A new report by the NI Fiscal Council highlights a growing crisis in the provision of water and sewerage services in Northern Ireland.
The report suggests that without greater and sustained investment, NI Water risks falling further behind its peers in service quality and environmental standards, and that this underinvestment is also constraining economic development, particularly in areas requiring commercial and residential growth.
The NI Fiscal Council says resolving these issues will require new sources of funding, even though this appears “politically unpalatable“.
NI Water is a publicly-owned company and currently operates under a unique and, what some say, is an increasingly unsustainable funding model. Unlike the rest of the UK, Northern Ireland does not charge households directly for water services. Instead, NI Water receives a government subsidy in lieu of domestic charges. In effect this diverts more than £300 million annually from the Executive’s Budget that could otherwise be directed toward other pressing public service needs.
Although NI Water has improved its efficiency and service performance relative to counterparts in England and Wales, the Regulator believes that a performance gap most likely still exists. What is more, Ofwat is not happy with the performance of the water companies in England and Wales and has sanctioned big increases in water charges over the next five years. This injection of funding is something NI Water cannot match under its current subsidy-based model, placing it at a growing disadvantage.
Another powerful argument for increased investment is that poor water and sewerage infrastructure impedes commercial and residential investment. The consequences of this underinvestment are already visible in development constraints at many sites in Northern Ireland. Despite a recent step-up in capital spending, NI Water estimates that it would take 18 years of above-average real terms investment to deal with the infrastructure backlog.
The report can be accessed on the Northern Ireland Fiscal Council website here:
Sustainability Report 2025: special focus – Water
Sir Robert Chote, Chair of the Council, said:
“Water and sewerage services are essential to public health, environmental protection and economic development.
“The current funding model is not fit for purpose. Charging for water or increasing taxes would put a further squeeze on the household finances, but failing to do so has its own costs.”
