Irish Water: A utility company flooded with workers

IF Irish Water is to be more than a balance sheet exercise to lower the national debt, the organisation needs to be freed of the legacy inefficiencies inherited from local authorities.

This is a crude summary of the message the Department of Environment was given by researchers in 2012.

But the figures being thrown about to promote this theory clash with some of the changes that have been taking place in recent years.

One of the key questions is how many people currently work in providing water services through the 34 local authorities and how many will transfer to Irish Water under the service level agreements.

The magic number appears to be 4,300. On paper, this is 2,600 more than Irish Water needs. The additional wage bill will come to an estimated €150m a year.

On this basis, it was suggested this will lead to unnecessary labour costs of €2bn over the lifetime of the initial 12-year service plan.

But is all this still correct? For a start, the headline figures do not tally with recent, and ongoing, staff reductions in the public service through retirements and natural wastage.

The department has already been told that if Irish Water was set up properly, with some independently sourced finance, it would move up to €3bn from the national debt into what would effectively be a private company. And it was estimated that the company would be self funding, based on a charge of €426 per household.

But in the document that discussed these issues, the department was also warned that if the utility company had to simply absorb the existing workers from councils, it would be overstaffed to the tune of 2,600.

The key paper was the 2012 ESRI submission, written by Professor John FitzGerald and Edgar Morgenroth.

It said that the body would be taking on inefficient staffing problems from local authorities. Their submission, to the Department of the Environment, said the new company should be allowed operate more like Bord Gáis where its staff levels would be dictated by commercial demand.

“The current workforce in the sector is significantly larger than [Irish Water] needed. The transfer of staff and the terms of employment of staff and services should be at the discretion of the new company.

“It should not be forced to inherit legacy staffing issues. These should be left for the local authorities to resolve,” the report said.

The authors based their concerns on overstaffing estimates detailed in a PricewaterhouseCooper report on the setting up of Irish Water. This was published a year earlier.

When the PwC report was delivered, the number of workers in local authorities was put at 30,967, which represented a 14% fall from 2007.

It said of this cohort its “best estimate” was that 4,278 frontline and support workers were involved in the supply of water and waste water services.

This number, 4,278, appears to be the authority figure on the number of staff that will transfer from local authorities to Irish Water.

The figures PwC used was drawn from the Office for Local Authority Management survey from Jul 2011.

However, it is not clear why the number of people engaged in the supply of services has not changed since then. Because 4,300 is still the figure cited by Irish Water.

The PwC report noted that council staffing rates had dropped and were falling due to retirement incentives, pension changes, and the recruitment moratorium.

Last May, Environment Minister Phil Hogan told the Dáil the overall staffing level in the sector had fallen again. “Since 2008 local authorities have reduced staff numbers by almost a quarter from 37,243 to 28,268,” he said.

This represents a 9% drop on the Jul 2011 figure the PwC report referenced.

Assuming workers in the water division dwindled at the same rate as other sectors, the 4,278 figure should have fallen by 372 by mid-2013 and continue to reduce before Irish Water takes control.

Moreover, the moratorium has not been lifted so that number will continue to drop as people retire or leave their jobs during each year of the service plan.

Given the changes that have taken place, and are taking place, the different figures pose questions that could have a significant impact on the payroll for the new body.

If the number of local authority workers engaged in water services has not changed since Jul 2011, in line with other departments, why has it not?

Or, if they have changed, why have they not been reflected in the latest estimates circulated by Irish Water?

And if the numbers have fallen what impact will this have on the annual wage bill?

Irish Water will also need to clarify how many workers will drop off its payroll each year until 2025.

If the moratorium remains in place, it is not feasible to promote the idea that there will be 4,300 local authority workers seconded to Irish Water every year until 2025.