Amendment 176

Environment Bill - Committee (6th Day) – in the House of Lords at 2:30 pm on 7th July 2021.

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Lord Carrington:

Moved by Lord Carrington

176: Clause 82, page 79, line 37, leave out “No”Member’s explanatory statementThis amendment seeks to remove the proposals for increased powers to vary or revoke abstraction rights without offering compensation to licence holders.

Photo of Lord Carrington Lord Carrington Crossbench

My Lords, I declare my interests as a farmer, as set out in the register. As a farmer, I think it would be more appropriate, in many ways, to discuss ways of stopping the rain than water abstraction licences. However, the climate is a law unto itself, and, unlike the Bill, it defies amendment.

I move Amendment 176 and will speak to Amendments 177 to 187, in my name, including Amendment 178, which is also in the name of the noble Lord, Lord Colgrain. They follow considerable discussion with and the support of individual farmers, as well as the National Farmers’ Union, of which I am a member. I record my thanks to the Minister and his colleagues at Defra for meeting me and the noble Lord, Lord Colgrain, listening carefully and responding to some of the issues.

There is no question over the full support of farmers for measures to protect and enhance water quality. The problem comes with the current lack of detail in the clause to revoke or change water abstraction licences—and, secondly, with the disappearance of compensation. Under current legislation, the Environment Agency has the power to revoke or change licences where environmental damage is being caused and to agree compensation. The new power widens the power of revocation or change to meet environmental objectives and removes the requirement to pay compensation.

If these clauses, as currently drafted, are implemented, they are likely to have severe consequences for agriculture and horticulture, particularly in areas where water abstraction has been the norm for many years. We are talking about some of the most productive land in the country, covering livestock, arable, fruit and vegetable and horticultural farming. We are talking about some of the most efficient farms in the land and some of the most technologically advanced farming in England. We are talking about farms with some of the highest investment costs in specialist buildings and machinery—and about some of the most expensive land in the country. Surely this is the type of agriculture that we should be encouraging, because expertise, technology, productivity and returns attract, and will continue to attract, investment and well-qualified and ambitious people. The threat to abstraction licences and the loss of compensation risks undermining all of this and might cause more agricultural production to locate overseas—to countries that have greater water issues than our own and fewer regulations to mitigate abstraction. Is this really what we want?

As far as Amendment 176 is concerned, this is not therefore a question of seeking to change the Environment Agency’s powers to vary abstraction licences. These can and do change when, for example, new environmental evidence emerges, indicating that abstraction is unsustainable. However, it is also a well-established principle that, when licence changes are made, the abstractor can be compensated for the loss of both the asset and the income resulting from that loss.

Farmer abstractors are vulnerable to licence changes because, usually, they lack the capacity to adapt to them in a timely manner. Water companies can engage with the Environment Agency in advance of proposed changes to agree a structured transition to, for example, an alternative water source. The asset management planning process secures the necessary funding for the water company to invest in the alternative intervention, having obtained customers’ agreement on their willingness to pay for it.

The process for farmers is very different. At present, they do not have the benefit of prior engagement with the Environment Agency, so the effect of the licence change on their business is immediate and often without warning. Access to alternative water supplies for individual farms tends to be limited, and it is unrealistic for them to expect that costs incurred in securing new supplies can be passed on to customers.

To my knowledge and that of the NFU, there have been few historical cases of farmers making claims for compensation arising from licence changes. However, this right to compensation helps to ensure that the Environment Agency uses reliable and transparent evidence in discharging its regulatory duties, and it therefore acts as a deterrent against excessive action and implementation.

Although abstractors will retain their right to appeal decisions taken to change licences, the loss of the right to compensation represents the loss of a significant protection against a blunt regulatory process. Farmers appreciate the proposal of a grace period up to 2028, which will give a sensible length of time in which to adapt—but the suggestion in other amendments in this group that the cut-off should be 2023 would be unreasonable and damaging to these businesses. If building a reservoir would be the appropriate mitigation, it can take up to two years to get planning permission, and then there is the time taken to build it. Of course, that leaves aside the time taken to appeal.

Amendments 177 and 179 raise the evidential bar, with a view to ensuring some balance between environmental and economic needs. Currently, a farmer could lose access to water not because of a proven direct impact from his or her actions but because of a possible future risk to the environment when all abstractions in the area, including large public supply licences, are taken together. This is unfair and unjustified.

With regard to Amendments 180 to 183 and Amendments 185 to 187, the Environment Agency already enjoys powers to revoke abstraction licences where they remain unused for four consecutive years. The need for additional powers contained in this clause is doubtful, and fair implementation is a problem. The Environment Agency is already engaged in an ongoing national programme to address unused and underused licences, encouraging abstractors to reduce their headroom on a voluntary basis. This is supported by the National Farmers’ Union.

However, for many farmers, an unused or underused licence is not an unneeded licensed volume. There are many good business and agronomic reasons why allocated water remains unused. In addition, the abstractor already has an ongoing regulatory responsibility to justify licensed use. Licensed water volumes equate to those estimated for use in dry years, but volumes of water actually used are dictated by seasonal variations—primarily summer use—weather-related variation, crop rotation, business adaptation and expansion, attitude to risk and so on. As drafted, the Bill proposes that these powers should be available to the Environment Agency where an abstraction licence is consistently underused for a period of seven years. For long-term business planning and investment, this period should ideally be extended to, say, 21 years.

For good agronomic reasons, many water-intensive crops are grown as part of a seven-year rotation, so the irrigated crop is grown once every seven years. Farmers fear that if their one-year-in-seven requirement to use the abstraction licence falls in a wet year, the regulations as drafted will place them at risk of losing access to water. By allowing the licence to continue for three complete crop rotations, the farmer can ensure that he is not disadvantaged by a fluctuating need for water and can invest accordingly. I emphasise that with specialist machinery often costing many hundreds of thousands of pounds and buildings often refrigerated, which can cost several million pounds and is needed for this type of farming, certainty is essential for investment.

Historic cases of claims for compensation following varying or revocation of an abstraction licence are relatively rare. The concern is therefore about the principle of compensation and the protection it affords abstractors by helping to ensure that the Environment Agency uses its substantial powers of variation and revocation only as a last resort. The monetary amount of compensation is not that relevant in itself, but abstraction rights attached to a farm business constitute an asset value to the farm as well as offering security for crop contracts that the farmer enters into. A water right is therefore used commercially to underpin the farm operation within the supply chain, whether or not the water is actually used.

Current provisions permit claims for compensation following licence change based on one or more of the following four types of loss. The first is mitigation measures: the cost of adapting the business to minimise the impact of the changed or revoked licence. Costs must be reasonable and proportionate. Second is loss of profit: if it is not possible to minimise or overcome the effect of the licence change, the abstractor may claim for any proven loss of business related to the reduction in water compared to that available under the terms of the abstraction licence before the change. Third is the loss of land value: this may be an additional element of the claim if the abstractor owns land and can prove a reduction in property value beyond the loss of profits stated above. Finally comes asset value loss: residual value considering the age and condition of any asset which is made redundant as a direct result of the licence change must be claimed.

It is hard to judge how much compensation a grower might seek following the removal of headroom for a licence—in fact, I am not aware of this situation ever arising. It is logical, however, to assume that if a farmer lost headroom, he would respond by reducing his future cropping area proportionately to maintain his exposure to drought risk. He could lose contracts if his supermarket supplier concludes that there is an unacceptably high risk of crop failure and consequent failure to deliver the contract.

At face value, these clauses alarm and unsettle those farmers and growers who will be affected. Assurance of proportionality is essential, together with close engagement between all parties and clear guidance.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench 2:45 pm, 7th July 2021

My Lords, it is a pleasure to follow the noble Lord, Lord Carrington, particularly as I agree with a lot of what he had to say, although, as he will see a minute, I come to some slightly different conclusions. Where I agree with him is that this is a tricky problem, and I speak as a farmer who grows and irrigates potatoes—or at least my son now does. I am aware that you can hardly sell unirrigated potatoes nowadays. It is all about skin finish: in the old days, you could, because mostly, of course, we peel the skin off our potatoes before we eat them, so the skin should really not matter. It should be the taste of the flesh underneath that is important but, apparently, or so we are told by the supermarkets, skin finish is king, and for that I am afraid that you need irrigation.

The second thing that makes this a tricky problem, as the noble Lord, Lord Carrington, referred to, is the huge capital involved in most of the crops needing irrigating. Returning again to the humble potato, you need stone separators, potato planters, ridgers, harvesters, grading lines and cold stores, not to mention the underground and overground pipes, as well as the pumps and irrigation equipment itself. All this could easily come to well over a million pounds, which huge sum most farmers will have had to borrow from the bank. The threat of all that borrowing going to waste or not returning the required interest is indeed frightening, although if your abstraction licence dates back to the 1960s or 1970s, as some of them do, and your capital is all paid off, it is slightly less frightening.

A third factor that makes this a tricky area is that whereas a water company has a network of pipes and many different sources of water, and so can juggle its extraction plans to cater for where the water might be in abundance, the farmer can get his or her water only from or adjacent to their own land. They cannot abstract water from a different catchment or a different aquifer from the one they farm on.

Why, might the Committee ask, am I wanting to shorten the leeway allowed to farmers from 2028 to 2023? The answer is that I am not; what I am saying is that no compensation for amending an abstraction licence should be allowable after January 2023. However, the Environment Agency should be able to extend the enforcement of the necessary licence modification for several years if it believes time is required by the individual business—for the building of a reservoir, for instance. This should be done on a case-by-case basis, and in that way most modifications can probably happen sooner rather than later. However, and this is my key point, the days when you can be compensated for not causing environmental degradation have, in my view, long since gone: you cannot be compensated for not causing environmental degradation.

At the risk of straying into the realms of the bleeding obvious, I should state that, as has been made clear again and again in our discussions on this water chapter, some of our rivers are in a pretty poor state: sewage overspills, road run-off, agricultural run-off and generally just having too many people or too much livestock per square kilometre all contribute to ever more damaging stuff—to use a highly scientific technical term—entering our rivers. Unless we can ensure sufficient water in the river to dilute that stuff, then trout, grayling, carp and perch, dragonflies, mayflies, shrimps and dippers could all disappear, along with irises, water violets and multi-fruited river moss, to name but a few lifeforms that are important inhabitants of our rivers. This dilution is important, and it must have been obvious to all farmers for years that anyone causing environmental damage by overabstraction was going to have to change what they did and how they did it; but, in some cases, very little has happened, and too many farmers have taken no action at all. There are still people extracting from rivers in the middle of summer.

It is possible for a farmer to build one, two or even three small on-farm reservoirs to ensure that they abstract only during the winter months. It is possible for farmers to share reservoirs. It is possible for licence sharing to exist between abstractors in a single catchment. It is possible to use precision irrigation systems which save huge amounts of water. There are a variety of possible solutions and it is to be hoped that all abstractors will be able to find some form of compromise on rivers and waterways where the environment is threatened. I gather from data produced by Defra last year that this amounts to some 18% of our rivers and waterways and over a quarter of our groundwaters. We cannot just go on allowing abstractors to continue to cause environmental degradation.

My proposal is that the Environment Agency should start talking now to farmers on an individual basis with a view to modifying licences which are deemed to be damaging rivers, especially where there are habitats of particular biodiversity importance. This obviously includes SSSIs, referred to in my Amendment 179A, which largely speaks for itself and I would have thought was indisputable.

The farmers will know that no compensation is ever going to be payable and it is up to them and Environment Agency to work out a reasonable solution as soon as possible and not wait for 2028. Where they cannot agree on a solution, I believe there should be an appeal process up to the Secretary of State, or a panel appointed by the Secretary of State. In their recent fact sheet, Defra tells us that there already is an appeal process, but perhaps it needs to be made clearer in this legislation. It is to be hoped that most cases will be resolved long before January 2028, but I think that that long stop should probably remain after which offending licences will be revoked or modified anyway. It is important that the Environment Agency provides the business certainty of a 12-year period for any new contract with farmers. One cannot go to the expense of building a new reservoir only to find that the rules are changed again.

If I can be so presumptuous as to suggest to the Government, I think that these abstraction clauses need to be slightly rewritten—first, to confirm that no actual compensation is payable after January 2023; secondly, to state that by then, or soon after, the Environment Agency and individual abstractors should have agreed a plan of action where necessary on how to modify any damaging abstraction licences before January 2028; thirdly, to set out a formal appeal system when the Environment Agency and the abstractor are unable to agree a way forward; and fourthly, to clarify that any new agreement would remain in place for a minimum of 12 years. That would make these clauses as fair to both sides as is possible.

Finally, I have great sympathy for the farmers involved. All businesses would love to have a framework of certainty and constancy in which to make sometimes risky and long-lasting financial decisions, but this situation has been on the horizon for years, if not decades. I repeat again: some of our rivers are in a very precarious state and the time when you can expect compensation for not causing environmental degradation has, in my view, long since gone.

Photo of Lord Chidgey Lord Chidgey Liberal Democrat 3:00 pm, 7th July 2021

My Lords, it is always a pleasure to follow the noble Lord, Lord Cameron of Dillington, in this House. He speaks with great knowledge and conviction. It is equally a pleasure to listen to the words of the noble Lord, Lord Carrington. I cannot think of another occasion when I have spoken in this House, following two clearly eminent and very experienced farmers. As a civil engineer, I have to just look at the mechanics of it. Nevertheless, it is easier to be supportive of Amendments 176A, 180A and 187ZA, rather than the perhaps more holocaustic view of “what will happen if” that we have heard in earlier remarks.

These amendments, which we support, would provide for the power that is set out in the amendments to be available earlier than given in the Bill. Given the damage that is already occurring—as has been so eloquently put by the noble Lord, Lord Cameron—the impacts of over-abstraction can be long lasting and profound. I speak from the point of view of someone who, while not farming, lives close to the farming community in Hampshire. Noble Lords will have heard me speak earlier of the issues concerning the catchment area of the rivers that we live with. Fish and wildlife can be lost from channels that experience low flows, and take many years to recover. We are already experiencing, in Hampshire, salmon failing to meet conservation limits. So it is not a guess that things will be bad—they are already bad.

Sustainable abstraction will the support the Government’s 25-year environment plan commitments and species recovery targets. Many farmers already farm under sustainable licences, and we must use the techniques and innovations adopted by those farmers to support best practice. For example, as the noble Lord, Lord Cameron of Dillington, has mentioned, with forward planning and investment, on-farm reservoirs are one of the options that can be used.

Amendment 187B would apply to abstraction of water from a river or aquifer that is used by businesses for commercial reasons and related in some sense to agriculture. I am thinking here of businesses such as those that process and distribute cress—watercress and so forth—or fish farms. Water is abstracted, used and then returned to the river by the licence holder. The cost of monitoring inflows and outflows, we believe, should be met by the licence holder as a regular means of, if not controlling what the users are doing, at least being aware of what they are doing.

This has been a very serious issue in our locality. Hampshire is famous for its watercress, but it is reliant, very much so, on pure water. When there is a situation where a successful international commercial company uses your local area as its base for international processing and distribution of their salads, because it has the benefit of a licence to use the water from the chalk stream to clean and remove chemicals and pesticides and so forth on their product, which is then distributed all over Europe, if they are then found to be abusing the licence, and end up by polluting the river, you have a serious problem. I think the Government need to have the means at their disposal to control that. In the particular case I mentioned, it was controlled because individuals mounted a private prosecution to demonstrate the abuse was carrying on, and this exposed it and eventually stopped it.

The terms of the licence will be determined at a level recognising the activities on a particular river or chalk stream, matching or improving on the water quality, and ensuring, by using settlement ponds or recirculation systems, that there are no additional chemicals, nutrients or sediments in the outgoing water compared to the incoming water.

Photo of Viscount Trenchard Viscount Trenchard Conservative

My Lords, I declare my interest as stated in the register, and as owner of a short stretch of the River Rib in Hertfordshire, a chalk stream with various numbers of brown trout, stocked rainbow trout and too many pike and alien crayfish. I also have two operating boreholes, supplying four different households with water and, over the weekend of our music festival, supplementing the water supply for 17,000 festival goers. Happily, our water table is strong, and the River Rib never dries up, unlike some other Hertfordshire chalk streams. The volume of water that we extract is now below the minimum amount that would trigger the requirement for a licence, but those whose volumes require them to have licences should receive compensation for unilateral and untimely cancellation or revocation of those licences. They provide farmers and market gardeners with the certainty they need to continue to produce food, and to invest in their businesses for the future.

I support Amendment 178, so well proposed by the noble Lord, Lord Carrington, and seconded by my noble friend Lord Colgrain. Would the Minister recognise that it is just not right, in the year when farmers start to lose a substantial part of their direct grants, that they should also face an additional increased risk of revocation or change to their licences? The risk is increased because clause (82)(1) of the Bill widens the possible grounds for revocation to include supporting environmental principles. It is therefore no longer necessary to claim that abstraction is causing environmental damage. I also worry about the arbitrary removal of excess headroom. The amount of rainfall varies considerably year on year and, whereas in years of ample rainfall a licence holder may use substantially less than his limit, he may well need to use his headroom excess in subsequent dry years.

I agree with the amendments put forward by the noble Lord, Lord Carrington, rather more than I do with those put forward by the noble Lord, Lord Cameron of Dillington, although I sympathise with his Amendment 179A, which he introduced persuasively. Otherwise, I think he is over-optimistic in seeking to bring forward the effective date from 2028 to 2023. I could support acceleration of the date, but only if the evidential bar were raised, as Amendment 179 seeks to do.

Photo of The Duke of Wellington The Duke of Wellington Crossbench

My Lords, I rise metaphorically to support Amendment 187B in the name of the noble Lord, Lord Chidgey. I think there is agreement across the House that we must legislate in this Bill to clean up our rivers. There will be many ways in which we can achieve this; we have already debated cisterns and discharges.

As it is necessary and important to monitor air quality, so it is with water quality. Duties to monitor water quality will be placed by the Bill on the water companies. To place a similar obligation on any party licensed to abstract and then discharge water seems both proportionate and appropriate. This point was argued forcefully by the noble Lord, Lord Chidgey. I therefore hope that the Government will accept the spirit of his amendment and place it in whatever clause will make it most effective. It is an important amendment and the Government would be well advised to accept it.

Photo of Lord Colgrain Lord Colgrain Conservative

My Lords, I refer to my interests in the register. I rise to support my noble friend Lord Carrington and to add my name to his Amendment 178. I also echo his words of thanks to the Minister for the time that he and members of his department gave us during our virtual meeting to discuss this amendment and for his subsequent letter.

While my noble friend focused his concerns on abstraction rights for arable and horticultural farmers and businesses, my concern is for licences that relate to spring chambers that are gravity fed from underwater strata. These are most often used to provide water to domestic dwellings and livestock troughs and many of these licences have been granted since the 1960s and before. Consequently, they have attached to them over 60 years’ worth of infrastructure investment, whether pipelines or reservoirs, and have become an integral property right and business asset, as my noble friend has already rightly said.

In the overview paragraph of his letter to us, the Minister says that a licence can be varied or revoked to protect from serious damage to the water environment. How this would apply to gravity-fed licences is not clear, since, after all, water appears from a spring and finds its own way to a watercourse. Where is the potential damage in that? In the paragraph dedicated specifically to gravity-fed licences, the Minister’s letter says that abstraction from springs of under 20 cubic metres a day does not need a licence at all, since at that volume they are exempt, but that over that the Environment Agency will balance the needs of abstractors and work with them to find alternative solutions if a revocation or variation is required. Frankly, I do not understand what that means, unless it refers to utilising mains pipelines, which defeats the original objective.

I am mindful of the words of the noble Earl, Lord Lindsay, in opening this debate that the Bill must satisfy the five Cs. If there is to be no compensation for the revocation or variation of these licences, the Bill will have failed in its defence of this category, in a manner where no environmental benefit is to be gained anyway.

During our virtual meeting, I understood the Minister’s officials to say that they did not think that gravity-fed licences would be included in revocation or variances. It is, after all, faintly ridiculous to think, King Canute-like, that water would be prevented from discharging itself from geographical fault lines. I look forward to confirmation from the Minister either that there is indeed scope for them to be excluded, or that there is scope for compensation for this category to be paid.

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Deputy Chairman of Committees

I call the noble Baroness, Lady Ritchie of Downpatrick. She is not with us. I call the noble Earl, Lord Devon.

Photo of The Earl of Devon The Earl of Devon Crossbench 3:15 pm, 7th July 2021

My Lords, it is a pleasure to support the amendments so ably proposed by my noble friend Lord Carrington. I understand from speaking with the Environment Agency locally that these provisions on the removal of water abstraction rights are directed for the most part at large water companies that have for many decades enjoyed the right to extract vast quantities of water from major waterways that they have never used and will likely never need to use. For example, I understand that South West Water enjoys the right to extract over 50% of the water in the River Exe, but it would never use it; if it did, it would cause huge environmental degradation to the sensitive and diverse lower reaches of the river.

If that was all the provisions achieved, they would have my wholehearted support, but they have a much broader impact. Once again, as we have heard, that impact will fall most harshly on the farming community, which will be under such considerable stress in the coming years.

Here, I note once more my farming interests. I also note and pray in aid a number of specific water abstraction rights that our farm in Devon has long enjoyed. Since I took over the farm, I have paid considerable sums each year to preserve those abstraction rights, but I have yet to use them, on the understanding that if those licences were not renewed, they would be lost for ever, impacting considerably the value of the land they serve and permanently restricting the form of agriculture that can be undertaken.

Your Lordships may query why a farmer would pay such sums for water abstraction licences that are not used. That is a reasonable question. The abstraction rights were established in the last century and regularly used then when the farm grew potatoes and other vegetable crops in considerable quantities. Cropping changes since have meant that the rotation now focuses on cereals, for which no irrigation is required, but the ability to extract water has been important, never more so than now.

As we have heard in various recent debates, we need to grow more of our own fruit and vegetables in the UK in the coming years to avoid exporting the environmental impact of a healthier national diet to other countries with lower standards. If we remove abstraction licences, we are in danger of limiting considerably the ability to diversify our nation’s farming, just at the time when we need to be doing the opposite, particularly as global warming is making changes to cropping a necessity. Also, are we not in danger of encouraging farmers now to make use of extraction licences that they do not currently need, solely to preserve them for the future, thereby merely adding to our water consumption?

Finally, it is not clear how these provisions sit fairly alongside basic property rights. Article 17 of the European Charter of Fundamental Rights states:

“Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid”.

Given the Environment Agency already enjoys the power to revoke or change abstraction licences where they are shown to be causing environmental damage, thereby securing the public interest, how are the provisions of Clause 82 consistent with the basic right not to be deprived of possessions without fair compensation?

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

I am delighted to follow the noble Earl. I would like to lend my support in particular to Amendment 176 and others in the name of the noble Lord, Lord Carrington. I commend his preparation and the detail he has given us this afternoon on this group of amendments and on what he seeks to achieve.

I am nothing other than a farmer’s friend, a fisherman’s friend and a friendly eco-warrior—I speak as a lay person in this regard. But I recall that, when chairing the Environment, Food and Rural Affairs Committee in the other place, for five years, there were two opportunities for our then Government—the coalition Government of my own party, the Conservative Party, supported so ably by the Liberal Democrats, when we had Ministers in each department from both parties—to consider abstraction policy. The first was in the context of the water management Act, which was adopted in 2010, and the second was in the Water Act 2014. Despite enormous efforts from the cross-party members of that committee, we were told that that was not the right time to come forward with an abstraction policy. The Government wished to take time, quite rightly, to consider a proper, well thought-out abstraction strategy and policy.

I look at the Bill and Explanatory Notes before us and I do not think we are quite there yet. That is why these well thought-out amendments from the noble Lord, Lord Carrington, serve a useful purpose in that regard. We have to accept that none of us wants to damage the watercourses, large or small, in any way, shape or form, and that we want to protect our aquifers and water, and particularly the fish and other habitats that are served by our watercourses. But we also have to accept that there are many competing uses of water.

From what I have seen and experienced, the farmers seem to be left as the last thought-about in that list. The mover and supporters of the amendment have explained that it is often the water companies and then industrialists who are considered. For example, it could be a brewery or a manufacturer; on a number of occasions I have visited Wilkin’s jam manufacturer—I admit to having a sweet tooth, and it is always a joy to visit. Many companies such as that are users of water and responsibly control its use. I urge my noble friend Lady Bloomfield of Hinton Waldrist to look carefully at ways in which farmers can have adequate provision of water supply.

The grace period should remain until 2028, for all the reasons that those speaking in support of the amendments have given. As the noble Lord, Lord Carrington, requested, there should be a licence plan, a formal appeal system and clarification of a new agreement—in fact, I think it was the noble Lord, Lord Cameron of Dillington, who suggested it. I entirely agree with what he signed up to, but moving that proposal forward to 2023 would be extremely ill advised.

I shudder for the future of farmers and their use of water at certain times of the year. I am concerned because, when one considers North Yorkshire, as one of the most rural counties in the country, there are times when there could be a flood in one part of the county and severe stress in its north-east. We must be mindful of the fact that there may be a need to abstract water in the summer months. I urge my noble friend the Minister in her response to express a note of caution, and I hope that the Government will take this opportunity to come forward with a proper, well thought-out abstraction policy within the context of the Bill.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour

My Lords, the pressure on our wetlands, rivers and aquifers is huge and growing. Demands for water from domestic and business customers, and from agriculture, are increasing. Climate change is reducing the supply and reliability of rainfall, as well as increasing our demand on water resources. I cannot believe that it is 20 years since I started campaigning for the withdrawal of damaging abstraction licences; it is a sad state of affairs that the argument has not yet been completely won.

I cannot support Amendment 176 in the name of the noble Lord, Lord Carrington. Water is a resource that we all must share. Historic abstraction rights are just that—historic happenstance—and can be inequitable in their impact on the environment and other water users. Overabstraction of water from low-flow rivers can have long-lasting damage; it can cause fish and other wildlife to be lost for ever, particularly in chalk streams. None of that will help with the Government’s biodiversity target if overabstraction continues. It can also result in salt water contamination of water resources, including groundwater, which is difficult to remediate.

In the Water Act 2003, we made some progress with the right to compensation for holders of licences that were causing serious damage being withdrawn, but that was a small provision, and rarely used. The Water Act 2014 removed the requirement to pay compensation for water company abstraction licence changes, which was another step forward.

Many farmers already farm under sustainable abstraction licences and have developed innovative solutions for reducing the amount of irrigation water needed, and developed more on-farm reservoirs, as outlined knowledgably by the noble Lord, Lord Cameron of Dillington. We need to pay farmers under ELMS for developing innovative solutions in adapting to a changing climate. Amendments 176A, 180A and 187ZA, tabled by the noble Lord and outlined so eloquently by him, are highly reasonable, practical and fair, and would enable an acceleration of the deadline by which abstraction should cease. His amendments are based on a lifetime of practical agricultural experience and gain much stature from that. There can be no argument at all about removing compensation for variations to licences to remove excess headroom, where historic licences with unused headroom are hampering the more flexible allocation of water.

I also support Amendment 179A—again, one of the splendid amendments of the noble Lord, Lord Carrington of Dillington—which would correct the narrow definition of ecological health and enable changes to be made in licences that are preventing the effective conservation management of sites of special scientific interest and where abstraction is causing damaging low flows in chalk streams and the main salmon rivers.

Photo of Lord Cormack Lord Cormack Conservative

My Lords, I am delighted to follow the noble Baroness, Lady Young of Old Scone. I always remember with great gratitude when she came to my constituency to help with a particular problem, and went to infinite trouble so to do. She speaks with knowledge and authority.

I have never heard a debate in your Lordships’ House that has been opened with two more impressive speakers, who illustrated the expertise we have here. A powerful case was made by the noble Lord, Lord Carrington, and I was almost totally persuaded by it—until I heard the speech of the noble Lord, Lord Cameron of Dillington. They both made powerful points, but what has emerged from the debate for me, as a pure lay man in these discussions, is that the prime purpose and overriding concern of an environment Bill—as underlined by the noble Lord, Lord Chidgey, who has an extremely sensible amendment in his name—must be the health of the environment, and you cannot have a healthy environment unless you have healthy rivers. The noble Duke, the Duke of Wellington, made a perceptive point when he underlined his support for the Chidgey amendment.

Where do we go from all this? Of course there has to be fairness at the end of the day, and an appeal procedure that can be respected by all concerned. I very much hope that, in the discussions that take place between now and Report—we say that again and again on this Bill—there can be an agreement on an appeal process whereby people do not feel that they have been harshly dealt with and, when following practices that they have followed over the years, they are not abruptly penalised. That is the direction in which we must go because—I come back to the prime point—the health of our rivers is fundamental to a healthy environment, and nothing must be done that further damages them. We referred in earlier stages of the Bill to the crucial importance of clean waterways—the noble Duke, the Duke of Wellington, has his own Private Member’s Bill in that regard—and we are a long way from achieving the cleanliness that is, I hope, the desire of us all.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Environment, Food and Rural Affairs) 3:30 pm, 7th July 2021

My Lords, I thank all noble Lords who have spoken in this debate, and I have listened carefully to the informed and thoughtful contributions from all sides. They have well represented the two sides of the dilemma. On the one hand, we recognise that water abstraction plays a vital role in the economy, generating power, driving industry and helping our farmers to grow food. On the other hand, we recognise that unsustainable abstraction can do serious environmental damage, particularly by changing the natural flow of water, with lower water flows and reduced water levels, and ultimately contaminating water resources, thereby affecting fish and wildlife and in some cases contaminating by allowing salt-water intrusion.

I think that we all accept that an abstraction licence should not give an automatic right to extract water whatever the environmental consequences. As my noble friend Lady Young of Old Scone said, water is a shared resource. The actions of one individual or business can have devastating effects on another farm or community downstream, so we have to manage it on a collective basis. In this regard, I welcome the amendment in the name of the noble Lord, Lord Chidgey, which would require a licensee to measure water quality in an aquifer and share that information publicly. That is all part of that collective management of a very scarce resource.

We also have to recognise that climate change has already varied the supply of water since many licences were granted, and all the Government’s indices point to looming water shortages. We accept the point made by several noble Lords that the rights experienced by a water company are of a very different scale and impact from those experienced by farmers. It is on this latter group that we are focusing today.

The Government place great emphasis in their proposals on the Environment Agency managing the changes to licences through local consultation. In his letter to us of 10 June, the Minister said that

“we expect the Environment Agency to work closely with the affected licence holders before using these measures.”

But when I visited Norfolk with the NFU a couple of years ago, this was far from the case. Their licences, which underpinned a thriving horticultural sector producing fruit and vegetables for the UK market, were under imminent threat and, despite numerous requests, there was no dialogue with the Environment Agency—indeed, at one point, I even got the noble Lord, Lord Gardiner, involved to persuade for some consultation to take place. As we discussed in the earlier debate, the Environment Agency is struggling to meet all its statutory obligations because of the funding crisis. I hope that the Minister has received sufficient assurance that the Environment Agency has the resources to manage the renegotiation of all the licences so that we can have more sustainable licences in the future.

Ultimately, we agree that we have no choice but to withdraw a licence if the evidence shows that the environment is being damaged. We agree with the premise of Clause 82 that there should be a negotiated settlement, with a reasonable compliance period for changes to be introduced rather than an automatic right to compensation. We also agree with the noble Lord, Lord Cameron, that the new agreements should be for a minimum of 12 years. As he made clear, we should take a catchment-based approach and look to introduce the best techniques available for water efficiency in parallel with the negotiations.

We agree with the noble Lord, Lord Cameron, that an operative date of January 2028 is far too long a time. I was alarmed to hear the noble Lord, Lord Carrington, talk of deadlines as far ahead as 21 years. The current timescale does not appear to grasp fully the severity and immediacy of the problems facing our waterways. We need to move all farmers on to sustainable abstraction licences as soon as possible. We cannot wait until 2028 to start revoking licences.

If compensation remains payable until 2028, there is a danger that budgetary constraints will limit the scope of the Environment Agency to act to protect the environment in the interim. There is also the danger of perverse outcomes whereby people start to behave in their short-term interest just to protect their rights and potential access to compensation. As we have heard, the Government are already beginning to address this issue through the 2017 abstraction action plan, so there is even more reason for bringing the date forward from 2028, since presumably action on many of these areas is already in hand.

This has been a difficult debate, and I understand the arguments on both sides but, ultimately, we think that a date of 2028 is too long away and we therefore support the amendments in the name of the noble Lord, Lord Cameron, and look forward to the Minister’s response.

Photo of Baroness Bloomfield of Hinton Waldrist Baroness Bloomfield of Hinton Waldrist Baroness in Waiting (HM Household) (Whip)

I thank all noble Lords for another interesting discussion on this Bill. As the noble Baroness, Lady Jones of Whitchurch, has just observed, the Government are endeavouring to perform a careful balancing act by delivering on their manifesto commitments to improve the environment through addressing the consequences of unsustainable abstraction and modernising the licence system while minimising the impact on farmers.

To put things into context—I was grateful for the balanced comments of the noble Baroness, Lady Young of Old Scone—I say that we expect that, out of the 13,000 permanent abstraction licences, there may be up to 1,200 that are unsustainable and to which these measures may apply. However, the Environment Agency expects that the number of licences will reduce in any case before the need for the measures to be applied following local site investigations and discussions with licence holders.

I also thank the noble Lord, Lord Carrington, for his Amendments 176 and 177 to 179, and understand his concerns about the effect of the proposals on licence holders. My noble friend the Minister and I were grateful to be able to meet the noble Lord alongside my noble friend Lord Colgrain the week before last to discuss this issue further.

As we have heard from other noble Lords, unsustainable abstraction can have very negative impacts on the aquatic environment, including causing low flows. Low flows can lead to reduced levels of dissolved oxygen, harming fish and insects. It can also lead to increased temperatures and impede the migration of fish species, which may not be able to reach spawning grounds. I say in response to the concern expressed by the noble Baroness, Lady Young of Old Scone, about salmon stocks—an interest of mine, of course—that Defra, the Environment Agency and partner organisations have committed to the salmon five point approach to restore the abundance, diversity and resilience of salmon stocks, ensure that river flows are adequate for the habitats they support and increase spawning success by improving water quality.

Of course, low flows have a knock-on effect on other parts of riverine ecosystems, including specialist species which rely on the aquatic environment. Low flows can also lead to dire consequences for internationally important chalk streams, 75% to 80% of which are found in the UK.

However, we also know that abstraction is vital for food production, as farmers provide drinking water for livestock or abstract water to irrigate their crops. I hope that my noble friend Lady McIntosh of Pickering is reassured that I put that firmly on the record.

As we heard from the noble Lord, Lord Cameron of Dillington, with respect to his potatoes, skin finish is vital, and the Government recognise the importance of maintaining the high quality of British produce. We must therefore balance the needs of agricultural and other abstraction licence holders with public water supply demands and the need to protect the environment. That is why the Environment Agency is using a catchment-based approach and trialling innovative approaches in priority catchments with a range of local stakeholders, including water companies, the National Farmers’ Union, local abstractor groups, environmental groups and navigation interests to solve issues of access to water and unsustainable abstraction.

As we have discussed in our conversations to date, the Government want the Environment Agency to continue to work closely with abstractors to explore all voluntary solutions to unsustainable abstraction. I do not agree that this is a blunt regulatory process; rather, it is the last resort in a collaborative process.

On removing compensation rights, which a number of noble Lords mentioned, we want to protect licence holders’ ability to abstract where it is fair and right to do so. Unless a licence risks damaging the environment or is underused, we believe that licence holders should be eligible for fair compensation for any loss if licences are revoked or varied.

Farmers hold more abstraction licences than any other sector and so a higher number of farmers may be affected than other sectors. However, the Government expect the Environment Agency to work closely with affected licence holders to find alternative solutions which balance the needs of the environment and the needs of farmers. We expect these powers to be used by the Environment Agency only after all other options have been exhausted.

The Environment Agency, as the statutory environmental regulator, has the relevant expertise to determine which licences may be affected by the changing of the threshold from “serious damage” to “damage”. The Environment Agency grants licences and proposes their revocation or variation based on monitoring of abstraction and the water environment from which the water is being taken.

To reassure my noble friend Lord Cormack and the noble Lord, Lord Cameron, who appealed for an appeals process, as currently, an abstraction licence holder will be able to appeal to the Secretary of State in respect of a proposed revocation or variation of their licence, as well as to put forward any additional evidence from other experts, if they wish to do so. Therefore, the Secretary of State is already required to consider relevant expert evidence when using this power as it is an intrinsic part of the existing process. Furthermore, I reassure noble Lords that the Environment Agency has already started conversations with a number of farmers, which I hope will reassure the noble Lord, Lord Cameron, and the noble Baroness, Lady Jones, who asked about the ability of the Environment Agency to undertake all these powers.

We should expect that these measures will be used only after other solutions have been exhausted. Partly for this reason, they will not be available until 2028. In the meantime, we expect the Environment Agency to work closely with affected licence holders on a case-by-case basis, to provide data and evidence for why a licence needs to be varied or revoked, to consider the type of abstraction when making decisions, and to take a risk-based approach and consider what the abstraction is being used for.

On the noble Lord’s Amendments 180 to 187, I hope he can see that the Government have designed these provisions to make more water available to other abstractors and to reduce the risk to the environment. These measures will be focused on permanent licence holders who consistently abstract much less water than they are licensed to take, but the Government are well aware that not all licence headroom indicates a lack of need. It is appropriate to safeguard licence headroom in some cases—for example, to manage higher demands during dry weather as well as the planned future growth of a business. The 12-year period specified in the Bill allows for weather variations and crop rotations and fits with the current abstraction licensing strategy timeframe.

On Amendments 176A, 180A and 187ZA from the noble Lord, Lord Cameron of Dillington, I hope that the arguments I have given have convinced him that introducing these measures from 2028 strikes the right balance between protecting the environment and recognising their impact on abstractors.

As I think the contrast between the amendments in this group illustrates, the Government have worked hard to reach a fair compromise on this issue. As well as allowing time to find voluntary solutions, the 2028 date will give time for licence holders to adjust. We understand that this is particularly important for business certainty and continuity. Furthermore, it will allow time for the catchment-based approach to water resources to produce solutions. In the abstraction plan, published in 2017, the Government committed to update abstraction licensing strategies for all catchments by 2027, and a 2028 date aligns with this.

Regarding Amendment 179A, also tabled by the noble Lord, Lord Cameron, the Government simplified Clause 82 following feedback received during our consultation in 2019 that our original proposals were far too complex. Licences can be varied or revoked without the Environment Agency being liable to pay compensation where the Secretary of State considers the licence change necessary, having regard to the relevant environmental objectives under the water framework directive or to protect the water environment from damage. As such, I am pleased to confirm for the noble Lord that the clause can already apply to licences that may affect all sites designated under existing legislation, including sites of special scientific interest and Ramsar sites.

The Environment Agency also already considers the impact on flow when assessing the environmental impact of an abstraction licence, including when it is considering whether to revoke or vary a licence. The Environment Agency will continue to do so when these new powers are available on or after 1 January 2028.

Restoring England’s internationally important chalk streams is a government priority, and the powers in this clause will apply to chalk streams. It will give the Government powers to address unsustainable abstraction in chalk catchments without liability to pay compensation if the abstraction is causing damage to the chalk stream environment.

My noble friend Lord Colgrain asked me about gravity-fed licences. The clause as drafted covers all permanent abstraction licences which are abstractions of over 20 cubic metres per day. Most gravity-fed abstractions are for less than 20 cubic metres per day and, as such, do not require a licence. However, if a gravity-fed licence takes over 20 cubic metres per day it will require an abstraction licence, which falls within the scope of this clause. Because of that, gravity-fed abstractions were not covered separately in the consultation or in the Government’s response as different types of permanent abstraction licence were not differentiated. The relevant factor here is the impact that the abstraction has on the environment.

I reassure the noble Earl, Lord Devon, that water companies are already subject to the removal of abstraction rights without compensation, so there is no need for them to be covered by this clause.

Finally, on Amendment 187B in the name of the noble Lord, Lord Chidgey, the Environment Agency already has the power to grant abstraction licences containing such provisions as it considers appropriate under Section 38(2)(a) of the Water Resources Act 1991. This could include water quality monitoring upstream and downstream of an abstraction point if there was any uncertainty about the effect the abstraction might have on water quality.

As regards the cost of such monitoring, the abstractor would pay for water quality monitoring if it were to be, or were to become, a condition of their licence. In practice, there is rarely any need to place water quality conditions on abstraction licences, as licences normally include conditions to protect river flows and, in turn, water quality. I hope that this provides reassurance to both the noble Lord, Lord Chidgey, and the noble Duke, the Duke of Wellington, who expressed similar concerns.

The Environment Agency can impose similar conditions to protect water quality on discharge permits issued under the Environmental Permitting (England and Wales) Regulations 2016 for returning water to the environment.

In summary, this debate and the range of opinions it has showcased have shown that abstraction reform is a complex issue. There are good points on all sides. However, I hope noble Lords can see how hard the Government have worked to strike a reasonable and sensible balance to protect our precious water environment while ensuring that we manage the impact on abstractors and farmers. I sincerely hope I have managed to reassure noble Lords and ask them not to press their amendments.

Photo of Lord Carrington Lord Carrington Crossbench 3:45 pm, 7th July 2021

I thank everybody who has participated in this debate. There have been some very informative contributions from all noble Lords. I may not agree with all of them, and I must say, with respect to the noble Lord, Lord Cameron, that maybe we should limit our conversations in future to the growing of potatoes in Devon, which he does very well, and the growing of potatoes in Lincolnshire, which I reckon we do quite well.

Leaving that aside, the most important thing that has come out of this debate is the uncertainty about some of the rules and regulations and the data that is used. It is this lack of certainty over the data behind licensing decisions, together with the use of the precautionary approach behind many of those decisions, that is causing great concern to farmers. I repeat my request, as I stated earlier, that proportionality should govern all this.

My other point is that the definition of damage is extremely vague, for understandable reasons. How and why should growers rely on the say-so of the Environment Agency, particularly in the light of the experience of the noble Baroness, Lady Jones of Whitchurch? You can understand where the concern comes in.

In the meeting with the Minister and the noble Baroness, Lady Bloomfield, a helpful promise came out. I shall read from the letter, which states: “We will set out in guidance what we expect the Environment Agency to seek to find collaborative, non-licensed change, such as habitat restoration and mutually agreeable voluntary solutions wherever possible. Responsibility for demonstrating that a licence is damaging or risks damaging the environment will lie with the Environment Agency.”

My conclusion is that the word “damaging” needs, if possible, to be defined very carefully and the guidelines given by the Ministry to the Environment Agency need to be circulated well in advance. I thank the noble Baroness, Lady Bloomfield, for her support for farming and, in particular, the noble Baroness, Lady McIntosh of Pickering. Some were perhaps less concerned about the importance of productive farming in this country than they. I also refer to the excellent speech of the noble Earl, Lord Devon, who mentioned the importance of property rights and the issue of compensation. That is a major issue, and I cannot underline enough how much money has been spent by some farms to put all this equipment in place. Although certainty is difficult, it is required for them.

In the circumstances, I beg leave to withdraw the amendment.

Amendment 176 withdrawn.

Amendments 176A to 187ZA not moved.

Clause 82 agreed.

Amendment 187B not moved.

Photo of Lord Duncan of Springbank Lord Duncan of Springbank Deputy Chairman of Committees

Before we move on, perhaps we need a pause to allow people to escape from the Chamber.

They have escaped. We now come to the group beginning with Amendment 188. Anyone wishing to press this amendment or anything else in the group to a Division must make that clear during the debate.

Clause 83: Water quality: powers of Secretary of State