Clause 21 - Form, contents and effect of licences

Water Bill [Lords] – in a Public Bill Committee at 2:45 pm on 18 September 2003.

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Photo of Robert Key Robert Key Conservative, Salisbury 2:45, 18 September 2003

I beg to move amendment No. 164, in

clause 21, page 24, line 7, at end insert—

'(2A) At the end of subsection (2) there is inserted—

''(c) provision for ensuring public access to information about the quantities of water referred to in paragraphs (a) and (b).''.'.

The amendment is designed to change section 46 of the Water Resources Act 1991. It would provide that every licence required publication of the quantity of water to be abstracted.

I should like to explain why I decided to table the amendment. My admiration for the military runs deep. In my time as the Member of Parliament for Salisbury, I have known about eight or nine Secretaries of State for Defence, four times as many Ministers of State and 10 times as many Under-Secretaries. I have dealt with them all about the estates of Salisbury plain. I must make it clear that I am full of admiration, not only for the MOD's guardianship of its land, but for the progress made on defence estates. Conforming to strict regulations, the MOD has made changes that relate not to military occupation of the land, but to looking after land properly on the community's behalf.

The Minister said that he does not want Crown immunity used, but he recognises that on grounds of national security it might be appropriate not to reveal some information. My hon. Friend the Member for East Devon (Mr. Swire) said that the MOD should decide what to disclose, which is fine up to the point at which it has to justify that decision. The MOD's natural stance is not to tell anybody anything if it can avoid it, and I understand that—it is not a bad rule of thumb. However, there are sometimes turf wars among Departments and their interests in the Salisbury Plain—or any other—training area, and among local people, parish, district and county councils, and the military.

The situation depends who is the current commandant of the Salisbury Plain training area and on how tough they are about the enforcement of public access to footpaths, bridleways and so on. At the moment, we have a tough regime, but at other times it has been not so tough. The Army always does its best to give maximum access for recreational activity, whether that is for hawking, model aircraft or riding.

Photo of Robert Key Robert Key Conservative, Salisbury

I am glad to say that hunting continues to be allowed on Salisbury plain at the specific direction of the current Defence Secretary. He may not know it, but he allows hunting.

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

Order. I did not want to intervene, but as the hon. Gentleman continues to talk about fox hunting, I have to. Will he stick to the amendment?

Photo of Robert Key Robert Key Conservative, Salisbury

I apologise, Mr. O'Brien; you are entirely correct.

The MOD does not have a good record on water and sewage disposal. It realises that its water treatment plants and processes are antiquated and, some might say, legendary. Indeed, a few years ago the Cholderton and District Water Company, a small private undertaking, discovered that there was carbon tetrachloride in the tap water. Some zealous NCOs on Salisbury plain had been cleaning out the tanks for the dry cleaning of military uniforms and the pollutant had gone into the aquifer. However, the military are making huge efforts to put that right with Project Aquatrine, the biggest single PFI project in the MOD, which will contract out all their water and sewerage systems throughout the country.

The problem is that there has been massive abstraction in the Salisbury Plain chalklands for many years, with the water being exported from the area to Yeovil, Chippenham and other places. The beneficiaries have not been my constituents, but they have suffered from the low flows that occur because of excessive pumping out in the headwaters of the catchment. I am particularly concerned that legislation will make a nonsense of catchment abstraction management strategies, or CAMS, which I am afraid brings us back to the water framework directive. I suspect that both Crown immunity and the military's failure to tell us how much water they are taking will fall foul of the directive.

I asked some parliamentary questions about the problem in February, starting with how many bore holes there were on Salisbury plain. The answer is that there are 24 belonging to the MOD, but I cannot be told where they are for security interests. That is fair enough—I do not mind where they are—but I wanted to know how much water they abstract and what impact they have on the low flows in the streams that share the aquifer.

I asked another question about the daily abstraction rate from all 24 bore holes, the emergency bore hole, the largest volume bore hole and the smallest volume bore hole. I received an answer on Tuesday 8 April:

''The abstraction rate from individual boreholes has security implications and I am therefore withholding it under Exemption 1 of the Code of Practice on Access to Government Information.''—[Official Report, 8 April 2003; Vol. 403, c. 145W.]

Under the heading

''Defence, security and international relations'',

that exemption cites

''information whose disclosure would harm national security or defence''.

I know a bit about the problems of water being used by terrorists as a means of distributing pathogens

because I also represent Porton Down, which is only a few miles from the area that I am talking about. I specifically did not ask for that information, but the MOD was not prepared to give even the global figures. It will not do for the Minister to reply by saying that the Defence Secretary invokes the code and that is the end of the story, because that is not joined-up government. We need to know why the MOD has done that—it must justify its actions.

It is also absurd if large public companies have the information and the Environment Agency does not. I say that because I had a letter from the area manager of the South Wessex division of the agency on 16 April about the important Bourn and Nine Miles rivers project, which involves low flows and abstraction from chalk, telling me about the current position.

I wrote back asking the area manager if he would explain how much water was extracted by the MOD because I had not managed to get such information. I asked if all his modelling on the Bourn and Nine Miles rivers project and the River Avon and special area of conservation strategy was taken into account. What particularly struck me is that when I spoke to a representative of Thames Water at the launch of those projects on 4 April, he expressed surprise that the MOD was withholding information. He said that all that information was public knowledge and was available to Thames Water and Wessex Water, without restriction or confidentiality agreements, in connection with project Aquitrine.

I wanted to know why, to the MOD, the information was so secret. The area manager wrote back to me on 19 May. He said:

''I am given to understand that various pieces of information concerning Ministry of Defence sites were made available to bidders under Project Aquitrine, but am unaware of the nature of that information.''

He was not told. The Environment Agency did not know, although the commercial company knew. The letter continued:

''No detailed abstraction data was received in this Region under those auspices and so I am unable to make further comment other than to say that any information we have concerning Ministry of Defence abstractions must be treated as confidential.''

That is why I tabled the amendment.

It is extraordinary that the MOD, without justification, can say that it will not tell anyone anything, but it then gives information to the water companies, which are large organisations employing hundreds of people. One can imagine the number of copies of the letters that are circulated to telling everyone, but the agency is not told and neither are Members of Parliament. That is not joined-up government and it will not conform to the water framework directive. It is an abuse of Crown immunity, whether or not it is in the security interests of the MOD to tell us.

I hope the Minister will agree that my amendment is sensible. It does not seek to say that the MOD should not have any secrets, which would be ridiculous. Of course it should, but the blanket approach to saying

no is not in the spirit of the age in which we live and is certainly not appreciated by my constituents.

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

The hon. Gentleman knows that as a general principle I accept much of what he says in making his reasonable case, but I cannot support his amendment. It may not be what he intended, but its effect would be to put the onus to provide information on the abstractor, not on the agency. I understand that he feels that information should be available, and certainly to the agency because of its responsibilities under the water framework directive.

As I explained, we want to lift Crown immunity in those circumstances, although we will have to respect issues of national security, as the hon. Gentleman will understand. Information on abstraction flows and rates may be useful to people who have a malicious intent, for example, so there may be good reasons for the MOD withholding that information.

Through the Green Ministers Committee, all Departments have been charged with responsibility for sustainable management on Government estates. The MOD has done a lot of good work on biodiversity and resource management, and it deserves credit for that; it has a successful structure to drive it forward.

I assure the hon. Gentleman that we are in the process of lifting Crown immunity. We will respect the issue of national security, which will reassure the MOD. The information related to all the points raised by the hon. Gentleman will be made available to the Environment Agency as part of the CAMS process in the water framework directive.

The agency will have that information, and I want it to put as much of it as possible in the public domain. However, to address the MOD's concerns and safeguard national security, the agency will release it only after clearance from the MOD. The water companies will also have a responsibility in that regard. They have a good understanding of security as they have their own security issues to address. The information that the water companies receive will be sent in confidence, and there are strict rules governing who in those companies has access to sensitive information.

I have outlined the current situation. In future, the agency will have all the information that the hon. Gentleman, quite rightly, would want it to have, and I want to see as much as possible put in the public domain, with the caveat of national security and one or two other legitimate reasons.

Photo of Robert Key Robert Key Conservative, Salisbury 3:00, 18 September 2003

I am grateful to the Minister for that commitment. It is an important step forward for the Environment Agency to have that information. It may therefore be unreasonable for me to seek to press the matter to a Division. However, I ask the Minister if he will draw this debate to the attention of Defence Ministers, and stress the importance that we all attach to the MOD being able to justify what it does, rather than just putting down the shutters when information is sought. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Robert Key Robert Key Conservative, Salisbury

I beg to move amendment No. 165, in

clause 21, page 24, line 15, at end insert—

'(3A) After subsection (3) there is inserted—

''(3A) Every licence under this Chapter to abstract water shall impose a duty to use the water abstracted in an efficient manner, so as to further water conservation.'.

One of the first things that we did on Tuesday was to delete clause 1, which had been subject to careful argument in the other place. That clause concerned the duty to conserve water resources, and in that context the Minister said that new clause 16 would impose

''a duty on the Secretary of State to take steps to encourage water conservation.''—[Official Report, Standing Committee D, 16 September 2003; c. 9.]

The new clause itself is headed, ''Duty to encourage water conservation.'' However, later in the clause, that is no longer mentioned as a duty, and certainly not as a duty on the Secretary of State.

The new clause says:

''The relevant authority must, where appropriate, take steps to encourage the conservation of water.''

That seemed odd to me, because I thought a duty was to be imposed. However, no duty is imposed in law, but ''where appropriate'' there is an obligation on the relevant authority to ''take steps''.

I was therefore intrigued to see a letter from Lord Whitty to my noble Friend Baroness Byford, dated 12 September, in which he reiterated that a duty would be imposed. He stated:

''The Government amendment retains the principle of the clause, whilst addressing these concerns. This will place a duty on the Secretary of State to take steps to encourage the conservation of water and report to Parliament every 3 years on the action taken.''

However, it does nothing of the sort. It does not place a duty on the Secretary of State: it requests the relevant authority to take steps. I contend that that is completely different, and I do not like it.

I do not suppose that Ministers were seeking to mislead anyone, but the situation could be read differently. In paragraph 9.27 of the Government's discussion paper, ''Taking Water Responsibly'', they said that they would

''bring forward legislation, when Parliamentary time allows . . . to place all other abstractors under an enforceable duty to use water abstracted under authorisations in an efficient and effective manner.''

That led to the drafting of clause 1 of the Water Bill, which was introduced in the other place.

The Bill will give the Environment Agency no control over the efficiency of water abstracted under licences granted in perpetuity, which account for 90 per cent. of the licences in force. The majority of abstractors will remain able to use water as they see fit, however profligately, provided that they do not exceed the licence conditions, such as those on use, volume and timing. The Government should honour their original commitment to place all abstractors under a clear duty to use water efficiently. After all, they claim that they have put a duty on the Secretary of State—but they have not.

All abstractors should be on a level playing field, and provide the Environment Agency with a new tool

for seeking efficiency gains without having to resort to the cost and complexity of revoking or varying a licence against a holder's consent. I make no apology for returning to this issue, which we dealt with on the first day of our proceedings, because I would like the Minister to explain why we have been told that there is a duty on the Secretary of State when there is not—there is no duty at all. I hope that that gives the Minister an opportunity to toughen up that aspect of the Bill.

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

Again, we have no problem with the perfectly reasonable principle of requiring efficient use of water by all holders of abstraction licences. We deleted clause 1 to insert a new clause, which—as the hon. Gentleman makes clear—recognises the need to ensure efficient use. We wanted to word it so that it was consistent with the Bill and with current needs. I assure him that, although he may have read it differently, new clause 16, which replaced clause 1, does indeed put a duty on the Secretary of State in relation to the efficient use of water. I put that on the record now.

On amendment No. 165, the Environment Agency already has the power to impose on any abstraction licence conditions relating to the efficient use of water. It also assesses water efficiency in the grant of every new licence as part of the test of ''reasonable requirement''. There must be a proof of ''reasonable requirement'', and it can take action to prevent prolific use of water where it occurs or where action is needed. All those requirements are tailored to specific cases and are clearly enforceable, whereas the changes proposed in the amendment may not be, as it is broad. We have addressed this point following debate in another place by adding clause 75, which makes it explicit that the Environment Agency's general water resources duties include a duty to ensure that those resources are used efficiently. There is a duty on the Environment Agency and one on the Secretary of State. I hope that the hon. Gentleman is satisfied with those assurances.

Photo of Robert Key Robert Key Conservative, Salisbury

Where is the phrase ''duty on the Secretary of State''? Can the Minister tell me please? [Interruption.] I think perhaps he cannot.

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

I can. It comes from the word ''must'', which implies a duty. New clause 16 states:

''The relevant authority''—

which is the Secretary of State

''must, where appropriate, take steps to encourage the conservation of water.''

When the word ''must'' is used in legislation, it implies an obligation or a duty.

Photo of Robert Key Robert Key Conservative, Salisbury

I am surprised that this has come to me so late. I do not know whether everyone else is satisfied with that explanation. I will take the Minister's word, but I imagine that many other people reading the debate will want to pursue it. In view of what he has said—

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

My hon. Friend has touched on an important point. New clause 16 states:

''The relevant authority must, where appropriate, take steps to encourage the conservation of water.''

Can he think of an instance when it would not be appropriate?

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

Order. I must remind hon. Members that although they may refer to new clause 16 at this stage, they may not debate it.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

I am grateful to you for pointing that out, Mr. O'Brien. The Minister prayed it in aid. However, I will not return to it.

Photo of Robert Key Robert Key Conservative, Salisbury

My hon. Friend is absolutely right. It is not a question of forcing the Secretary of State but of encouraging people to conserve water and reporting to Parliament every three years. That is very different. I do not want to get bogged down in the semantics. We have the word of the Minister here. It is on the record. We may return to the matter later. Others may wish to return to it on Report. 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. 47, in

clause 21, page 24, line 22, at end insert—

'( ) The expiry date shall take into account the availability of water in the source of supply to which the licence applies and the investment needs of the applicant.'.

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

With this it will be convenient to discuss the following amendments:

No. 49, in

clause 21, page 24, line 24, at end insert—

'(5B) In determining the period that a licence under this Chapter shall remain in force, the Agency shall take into account—

(a) the life expectancy of any associated infrastructure works (existing and prospective),

(b) the costs of those works (actual and projected), and

(c) the period over which those costs may reasonably be expected to have to be recovered.'.

No. 50, in

clause 22, page 25, line 16, at end add—

'(5) There shall be a presumption that any licence in respect of which the conditions of this section are met shall be renewed unless the Agency is able to show that revocation is necessary in order to protect any waters or underground strata, or any flora or fauna dependent on them, from serious damage.''.'.

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

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.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs 3:15, 18 September 2003

The soft drinks sector and water bottling companies already have abstraction licences. Those are full licences that will continue in perpetuity, and the Bill will not change that. The Bill will change the compensation arrangements but not the length of licence for those who already hold one. Companies may wish to transfer to time-limited licences, and that is a choice that they can make. If they want to expand their businesses, they may seek a variation or a new licence, which would be time-limited, but the Bill will not remove their current right of perpetuity. However, new issues, such as transfer licences, have emerged.

Amendments Nos. 47 and 49 would impose particular considerations in specifying the expiry date. Incorporating criteria such as a fixed duration or the need to relate it to asset lifetime criteria could override other criteria, not least environmental considerations. For sustainability, there must be a balance between economic activities and environmental considerations, but this is a resource management Bill so it must have tools and powers for resource management. It would be unacceptable to override environmental considerations simply on the grounds of asset life.

The Environment Agency already has duties under the Water Resources Act 1991 to consider impacts on water resources when determining an application for an abstraction licence. It will use information from the relevant catchment abstraction strategy to do that. It must also take into account the needs of an abstractor as part of the test of reasonable requirements for the licence.

The agency recently published extended guidance on how it will address the duration of licences. The guidance states that licences longer than the normal 12 years can be considered provided that they meet the criteria of the four tests in the Government policy document ''Taking Water Responsibly''.

The first test is whether the lifetime of the infrastructure inseparably associated with the authorisation will extend over the desired period of validity. That may cover some of the hon. Gentleman's points. The second is that there should be a continued need for the service or product associated with the infrastructure throughout the desired period of validity; the third is that the fullest possible appraisal of likely changes in environmental and economic circumstances that may have a bearing on the acceptability of abstraction over the desired period of validity has been carried out and shows no significant concerns; and the fourth is that the infrastructure development contributes to sustainable development, which also touches on the hon. Gentleman's point.

Those are four very good tests to determine whether there is a basis for a longer period of abstraction licence. The agency has already said that the average period will be 12 years but it can set shorter or longer periods. I have outlined the criteria that it will use when deciding whether there is a case for a longer period.

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

I am grateful to the Minister for reading out the criteria, and he is right to draw the

Committee's attention to the four tests, but if they are so good they should be in the Bill—and they are not. He argued, first, that the asset life should not be identified or examined without paying due consideration to the environment. The amendments do so; we are not asking the Government to put it in the Bill that the asset life alone should be considered. We want it to be part of the environmental consideration.

We must bear it in mind that companies that are quarrying cannot abstract rock without pumping water out; if the licences and the compensation that goes with them serve to put a brake on the Environment Agency, that has an environmental impact, too. If a company is extracting rock and cannot go further down, it may be able to go sideways, which will make a much bigger hole in the ground, with the potential for a much worse environmental impact. We therefore have much to consider.

If the Minister is happy with the four tests, they should be in the Bill, in which case the amendment would be superfluous.

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

I do not agree with the hon. Gentleman's point about the amendment, because of the restrictions and the change in balance involved. On the issue of compensation for environmental damage, that is part of the consistent approach of the ''polluter pays'' principle. There can be no compromise in that respect. If people are worried that their current abstraction licence may fall within the criteria, they can switch to a time-limited licence, which has a compensation element, unlike those issued in perpetuity. That is one reason why people may want to switch. However, it depends on the circumstances. It is a question of being reasonable and applying the criteria in a sensible way. The agency has to take into account the infrastructure, the investment and the economics. If it does not, it is open to challenge and to appeal.

Amendment No. 50 would significantly limit the Environment Agency's ability to refuse to renew a licence to a narrow set of circumstances and affect its ability to manage the resource's sustainability. As ''Taking Water Responsibly'' makes clear, there is a presumption in respect of the renewal of time-limited licences. I stress that again. I know that it is not in the Bill, but it is in the document, which is supported by the legislative framework.

The guidance that I referred to earlier also deals with the renewal of licences, for which there are three tests. The first test is of ongoing need for the licence, which can be clearly established. The second is an efficient-use test. Bearing it in mind that we are debating resource management legislation, it is not unreasonable that licensees should demonstrate that they are using water efficiently. The third test is environmental sustainability. Those are not unreasonable tests for renewal, and I would have thought that most people would not have any difficulty with them.

Part of the problem when moving to a new system is the fear of the unknown, but that fear is being exaggerated. Generally speaking, we would expect

licences to be renewed unless there is a very good reason not to do that. That is laid down in the criteria, ''Taking Water Responsibly'' and the agency guidelines. Those safeguards recognise the legitimate needs of the industries that have to abstract water. We do not have any problem with that, and the Bill balances the needs and rights of abstractors and the duty on the Government and agency to ensure sustainable water management.

With all respect to the hon. Gentleman, I do not think that the amendments achieve that balance. However, I understand the hon. Gentleman's points, and I hope that by spelling out the detail, particularly on the criteria in ''Taking Water Responsibly'', I have assured him that we take them seriously and have addressed them.

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

I should like to pick up on a couple of the Minister's points. First, he emphasised the importance of the ''polluter pays'' principle. That is well understood, and inevitably the customer will pay. However, I was worried when he said that if an abstractor felt that it might be sailing close to the wind, it should move towards a time-limited licence, which comes with compensation from the Environment Agency. The purpose of the legislation is to prevent people from polluting in the first place, so we should not be moving the guilty into the safe haven of time-limited licences.

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

The hon. Gentleman is seriously misrepresenting my meaning. I am not suggesting that people who believe that they run the risk of having their licence taken away because of environmental damage should simply switch to time-limited licences. Indeed, that would not work. There is a compensation element to the time-limited licences because they are set according to the resources available and the Environment Agency assessment. If the agency somehow got that wrong, there would be an element of compensation. That is the difference.

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

I thank the Minister for that intervention, but it was not what he said earlier.

The second point was about the presumption of renewal. If I asked the Minister to lend me some money on the presumption of repayment, he might consider a tenner fair enough, but when I ask for hundreds of thousands of pounds, he might think that I will disappear before repaying. We are dealing with trust. It is not fair to say that the presumption of renewal is implicit in the Bill, or for the Minister to read out two sets of criteria to give companies comfort on the basis that they have a presumption of renewal, but not to include either set in the Bill.

We are asking investors to take a great leap of faith, which is not reasonable, fair or proportionate. The Bill is designed to protect the environment. No one is suggesting that that is wrong, but we want to ensure that the people who are abstracting and who will be most affected by the legislation are properly protected financially.

I accept the Minister's point that the amendment's wording is not quite right, but I have offered him

several alternatives. He should publish the criteria or put them in the Bill, so that people know where they are. As soon as they know that, they can put their fears aside and carry on their business safely, sensibly and in a manner that is helpful to the environment. The Bill is not quite right and I am offering alternatives. I hope that the Minister will consider the wording of the amendment, if that is what is wrong, and put it right, because the presumptions of renewal need to be clear and they are not at present.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs 3:30, 18 September 2003

The criteria and other details are published in policy documents and strategies, because they can be consulted on. Indeed, they may change over time as a result of consultation. If we put the presumption of renewal in the Bill, we would need a list of all the situations in which the presumption would not apply. That would be a real problem, because we would have to try to think of every possible scenario or case in which there might have to be an exemption.

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

I fully recognise the difficulty of legislating in that way, but the Minister has offered the choice of a code of conduct of some sort. It will take into consideration the criteria that he nailed down. That work will take place, whether we put it in the Bill or not, so we should put it in the Bill.

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

If it is in the Bill, it becomes part of the legislation, which makes it very rigid. The problem is that although we can anticipate some situations in which environmental sustainability may prevent licence renewal now, it is difficult to anticipate cases that may arise in future. The advantage of having the measure in documents such as ''Taking Water Responsibly'' is that it can be changed, and changed both ways—following representations from users or from, say, the Environment Agency. That is a much more responsive way to deal with matters than putting them in the Bill and making everything rigid. Trying to change such measures at a later date is very difficult, as we all know. That is why we have approached the measure in this way.

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

The Minister is absolutely right. He has put his finger on the whole situation. The reason why we will not publish any of these things is that if we deal with them as he suggests, we can change them. However, that is a fundamental problem for anyone investing in any of the businesses. Because the measures can be changed, they do not want to invest. The situation is as simple as the Minister makes it. That is why I am wholly unhappy with his responses.

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

The hon. Gentleman is taking this too literally. There are some fundamental principles, such as the presumption of renewal. I am talking about the criteria that are applied so that people understand how renewal will apply. I am talking, for example, about how the power to extend the time limit beyond the average of 12 years will be applied. There is the power to do that; it is laid out clearly how that will be done. Those are safeguards for people who need abstraction licences. We are not trying to undermine that in any way.

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

We have done as much as we can. I simply do not agree with the Minister. I do not think that he fully understands the attitude that investors require from a Government before they invest in this type of business. When you give these powers to the Environment Agency, you are threatening people's life savings, their pensions, everything. You are—

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

Order. I can assure the hon. Gentleman that I am not threatening anyone.

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

Thank you, Mr. O'Brien—although I worry about your pension, too.

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

The point is that this series of amendments may not be perfect in every way, but they would ensure that the presumption of renewal and the compensatory element stayed in the Bill. The criteria that the Minister mentioned would have done instead, but he has chosen not to publish them, so I urge the Committee to support the amendment.

Question put, That the amendment be made:–

The Committee divided: Ayes 7, Noes 12.

Division number 6 Adults Abused in Childhood — Clause 21 - Form, contents and effect of licences

Aye: 7 MPs

No: 12 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I beg to move amendment No. 140, in

clause 21, page 24, line 26, at end add—

'(6) All licences which were hitherto expressed under section 46(5) of the WRA as remaining in force until revoked shall, over a 6 year period beginning on the 15th July 2012, be reissued to state—

(a) the date on which they take effect, and

(b) the date on which they expire.'.

As we have considered the Bill, the Minister has been keen to talk about the balance between the needs and rights, on the one hand, of abstractors, and, on the other, of those who wish to protect the environment, and of the environment itself. The most recent discussion concentrated on the consequences for abstractors, but I now want to examine the consequences for the environment if we continue to have large numbers of permanent licences.

The hon. Member for Salisbury (Mr. Key) commented earlier that 90 per cent. of licences are permanent. That could put a gaping hole in the achievements that the Government want from the Bill. There may be provisions for revoking the most environmentally damaging licences, but implementation of those provisions will be costly and time consuming, and they may not be used frequently. That is not the means by which abstraction should be put on to a sustainable footing.

It is necessary to include in the Bill a mechanism that will convert so-called permanent licences to a time-limited status, thereby introducing greater flexibility into the licensing system. I believe that to be vital if future abstraction management is to take account of factors such as climate change and increasing pressures on water resources, particularly in my constituency and elsewhere in the south-east. I suspect that the Minister agrees with me.

I draw the Minister's attention to article 11.3(e) of the EU water framework directive—the parallel legislation that we are not allowed to mention in this Room—which will require abstraction licences to be ''periodically reviewed'' to meet European standards. That requirement of EU legislation is not provided for in the Bill, or it is not provided for in a manner that is adequate to meet the requirements of the directive, let alone the environmental requirements. We therefore need a clear steer towards a flexible system of more easily variable time-limited licences. The continuation of permanent licences without such a timetable does not meet that EU requirement.

The Minister spoke about voluntary conversion from permanent to time-limited licences. I have waited with interest to ask him about that because my predecessor in my role, my hon. Friend the Member for Gordon (Malcolm Bruce), asked about that in July 2002. His question was:

''To ask the Secretary of State for Environment, Food and Rural Affairs how many abstraction licence holders have voluntarily converted their licences of right to time limited licences since the publication of Taking Water Responsibly.''—[Official Report, 18 July 2002; Vol. 389, c. 487W.]

The answer given by the Minister's predecessor was, ''None'', so that method does not appear to be very effective in persuading abstractors to change from permanent to time-limited licences. After all, there is no reason for them to change if they perceive it to be in their interests to stay as they are. There must be some mechanism to persuade people to change—either a carrot or a stick. Can the Minister give us an update on that, and tell us whether any abstractors have voluntarily changed since July 2002? Perhaps his officials will know, but at that time there were none.

A voluntary approach gives no incentive for abstractors to convert their licences, and nothing that the Minister has said so far has changed my view on that. In the amendment that I have tabled with my hon. Friend the Member for Guildford we suggest that there should be a six-year transition period for the conversion of abstraction licences to time-limited status. That would begin in 2012, which is also the date beyond which compensation will not be payable for the revocation and/or variation of licences in cases of serious environmental damage. That is a legitimate period to set; it is a long time in the future. We also chose that date because it may overcome any challenges under the Human Rights Act 1998.

There is an issue about taking something away from people to which they have had a right, and we should acknowledge that across the Committee. I have served on the Human Rights Committee and I am aware of those sorts of issues coming up. I do not think that the Human Rights Act, in my humble interpretation of it,

gives individuals the right to behave in an environmentally damaging way in perpetuity. It is reasonable to give people time to adjust, and in these circumstances 2012 is a reasonable time by which to do so. Does the Minister believe that there is a Human Rights Act implication here, or does he accept that the time scale that I have set down would overcome any possible challenge?

I read the Report stage of the consideration of the Bill in the Lords, where the point about there being no incentive to convert from permanent to time-limited licences was raised. Lord Whitty said:

''There are a number of measures and features of the new system that will encourage such voluntary conversion. For example, the agency will introduce financial incentives to convert, such as differential charging according to licence status.''

It would be helpful if the Minister could tell us more about that so that we knew how much of an incentive it is. Lord Whitty continued:

''It will be consulting on a new charging scheme in the autumn. Moving to a time-limited licence where at least six years' notice of non-renewal is given will, in future, offer more security, rather than less, than retaining a non-time-limited permanent licence that could potentially be subject to revocation without notice. Removing the right to compensation where a permanent licence causes damage to the environment should also act as an incentive to conversion.''—[Official Report, House of Lords, 12 June 2003; Vol. 649, c. 408.]

Lord Whitty therefore attempted to give some reasons why voluntary conversion will take place. I am not convinced that—[Interruption.]

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

Order. We have some competition. The hammering from next door is making it difficult to concentrate on the debate. The Doorkeeper has gone to investigate. The hon. Gentleman may continue.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I was saying that in the absence of any evidence to the contrary from the Minister, I do not believe that a rush of people want to convert from permanent to time-limited licences. I should be interested to know how many have done so in the last year. Lord Whitty set out means by which some people may be encouraged to convert. We have to understand the financial incentives to gauge whether those will be successful, but they do not represent a strategy for converting from permanent to time-limited licences, and a strategy is needed. It must either be an effective voluntary strategy or what we propose in the amendment, which is fair and balanced. It would protect the environment without infringing people's human rights, and it sets a fair timetable for achieving what I think the Minister wants.

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

I can confirm that that is exactly what I want to achieve. Ultimately the Government would like all abstraction licences to be time limited. We make no secret of that. Our preferred method is predominantly voluntary. We want to encourage people to move over. The hon. Gentleman is right to say that one way the agency can encourage that is through a differential price. The annual fee for the time-limited licences will be lower than that for the permanent licences.

I also stated that compensation for permanent licences will end in 2012, but there will be provision for

compensation in time-limited licences because, in setting the time, that test has to be met. If the test is wrong or some issue arises, there is the potential for compensation, which reassures some people. The Government also believe that such an automatic conversion would breach the Human Rights Act. Compensation would potentially be payable for all licences that were compulsorily changed, which would have enormous cost implications. The conversion mechanism would involve the agency having to propose variations on each and every licence, and each and every licence holder could appeal, if they wished. Desirable though that might be, dealing with that would tie the agency down for years.

On the balance issue, all new licences are time limited and have been for the past two years. The Bill imposes a duty on the agency to issue time-limited licences only—that is all that will be available from now on. As we have discussed, different kinds of temporary licence will be available, and holders of permanent licences can transfer voluntarily. Licences not being used will be extinguished in four years; that will be another way of reducing their number. There may eventually be a case in some areas for subjecting existing licences to a time limit. Before 2012, compensation would have to be paid in those cases. Where there is environmental damage, the impact of the damage might mean that there is a case for time limiting licences now rather than waiting until 2012.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons) 3:45, 18 September 2003

If environmental damage can be proven, presumably the licence can be rescinded anyway.

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

Yes, it can. The point is that if the licence is rescinded before 2012, in an urgent situation, under the existing powers, compensation must be paid even if environmental damage has occurred. That is the only difference. Indeed, a licence can be rescinded and a time-limited licence issued in its place. That does not necessarily mean that the licence holder will stop abstracting; that depends on individual cases. The licence holder may have to reduce the abstraction, for example; the amount may have to be varied or, in odd cases, abstraction may be totally inappropriate and too damaging. We have to face up to the fact that in such cases, under existing powers, compensation has to be paid when a licence is rescinded.

Photo of Robert Key Robert Key Conservative, Salisbury

Please can the Minister explain what is the advantage for someone who holds a licence in perpetuity of converting voluntarily to a time-limited licence?

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

There are a number of advantages. Let me give an example. Someone has a licence as a landowner and is abstracting from a good aquifer; they are confident that there is no environmental damage and that they do not risk a restriction or a licence renewal refusal. As I pointed out, there is a presumption of renewal. The longer the measure applies, the more comfortable abstraction holders will feel with the regime. The regime is designed not to restrict every abstraction licence holder, but to have proper management. The person is confident and comfortable with that; they pay a higher charge for their licence in perpetuity than for a time-limited

licence; they know about the presumption of renewal, and there is no reason why they will not get a renewal—so why not switch and enjoy the benefits of the lower charge?

Photo of Robert Key Robert Key Conservative, Salisbury

That is very helpful. Can the Minister give any indication of the scale of the difference in charges? How significant would that be for a small business such as a watercress grower?

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

Before we frame those charges we want to give people an opportunity to comment in proper consultation, which will take place this autumn. I am sure that businesses such as watercress growers will have an interest in that.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

The Minister is arguing persuasively that people may wish to change from permanent to time-limited licences. Can he answer my earlier question and tell the Committee how many have so far voluntarily changed?

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

I should be surprised if there has been any change to the last answer that the hon. Gentleman received.

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

That is right. But the framework to encourage that change is not yet in place; it will be put in place by the Bill. Once that is done, people will make that voluntary move, and licences that are not being used will be withdrawn. As I said, we have asked the agency to undertake a programme of prioritised conversion of licences to time-limited status where costs are proportionate to the benefits—that is, where severe damage is being caused. It will consult on the programme when the Bill has been considered.

We are not simply waiting for 2012, when there may be a need to take action in a small number of cases. With the range of measures that the Bill puts in place there will be a genuine inducement for people to switch to time-limited licences. I am confident that for the majority of licence holders there will be no problem with the renewal of time-limited licences. Of course, change is unsettling, but I am confident that when the measure has been running for a few years, people will have no concerns about it.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

Can the Minister cite a precedent, off the top of his head, in which public money was employed to persuade, or bribe, people to give up something that they thought they had obtained in perpetuity, in order to have something that would be licensed at the Government's whim every four or five years?

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

Yes, there are a number of cases, and I can give the hon. Gentleman one example off the top of my head. The Government laid out between £12 million and £15 million to buy up legally held mineral rights to peat extraction because of the environmental damage that was being caused. Despite causing damage, the company concerned was not doing anything illegal because planning permission had been given a long time ago. It was working within its rights in respect of its mineral permissions, and the Government bought those rights to prevent further damage.

I would rather not do that. As I said, compensating people who cause environmental damage is not an

appropriate use of public money. In the case that I cited, the company could not be blamed because it had secured rights, fairly and squarely, in the process that had applied many years ago. That was a fact of life. Some licences may be causing damage; they will have to be rescinded and compensation may have to be paid. That is why I asked the agency to make a prioritised list, and that is why the powers in the Bill will improve our management of important water resources.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I hear what the Minister says; I suppose that the jury is out on whether the measures—the carrots—that Lord Whitty and this Minister have mentioned will be successful. If they are to be successful, there will have to be considerable financial inducements to persuade people to give up permanent rights in exchange for those that are time limited. If those financial inducements are attractive, there will be a reduction in moneys to the Government, which will be as much of a loss to the taxpayer as compensation payments. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 21 ordered to stand part of the Bill.

Clause 22 ordered to stand part of the Bill.