Continued pressure on the executive to find real solutions
FMB recognises the difficult financial pressures facing the Northern Ireland Executive and have continued to work with it to look at practical innovative solutions. FMB NI would repeat the Audit Office’s call for an expert led review of Northern Ireland Water’s funding and governance model. However, members and staff have grave concerns over the proposals recently flagged in a Departmental consultation-
https://www.infrastructure-ni.gov.uk/consultations/developer-contributions-wastewater-infrastructure
The dire investment in a crumbling water infrastructure system has long been highlighted by FMB and others as a potential stumbling block to growth and development. Going back to 2018/2019 FMB worked with the BBC, raising the issues of more areas and sites unable to be provided with connections to build.
This crisis has now been responsible for chronic delays in building new homes in many areas across Northern Ireland. Some estimates by NI Water themselves put this as high as 19,000 homes currently delayed in some cases for years. At the centre of this is a poor funding model and lack of investment over many years by the NI Executive despite many warnings.
Proposed developer levies: A flawed fix?
Among the proposals The Department of Infrastructure have plans for:
- Voluntary Developer Contributions whereby developers could voluntarily pay to offset the costs of upgrading or replacing the wastewater infrastructure preventing new connections in the specific areas where they are unable to build.
- Or a Compulsory Developer Wastewater Contribution Levy, which could see the introduction of a compulsory wastewater levy, requiring a financial contribution from developers which would be used on prioritised needs basis across the whole of Northern Ireland, not just the areas where they directly benefit.
The risk of driving down development
Some members with large site developments may feel that to pay a levy would be worth it to free up land and get going with a long-awaited development, which otherwise becomes increasingly expensive to deliver with each delay. But for most members, small sites make these proposals difficult to work with.
Chronic failings in Northern Ireland’s wastewater infrastructure have, however, driven house building to historic lows.
This consultation will not address the heart of the problem. There are also concerns that this could, in effect, drive up the cost of new home development and this will be an added cost to the buyer. Making more projects unaffordable.
Developer contributions will not provide the level of funding that is required to address the historical underfunding of wastewater infrastructure investment in Northern Ireland. NI Water has also confirmed that developer contributions will not meet its underlying funding gap which it estimates to be currently requiring around £2 billion to address the needed work!
Who benefits, and who doesn’t?
Serious concerns have been raised as to how the levy would be paid. For example, take a developer with a site for four homes in a provincial town, currently sitting with no connection. He is asked for £15,000-£20,000 per home. Making his contribution £80,000.
However, the work to upgrade the system in his area costs some £1 million pounds. At what stage does he see value for his money or as this is just a large pot of money that NI Water then decide where it is spent? In essence funding repair work in a network elsewhere in NI and not affecting his area it becomes a postcode lottery.
The bottom line: A tax on builders
Ultimately as there appears no correlation between the levy and getting water too and sewage away from the site of a builder, it is a tax on new home builders.
Recent developments have seen the Department of Infrastructure release some funding in the North-West to free up several sites. This is welcome however FMB believe there needs to be a full review of NI Water funding, allowing it to borrow against its assets and invest across a longer period of time.
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