Clause 21 - Form, contents and effect of licences
Water Bill [Lords]
3:00 pm
Mr Bill Wiggin (Leominster, Conservative)
This is a very serious part of the Bill. I am sure that the Committee will give it proper consideration. The investment necessary to abstract water, to put a bottling plant together, to set up a quarry, is wholly reliant on the ability to have a licence to abstract water. It is vital that we take into consideration the amount of water that is available. Once again, we come back to the same old dilemma: does the Environment Agency put the environment way above the interests of other people or does it have a duty to be proportionate in its judgment?
Amendment No. 49 would ensure that the agency took into account the life expectancy of associated infrastructure works. The cost of pipes may be quite low, relative to a reservoir or a bottling plant, but those pipes may last hundreds of years rather than just seven or 12 years. Indeed, some of the sewers beneath our feet are Roman. It would also take into account the cost of the works, actual and projected, and the
period over which they may reasonably be expected to have been recovered. We need to ensure that all those factors are proportionate. As they stand, the licences seem to be a little bit short.
The Minister said that it was a matter of judgment. It is not just judgment. There are standard procedures over which these costs are measured. When one buys a house, one is normally offered a mortgage that lasts 25 years. This is the same type of financial arrangement. Any institution lending money to a company seeking to do any sort of work of this nature would be looking at a much longer period than 12 years, particularly as the equipment lasts so much longer.
Once again, we want to ensure that the Environment Agency does not close down businesses before due time. It is illogical. The Environment Agency may determine that it is reasonable to authorise the abstraction up to a specified quantity of water. It may then also specify a lower quantity down to which the licence may be varied without payment of compensation. I want that point, as well as the minimum values, taken into consideration. It is difficult to explain minimum values, but I am sure that the Minister understands them, and the amendment is designed to ensure their consideration.
Once the Environment Agency has taken into account the infrastructure, costs and investments associated with abstraction, it should then decide the life of the abstraction licence. That would provide many benefits. We would have a clearer and more consistent framework for decision making that would take into account the life of the assets to be abstracted, and a reduction in costs. It would also lead to the maintenance of secure water supplies for customers over a reasonable time span and appropriate capital investment that would ensure a focus on social, environmental and economic benefits—a demonstration of sustainability in action.
The British Soft Drinks Association is extremely unhappy about the matter. The association has a huge bottling infrastructure, unlike quarries or and most other abstractors, such as farmers. The quality of the water is fundamental, but the majority of the work, once the water has been taken out of the ground, is involved in the bottling process, the packaging, and ensuring that the bottling equipment is clean and there are no impurities. I visited several factories, and although they are mainly packaging operations, they depend on lots of machinery and the costs are extremely high. In the two bottling plants that I visited, I am sad to say that most of the machinery was made in Italy rather than Britain.
Nevertheless, British bottled drinking water is a tremendous success story, with 1.4 billion of the 1.8 billion litres drunk here in a year produced in the UK. That figure is growing and has doubled over the past six years. We must consider that type of investment when dealing with the length of licences and, more importantly, compensation when licences are cancelled.