[Sinn Fein]

Submission to the Consultation on the reform of water and sewerage Services


June 2003

SUMMARY

Sinn Fein is opposed to the introduction of a water charge. We believe that the introduction of such charges has more to do with British Treasury insistence on further taxation than EU directives or misleading comparisons with the British level of rates.

In short people are being expected to pay for decades of neglect on the part of successive direct rule administrations, which has resulted in the unacceptable deterioration of a critical service.

Sinn Fein is opposed to the metering of domestic water charges. We support the option of water and sewerage services being provided through a statutory corporation.

Sinn Fein also believe that the consultation process has been unsatisfactory.

INTRODUCTION

Sinn Fein are opposed to the introduction of water charges. We view it as an additional tax. We are concerned that this consultation is premised on limited options around water charging and misleading perceptions about how people here have in the past paid for their water.

To suggest that people have not been paying for their water services is misleading because people have been paying for water through their rates bill.

Sinn Fein are also deeply concerned that the clear indication is that a decision has already been made. We believe that this current consultation must be extended to ensure that all stakeholders are included, and the views of Trade Unions, political parties and communities, particularly those in poverty be given due weight in any final decisions.

Sinn Fein would also question the specific narrow remit of the consultation.

The case has not been made that the introduction of Water Charges is either justified or will lead to improvements in water services or lead to a reduction in the usage or wastage of water.

The terms of the debate set out in the current consultation are totally unsatisfactory. Instead the clear assumption can be drawn that the introduction of a water tax is a foregone conclusion and the debate is being framed about what charging mechanism will be used.

We endorse the view that everyone has the right to an adequate supply of safe, wholesome water as a basic entitlement.

After 30 years of under investment our water and sewerage services here are drastically underdeveloped and are incapable of meeting international and European health and safety standards. The result is that we now require a major investment in our infrastructure.

What is required is a long-term injection of public money to bring our water services up to date with stringent European legislation.

`REFORM' OPTIONS

Options for Determining Domestic Water and Sewerage Charges

Sinn Fein has deep reservations about the terms of reference contained in this consultation document. We believe that they entail a pre-determined position, which is one that we cannot accept.

The Consultation proposes a number of options for the payment of water charges.

Current arrangements whereby water charges are funded through taxes and rates is not included as a possible option. This, we believe, closes down real debate about the appropriate funding of basic services. We cannot accept any of the three options laid out in the consultation document.

The introduction of a blanket or uniform charge would have a regressive effect in that lower income households would have to pay proportionally more of their disposable income on this charge. There is no incentive to reduce water usage.

A charge based on the value of the property would discriminate against those who live in high rateable value homes. It does not consider the size of the family in that home or indeed water usage. Again there is also no incentive to reduce usage or wastage.

A combination of both charges would still have the regressive affect in that it does not take into account the consumer's ability to pay. It also still has no incentive to reduce wastage.

None of the three options outlined places any onus on the Water Services to reduce the level of water wastage. Individuals are instead being penalised for under investment in the water system and poor performance.

Metering of Domestic Water Supplies

Given that we oppose direct charges for domestic rates, we cannot support proposals for metering of domestic water supplies. The Executive of the Northern Assembly has already ruled out the option, and it is our belief that there is no reason to revisit that decision.

Safeguards for Vulnerable Groups

Given that we propose that water services continue to be funded through general taxation and rates, we believe that the issue of safeguarding vulnerable groups can be dealt with through a generous rate rebate system.

Possible Business Models for the Future Delivery of Water and Sewerage Services

Sinn Fein is opposed to the privatisation of public services. As a consequence we are opposed to the first two options presented in the consultation paper, namely full privatisation and the setting up of a not for dividend company. We are also opposed to the use of public private partnerships, so reject the third option. Of the two remaining options, we feel that the final option of a government owned company is not suitable, in that it represents potential privatisation. We therefore support the proposal for water services to be administered through a statutory corporation.

GENERAL COMMENTS

EU Directives

There is nothing in the EU legislation which states that there must be a direct water charge. The EU directive specifically requires a pricing ratio, such as that previously contained within the element of rates that related directly to the provision of water services. Not as is being falsely claimed a directive to introduce a charging ratio or direct water charge.

The objective of the EU directive is to both reduce water usage and waste. There is nothing in the current proposals that indicate that these objectives will be successfully met.

Water Management and Efficiency

The most recent report into Water Service: Leakage Management and Water Efficiency by the Assembly Public Accounts Committee published in June 2002 (09/01/R PAC) was highly critical of Water Services and throws into question the ability of the proposals in this consultation to meet the objectives of reducing water usage and waste.

The key findings indicate that Water Service loses some 250 million litres of water a day as a result of leakage or 37 per cent of the treated water put into the distribution system. Despite spending 22 million on leakage reduction over the past four years leakage has continued to increase each year. The PAC report put a figure of 47 million on the cost of leakage based on the Accounting Officer's figure for total expenditure of 255 million.

Given this poor performance the PAC report recommends that the Water Service must ensure that its processes and procedures for addressing leakage are working effectively to ensure that best use is being made of the very substantial resources being devoted to this area.

Tackling these problems that require an extra 37% to put into the water system represents an area of savings that have not been fully explored, particularly as a mechanism for releasing extra resources for capital expenditure.

Local Revenue

Sinn Fein rejects the comparison with revenue raised through local government in Britain. The argument that in Britain they pay proportionately higher council taxes and water charges takes no consideration of the fact that councils in England are an entirely different service provider.

Large amounts of capital were invested into both Wales and Scotland prior to moving towards a `self-financing' model. Here we have had decades of under investment that we are now being penalised for.

Almost 10 years into the Peace Process, to date there has been no peace dividend. The British Treasury has to some extent successfully avoided the argument for a real peace dividend, in recent times largely as a result of the possibility of borrowing to repay through rates increases negotiated by OFMDFM in the form of the Reinvestment and Reform Initiative.

We also must consider that the average household income in the North of Ireland is proportionately less than in Britain. Or the fact that there are higher levels of Identified Need. There are also high levels of fuel poverty in the North of Ireland; we already pay more for our fuel, light and power than households in Britain.

The proposed charges would be outside the rate rebate system there would be no relief for low-income households in any system of charging for water and sewerage services in any of the options suggested by the consultation

Concerns

Sinn Fein are opposed to the introduction of a separate direct water charge. We would also be particularly concerned if this is a prelude to the making the water services attractive to privatisation.

The implementation of privatisation in the water services would have a particular affect on those living in rural areas, which already have a limited access to services.

3 billion is required to bring our water services up to scratch but privatisation is not the answer. Privatisation will particularly hit people living in rural communities where connection charges will be higher and isolated communities will not be profitable. Privatisation would also mitigate against the levels of investment required to bring our water service up to scratch.

We share the concerns of Trade Unions that the possible job losses, in the region of 500-600, will not be cost effective for either the Water Service or our water services but instead will translate in a profit differential generated within the private sector.

If we look at the Welsh not-for-profit model we see a considerable investment prior to moving to self-financing basis. If we look at Scotland the Water Industry Commissioner Alan Sunderland has said that the Scottish bills are 60% higher than necessary.

It is particularly telling that there will be no cash injection directly from British Treasury (as was the case in Scotland and Wales) prior to the introduction of water charges to bring the standard of services up to scratch. Instead the concern is that revenue raised as a result of charges will be spent in part on ensuring that existing water services meet the requirements of today.

We feel that there is a lack of imagination in how we raise money to pay for the much needed infrastructure investment. Almost 10 years into the Peace Process, to date there has been no peace dividend.


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