Ireland
UK
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London
Northern Ireland's housing and construction sectors face long-term disruption due to the ongoing wastewater crisis, according to a recently published joint paper.
Commissioned by NI Chamber, the Construction Employers Federation (CEF), and the Northern Ireland Federation of Housing Associations (NIFHA), the report proposes a series of solutions, including a low-cost Infrastructure Levy, to help address the issue.
The summary paper combines the findings of two reports, undertaken jointly by Grant Thornton and Turley Economics, addressing both the economic impact of not delivering sufficient infrastructure to enable housing delivery, and proposals for a new fiscal model to ensure sufficient investment in wastewater infrastructure in the future.
The paper comes on the back of the NI Fiscal Council Report, published on June 10, which also warned that Northern Ireland's wastewater infrastructure is facing a critical funding crisis that threatens to undermine economic growth, housing delivery, and environmental protection for years to come.
Suzanne Wylie, Chief Executive of NI Chamber, said: "NI Water's current funding model means it is unable to effectively upgrade, replace and build the new sewerage infrastructure needed for our towns and cities. Because this has not been properly addressed for many years, the problem has escalated to a point that the system cannot take new connections in many areas, while much of the existing infrastructure is operating at over-capacity. We face a stark choice; continue to defer the inevitable or confront it with clarity and a commitment to long-term reform."
Every report which has been undertaken to date has said that a solution needs to involve some form of revenue raising. The NI Executive has made it clear that to date, this is not part of its plan. However, this report sets out mechanisms for keeping any levy to an absolute minimum. One of the models suggests that the cost to the domestic ratepayer could be on average an additional £11.80 per month.
The joint position paper presents a series of models which propose a progressive levy applied to rates to recoup the cost of borrowing over 40 years. The model applied the analysis, undertaken by Grant Thornton, illustrates how the shortfall in investment could be met by the average domestic rate bill increasing by just £101.15 per year. According to Turley Economics investing sufficiently in waste water infrastructure could add an additional net £2.5 billion Gross Value Added (GVA) added to our economy by building more homes.
In addition to suggesting a progressive and modest rates-based levy to meet the deficit over this Price Control and the PC28 period (estimated at £2bn), the report also calls on the UK government with support from the Irish government, to establish a Wastewater Infrastructure Transformation Fund. The purpose of the fund would be to ensure major capital programmes, such as the Living with Water Programme, are sufficiently funded to kick-start more home building and industrial development across Northern Ireland.
Mark Spence, Chief Executive of the Construction Employers Federation in Northern Ireland, commented: "The wastewater capacity and housing crises we face have been years in the making, but recent weeks have brought the urgent need for action into sharp focus. While the Infrastructure Minister's three-pronged approach has some merit, it's clear that the Department for Infrastructure's proposals on developer contributions and sustainable drainage fall far short of addressing the barriers to economic growth and environmental decline.
"Lack of investment in wastewater infrastructure is crippling Northern Ireland's construction sector. We're seeing the lowest new housing starts since the post-war era, delayed school projects, and factories opting to invest elsewhere. Turley Economics projects that without urgent investment, 6,150 essential new homes cannot be built in the next three years, exacerbating housing shortages and driving up rents. This stagnation would also result in 1,690 direct and 870 indirect job losses, costing the economy £1.3 billion in lost construction investment, with far-reaching consequences. The economic damage will only worsen each year we fail to strategically reform wastewater funding."
