Monday 23 October 2017

Splashing €50m on consultants - Irish Water's giant bill

Company ordered to explain how it spent €100m just to get set up

John Tierney, managing director of Irish Water, with one of the water meters being installed around the country.
John Tierney, managing director of Irish Water, with one of the water meters being installed around the country.
John Tierney, managing director of Irish Water
Daniel McConnell

Daniel McConnell

TANAISTE Eamon Gilmore has heaped pressure on Irish Water to prove €50m it has spent on consultants is value for the taxpayer.

Irish Water chief John Tierney sparked outrage when he revealed that half the €100m cost of setting up the company was paid out to consultants.

Former auditors of Anglo Irish Bank, Ernst & Young, were among the companies to enjoy the €50m bonanza in consultancy fees.

Other services providers named as benefiting from the payments included IBM, Accenture and Oracle.

The multi-million euro payouts have been made as fears grow about significant delays in the roll-out of water meters because of a backlash from angry councillors across the country.

The massive scale of spending in establishing the company, which is charged with administering the new water charges, has emerged for the first time. It has also emerged that Irish Water may be allowed to increase its charge per unit for water if demand is not as high as anticipated.

Consumer groups have responded angrily to the suggestion that families could end up facing higher charges if a concerted effort is made to conserve water.

Fianna Fail leader Micheal Martin branded the latest revelations a "scandal waiting to evolve".

And the Tanaiste questioned the need for such an expense on consultants.

"I've seen the figure for the expenditure by Irish Water on consultants," Mr Gilmore said.

Telling the company to justify its expenditure, he added: "It does seem to me to be a high figure and I think Irish Water will have to demonstrate that it represents good value for money, and that the expenditure was necessary as part of the set-up costs for Irish Water."

While Taoiseach Enda Kenny appeared to defend the spend on

consultancy fees by the company that will manage the new water metering system, there is concern that customers will ultimately foot the bill.

Speaking from the Middle East, Mr Kenny said "significant radical change" to the country's water supply "does not come without costs".

He added: "Clearly the focus here is on the provision of the highest quality water systems for business and for people all over the country.

"This is the most radical shift in transforming Irish water supplies for our people and for industry since the foundation of the State."

In a statement to the Irish Independent, Irish Water insisted all external contracts were subject to a competitive tender process to ensure best value for money. The huge costs have gone on "developing IT, business and customer billing service systems, financial management and the asset management systems", a spokeswoman said.

Mr Tierney added that now that Irish Water has established itself as a business, there would be very limited expenditure on consultants because it would have hired in the expertise.

But this failed to quell unrest from opposition political parties.

Mr Martin criticised the fledgling organisation, which will serve as a new national water utility as a state-owned subsidiary within Bord Gais.

He branded Irish Water "one hell of a quango" and said householders would end up paying the price.

Mr Martin added that the €50m figure was "an extraordinary situation" and one that was likely to escalate.

He also claimed that local authorities were "completely in the dark" about the organisation and that they were losing staff to it.

"And this Government, prior to the election, and Phil Hogan, in particular, was a great man for saying he was going to cut quangos and reduce a number of so-called quangos and so on like that," he added.

"He has created a hell of one now and I think it's going to eat up resources, and ultimately the customer and the person in the house will end up paying for all of this," Mr Martin said.

PIGS

People Before Profit TD Richard Boyd Barrett added that the revelations about the €50m paid to consultants was early evidence that Irish Water was yet "another trough for the pigs to feed from".

He claimed that struggling families and households would be forced to pick up the bill "for this greed and the theft of a public resource".

Irish Water began rolling out water meters in households across the country last year, with initial water charges due to be applied in the last quarter of 2014. However, the Commission for Energy Regulation has said it may allow Irish Water to increase its charge per unit for water if demand is not as high as anticipated.

While it is envisaged charges will be fixed until at least 2016, it said it would consider the move if it was deemed necessary to meet the costs incurred by the company in running the network.

The Consumers Association of Ireland hit out at the revelations, saying that families would be "stunned". "Very few consumers would have thought the establishment of Irish Water would be handled like this," said the association's chief executive Dermot Jewell.

The majority of homes across the country will be hit with a flat water charge from October, as fewer than 80,000 homes have been metered so far.

Irish Water targets suggest 320,000 meters will be installed by the time billing begins and just over 400,000 by year end, but government figures have conceded that this target is "very likely to be missed".

And councillors in Donegal have vowed to bring down their own council unless the Government's 'privatisation' of water services is stopped. They have called for other local authorities to follow their example.

 

Daniel McConnell

Irish Independent

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