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Report (3rd Day)

Part of Infrastructure Bill [HL] – in the House of Lords at 7:30 pm on 10th November 2014.

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Photo of Lord Whitty Lord Whitty Labour 7:30 pm, 10th November 2014

My Lords, I am trying to help the Government out here. This is yet another part of the jigsaw that is necessary to ensure public acceptability of fracking in appropriate circumstances. The amendment deals with the issue of damage caused by fracking and who is liable for it.

We have had a debate about the nature of the regulations, whether or not they are effective and whether there are enough resources to enforce them. Even if we accept that we have world-class regulations and regulators in this area, if fracking takes off in the way in which its proponents—and, to some extent, I—hope it will, then there will be hundreds of sites across Britain and, however good the regulatory process, however vigilant the regulators themselves and however well motivated those companies that are responsible for those operations, there will be problems. There is no prior form of energy where there have not been some accidents, leakages or effects on the environment, on neighbours, on businesses or on the water supply.

The failure of even a fraction of the number of wells that are being talked about could have a significant impact on the landowner, on the farmer, on the community close to the fracking site, on individual households or indeed on individuals, or it could have an effect on other businesses, whether small local businesses or giant water companies. We therefore need to have an effective liability arrangement that ensures that the cost of such damage and its remediation do not fall on the public purse. We have historic examples here in the energy field. Whether you are talking about deep coal mining, opencast mining or the nuclear industry and the cost of decommissioning there, the reality has been that the costs of damage, waste and pollution have been borne almost entirely by the taxpayer. I want to see a provision in the Bill whereby that does not arise in the case of substantial development of the fracking industry.

My amendment would therefore deal with the Secretary of State’s obligation to bring forward regulations to ensure that any operator within this field, whether in the exploratory or subsequent stages, has sufficient resources to cover any loss arising from the operation, the costs of remediation and the costs incurred by the public authorities in enforcing that. That may require a separate fund within the company or a common fund. I leave that to the Secretary State in the regulations. However, such provision is necessary.

I am afraid that the Minister’s reply, when I referred to this issue in rather similar form in Committee, raised several concerns. It was argued by the Minister that companies can be required to remediate the effects and prevent further damage from pollution under existing regulations. However, in general, that applies only if land itself is contaminated in the strict terms of those regulations. It is not clear that funds need to be available from the outset to foot the cost of this remediation activity.

The Minister made a big point of saying that we should not treat fracking differently from other industries and that existing law is robust. However, one has only to look at one of the examples that I mentioned: opencast mining in Scotland cost £200 million in Scotland alone, and the entire cost fell on the public purse. My amendment also therefore seeks to ensure that that would not arise in this case and that a fund would be provided in advance, as it were, and in effect would be bankruptcy-proof.

The Minister also argued that environment regulators already have the power, although not the requirement, to require up-front financial bonds to address the risk wherever they deem that necessary. Article 14 of the European mining waste directive is relevant here but it is limited; it relates only to the situation where the waste itself is hazardous or is managed at a category A site. Neither of those things needs to apply for substantial damage to be caused if there is some leakage or other damage caused by the fracking operations.

The amendments are fairly straightforward. They require anticipating what has happened in other industries at the same time as we are designing the permitting system for fracking operations. It would be a substantial piece of foresight by the Government to introduce such requirements and to ensure that the operators in this field had sufficient resources to meet such contingencies. However, probably more importantly, to outline a point that I made in my brief intervention earlier, it is also a vital part of ensuring that the public, the businesses, the communities and the landowners who are anxious about the effects of fracking are reassured from the outset that if something goes seriously wrong, their interests will be respected and it will not be the taxpayer who pays but the operator. The noble Lord, Lord Deben, who is no longer in his place, said at an earlier stage that it should be clear in relation to the enforcement of regulations that the polluter pays. That must be true also in relation to any negative effects that require action and remediation as a result of these operations.

This would be a reassurance, and in extremis it might become an absolutely necessary reassurance, so that we do not go through the sequence of events that followed earlier generations of energy exploitation in coal and nuclear power, where no such liability was placed on the operator and where, in fact, the taxpayer has paid and is continuing to pay. In the case of nuclear in particular, the taxpayer will continue to pay for many generations to come. Let us anticipate that and at the same time reassure large sections of the community who may not have any fundamental objections of the type that the noble Lord, Lord Wigley, has to fracking but nevertheless are anxious about their own interests and the effect that this may have on their own businesses and their way of life. I beg to move.