BELFAST BRIEFING:Northern Ireland Water is in the firing line – but is it the only one to blame for the shortages?

THOUSANDS OF businesses who say their profits have gone down the drain over the last two weeks as a result of the water crisis in Northern Ireland are looking for someone to blame.

If Minister for Regional Development Conor Murphy is to be believed the most obvious candidate is Northern Ireland Water, the company responsible for delivering water and sewage services.

Murphy says the water company’s “dismal response” to the crisis puts it firmly in the firing line.

He intends to launch an inquiry to uncover why thousands of businesses and families were without water over the Christmas period. But Murphy believes it is already clear that there was “a significant operational failure” at Northern Ireland Water.

In the meantime who will pay for the clear up and the loss of business?

Will the Executive establish an emergency water fund to help retailers and businesses who were already struggling before the water crisis hit them?

Could it even afford to if the political will was there? And if politicians cannot act will jobs be lost as a result?

Many pubs had, according to a key trade body, already suffered a major drop in business because of the freezing weather during December.

Colin Neill from Pubs of Ulster said the Christmas season, during which pubs make 20 per cent of their turnover for the year, had been wiped out by the snow.

He says the water crisis may prove to be the final blow for many pubs fighting to survive. Neill estimates that as many as 100 pubs in the North are currently in receivership.

Northern Ireland Water’s response to the recent water supply catastrophe may have been less than impressive but it may not be fully to blame.

Instead the blame may lie with how water and sewage services are structured, provided and paid for in the North.

Northern Ireland Water is a so-called GoCo – a company owned by government but which operates under company legislation. The company was established in 2007 although plans had been previously drawn up under a period of direct rule in the North to create a company that could facilitate the privatisation of water and sewage services.

Households should have received their first water bill in 2007 but when devolution was restored the Executive immediately ruled out privatisation as an option.

At the time the Executive also secured an additional £400 million (€460 million) from the UK treasury to defer the introduction of domestic water charges.

Northern politicians have refrained from introducing water charges, which could raise an average of £400 per year from each household.

Last month Minister for Finance Sammy Wilson ruled out any potential domestic water charges until 2014. It may be a vote winner but this decision to defer water charges yet again has created an investment vacuum which might explain why Northern Ireland Water was so ill equipped to deal with millions of gallons leaking from old pipes.

Much of the water infrastructure in Northern Ireland has been there since Victorian times and it is estimated that to create a 21st century infrastructure it will require an investment of more than £3 billion by 2020.

People in Northern Ireland assume they already pay for water through their rates bill but the reality is that the Executive uses some of the block grant it gets from the treasury to foot the bill for water and waste charges.

According to Victor Hewitt, director of the Economic Research Institute of Northern Ireland, finding another way to fund the water service rather relying on public expenditure could free up to £200 million per year for other services.

In England and Wales, where water services are privatised, the majority of homes have a water metre or pay a charge based on the rateable value of the house.

In Scotland consumers pay Scottish Water, a publicly owned company, answerable to the Scottish parliament, a combined water service charge which is detailed on their council tax bill.

In Northern Ireland there has long been an acknowledgement that there needs to be some way to finance new investment in water infrastructure but no one appears willing to take the difficult decisions on how this should be done.

The Federation of Small Businesses in the North is, on record, opposed to the introduction of water charges but its members have been more than just inconvenienced by the latest water crisis.

The Northern Ireland Independent Retail Trade Association has also criticised the response of the water company to the shortage disaster.

But neither of these organisations, which between them represent more than 9,000 businesses, has ever put forward a constructive proposal on how to fund the provision of water services in the North.

When political leaders such as Conor Murphy attack how Northern Ireland Water has handled the crisis perhaps they should look closer to home before assigning blame.

One thing is certain – everyone in the North is going to pay for this mess and water charges could be the least of Northern Ireland’s worries in 2011.