could have been better controlled throughout the 2024/25 financial year.'
Ms Kimmins said she is intent on working closely with NI Water 'to help prevent such an occurrence in future years'.
'I am determined that the learning from this investigation will be useful for both parties, but it is essential that NI Water, like every other arms' length body, takes every opportunity, where it can, to live within its budget.
'The board needs to factor in affordability to all its decisions, alongside careful financial profiling, just as the department and other public bodies have to do.'
Stormont Infrastructure Committee chairwoman Deborah Erskine responded to the ministers' statement in the Assembly, calling it a 'whitewash'.
'This process cost the department thousands of pounds, yet it is a whitewash: it pinpoints themes that we knew would be the case before the forensic accountant even began work,' she said.
'Those themes can be replicated across a number of public bodies and in the spending profile of the public sector. Therefore, there is nothing new really.'
The DUP representative also pressed Ms Kimmins to come back to the Assembly with measurable targets for NI Water to meet the recommendations of the review.
Ms Kimmins rejected that claim, describing 'an important piece of work that has clearly identified areas for improvement'.
NI Water said in its statement: 'Persistent underinvestment in water and sewerage services is having wide reaching implications for Northern Ireland.
'Both the Northern Ireland Audit Office and the Fiscal Council have recognised that current funding arrangements are not sustainable.
'The underfunding, which has continued since the creation of NI Water in 2007, means that key objectives and priorities that underpin the Programme for Government cannot be met under these arrangements.
'In March 2024, NIAO highlighted how historic underinvestment has led to serious capacity constraints across Northern Ireland's wastewater network. It also warned that the short-term funding model undermines long-term planning—underscoring the urgent need for a comprehensive, expert-led review of funding and governance, and a coordinated, cross-departmental approach to infrastructure delivery.
'NI Water would welcome an Executive-led, fully funded, and realistic cross-departmental transition plan to simultaneously meet the objectives on housing, economic development, and the environment as set out in the Programme for Government.
'We remain ready to work with the Department, in conjunction with the Utility Regulator, and all relevant stakeholders to help shape and deliver a sustainable, joined-up solution.
'Prioritising one objective over others risks systemic failure, with profound consequences for the Programme for Government and the tough choices required to determine which outcomes in the current Price Control Determination should take precedence.
'NI Water's core mission remains unchanged: to deliver safe, reliable water and wastewater services that support existing homes and businesses, enable new housing and economic development, and protect the environment. These remain the three priorities that underpin the Programme for Government.'
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