Water charges in North to begin in 2009

Households in the North are going to have to pay water charges - but they have been delayed for another year, it was announced today.

They will be phased in over two years from April 2009, but crucially the Executive has decided there will be no double charging, as planned under direct rule.

It has accepted a report on water charges which said people already paid an average of £160 (€229) for water through rates bills and that should be taken into account.

The announcement was made in a special statement to the Assembly by Regional Development Minister Conor Murphy.

He said the Executive had accepted the recommendation of the review panel headed by Professor Paddy Hillyard that from 2008/09 there should be full recognition that domestic regional rates revenue made a contribution to the funding of water and sewerage services.

The panel, he said had estimated that at £109m (€156m) at today's prices, equated to around £160 (€229.37) per household.

Mr Murphy (Sinn Féin, Newry and Armagh) said: "This figure is consistent with the Finance Minister's own projections of what domestic ratepayers are contributing to the funding of water and sewerage services.

"In 2008/09, this will be households' only contribution to the services; the balance will be paid from the Northern Ireland Bloc.

"This represents the Executive's commitment to tackling the inequality of double charging."

However the Executive, he said, had accepted the Hillyard proposals that consumers should pay an increased contribution to cover the true costs of water and sewerage services - the alternative being other public services being deprived of funding.

Extra payments would be introduced in 2009/10.

The minister said: "The panel has suggested that these additional contributions should come into effect in full for domestic households from 2009/10.

"We have concluded instead that these additional contributions should be phased in with domestic households paying two thirds of their full liability in 2009/10 and full liability the year after.

"However the amount due to be collected from domestic households will be reduced by the amount of the contribution that households are already paying via the rates - £109m (€156.3m) or an average of £160 (€229.40) per rates bill - this means there will be no double payment."

Mr Murphy said whether water charges would be billed with the rates or separately would be determined after an assessment had been made of implications for existing billing arrangements and contracts.

He pledged that after Professor Hillyard delivered his second report on affordability arrangements for vulnerable groups at the end of the year, "there will be robust arrangements to protect the vulnerable in our society from hardship and water poverty".

The minister also announced an easing of the introduction of water charges for non-domestic customers.

Under direct rule plans there would have been a charge of two thirds of the full level in 2008/09.

Mr Murphy said: "The Executive recognises the challenges and difficulties faced by the non-domestic sector and has decided to phase in the new charges more slowly at 50% of the full change in 2008/09 and 100% in 2009/10."

The Executive would also be endeavouring to reduce the burden on the consumer, both domestic and non-domestic, through delivering efficiencies and by attracting further revenue sources. Significantly the minister did not commit to the 40% efficiency saving recommended by Hillyard.

He said "The Executive has been committed to no privatisation of our water and sewerage services and to tackling the injustice of double taxation."

Fred Cobain (UUP, North Belfast), the chairman of the Regional Development Committee, said there had been insufficient information in the panel report for the committee to form an opinion until it saw the second part of the review in December.

Cobain hit out saying it was "absolutely ridiculous" the minister had made a statement and there had been no Assembly debate on the issue.

"It is a new tax, there is no indication on what basis the tax is going to be charged and how much is going to be collected for the charges."

He said there was no doubt that tens of thousands of people on the lowest incomes would be worse off "tens of thousands of people will be facing water poverty - that is what has been announced today."

He sought an assurance that those who currently did not pay charges for rates would not pay water charges.

Mr Murphy said his announcement had been an important first step in dealing with the issue and water poverty would be examined in the second part of the Hillyard review.

He said also it was open to Mr Cobain or any member to bring a motion for debate to the Assembly and he would be quite happy to debate the issue.

Committee vice chairman Jim Wells [DUP, South Down] asked whether the minister's figures were based on the Hillyard proposals for a 40% saving in costs by Northern Ireland Water.

"That is a very difficult target to meet and may not be met - was that taken into account in the figures he gave us," he asked.

The minister agreed that his figures were based on "very demanding targets".

He added: "One of the implications of the Executive decision of progressively rolling out the contributions that might be made by domestic households is to give an additional year to get towards some of those targets."

Meanwhile the Consumer Council welcomed the decision to defer payments.

Chief executive Eleanor Gill said the organisation supported the deferral and the recognition that people should not be paying twice for water.

"The clarity provided by the Assembly today allows the necessary space to consider all decisions in detail, particularly the second report of the Review Panel in order to get this right."

The Consumer Council would continue to engage fully with the Review Panel, the minister and the Regional Development Committee and inform the debate from the consumer perspective, she said.