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Last Updated: Tuesday, 27 March 2007, 13:04 GMT 14:04 UK
Why doesn't Northern Ireland have water bills?
WHO, WHAT, WHY?
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Dripping tap
The fact the DUP and Sinn Fein are talking is partly due to their opposition to the proposed water bills. So how do Northern Irish households pay for water?

After decades of animosity, one of the driving forces getting Gerry Adams and Rev Ian Paisley to sit together was something as mundane as water rates.

Northern Ireland Secretary Peter Hain had threatened to introduce water bills for the first time, unless the Sinn Fein and DUP leaders agreed to meet. The letters to every household setting out how much they would pay were ready to post but have now been put in storage.

For despite their fundamental political differences, water was an issue upon which the two sides agreed: both being deeply opposed to water bills.

The impression given in some media reports was that there are currently no water charges, which is misleading. Households pay for water as part of their overall domestic rates - there is no council tax in Northern Ireland - which also go towards education, health and transport.

THE ANSWER
They pay as part of their domestic rates
Peter Hain's proposal for a separate bill has been deferred
More than 1bn is needed in the next five years

Since 1999 the amount allocated to water has not been itemised on household bills.

"Consumers have been unaware how much they were paying," says Alison McCrystal of the newly-formed Northern Ireland Water. "They just paid for their rates and the water came out of it. The proposal from Peter Hain was for a separate bill."

Unlike some parts of England, water itself is not in short supply in Northern Ireland, which is home to Lough Neagh - the biggest fresh water lake in the British Isles. It alone provides 40% of Northern Ireland's drinking water.

But the water infrastructure - pipes, sewage plants etc - has suffered a chronic lack of investment in recent years, says Michael Smyth, an economist at the University of Ulster and political adviser. While privatisation of water in England delivered a shot of investment for new infrastructure, in Northern Ireland the water supplier remains in public hands.

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Northern Ireland faces a 2010 deadline for compliance to EU water standards and needs 3bn over the next 10 years, he says.

Although the issue on how this is paid for has been deferred until the new government agrees on it, the complaint from the likes of Messrs Adams and Paisley, is that the new arrangements would see consumers paying for water twice: in their rates and in separate bills.

The new bills were to be phased in over three years. They consist of a standing charge which is fixed and a variable charge based on the value of the property. Meters would be installed in new-build properties and buildings for pensioners, while reduced tariffs are available for people on low incomes.

Peter Hain has upped the ante and used water as a stick to beat the politicians into agreement
Michael Smyth
Economist, University of Ulster
Northern Ireland households pay about half the UK average on water and council tax, says Mr Smyth. The Treasury allows the province greater borrowing powers but its impatience about the size of subsidies has increased.

"Peter Hain has upped the ante and used water as a stick to beat the politicians into agreement," he says.

"DUP and Sinn Fein politicians were united in the view that if you did the unthinkable and agreed on power sharing and this was the first thing your names go on, then it would not play well among the electorate."

But Mr Smyth believes Westminster might find some extra cash for investment to quell growing objections.


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