Clause 27 - Compensation for modification of licence on direction of Secretary of State

Water Bill [Lords] – in a Public Bill Committee at 4:15 pm on 18 September 2003.

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Photo of Ms Sue Doughty Ms Sue Doughty Liberal Democrat, Guildford 4:15, 18 September 2003

I beg to move amendment No. 141, in

clause 27, page 32, line 30, leave out subsection (2).

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

With this it will be convenient to discuss the following:

Amendment No. 42, in

clause 27, page 32, line 30, leave out 'four' and insert 'six'.

Amendment No. 228, in

clause 27, page 32, line 30, at end insert

'except in the case of licences where water would otherwise be abstracted for use on land which is subject to phytosanitary restrictions.'.

Photo of Ms Sue Doughty Ms Sue Doughty Liberal Democrat, Guildford

Sadly, we return to the vexed question whether the time period should be four, six or seven years. There are various reasons, such as agricultural practices, to delete subsection (2), which changes the time period to four years. Clause 27 reduces the period of non-use of a licence from seven to four years, after which time revocation or variation does not entitle the licence holder to compensation.

In some situations, it would be good agricultural practice not to abstract water for at least seven years or maybe longer. Problems such as disease control might lead to water not being abstracted and they must be addressed. In the case of watercress growers, the specifications of supermarket contracts demand that the water must return to its previous quality before it can be abstracted. Again, the question of compensation arises. Farmers and growers should not risk losing a right to compensation after only four years of non-use. Despite the long and tortuous debate this morning and in previous sittings, we will pursue the amendment until we hear what the Minister is going to do about the matter.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs 4:30, 18 September 2003

Currently, if a licence has not been used for seven years it can be revoked or varied and the holder is not entitled to compensation. Clause 27 reduces the period to four years. We have already had this argument. I explained that four years is a reasonable balance, given that the Environment Agency needs maximum flexibility in respect of its water management. There may indeed be very good reasons why some people want to hold stable licences—the provision of drinking water, for example—and I am sure that the agency will consider them carefully.

Amendment No. 228 deals with issues relating to farmers who are holding a licence but not abstracting because there is an irrigation ban to prevent an outbreak of plant diseases such as potato brown rot. I am assured that the Environment Agency would take such circumstances into consideration before formulating the process to seek revocation of the licence. We are not talking about a situation in which there is no flexibility and where people's circumstances cannot be considered. Of course, special circumstances such as the one that I mentioned will be taken into account.

I hope that what I have said reassures the hon. Lady that four years is an appropriate time. It fits in with what we have agreed in relation to the protected rights and is consistent with other approaches in terms of the time scale.

Photo of Ms Sue Doughty Ms Sue Doughty Liberal Democrat, Guildford

I thank the Minister for his reply. I am pleased that he has put it on the record that the Environment Agency will take circumstances into consideration. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I beg to move amendment No. 51, in

clause 27, page 32, line 30, at end insert—

'(2A) After subsection (4) there is inserted—

''(4ZA) Subsection (4) shall not apply while the possibility of the abstraction of water under the licence constitutes part of—

(a) any water resource management scheme maintained under section 20, 20A or 20B, or

(b) any drought plan maintained under section 39B.''.'.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

With this it will be convenient to discuss amendment No. 54, in

clause 29, page 34, line 15, at end insert—

'(1A) When the holder of the licence is a company appointed as a water undertaker under the WIA, the revocation or variation will not—

(a) require the undertaker, in order to meet all its existing obligations to supply water for domestic or other purposes, together with its probable future obligations to supply buildings and parts of buildings with water for domestic purposes, to incur unreasonable expenditure in carrying out works; or

(b) otherwise put at risk its ability to meet any of the existing or probable future obligations mentioned in paragraph (a) above.'.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I want to be sure I am on the right clause. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I beg to move amendment No. 53, in

clause 27, page 33, line 7, at end insert—

'(4C) Whenever the Secretary of State determines that compensation should not be paid under this section in respect of the variation of a licence on the grounds set out in subsection (4A) above, the holder of the licence may dispute the determination by referring the dispute to the arbitration of a single arbitrator appointed by the President of the Institution of Civil Engineers.

(4D) When a dispute is referred to arbitration under subsection (4C)—

(a) the arbitrator shall take into account any representations that the Secretary of State, the Environment Agency or the Authority may wish to submit to him; and

(b) in making his award the arbitrator may confirm, revoke or vary the whole of the Secretary of State's determination, or any part of the determination whether the reference relates to that part of the determination or not.''.'.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

With this it will be convenient to discuss amendment No. 55, in

clause 29, page 34, line 17, at end insert—

'(2A) Whenever the Secretary of State determines under this section that compensation should not be paid under section 61 of the WRA in respect of the revocation or variation of a licence, the holder of the licence may dispute the determination by referring the dispute to the arbitration of a single arbitrator appointed by the President of the Institution of Civil Engineers.

(2B) When a dispute is referred to arbitration under subsection (2A)—

(a) the arbitrator shall take into account any representations that the Secretary of State, the Environment Agency or the Authority may wish to submit to him; and

(b) in making his award the arbitrator may confirm, revoke or vary the whole of the Secretary of State's determination, or any part of the determination whether the reference relates to that part of the determination or not.'.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I have learned my lesson about batting away at the wrong clause. If there is a typo, it is better to quit while you are behind, rather than seeking hopelessly to sneak ahead.

It is gravely disturbing that the compensation paid will be varied, and the arbitration in proposed new section (4C) in the amendment would be most helpful. It would take into consideration representations from the Secretary of State, the Environment Agency and the authority as well as the Secretary of State's determination, whether the reference relates to that part of the determination or not. I look forward to the Minister's comments.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Where a licence is revoked or modified, compensation is payable for loss or damage under section 61 of the Water Resources Act 1991. The same section also provides that any disputes relating to the amount of compensation may be referred to the Lands Tribunal, which is common in many issues. The tribunal is independent of the Secretary of State and has a great deal of experience in dealing with such disputes.

Clause 27 sets out circumstances in which compensation would not be payable when a new abstraction licence is varied to a minimum amount specified in the licence itself. That provision, coupled with clause 21(3), is intended to give the agency the competence to issue licences with a duration of more than 12 years, in respect of major, long-term development. Given what was said in some earlier debates, I would have thought that Opposition

Members welcomed that, because it will be part of the agency's flexibility.

Clause 29 specifies that compensation will not be payable when a non-time-limited licence is revoked because the abstraction is causing serious environmental damage. We discussed that matter earlier.

Amendment No. 53 would amend clause 27 to reflect the principle that the holder of an abstraction licence should not be deprived of abstraction rights without the possibility of a hearing. Amendment No. 55 would have the same effect with respect to clause 29. The 1991 Act already provides a mechanism for a hearing in such cases. The hearing would take place when it is decided whether to vary a licence on the grounds set out in clause 27 or clause 29. It is also important to note that, contrary to what the amendments imply, section 61 of the 1991 Act does not provide for the Secretary of State to make a decision on whether to award compensation. In the circumstances set out there, that would follow as a matter of law. I hope that I have reassured the hon. Member for Leominster that there is a right of appeal, and that he will therefore withdraw his amendment.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I am grateful to the Minister for his reply—those were the types of assurance I sought. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 27 ordered to stand part of the Bill.

Clause 28 ordered to stand part of the Bill.