Water Bill [H.L.]

HL Deb 12 June 2003 vol 649 cc399-449

4.6 p.m.

Consideration of amendments on Report resumed.

Clause 10 [Orders under section 33 of the WRA, etc]:

Lord Dixon-Smith

moved Amendment No. 18: Page 13, line 33, leave out from "section" to end of line 34. The noble Lord said: My Lords, in moving Amendment No. 18, I shall speak also to Amendment No. 20.

In Committee, the noble Baroness, Lady Farrington of Ribbleton, said of the amendment: We welcome the way in which the amendment deals with issues that we would like to consider … We shall take the amendment away and look at it".—[Official Report, 1/4/03; col. GC 118.]

We tabled this amendment to see what that consideration was. It may be that Amendment No. 19 was the result of that consultation. If that is the case, I will wait for the Minister's reply before I say anything about it, as it is also in the group.

Amendment No. 20 relates to a cause of some puzzlement to us. In Committee, the Minister seemed to suggest that the combination of subsections (5), (6) and (7) in some way allowed flexibility in setting abstraction limits. That is not our reading of the Bill. Subsection (5) appears to say that the Bill may be used to revoke exceptions in exactly the same way as under Section 27A(1) of the Water Resources Act 1991, except in situations covered by subsection (6) of this Bill. Subsection (6) says that changes to the exception quantities may only be greater than 20 cubic metres. That is one interpretation. Have we misread it? Does it mean that orders to be revoked may be only for amounts greater than 20 cubic metres? Subsection (7) appears to state that having set things up under subsection (5) above, Section 27A(1) of the Water Resources Act may be used to overturn the whole lot. This is something of a roundabout and we should like to have it clarified. That is why we have tabled the amendment. I beg to move.

Lord Whitty

My Lords, Amendment No. 19, standing in my name in this group, is an attempt to meet the points raised by the noble Duke, the Duke of Montrose, when he moved his amendment in Committee. My amendment attempts to have the same effect of allowing a more flexible approach to the removal of exception orders in so far as they relate to underground strata. I therefore hope that we can focus on my amendment. I think that I can partly clarify the matter, but I am starting at the other end of logic from that of the noble Lord.

In essence, Clause 10 provides for an order to be made that revokes existing exemption orders made under Section 33 of the Water Resources Act. Those exemption orders currently disapply the licensing system to defined sources of supply. Revoking an exemption order will introduce the licensing system to the previously exempted source and the standard threshold of 20 cubic metres per day for licence control. If that threshold is considered too low for the source concerned, the revoking order can simultaneously substitute a higher one.

Once the original exemption order has itself been revoked by the order under this clause, there is no further opportunity to use the powers of this clause as there is no longer an exemption order to revoke. So any further change to the exemption order could then be made only under the new arrangements provided for in this new Section 27A being introduced by Clause 6. The amendment seeks to enable a subsequent variation of the threshold to be made under Clause 10, but that would not work—for the consequential logic which I hope that I have explained.

It says in my brief, "With this clarification"—

Noble Lords

Oh!

Lord Whitty

My Lords, I hope that the logic of that explanation is followed by the noble Lord. However, there is a further complication in relation to Clause 10. We may need to bring forward further amendments to apply the provisions of the Water Resources Act to this clause, and possibly other clauses, in order to ensure that the whole sequence of events ties together. If the noble Lord would like that in writing before Third Reading, I think it might be appropriate for us all.

Lord Dixon-Smith

My Lords, it seems to me that the logic is about as clear as the route through the Hampton Court maze. Once again, we seem to have provoked some perhaps what in time will be useful thinking and re-thinking about exactly what is going on here. A written explanation would certainly help before Third Reading. Obviously, if the Government are to bring forward further amendments in order to clarify the situation, my noble friend the Duke of Montrose, in moving his original amendment, has served the House well. We shall now obtain some real clarification which we do not appear to have achieved quite yet. But I am most grateful to the Minister for his reply. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty

moved Amendment No. 19: Page 13, line 34, at end insert "or any other way The noble Lord said: My Lords, despite the fact that we have not yet obtained total clarity, it would be better to insert this amendment. Thus, the subsequent correspondence can relate to the text as at least partially moved in the direction I think we all want. I beg to move.

On Question, amendment agreed to.

[Amendment No. 20 not moved.]

4.15 p.m.

Clause 15 [General consideration of licence applications]:

Lord Dixon-Smith

moved Amendment No. 21: Page 19, line 26, at end insert— ( ) In subsection (3), after paragraph (b) there is inserted— (c) the probable funding period required to finance the construction of engineering facilities necessary to the supply, storage or processing of the water that is the subject of the licence applied for". The noble Lord said: My Lords, Amendment No. 21 is an innocuous little amendment which I hope that the Government might consider favourably. I say that it is innocuous, but we tabled a fairly innocent amendment for Grand Committee to consider and we had very robust debate on the subject. The Government thought that perhaps the amendment was too forcing. This amendment certainly is not—or is less forcing anyway.

I have a problem with what I would term the psychology of this Bill. Anyone who might read this Bill in an attempt to find out what the rationale is behind the licensing process for the abstraction of water would come across the regime set out on the face of the Bill, which gives the clear impression that water abstraction licences would last for 12 years and could then cease. That is what appears in the Bill. Those of us who have had the joy of sitting through Grand Committee and are participating today know that that is not the true situation. If one delves through all the previous legislation and the explanations thereof and takes the trouble to read Hansard, we know that licences might be granted for longer periods.

Consider the position of, for example, a banker who has to consider the funding of a major water project. What will he do? He will look at this Bill—that is, the latest legislation that deals with the subject. We all know that investment in the water industry is on the whole large-scale, long-term and long-life. Investment periods will match that. One has only to consider large reservoirs, as we were this morning: many of the main reservoirs that supply this country's water were built more than one century ago. One has only to consider water mains: the London ring main was recently installed, but I am sure that it is hoped that it will have a life at least as great as that of the London sewers which were installed 150 years ago. Consider even more local mains or supply pipes to houses: the old one inch gas and water connections installed 100 years ago are still going strong. Drains and sewers, of course, are the same, although they are not directly related.

My point is that all of these things, and housing, too, are long-life projects and have long funding periods. Therefore, it would be perfectly reasonable for them to be funded over a similarly long period. But that banker, looking at the latest legislation, would say, "Hey, I have no security in the continuity of use of this particular asset. It could lose its useful life after 12 years because the licence might be withdrawn". As I have said, we know that that is not the case, and after diligent research the banker may find that out. Furthermore, the applicant for the investment funding would no doubt make the reality perfectly plain. However, it would be so much simpler if something giving a hint of the real position was included on the face of the Bill.

So we come back to my innocuous little amendment. It simply requires that, the probable funding period required to finance the construction of engineering facilities necessary to the supply, storage or processing of the water that is the subject of the licence applied for", be a matter that is taken into account in the granting of the licence. I would not say that the phrase is strong enough, but I propose it on the basis that we are asking the Government to accept a form of words in an area where they have proved reluctant to acknowledge, on the face of the Bill, that there is a problem. I beg to move.

Lord Borrie

My Lords, the noble Lord, Lord Dixon-Smith, has spoken to his amendment with reason and moderation. He alluded to a problem which was discussed at some length in Grand Committee. It is one of two or three amendments on a similar matter, one of which we shall come to shortly dealing with a presumption of renewal of licences. The difficulty indicated by the noble Lord was well exemplified by his reference to a banker considering the matter. Although the hidden meaning of the Bill—when he reads Hansard and takes into account ministerial assurances, guidance, what is said by the Environment Agency and so forth—may assist the banker in coming to the view that the licence will be available for a longer period, on the face of it the capital expenditure which the banker may be asked for will not be recovered for a much longer period than, say, 12 years.

However, it is not just the banker and the water company who will be concerned about getting their money back. Who is the beneficiary of the infrastructure and capital expenditure here? It is the consumer, in particular the consumer of the future, who, we all know, needs an adequate supply of water. Consumers need it not only today; they need a firm assurance for the future. At the moment I share the view of the noble Lord, Lord Dixon-Smith, that the Government have been hesitant about this. Readers of the Bill and later the Act will be concerned that there is not enough clarity as regards how long the licences will last or whether there is a presumption of renewal. Therefore water companies will hesitate to put down money and the consumer may be left uncertain about his future supplies of water. For those reasons I share the doubts that have been expressed. I agree with the thinking behind this amendment and the similar amendments to be discussed shortly.

Lord Sutherland of Houndwood

My Lords, I support this amendment, which overlaps with an amendment I shall move later. The presumption that, ultimately, the Bill must serve both suppliers and consumers and create the stability necessary for the relationship to last over the coming decades—not simply years—is a good presumption to put on the face of the Bill. For that reason, I support the amendment.

Baroness O'Cathain

My Lords, although I have already intervened in the debate, I have not yet declared my interest as a director of a water company. I did not think it necessary to do so when I was speaking on more general points. I strongly support my noble friend in his amendment. The reality is that the investment required in facilities for the supply and treatment of water is such that it can be approached in two ways. It can be done in the good old World War Two manner of "make do and mend", or it can be done by ensuring that the investment will last for generations to come.

When water supplies first became widespread in the United Kingdom, as we all know from the Victorian pipework still in place, it was done on the basis of a very robust investment intended to last for ages. If companies are given no guarantee that they will be able to recoup their investment, they have two ways of approaching it. As I said, one is the policy of make do and mend, which not for one moment do I think any sane water company would choose. The other approach is to load the current customer with the cost of the investment because the payback period would then be much shorter than it would have been if there was a presumption that the licence would be renewed or a reasonable time-scale for the payback could be guaranteed.

The present provisions could result in a short-sighted way of dealing with these serious issues. Given the long-term nature of this business investment, it should be noted that no other industry with long-term investment interests has a threat hanging over it that the whole operation could grind to a halt on the suspension of a licence. I support my noble friend's amendment.

Baroness Miller of Chilthorne Domer

My Lords, the noble Lord, Lord Dixon-Smith, and I have had a common interest in most of the amendments moved so far, so I am particularly sorry to have to tell him that, on this amendment, I cannot support him.

I take the point just made by the noble Baroness, Lady O'Cathain, but we can look at the reverse of that coin and point out that, in many ways, the investment for a water company is safer than that faced by many businesses, whether they be in retail or manufacturing. I say that because, with the exception of the duration of the licence, the water company operates in a virtual monopoly position.

I accept the worries expressed about the renewal of licences, but after debating these matters in Grand Committee and listening to the reasoning behind how the Environment Agency is to regard the renewal of licences, I feel that the assurances we were given are satisfactory. So I am not in favour of giving any further assurance here when half of the thrust of the Bill is to assure the future balance between the needs of the environment, investment and social need. In that regard, the Bill has struck the right balance already.

Lord Whitty

My Lords, I am not sure whether this amendment is innocuous or if it would be effective in achieving what the noble Lord seeks. It would require the Environment Agency, in addition to its other duties in determining a licence application, to have specific regard to the funding period for any engineering, storage or processing facilities.

If the amendment aims to ensure that the time limit of the licence is linked to such considerations, then it would not achieve that aim. The intervention of the noble Lord, Lord Sutherland, suggested that it would be achieved in his later amendments. Of itself it would not do so, but it would give funding issues a specific status to which the agency would have to have regard when it determines a licence. Putting such a provision on the face of the Bill, it would raise the funding issue above other matters which the agency must consider, including those relating to the water company and its ongoing costings and others relating to the effect on abstractors, consumers and so forth.

While obviously it is right that the agency should consider the funding issue among other matters, we would not want it to be constrained in the way proposed in the amendment. The agency already has to have regard to the reasonable requirements of the applicant, who can submit a business case to support consideration of the desired time limit of the licence. The agency can already consider such issues, including funding issues, and should do so where they form part of a business case. But, as the noble Baroness, Lady Miller, implied, it should not do so over and above other considerations. There is a balance to be struck and placing greater emphasis on this one dimension would unbalance the approach.

As regards how the Environment Agency considers the time-limiting of licences, it has guidelines which recognise that longer duration licences may be justified in certain cases, including where the funding consideration is of importance. We believe that the guidelines provide the necessary flexibility to determine the duration of licences in the context of the sustainable management of water resources and investment in those water resources. That is properly a matter for the agency to determine in accordance with its existing duties and responsibilities. In making its decision it has to take into account all considerations and should not place an undue emphasis on funding issues. It should, however, recognise that they are a part of the process.

I do not believe that it would be helpful to put such a consideration on the face of the Bill. It would constrain the agency in taking an all-round decision in relation to an application for a licence.

4.30 p.m.

Lord Dixon-Smith

My Lords, I am grateful to the noble Lords, Lord Borrie and Lord Sutherland of Houndwood, and my noble friend Lady O'Cathain for their support. I am disappointed that the noble Baroness, Lady Miller of Chilthorne Domer, feels that we do not need to put this requirement on the face of the Bill.

But the demand for water has to be met. The enormous increases in housing that are being discussed will have to be supplied. They will not be supplied out of the existing infrastructure and water systems in the South East. I am not saying that we are short of water because we are not—we use a very small proportion of the available water in this country—but we do not have adequate conservation to guarantee supplies. It is that issue which lies behind the discussion.

I heard what the Minister said about the guidelines given to the Environment Agency, but they will not be readily available to people in other walks of life. I have no doubt that we shall be able to get a copy of them from the Library, but whether banks, financial houses and other such bodies will carry them is entirely another matter. It is very doubtful that they will. It is very doubtful that, when discussing the subject generally, they would necessarily have them drawn to their attention.

I shall consider what the Minister said. We will be discussing later amendments on a similar theme and at some point we may begin to elicit some satisfaction from a reluctant government. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 17 [Protected rights]:

Baroness Byford

moved Amendment No. 22: Page 21, line 2, at end insert— ( ) A protected right that has been unused for four years shall not cease under subsection (4) above if the licence holder can demonstrate that his pattern of abstraction is or has been over a longer cycle.

The noble Baroness said: My Lords, the amendment relates to those abstractors who, perhaps for reasons of sound agricultural management, operate a crop rotation pattern that demands extra water resource at, say, seven-year intervals. The Bill does not make plain that there will be any presumption of flexibility of approach to the removal of these licence rights.

The agricultural and rural tourism industries have long memories of the damage wrought by the outbreak of foot and mouth and the action—in some cases, the lack of action—taken by Defra. If the renewal of licences is to be a matter for reasoned consideration and a flexible approach, it does no harm to have that reflected in the law. If the true intention is to be rigid and uncaring, then we should change the proposed legislation.

We have received a submission from the National Farmers' Union and I should like to enlarge upon it. We all agree that Amendment No. 22 raises an important point. Abstraction and irrigation is not necessary in every growing season. This might be due to the weather, the crops under production, the rotational cycle or, more seriously, health considerations for the land and the crops.

There are many examples of situations where abstraction from surface water is restricted for phytosanitary reasons. These include restrictions for the containment and eradication of notifiable diseases such as potato cyst nematodes—such restrictions are in force on the River Nene—or simply to control the build-up of soil-borne disease such as neck-rot in onions and cavity spot in carrot crops.

The use of an elongated crop cycle promotes a reduction in the use of plant protection products and such a requirement is frequently seen in the supply contracts from multiple retailers. Organic producers, for example, often rely on the fallow period of rotation for the eradication and control of plant pests and diseases. It is clear that where a cropping pattern is influenced by considerations such as these a licence-holder should not be in any danger of the loss of his abstraction rights.

The NFU would also welcome the amendment being extended to take into account future changes in production where there is under-production of crops in response to market considerations.

We had a lengthy debate yesterday on the issue of the countryside. For once I was able to say to the noble Lord, Lord Hoyle, who is not in his place, that it was a good debate because it went much wider than agriculture. When we are considering such Bills we must also consider the industries that are directly affected.

In Grand Committee I had the support of the noble Lord, Lord Livsey, for which I was grateful, and, although she is not in her place today. the noble Baroness, Lady Young of Old Scone, said: I am sure that there is no intention to get in the way of legitimate agricultural rotation, which would simply be nonsensical".—[Official Report, 1/4/03; col. GC142.]

If the Government do not intend this to be a restriction on agriculture, they should accept the amendment. I hope they do. I beg to move.

Baroness Miller of Chilthorne Domer

My Lords, I declare an interest as chairman of Somerset Food Links.

It is clear that even if the Government are not minded to accept this amendment they would be wise to bring forward an amendment along the same lines, as they still have time to do. The noble Baroness, Lady Byford, set out the case for the amendment very cogently. It pays regard to the rights and needs of farmers, particularly those pursuing organic production which, of necessity, involves longer cycles.

I support the amendment. I hope that the Government will tell the House either that they will accept it or that they will bring forward a similar amendment at Third Reading.

Baroness Farrington of Ribbleton

My Lords, I hope that both noble Baronesses will be pleased to hear that we accept the underlying general concern expressed in Amendment No. 22, and we wish to give further consideration to the best formulation of a suitable amendment to meet the concerns.

In the case of revocation of unused abstraction licences, we have said that we would not expect the agency to make proposals for revocation where non-use was a part of the operational requirement of the abstractor for valid reasons. The automatic cessation of a protected right after four years of non-use for exempt abstractors might be seen as unfair, as the noble Baronesses have recognised, as it would not allow planned non-use to be taken into account. We will therefore bring forward a suitable government amendment to cater for this situation. On that basis, I hope the noble Baroness, Lady Byford, will be happy to withdraw her amendment.

Baroness Byford

My Lords, in the briefest of time, I thank the Minister. I am delighted, and thank her for agreeing to bring back a suitable government amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 [Form, contents and effect of licences]:

Baroness Miller of Chilthorne Domer

moved Amendment No. 23: Page 22, line 33, at end insert— (5B) All licenses which were hitherto expressed under subsection (5) of section 46 as remaining in force until revoked shall, over a 6 year period beginning on the 15th July 2012, be reissued to state—

1. (a) the date on which they take effect, and
2. (b) the date on which they expire.""

The noble Baroness said: My Lords, this amendment seeks to provide a mechanism for the conversion of permanent licences to time-limited status. In Committee, we said that it was in our view essential to introduce greater flexibility into the licensing system, which is vital if future abstraction management is to take account of such factors as climate change and increasing pressure on water resources.

When such an amendment was moved in Grand Committee, the Minister said that he favoured the conversion of all abstraction licences to time limits but that he would like to achieve this conversion through voluntary means. However, it became apparent, when answering questions about how many permanent licences have been voluntarily converted to time-limited status in the past five years—and I think voluntary conversion only became Government policy from 1999—the Minister replied that he did not know that there were any. In fact, none has been so converted, as was confirmed in answer to a question asked by my noble friend Malcolm Bruce in another place, on 18th July 2002, in column 487 of Hansard.

I do not believe that a voluntary approach gives any incentive for abstractors to convert their licences. A statutory mechanism is therefore necessary, and it is for that reason that I have brought this amendment back on Report. I beg to move.

Lord Whitty

My Lords, the amendment seeks to impose a time limit on all permanent licences that will still be extant in July 2012 over a period of six years after that date. For all the reasons the noble Baroness underlined and I underlined in Committee, it will be desirable to move everybody on to a time-limited licence. However, the Government's view, based on legal advice, is that automatic conversion of this sort could have significant human rights implications and also give rise to the potential for substantial compensation costs to be paid by the agency—in effect, by all outstanding and non-time-limited abstractors, theoretically, at least.

The Government have said that we would like to see abstraction licences eventually made subject to a time limit where the cost of doing so is justified. A voluntary, gradualist approach would be preferred; I accept the noble Baroness's indication that there is no voluntary conversion at present, but the Bill's provisions will help to ensure that there is more. The Environment Agency will need to undertake a programme of prioritised conversion of licences, where costs are proportionate to the benefits. It will need to consult on this programme once the Bill becomes law.

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 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. Where abstraction under a time-limited licence causes such damage, the agency should, in most circumstances, rightly compensate because it will in effect have been at fault in granting the licence. In those circumstances, there will be some compensation.

If we take the other route, compensation and human rights issues could arise for all those who are converted mandatorily as of July 2012. The compensation in that case could be substantial. A much more gradualist, voluntary and co-operative programme, supported by the measures I have outlined, would be a better approach to this conversion. I hope, therefore, that the noble Baroness will accept that our approach is better than her nuclear option, if I can refer to it in that way, and will be less costly to the Government or the Environment Agency and, potentially, the existing abstractors.

4.45 p.m.

Baroness Miller of Chilthorne Domer

My Lords, I thank the Minister for his reply. Of course, I do not want to place unnecessary burdens on the public purse by way of compensation. I merely remain concerned that the voluntary mechanism does not seem very effective at the moment regarding the method of conversion. As for the human rights angle, I think I should take this away and discuss it with my noble friend Lord Lester, who has far more experience in that area than I have. The Minister looks excited at that prospect. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer

moved Amendment No. 24: Page 22, line 33, at end insert— (5B) Every licence under this Chapter shall be subject to a duty to use the water abstracted in an efficient manner, so as to further water conservation"

The noble Baroness said: My Lords, there are a number of points in the Bill where we could choose to push for proposals on efficiency. Indeed, we voted on one such amendment this morning, in the name of the noble Baroness, Lady Byford. There are two amendments to be debated later, one in my name and one a government amendment. So I will not speak to Amendment No. 24 at great length but will listen to the Minister's reply and take it into account when we debate Amendments Nos. 36 and 160. I beg to move.

Lord Dixon-Smith

My Lords, anything that encourages the efficient use of water has to be beneficial. To that extent, quite obviously, we would support the amendment if we get no satisfaction eventually as we go through the Bill.

Lord Whitty

My Lords, the noble Baroness is correct that we have tabled Amendment No. 160, which would amend the Environment Agency's general duty on water resources to include water efficiency. That would, of itself, have implications for the way in which the Environment Agency dealt with its licences in a more substantial way than adopting the duty on the agency through the water efficiency measures that would be required by the noble Baroness's amendment. Perhaps we can have that discussion when we reach Amendment No. 160. If the noble Baroness is not satisfied at that point, no doubt we can return to it on Third Reading.

Baroness Miller of Chilthorne Domer

I thank the Minister for his reply and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer

moved Amendment No. 25: Page 22, line 35, at end insert— (6) The agency may licence a number or variety of activities on the same land-holding, by issuing a whole farm licence when it judges that to be in the interests of good regulation.

The noble Baroness said: My Lords, we have heard much from the Government during proceedings on this Bill and during debate on the countryside and CAP reform about a move to streamlining regulations. They have referred to whole farm approaches and so on, so I believe that there is some merit in exploring the matter. The Government decided at Committee stage that different licences were still needed for different activities. Exactly when would issuing a whole farm licence make sense?

The amendment would give the Environment Agency power, so that when it judged that it was in the interests of good regulation to issue a whole farm licence, it could do so. Of course, the agency might never judge that that is in the interests of good regulation. However, as we move to one-stop advice for farmers and a system of environmental payments based on whole farm activity, I hope that approach is seen to be a good one. I would not want there to be enshrined in the Bill a necessity for the agency to licence everything in the abstraction and empowerment areas separately, without the power to move on it. I emphasise that the agency would issue a licence only if the agency judged it, to be in the interests of good regulation".

I beg to move.

Lord Hardy of Wath

My Lords, I am a little confused about the last two words of the amendment—"good regulation". As my noble friend said a moment ago, good regulation is the regulation with which the applicant agrees. If the amendment referred to the interests of the community, conservation or good use of water, I would view it with more favour. Regulation should always be good—that should be implicit. We should hear a little more argument in favour of the amendment before we start voting with blanket approval for good regulation.

Lord Whitty

My Lords, of course my noble friend is right that all regulation should be good. However, regulation relating to farmers is regrettably not always applied in the most effective or user-friendly way or with the best outcome. The noble Baroness is right in saying that we would like to move to a whole farm approach. The problem with her amendment is whether one can do that on the unilateral basis of the one dimension of the regulations that applies to farming. The first problem that we have when we develop whole farm approaches to regulation is the definition of a farm. That problem would apply in relation to the application in this case.

As the noble Baroness recognised, in so far as the activity referred to in her amendment relates to the abstraction of water, it is already possible that the agency can grant a licence to the same person. authorising multiple points and purposes of abstraction, provided that it is from the same source of supply. Most farms would be covered by that potential discretion anyway. There is nothing in the application process to prevent a single application from being made for a licence covering applications from all sources of supply. There would be aggregate charging, and no penalty to the licence holder when separate licences needed to be issued, if they were all covered by one application.

In a sense, therefore, the proposal is already a possibility, but one without the total context of the rest of regulation for farmers being covered by a whole farm approach. Therefore, reference specifically to whole farm licences in that context is probably not sensible. We would need to wait until we developed the full programme before it made sense.

There will be other forms of activity where multiple abstraction points and potentially multiple sources would also apply. Therefore, the discretion that already applies to the agency would not be limited to farms, in any case. Large factory and commercial sites might also benefit from that discretion. Therefore, the noble Baroness's amendment is premature, but at some point down the line it could fit in more directly with an overall approach to whole farm planning and regulation.

Baroness Miller of Chilthorne Domer

My Lords, I thank the Minister for his reply. I also thank the noble Lord, Lord Hardy of Wath. Rereading my amendment, I agree with him that it should have said something more along the lines of, when the Environment Agency judges it to be good regulation in the interests of its clients", or whatever. He is right to point out the sloppy wording.

The Minister's reply was very helpful. He holds out hope that in future the regulations may be more streamlined. He said that licences could be the subject of one application—I presume that he also meant one licence fee. That being the case, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford

moved Amendment No. 26: After Clause 19, insert the following new clause—

"RENEWAL OF LICENCES

After section 46 of the WRA there is inserted —

"46ZA RENEWAL OF LICENCES

(1) Licence renewal will be subject to three tests, namely that

1. (a) environmental sustainability must not be in question;
2. (b) the need for the licence is demonstrable;
3. (c) the water extracted under the licence is being and will be used efficiently and effectively.

(2) If the conditions of subsection (1) above are met, except in exceptional circumstances of extraordinary pressure on water resources in that locality, the licence will be renewed for a minimum of six years.""

The noble Baroness said: My Lords, when the amendment was before the Committee, we had a very full and thorough debate. We have tried to improve the thoughts that were reflected in the discussions that took place, and have come forward with our suggestion of the three tests for the licences, of which the Government apparently approve.

The first test is that, environmental sustainability must not be in question".

The second test is that, the need for the licence is demonstrable".

The third test is that, the water extracted under the licence is being and will be used efficiently and effectively".

As I said, our discussions on the matter were full. They ranged from cols. GC 125 to GC 128 of the Official Report of 1st April 2003, and those who spoke in support of the amendment that I moved then included the noble Lords, Lord Borrie and Lord Howie, and my noble friend Lady O'Cathain. We have considered noble Lords' comments carefully, and hope that the new wording will meet some, if not all, of the points made by the Minister.

The three tests that I mentioned have already been set out by the agency. It is appropriate that they appear as an open commitment in the Bill. The period of six years has been chosen to match the review period stipulated in the European water directive. The get-out clause is an attempt to recognise that we do not control nature on a permanent basis. Water is a most powerful medium, capable of changing its own path without man's assistance. We should not like to have in law a clause that, on the face of it, insisted on renewal in the event of a landslide that blocked a water course or the opening up of an underground channel that dried a water course.

I have had a contribution from the National Farmers Union, which stated its concerns and its support for the amendment. As recently demonstrated by the joint awarding of the Environment Agency's water efficiency award for the agriculture and horticulture sector, sponsored by the NFU, the efficient use of water in those businesses is actively promoted by the NFU and its members. The NFU "Waterwise" campaign encourages farmers and growers to undertake a simple water audit for their holdings and to track down and eliminate sources of inefficient water use and wastage. Farmers are well aware of the benefits for their businesses that can be achieved by effective and efficient use of water.

The amendment is important. I beg to move.

5 p.m.

Lord Borrie

My Lords. I was reminded by the noble Baroness, Lady O'Cathain, declaring her interest, that perhaps I should have declared my interest and connection as a non-executive director of a water company. I made that declaration at Second Reading and in Committee, but perhaps it is best practice to declare it at each stage of the Bill.

In a way, the subject of this amendment is part of a theme pursued—but just touched on—in an earlier amendment tabled by the noble Lord, Lord Dixon-Smith, and others. Water companies very strongly need reassurance when they are expected to lay out capital expenditure for vital infrastructure. They want assurance that there will be an adequate period of licence during which they can recover their money. Of course we have had some—I use the word again—assurances of a sort from the Government that if the water company presented a suitable business plan to the Environment Agency, the company might be able to convince the agency that the normal licence length of 12 years should be longer.

I think that the noble Lord, Lord Whitty, indicated in Grand Committee that the Environment Agency is committed to a presumption of renewal, which is what we are discussing under this amendment. The trouble is that those assurances and statements from either the Minister or the Environment Agency—with due respect to both of them—are not on the face of the Bill and therefore may not satisfy the mythical banker to whom the noble Lord, Lord Dixon-Smith, referred earlier and may not satisfy companies. Consequently, they may not satisfy the needs of future consumers who will want such capital expenditure if adequate supplies are to be assured for the future.

In Grand Committee, the noble Lord, Lord Whitty, denied—I put it in perhaps a provocative way, though the noble Lord does not usually need much provocation to be very clear and blunt himself—that there was a presumption against renewal. I think that it is implicit in the Bill as it stands that there is a presumption against renewal. I suppose that that is why I see value in Amendment No. 26, which would introduce a presumption in favour. It would give that magic reassurance which I think is so important.

Baroness Miller of Chilthorne Domer

My Lords, I have certain reservations about this amendment as well. I believe that the Bill's current provisions for the renewal of licences are adequate. The Bill also provides for an appeals process. My unease may be more to do with the second part of the amendment, which ties the licence renewal period down to a period of six years. We have discussed at length the issue of climate change and various other pressures. I think that the six-year minimum is likely to be used in practice. However, given all the comments about those pressures, I would be very uneasy if, by accepting the amendment, we removed the ability to grant licences for shorter periods should that become appropriate. We should particularly bear in mind that the amendment would, I believe, cover all licences regardless of whether they applied to very large projects or very small ones or to multiple small abstractions that exceeded the licensing threshold. I therefore have reservations about the amendment.

Lord Whitty

My Lords, I too have reservations about the amendment. There is not, to answer my noble friend Lord Borrie, a presumption either in this legislation or in practice against renewal. Indeed, the Environment Agency has clearly included a presumption of renewal in its published draft guidance on the time-limiting of licences. So the Environment Agency will operate the system on the presumption of renewal. However, it needs some discretion in that regard. The amendment is seeking to introduce into a well established statutory decision-making process a requirement that, where certain conditions are met, the decision is effectively taken out of the hands of the decision-making bodies.

I am slightly surprised that my noble friend, who has himself been one of those decision-making bodies, can contemplate such a constraint on judgment being made so explicit in primary legislation. Introducing a statutory criterion would tend to predetermine the outcome if the tests in the amendment were met. The general approach to licensing is that there is a presumption for a licence if the conditions are met. That same presumption applies to the renewal of the licence.

There is an appeals process. In essence, the renewal tests—the judgment of the regulator at the point of application for renewal—really should be seen as a quality check that the conditions of the licence are still met; that changes that could not reasonably be foreseen at the time of grant, such as climate change, have been taken into account; and that there is therefore no reason to go against the presumption of renewal.

One of the difficulties with the stipulations in the amendment is that the changes since the granting of the first licence, which may have been some time ago—more than 12 years; we are potentially talking about a rolling programme here—will have been gradual rather than dramatic, particularly in relation to climate change, one would hope. Therefore, different judgments have to be made at different times as to whether the licence terms are still appropriate. So a certain amount of judgment has to be exercised even against an administrative presumption of renewal.

The amendment's effect and implied prescription would tie the hands of the regulator in reaching those judgments. So, with reassurances about how the Environment Agency is approaching this task, I recommend that the House should not accept an amendment that would put on a statutory basis a rigid presumption of renewal.

Baroness Byford

My Lords, before the Minister sits down, will he look at subsection (2) of the amendment? It clearly states: If the conditions of subsection (1) … are met, except in exceptional circumstances of extraordinary pressure on water resources in that locality, the licence will be renewed for a minimum of six years". So there is a built-in safety valve. I should be grateful if he would comment on that.

Lord Whitty

My Lords, my point is that that is a fairly extreme exception. The amendment specifies, "except in exceptional circumstances", whereas changes may have occurred over the whole 12 years since the licence was granted or most recently renewed. "Exceptional circumstances" suggests a sudden and dramatic emergency, whereas looking forward to the next 12 years, the Environment Agency—the regulator—may well judge that the licence conditions should be changed or the licence should not be renewed in its current form. That is why I say that the amendment greatly constrains the judgment of the regulator. The provision which the noble Baroness quoted deals with an extreme example of change which would allow the regulator to behave differently from the presumption. There is a whole range of circumstances where there may be other matters to be taken into consideration when making the judgment on a renewal application.

Baroness Byford

My Lords, I follow the Minister's argument but I do not accept it. I thank the noble Lord, Lord Borrie, for his support. I think that people generally—not just water companies, but everyone who uses water, particularly those whom I know well within the farming community—are looking for reassurance. The Minister said that the Environment Agency will operate a presumption that. subject to the requirements, renewal will be granted. However, the Bill does not state that. The Environment Agency is not answerable to anyone. It may be answerable to the Government as it is a government agency, but it is not answerable to this House. I am certainly not happy with the Minister's answer. We shall return to the matter at Third Reading. I hope that the Government will give it further consideration. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sutherland of Houndwood

moved Amendment No. 27: After Clause 19, insert the following new clause—

"COMMENCEMENT AND EXPIRY OF LICENCES

After section 46 of the WRA there is inserted—

"46B COMMENCEMENT AND EXPIRY OF LICENCES

(1) A licence granted under this Chapter to abstract water—

1. (a) to prevent interference with any mining, quarrying or engineering operations (whether underground or surface); or
2. (b) to prevent damage to works resulting from such operations ("de-watering abstractions");

shall be stated to take effect and to expire simultaneously with any planning permission or any extension or amendment to any planning permission granted for such mining, quarrying or engineering operations instead of a specific date, or dates, in the licence for the de-watering abstraction itself.

(2) In all other respects, reference in this Chapter to the date on which a licence is stated to take effect and on which it expires, insofar as a licence for de-watering abstractions is concerned, refers to the commencement and expiry dates comprised in any planning permission authorising the mining, quarrying or engineering operations relevant to the de-watering abstraction.""

The noble Lord said: My Lords, I rise to speak in support of Amendment No. 27. I wish to take a few moments to make some general remarks which apply to other amendments under my name; that is, Amendments Nos. 28, 32, 183 and 185. Those remarks, if made now, need not be repeated. I give that commitment.

I declare an interest as a non-executive chairman of the Quarry Products Association. I support the general principles of the Bill to maintain quantity and quality of water—who could not? But the amendments under my name relate to the way in which the provisions of the Bill have relevance to the quarrying industry in particular. That is an important point.

A distinction must be drawn between those who use water in the processes of their respective industries and the needs of the quarrying industry to extract water literally in order to keep digging and then to return that water to the aquifer either immediately or after storage at equivalent quality. The point about the quarrying industry is that the water is not lost in either quantity or quality in this process of abstraction.

My initial proposal at Committee stage was to ask for the quarrying industry therefore to be exempted from the type of licensing process envisaged in the Bill. In the light of discussion at that stage and the comments of the Minister, I have returned with this amendment rather than my original amendment. I hope that this amendment can be regarded as both conciliatory and consensual.

Amendment No. 27 seeks to protect the quarrying industry from what I can only view as a potential double hazard; that is, the need for planning permission and a licence to abstract water to run on different timescales. The amendment proposes that the licence and the planning permission should run concurrently with the same expiry date. Why is that important? It is important due to a matter already touched on in earlier amendments—the length of the investment cycle in the quarrying industry. I need not go over the details of that as that matter was covered in earlier discussion.

The Bill, if unamended, would reduce to 12 years the horizon under which significant investment is considered, with a time warning given after six. Let us consider the implications of that. I give a specific example to impress on the House the seriousness which such a use of powers could have, not simply for the quarrying industry. The Torr Quarry near Frome currently supplies virtually all the limestone needs of the South East of England. That is a consequence of geology not of business strategy as that is where the limestone is found. The quarry has been managed with great skill. Investment has been channelled into developing an adequate rail transport infrastructure to ensure that the flow of material to the construction sites of the South East of England that need the material takes place in the most effective and efficient manner.

Such investment in both the quarry and the infrastructure is unrealistic over a short investment timescale—a 12-year period. But what is at issue is the supply of limestone for construction, the huge majority of which occurs in the South East of England. The Minister does not need reminding of the ambitious government plans for construction in that area. That one quarry is pivotal to those plans.

I remind the House, however, that the issue is not simply the use of water and the possible contamination of water—as might arise in other industries—but the dewatering necessary to allow limestone extraction in this case and the return of the water to the aquifer. That is different from the position of some other industries which have an interest in this area which use water and, in so doing, diminish either the quantity or the quality of water returned to the aquifer.

I also remind the House that the measure does not imply an avoidance of proper regulation because planning permissions are subject to a rolling 15 year reaffirmation and regranting. The Environment Agency has a role in that process as a statutory consultee. I believe that proper regulation as proposed in the amendment in the spirit of the Bill can be observed along with the provisions already in place. I beg to move.

5.15 p.m.

Lord Berkeley

My Lords, I support the amendment. I apologise for not having been present at previous stages of the Bill. I am a civil engineer and I have done some quarrying work in my youth, if one can call it that. The points made by the noble Lord, Lord Sutherland, are very valid.

No one likes quarries. They comprise big holes in the ground and often you cannot see them. Often they last for decades and sometimes more than 100 years. However, as the noble Lord said, people like the products of quarries. They want cheap buildings, roads, railways and harbours. The quarrying industry is a classic case of an industry that needs to plan for decades ahead in order to produce stone of the right quality at the right volume in an environmentally friendly way. As the noble Lord said, there is a need to dewater and return the water after it has been processed and cleaned.

I declare an interest as chairman of the Rail Freight Group. As the noble Lord also said, much of the material we are discussing is transported by rail to the benefit of the environment. Investment is made in the equipment needed for the crushing, loading, and screening processes and in all the other equipment that is required, including for concrete mixing. That is part of a big chain of business—it is almost a logistics chain—which could be affected if the businesses that run quarries are required to take the risk involved in reapplying for a licence after a comparatively short period.

If quarry companies have obtained the relevant planning permission, having consulted the Environment Agency, and having undergone very strict environmental assessments, it is reasonable for them to have the certainty of being able to carry on their business for the length of the planning permission without the worry of whether they can continue to extract water. If they cannot extract water, they cannot carry on the business.

The noble Lord, Lord Borrie, talked of the importance of assurance as regards those who have invested in the area we are discussing. Yesterday at Question Time we discussed the Royal Mail. The noble Lord, Lord Sainsbury, said that it was important that the Government did not interfere with business investments. I am not sure that I agreed with him on that occasion, but that was for another reason. However, it is important that uncertainty should be removed. The amendment is a reasonable attempt to bring the two timescales involved in planning permission and licences into line. I hope that if the Government cannot accept the wording of the amendment, my noble friend will at least agree to take it away and come back with a measure that would achieve a similar result.

Baroness Miller of Chilthorne Domer

My Lords, in speaking to the amendment I should declare an interest as a Somerset county councillor. I believe that the quarry to which the noble Lord referred is situated in Frome, Somerset. My council is the mineral planning authority for that area. Considering the scale of its operations the quarrying industry in that area has done a great job in terms of considerate working and, in particular, in relandscaping worked areas. I pay tribute to the achievement of the quarrying industry in that regard.

I still have in mind a question as to the fact that dewatering is, as the noble Lord said, a closed-cycle operation. The water is taken out and the same quantity is put back. I think that he said that it was of equivalent quality, not necessarily the same quality. I am not sure what the difference is. I do not know whether dewatering is defined anywhere as a closed cycle, so I am not sure what, if we agreed to the amendment, we would understand dewatering legally to be. I may have become more interested in exact definitions as we have worked our way through the Bill, and I believe that they are important.

In general principle, I have accepted the argument that we should require all people, whether trickle irrigators, water companies or quarries, to be brought within the licensing arrangements for the Bill. I am minded to stay with that position, except for the persuasive argument of the noble Lord, Lord Sutherland of Houndwood, that dewatering is a closed cycle. I still have certain reservations.

The Government are in a difficult position on the amendment, however. Dewatering is a closed cycle and so they might not want to accept the amendment, but every time we mention British Waterways, which wants some of its reservoirs to stay outside the system, the Government are minded to allow it to do so. They say that that is a closed-water system and that British Waterways will use only the water from those reservoirs to fill those canals and nothing else. A slight double standard would seem to be operating if the Government did not like the amendments of the noble Lord, Lord Sutherland, but did like those suggested by British Waterways.

Lord Dixon-Smith

My Lords, the amendment presents another aspect of the problem that all those involved in the water industry face, as did one of my earlier amendments. The reality is that, as with the water industry itself, a long-term industry such as the quarrying industry has very distinctive and specialist long-term problems. Above all else, the quarrying industry is not a water consumer, generally speaking. It takes water from one place, where it is an obstruction to its work, and puts it back in another. It clearly cannot put it back in the same hole; were it to do so, that would be such a circular motion that it would never get any quarrying done.

The industry could presumably recharge the underground aquifer from which it abstracted the water at a safe distance so that it was not a problem, but I suspect that sometimes it uses surface disposal into a river or whatever. In the context of catchment-area management, which is one of the drivers for the changes in the licensing system proposed in the Bill, that is entirely acceptable. The catchment area is not losing water resource at all, and to that extent I completely support the noble Lord's thrust.

The difference of treatment mentioned by the noble Baroness, Lady Miller of Chilthorne Domer, as regards British Waterways is an interesting conjunction that I had not reached myself. It indicates that the Government ought to think a little carefully about how they treat the amendment and the noble Lord's other amendments. They warrant the most serious consideration. I know that we shall get all the assurances that we have had previously on the matter, but people like what they can see. It is not that they do not like something if they have to go to research it to find out about it; they might be jolly relieved when they find the answer. However, if we can put the answer where they can see it in the Bill, it would save everyone a great deal of trouble. I definitely support the amendment.

Baroness Farrington of Ribbleton

My Lords, I shall begin, in response to the noble Lord, Lord Sutherland of Houndwood, by dealing with the mechanism that he proposes in the amendment. I shall then move on to some of the issues that underlie his reason for tabling the amendment.

The amendment would completely remove from the Environment Agency and, incidentally, the Secretary of State on appeal, the responsibility for determining the key condition of the time limit to apply to transfer licences, but only those granted for dewatering activities. The duty would, in effect, be transferred to planning authorities, which are not set up to deal with it. Indeed, there is no statutory requirement for a planning authority to give effect to the Environment Agency's recommendations on the matter.

I acknowledge that the noble Lord is right that the agency is a statutory consultee for planning applications, but there is no requirement for the agency's views to be incorporated by the planning authority. If it is right that a transfer licence should initially be granted for a fixed period to deal with the uncertainties facing us in water resources management, that is the decision that should be arrived at, whoever takes it. The amendment may assume, of course, that the planning authority would in some way take less heed of the implied significance of its decision for water resources when deciding the appropriate duration of the planning permission. Alternately, it could imply that the duration of planning permission should be shorter for water resources reasons. Neither of those can be right. Each case must be considered on its merits.

The amendment would confuse responsibilities between the two regulatory regimes, which were set up for entirely different purposes. We agree that there must be liaison and co-operation between them. That already exists and works well. However, it cannot be right that the responsibilities of the planning regime are effectively removed and given to the other regime in just one particular aspect and for only one particular industry. Most, if not all, industries are subject to more than one regulatory regime, and we have to learn to deal with that.

The issue underlying the amendment is, of course, the question of the initial investment uncertainties if a transfer licence is shorter than the intended life of the quarry. We recognise the concerns of my noble friend Lord Berkeley and those that my noble friend Lord Borrie raised on previous occasions. We recognise that there are genuine and important concerns, but the problem is not insurmountable, and it is not entirely peculiar to the quarrying industry.

As we sought to do in Grand Committee, I can reassure the noble Lord that quarry and mine operators will have the same opportunities as all other abstractors to submit to the Environment Agency a business case in support of their applications, addressing issues relating to the proposed life of the initial licence to be granted. The time restriction on the operation would form part of such a submission, and the agency would have proper regard to it, as would the Secretary of State on any appeal. I hope that the noble Lord will accept the arguments against the mechanism that he proposes in the amendment.

With regard to the points raised by the noble Lord, Lord Dixon-Smith, the noble Baroness, Lady Miller of Chilthorne Domer, and my noble friend Lord Berkeley, the position of mining and quarrying companies will be no different from that of industrial abstractors, in so far as local effects on the water environment are concerned. We recognise that they are not net consumers of water, although it is not unusual for the water taken out of the ground to be returned to a nearby stream. As far as concerns the groundwater resource, that may be a total loss. Quarry dewatering is achieved by pumping groundwater, as noble Lords have said, to enable dry working of the quarry. The water is usually put back into surface streams. Therefore, it may be a total loss to the groundwater resources.

Moreover—and this was one of the concerns expressed by the noble Lord, Lord Dixon-Smith, and the noble Baroness, Lady Miller of Chilthorne Domer—there is potential for significant adverse effects on adjacent groundwater sources and dependent features, such as springs, wetland, and SSSIs. In some circumstances where the acquifer generally may be already over-committed, especially in the future with climate change, it could reduce the availability of scarce resources for others.

However, we recognise that there may be circumstances where we need to consider the concerns of the noble Lord. I understand that a visit to a quarry has been arranged with a view to considering such issues. If it would be helpful, I can assure the noble Lord, Lord Sutherland, that a meeting could be arranged following that visit, and before Third Reading, to see whether we are able to come closer to reassuring him.

I stress, yet again, that where there is a reasonable requirement that depends upon the abstraction of water, a licence will generally be granted, provided only that the rights of other users and the environment are adequately protected. I hope that that reassures the noble Lord, Lord Dixon-Smith. Where that is the case, there will be no reason for the Environment Agency to refuse a licence. If nothing has changed, the same will apply at renewal. That is what we mean by presumption of grant and of renewal. This is how the system has operated since its inception. I have responded in as much detail as possible, because I hope to reassure the noble Lord. We are certainly happy for officials to meet him.

Reference has been made to British Waterways' reservoirs. I should point out that not all dewatering is a closed system. Indeed, as I have already said, there may be a loss from groundwater into streams. We are exempting only transfers from British Waterways' reservoirs to British Waterways' canals where they are for navigation and not other purposes. British Waterways' use is for productive purposes, whereas, in the case of dewatering, it is a by-product of the industrial activity taking place.

I have sought to answer the noble Lord's concerns, though I suspect he may wish to seek a meeting with officials between now and Third Reading. In the mean time, I hope that he feels reassured enough not to press his amendment today.

5.30 p.m.

Lord Berkeley

My Lords, the noble Baroness said that British Waterways' water is for "productive purposes", but I would suggest that it is a matter of keeping a canal going so that barges can travel up and down it. Surely a quarry exists also for productive purposes, with the watering being an essential means of achieving those aims. What is the difference?

Baroness Farrington of Ribbleton

My Lords, the difference is that it is impossible to travel up and down a canal without having water in it. That strikes me as the prime purpose of the water. The dewatering process is a by-product of the process of quarrying. The different modes and systems involved in dewatering and returning the water in equivalent quality is a matter that can be considered separately. There is no alternative to having water in the canal if one wishes the boat to travel along it.

Lord Berkeley

My Lords, there is no alternative to dewatering a quarry if you wish to get stone out of it.

Baroness Farrington of Ribbleton

My Lords, we are not, at this stage, discussing the dewatering of quarries; we are discussing whether it can reasonably be said to be different in every case from other commercial uses that require dewatering because of the processes involved.

Lord Sutherland of Houndwood

My Lords, I thank the Minister for what I regard as a conciliatory reply, even if it is not quite consensual; indeed, that remains to be seen. I also thank the noble Lords, Lord Berkeley and Lord Dixon-Smith, for their support, as I do the noble Baroness, Lady Miller of Chilthorne Domer. Equally, perhaps I may couple that with thanks for the tribute paid to the good practice of one of our members at Torr quarry. I believe that to be significant: the industry is responsible.

I have a few points to make. Beguiled, as I was, by the productivity of canals, I shall not enter into that argument. I begin with the question of what "dewatering" is legally. When St Augustine was asked "What is time?" He replied, "Well, when nobody asks me, I know what it is; but the minute somebody asks me I can't produce a definition that's adequate". That seems to me to be the same as the problem of giving a legal definition of "dewatering", although I dare say some lawyer could do so.

The issue raised by the noble Baroness was whether it is a closed cycle, and how that relates to quantity and quality. The quality is already checked. I shall give noble Lords an example. I know of a quarry that was fined by way of a penalty because its dewatering process left too much silt: it happened too quickly in the water that was abstracted and then returned. Therefore, there are processes already in place—and that will continue to be so—to deal with such situations so that quality can be measured.

The question of quantity and where the water goes is, perhaps, an issue for further discussion. The quantity can be measured. Equally, depending on pragmatic concerns, some of the water is stored in quarries. However, if the issue were to become whether one could store the water and return it to the original place, it would be a technical and technological question that could be confronted and considered to see whether it is practicable. I hope that my remarks deal with those questions.

The Minister's reply is such that I beg leave to withdraw the amendment at this stage. However, I reserve my position following the discussions that will take place in due course.

Amendment, by leave, withdrawn.

Clause 20 [Limited extension of abstraction licence validity]:

Lord Sutherland of Houndwood

moved Amendment No. 28: Page 23, leave out lines 10 and 11.

The noble Lord said: My Lords, I shall not speak at equivalent length on this amendment. I have set the context. The point of the amendment is very straightforward. It is to allow that a licence legitimately held can be transferred on the sale of a quarry, just as planning permission is currently transferred on such a sale.

Consolidation has taken place in the industry, and has maximised both high quality and efficiency, and consolidation will continue to take place. It would be a serious impediment if a licence had to be re-applied for in the possible event of the consolidation of two major companies and an application had to be made for every quarry that they ran, or, alternatively, where a single quarry is amalgamated into larger combine. I hope that the proposal is straightforward; namely, that licences can be transferred, all other things being equal. 1 beg to move.

Lord Dixon-Smith

My Lords, I rise with a certain amount of regret to express my slight concern about the amendment. Clause 20 makes the burden of responsibility for the renewal of an extraction licence—particularly the initiation of the process—a responsibility of the Environment Agency. That is not unreasonable. The amendment, however, would shift that responsibility back to the applicant.

In the case of a large quarrying business or any other large industrial use, that is well and fine. But we have talked about the administrative burdens on agriculture. I am not sure that, from the point of view of most of the agricultural industry, one would not rather see the initiation responsibility with the Environment Agency. One could be much more sure that the Environment Agency would not forget about it—whereas I would not absolutely guarantee my own memory, or indeed that of every farmer in the country. For that reason, we have a concern about the amendment—although anything that makes the process easier would be welcome.

Baroness Farrington of Ribbleton

My Lords, I am slightly concerned. My understanding is that the effect of the amendment would be to allow the extension of a time-limited licence under the remaining conditions of this clause, even if the person who makes the application for renewal is someone other than the existing licence holder.

It seems to us most unlikely that a person other than the existing licence holder would either want or be in a position to meet the appropriate application for the purposes of this clause to operate. We are not persuaded that parties in negotiation for a transaction would necessarily want this, given that the seller would want to preserve his own right until such time as the sale was agreed.

I hope I have clarified the matter. If I have not clarified the position with regard to an existing licensee, the licensee will be able to transfer the licence to a new owner at any time simply by giving notice to the agency. If the noble Lord, Lord Sutherland, has any remaining concerns in this area, I think I ought to offer to respond to any queries he raises. However, I hope that I have been able to reassure him.

Lord Sutherland of Houndwood

My Lords, I thank the noble Baroness for that reply. I have heard the concerns expressed both by the noble Baroness and by the noble Lord, Lord Dixon-Smith. I beg leave to withdraw the amendment and I will consider the points raised. Amendment, by leave, withdrawn.

Clause 24 [Claims arising out of water abstraction]:

Baroness O'Cathain

moved Amendment No. 29: Page 30, line 28, at end insert— (8) It shall be a defence to proceedings brought under this section that the abstractor was abstracting the water in accordance with the provisions of a licence granted under this Chapter."

The noble Baroness said: My Lords, my noble friends Lady Byford and Lord Dixon-Smith have added their names to the amendment. It proposes to add a new subsection (8) for the purpose of providing a suggested defence of compliance with an extraction licence. It would, of course, be necessary to remove the quotation marks at the end of subsection (7) of proposed new Section 48A before adding the new subsection.

As the Bill stands, Clause 24 would insert a new Section 48A into the Water Resources Act 1991 which would create a new statutory tort of causing damage by abstraction of water. However, except where small quantities of water are involved, it is generally necessary to obtain an extraction licence from the Environment Agency. This enables the agency to assess the impact of the proposed extraction and, then, taking its assessment into account, refuse a licence or grant a licence with or without conditions. In this connection, the agency should be better placed than the abstractor to assess the potential impact of an abstraction.

In the circumstances, when an abstractor is complying with the conditions of his licence, it seems reasonable that such compliance should amount to a defence to any proceedings brought under the proposed new Section 48A of the Water Resources Act. I beg to move.

Lord Whitty

My Lords, Clause 24 introduces the right to sue any abstractor who causes damage. The intention is that the change will foster greater environmental responsibility and respect for other property among the abstractors. They will need to remain alert to the possibility that they are harming others or otherwise they could be subject to a claim for damages.

In granting a licence, the agency will not have considered the effect of abstraction on the property of third parties. It will have considered only the effect on water resources, on the environment and on the rights of other abstractors to abstract. It is important to bear in mind that it is the abstraction of water that can cause damage, irrespective of whether this is under licence or not.

The abstraction licences allow abstraction without committing any offence. It is not a licence to allow or cause harm to the environment, damage to property or any other detrimental effect. Therefore, the indemnity that the clause would give, with the abstractor abstracting water in line with a licence but against causing damage to the property of someone else, would not have been taken into account in the granting of the licence. It is part of everyone's general duty of care to ensure that in conducting their businesses, which in this case would include the abstraction of water, they do not do so to the detriment of the property of others. 1 believe that that is far too wide an indemnity to be inserted in the Bill and I hope that the noble Baroness will not pursue the amendment.

5.45 p.m.

Baroness Byford

My Lords, before the noble Lord sits down, does he not consider that there should be a responsibility for the damage that one person might do to another? If damage is above the ground, it is easy to see, but damage can be caused to a third party without awareness. Therefore, I believe that there is great strength in the amendment moved by my noble friend and I should be grateful if the Minister would clarify the matter a little further.

Lord Whitty

My Lords, whatever business one is in, one is under a duty of care not to damage someone else's property. The granting of a licence does not override that duty of care. However, the amendment would mean that the person being damaged would not have the right to sue a person who had abstracted water and thereby caused damage. That is not sensible. Not only must the abstractor operate in terms of the licence, he must also operate with regard to the duty of care. Saying simply that he has abstracted water in accordance with the licence is not an adequate defence against the duty to avoid damage to other people's property, whether or not it is above the surface and immediately visible.

Baroness O'Cathain

My Lords, I do not know whether the Minister heard what I said. I said that the agency grants the abstraction licence, so therefore the agency assesses the impact of the proposed abstraction. Then, taking its assessment into account, it can refuse a licence. Is there no responsibility on the agency?

The Minister said that the Environment Agency took into account water resources, the environment and the right of other abstractors to abstract, but surely the agency's assessment must take into account the possible impact on third parties. Is that not a duty on the Environment Agency when granting an abstraction licence? We must not forget that it grants the licence, so can the Minister clarify the point?

Lord Whitty

My Lords, we are in danger of getting out of order again. The agency is bound to take into account damage to the environment, which may include property damage, and damage to the right or ability of another abstractor to abstract, but it does not take into account any more general, non-environmental damage which any business is obliged to try to avoid. To give an indemnity against that simply because an abstractor is fulfilling the terms of his licence on abstraction would be excessive and would not be granted in other circumstances.

It is not the duty of the Environment Agency to ensure that by giving a licence it prevents someone causing damage further down the line. In granting the licence, it must take into account the specifics.

Baroness O'Cathain

My Lords, I thank the Minister for that reply. Obviously, I am unhappy about it and shall seek advice on whether an amendment to limit some of the proceedings brought against the abstractor under the proposed Section 48A of the Water Resources Act can be limited. I shall return to the matter at Third Reading and in the meantime beg leave to withdraw my amendment. Amendment, by leave, withdrawn.

Clause 25 [Compensation for modification of licence on direction of Secretary of State]:

Baroness O'Cathain

moved Amendment No. 30: Page 30, line 43, at end insert— ( ) After subsection (4) there is inserted— ( ) Subsection (4) above shall not apply while the possibility of the abstraction of water under the licence constitutes part of—

1. (a) any water resource management scheme maintained under section 20, 20A or 20B above; or
2. (b) any drought plan maintained under section 39B above.""

The noble Baroness said: My Lords, Amendment No. 30 amends Clause 25 and deals with sleeper licences. On 3rd April, the third day of Grand Committee, we had a long debate on sleeper licences.

If my amendment is carried, the reduction of sleeper licences from seven to four years under Clause 25 would not apply where water may be abstracted as part of the, water resource management scheme… or any drought plan". At the moment, water companies are required to produce water resource management plans. The Bill places these and drought plans on a statutory basis. Sleeper licences give companies the flexibility they need to manage their water resources. If sleeper licences are reduced from seven to four years, companies may need to revise their existing plans, and, indeed, they might not be able to produce the water required in a drought period.

We do not have any model which suggests that droughts occur every three and a half years. They could happen every two years, or indeed every year or sometimes not before six years. If drought plans are not in existence, the problem is huge for water consumers.

When the amendment was discussed in Grand Committee, the Minister said that he was "sympathetic" but argued that the clause was only meant to be used in, a situation where unnecessary, unreasonable non-use of a licence causes damage in one form of another". The Minister indicated that if the so-called sleeper licence were part of long-term planning and drought planning, clearly the Environment Agency would he acting unreasonably if it tried to revoke it.

He continued: Clearly, if there is no damage to the environment or to access to water, the Environment Agency would be acting unreasonably to revoke a licence being used for beneficial purposes".—[Official Report. 3/4/03; col. GC 170.] He added, at col. 171, that it, would not be reasonable for the Environment Agency to act against a water company if the sleeper licences … were part of a water company's plan". At that stage, the Minister sought to justify the new clause on the basis that the agency must be able to intervene for unnecessary non-use of a licence that causes damage or certainty in the management of that water resources plan. He indicated that it was a power for the agency to deal with particular situations in which the abstractor was behaving unreasonably by not using the abstraction rights.

He argued that, the intervention is a power in certain circumstances to be exerted reasonably and with due regard to all the other duties and powers in the Bill by the Environment Agency".—[Official Report, 3/4/03; col. GC 172.]

The amendment, in essence, provides water companies with a protection on the face of the Bill against the risk of losing abstraction rights that they might need for water resource management plans and drought plans. It makes a clear distinction between situations in which an abstractor is behaving unreasonably by not using the abstraction rights—in other words, a dog in the manger approach—and those where sleeper licences are an integral part of water resource management plans and drought plans. I beg to move.

Baroness Byford

My Lords, I support my noble friend's amendment. We did indeed have a long discussion in Committee about the whole question of sleeper licences. I believe that changing the length of period over which it is allowable to suspend abstractions without losing one's licence needs to be carefully examined.

In Committee, the Minister was adamant that the Environment Agency must review the use or non-use of licences in the light of reasonableness. He said: The Environment Agency will not be required to take away a licence that has not been used for four years: it will have a power to do so, if, in all reasonable circumstances, it judges that there is unreasonable non-use of the licence that is either causing environmental damage or preventing access to the water for other potential users".—[Official Report, 3/4/03; col. GC 168.]

I have some questions for the Minister. In drafting the Bill, did the Government and their advisers calculate four years? Did someone go out and ask non-users why they were not abstracting water? Did that someone then work out the mathematical average time that it took for non-users to become "no further requirement for"? What factors were involved in reaching four, rather than two or five, years? Will the changing face of Britain have an effect in years to come on that figure?

There is almost no industry left. When it has all gone, will water abstraction be done by mining and quarrying, water undertakers and food producers alone? When that happens, will four years be workable, never mind reasonable? What happens to a farmer or a water undertaker who loses the right to abstract and then needs it again? Does the farmer have to relocate? Does he have to change his crop rotation? Does he have to let his beasts die of thirst first? At current prices, it may become more economical to slaughter them than to pay water bowsers to visit the farm.

Does the water undertaker tell developers of the new 4,000 unit estate that there will be no local water supply? Is a water undertaker allowed to do just that? Is he allowed to charge more for supply to that estate because it comes from Wales or Scotland, or will all the region's customers have to pay?

Will the Minister give details of how the four years was reached? Will he tell us how many abstraction licences have not been used for four, five, six or seven years? Can he subdivide those figures by region and then give us the water volumes involved? Will he also set against that breakdown of unused capacity the totals of unfilled demand represented by would-be abstractors in each region who are unable to gain licences?

We have pursued the amendment at length in Committee, but many of those basic questions have not been answered. Will the Minister provide the totals, for example, for each water undertaker of the "imports" from other regions that will be rendered unnecessary by the reduction from seven to four years? Will he also provide an estimate of the costs, by water undertaker, that will be saved by taking this step and the likely effect on household bills?

If I may, I shall discuss the environment. Will the Minister tell us what calculations have been made of improvements that will follow on from this action? Can he cite examples in each region of species to be protected that will otherwise be in decline or fail? Will he give us calculations of the effect on the landscape, with its beneficial follow-through to tourism?

In other words, can the Minister lay out in detail the thinking, calculations and the evidence that this change to abstraction licences will result in measurable, tangible, obvious benefits to some parts of society? The Minister indicated previously that the Government are not minded to give way on this amendment. If so, those basic questions deserve a reply.

Lord Sutherland of Houndwood

My Lords, I wish to support the amendment on the grounds that, in any large quarrying footprint, different areas of the quarry may be worked at different times but all within the same investment horizon. The reasons for a section of a quarry not being worked, with the result that it may require a separate licence, may be beyond the control of the company in question. None the less, the investment assumes that that section can be worked without further impediment. I therefore support the amendment.

6 p.m.

Lord Whitty

My Lords, we have debated the matter at great length before; I am grateful to both noble Baronesses for quoting large chunks of my speeches on the subject. But the noble Baroness, Lady Byford, is asking me a whole range of questions about why the existing seven years will be reduced to four years. I cannot answer most of her questions.

We are moving into an era in which we need tighter control of water resources. Therefore, if there is a damaging sleeper licence, it would be sensible to be able to intervene earlier than previously. We hope that the number of occasions on which that would occur would be relatively small. As I said, the Environment Agency would not be acting reasonably were it to revoke a sleeper licence when the non-use of the ability to abstract was because of a shift in part of the quarry that was being used, or for other planning purposes.

This part of the Bill provides for where the revocation can be made without compensation. The circumstances in which that may arise will be limited: to where the existence of that sleeper licence caused environmental damage because failure to abstract had caused problems down stream, or whatever; or where it had damaged the interest of another abstractor; and where it was unjustified on grounds of the type referred to in the debate in relation to the quarrying and farming industry.

It would of course also be unreasonable for the Environment Agency to act were the provision to be part of the undertaking's drought plan or water resource management plan, which itself would have already been agreed by the Environment Agency. It would be somewhat bizarre were the Environment Agency to act to revoke something that was part of a plan to which it had already been party.

The number of circumstances in which that has arisen under seven years has been relatively limited; the number that would arise under four years would therefore be limited; but it could exist and cause serious damage to another abstractor or to the environment further downstream. Therefore, we need to provide for the Environment Agency to act without fear of being faced with substantial compensation claims as a result.

However, the instances referred to by the noble Baronesses, Lady O'Cathain and Lady Byford, and by the noble Lord, Lord Sutherland, would not fall within that category. In those circumstances, it would not be reasonable for the Environment Agency so to act.

I know that we are going over ground covered in Grand Committee, but I hope that the noble Baroness will accept that explanation and the need to have tighter controls over damaging sleeper licences, but not give the Environment Agency carte blanche to intervene where the non-use is part of a sensible planned use of resources of the type described.

Baroness Byford

My Lords, before the noble Lord sits down, perhaps I may press him a little further. If someone is causing damage, my understanding is—perhaps the Minister can clarify this for me—that the Environment Agency has existing responsibilities under which, if someone is damaging the environment or doing something that he should not be doing, the agency can act straight away. That issue is entirely separate from that of the period of licence renewal being reduced from seven to four years.

I find the Minister's argument illogical. I hope that I am not the only noble Lord currently in the Chamber who is confused. We are dealing with two separate issues. No one in the House has suggested that where damage is being done, action should not be taken straight away against someone damaging the water course, the environment, or whatever. I should like to make that clear, because if the Minister thinks that we want to defend people who damage them, I have obviously not expressed our position clearly.

My various questions were to raise why the Government wish to reduce the number from seven to four: why that number rather than any other ratio? I know that I asked many questions. If the Minister is not able to answer them immediately—I accept that he probably is not—I should be grateful for a general steer. I should then be quite happy for him to respond later. But, for the sake of the House, I want to clarify that we are dealing with two separate issues that have unfortunately been merged. One is damage, and I am sure that all of us would say that it should be dealt with immediately. If it is not dealt with properly, that licence should be revoked. The other issue, to which my noble friend's amendment relates, is the reduction of a sleeper licence from seven years to four years. I hope that the Minister can clarify that.

Lord Whitty

My Lords, there is no mathematical formula that shows that four years is the exact figure. The Environment Agency has some powers to intervene in the case of emergency damage but not when there is a long-term effect from a failure to abstract water at a particular point for no good reason or no reason that is justifiable in terms of the management of the facility or the use of the water. After all, the revocation of a licence that has not been used effectively releases increasingly scarce resources for somebody else to use.

It seemed sensible to reduce from seven to four years the period of non-use, potentially damaging use or, at a minimum, failure to allow the water to be used by somebody else. We consulted abstractors on the matter in 1998, when we discussed the general approach to water planning. By and large, a reduction was felt to be sensible. I cannot justify four years mathematically. If either noble Baroness requires further information, I will, of course, write, but there is no more precise answer, except to say that it was generally regarded as a reasonable move.

Baroness O'Cathain

My Lords, I thank the Minister. I had a certain amount of sympathy with him, when he was confronted with the questions asked by my noble friend Lady Byford. I thought, "My goodness. How many more?". I asked her sotto voce, and she said, "Probably 20. Maybe more". We know that there is no way that the Minister could reply to those questions at this stage. However, I must say, sparing my noble friend's blushes, that it shows the amount of research that she does. She gave us a clear picture of the sort of problems that could arise.

I reiterate what was said. There is no question of damaging the environment. Anybody who damages the environment must be penalised there and then. I do not intend to divide the House on the amendment, but I certainly intend to bring the matter back. In the mean time, I want the Minister to consider a couple of questions from me, as opposed to my noble friend. The Minister has discussed the matter with abstractors, who seemed generally to accept the reduction from seven to four. I ask him specifically whether they have looked at the matter on a regional basis.

I come back to a point that was made either at Second Reading or in Grand Committee: the average amount of water per head in the South East is less than that per capita in Sudan or Ethiopia. We have a massive water shortage in the South East. By the very nature of the climatic conditions that prevail in the South and South East, we are more likely to be in drought situations. I am sure that few people living in certain parts of the country—the North East, the Borders or up there in the Lake District—are subjected to hosepipe bans. I remember many such bans, fortunately not in the past few years. With the additional threat—I use the word advisedly—that a lot more housing will be situated in the South East—something like 46,500 new homes—there are bound to be problems with water resource management plans. The sleeper licence is absolutely imperative for drought planning.

Although the Bill is environmentally skewed—rightly— we should not forget that one of the big things about water is that we must produce clean, usable water for everybody in the country on a regular basis. If we decide to do away with sleeper licences or reduce them to four years, we could fail in our duty to do that. The Environment Agency would be found to have failed. But because the Environment Agency is an agency for government, it would come back to the Government. As a director of a water company, it would be quite nice not to have to face the brouhaha of the local population when it is reduced to standpipes and hose-pipe bans. We would be able to say, "Oh, it is the Government's fault". But, of course, everyone says that anyway.

If there is a drought, I should like the Minister to give some consideration to what the Government would be able to do. Would they be able to revitalise an abstraction licence and give a quick—within a day—abstraction licence to a water company? Indeed, would they be able to reactivate that? I am not so sure that they would. I must say—rather flippantly—that if the people who have given advice to the Minister, whether officials or other abstractors, have said, "Well, probably, four years is the maximum we need", are they such brilliant weather forecasters that we can rely on them to reveal where we should go for our holidays for the next seven, eight or 10 years? I know that is a slightly flippant comment, but in the circumstances it is a very serious issue. I shall not seek the opinion of the House today but I hope that between now and Third Reading, the Minister will give some thought to the points raised—certainly those raised by my noble friend—and revisit this issue. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain

moved Amendment No. 31: Page 31, line 24, 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. (4D) When a dispute is referred to arbitration under subsection (4C) above—

1. (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
2. (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.""

The noble Baroness said: My Lords, in moving Amendment No. 31, I speak also to Amendment No. 35. I assure noble Lords that I shall be brief. Clauses 25 and 27 will, in prescribed circumstances, empower the Secretary of State to deprive licence holders of rights under existing licences without the payment of compensation. This amendment provides a right of appeal against the merits of such decisions to some independent person or tribunal. It recognises that existing rights are affected.

This is part of a package of amendments on appeals which aim to ensure that there are rights of appeal on the merits of the regulator's decisions to independent persons, taking into account that there are already such rights in relation to the granting of abstraction licences and decisions on competition issues. These amendments, and other appeal provisions, replace what I would refer to as our "jumbo" appeals amendment in Grand Committee. It was somewhat complex and caused some confusion. Instead, specific amendments are proposed to provisions where regulatory decisions affect existing rights or are punitive in nature. I beg to move.

Lord Borrie

My Lords, the noble Baroness, Lady O'Cathain, and, no doubt, her colleagues, have made quite an effort to move away from the so-called "jumbo" amendment tabled in Grand Committee. Looking at this amendment, I think that we can go back to square one and determine whether each of these is justified. Amendment No. 31—I think the same point applies to Amendment No. 35 with which Amendment No. 31 is grouped—deals with the right of the Secretary of State to deprive licence holders of compensation when rights are withdrawn. The basic question is: is that not an issue on which there ought, in all terms of natural justice, to be some sort of right of appeal somewhere?

The idea that there should be a single arbitrator—it does not say who or how he or she would be chosen—presumably would be agreed between the parties, as would be normal. If there was no agreement, one would go to someone like the president of the Chartered Institute of Arbitrators to appoint one. It seems to me a matter of common sense that, when anyone has a power of this kind—such as the Secretary of State has here—not to pay compensation on certain grounds, those grounds are challengeable, they are disputable, and someone else should be able to determine whether it is a correct decision or not.

When Ministers and regulators have decision-making powers on matters of policy, it is often inappropriate that there should be a right of appeal because it is a right of appeal from a specialised person with particular powers relating to policy to another person outside the circle. As I have said, that is completely inappropriate. But here we are not talking about appeals on matters of policy, but appeals on whether compensation should be paid on certain specified grounds set out in the statute, which is a matter of interpretation.

Some form of appeal, perhaps that suggested in the amendment, seems quite suitable, while judicial review would be much too narrow and limited because presumably it would succeed only if one could prove that the Secretary of State was acting illegally or had not followed the right procedures. That seems inadequate for the matter raised by the noble Baroness.

6.15 p.m.

Baroness Byford

My Lords, I too support the amendment moved by my noble friend. The noble Lord, Lord Borrie, was quite right to say that a good deal of work has been put into trying to find the appropriate wording. When looking around the Benches, I wonder whether we will have been successful, but we shall know that later.

It is clear that there is a human rights issue here. We have not framed the amendment around human rights, but if someone is to be deprived of their rights to compensation currently in place, I would suspect that the Government have considered it and will have clarified that there is no human rights challenge. Ultimately, however, it is not right for the Government to be judge and jury over their own business. Given that this amendment has not defined or specified exactly who the person should be, it should be something that the Government will feel able to take on board. Provided that the person is acceptable to the two businesses or challengers concerned, then I see no difficulty with it.

We had considered whether we should define the person, but at this stage we felt that the amendment might be more acceptable to the Government if it was left to the Secretary of State or to the Environment Agency to define the single arbitrator.

I am very grateful to the noble Lord, Lord Borrie, for his strong support for this amendment.

Lord Whitty

My Lords, there may be something of a misunderstanding here. 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 over the amount of compensation, or whether compensation should be paid, may be referred to the Lands Tribunal. The tribunal is independent of the Secretary of State and is thoroughly experienced in carrying out such assessments. So in general a system of appeal is already in place.

Clauses 25 and 27 set out a limited and statutorily defined set of circumstances in which compensation would not be payable after an abstraction licence is modified or revoked. If the clauses stand, it is not then a question of judgment or appeal to the Secretary of State, it is a matter of statute.

The amendments seek to amend those clauses to install the principle that the holder of a new licence should not be deprived of abstraction rights without the possibility of a hearing. I accept that principle. However, the Water Resources Act already provides a mechanism for a hearing in such cases. This would take place when it was decided whether to vary or revoke a licence on the grounds set out in the two clauses.

It is important to note that, contrary to the implication of the amendment, Section 61 of the Water Resources Act does not provide for the Secretary of State to make a decision whether to award compensation. As I have said, that would follow as a result of statute in the circumstances set out in these two clauses.

The procedure for deciding whether to vary or revoke a licence is set out in Sections 52 to 54 of the Water Resources Act. Therefore, at the appropriate stage in the decision-making process there is already the chance for a full hearing as to the need for the revocation or modification of an abstraction licence.

Whether or not the interpretation of those clauses is correct is a matter for judicial review, but it is not a judgment or a decision of the Secretary of State that can be appealed against, which I think is the motivation for the amendments.

With that explanation, I hope that the noble Baroness will not press the amendments.

Baroness O'Cathain

My Lords, I am deeply unsatisfied by the Minister's response. I take his point that there is already access to judicial review, but that is both cumbersome and costly. The issue should be taken out of that area.

I liked the comments made by the noble Lord, Lord Borrie, in regard to the Institute of Arbitrators. Whenever that body has been used in the past it has delivered answers that seem to satisfy everyone. A judicial review often gives a "yea" or a "nay" answer, which does not satisfy anyone—certainly not the people who feel aggrieved.

There is a great feeling that the powers are stacked against the water industry. In those circumstances, I should like to test the opinion of the House.

6.21 p.m.

On Question, Whether the said amendment (No. 31) shall be agreed to?

Their Lordships divided: Contents, 40; Not-Contents, 84.

Division No. 4
CONTENTS
Anelay of St Johns, B.	Jenkin of Roding, L.
Astor of Hever, L.	Lamont of Lerwick, L.
Blatch, B.	Linklaterof Butterstone, B.
Brougham and Vaux, L.	Lyell, L.
Buscombe, B.	Montrose, D.
Byford,B.	Newton of Braintree, L.
Campbell of Alloway, L.	Northesk, E.
Colwyn, L.	O'Cathain,B.[Teller]
Cope of Berkeley, L. [Teller]	Onslow, E.
Cumberlege, B.	Park of Monmouth, B.
Darcy de Knayth, B.	Rawlings, B.
Denham, L.	Renton, L.
Dixon-Smith, L.	Seccombe, B.
Erroll, E.	Shrewsbury, E.
Fowler, L.	Skelmersdale, L.
Freyberg, L.	Sutherland of Houndwood, L
Hanham, B.	Taylor of Warwick, L.
Higgins, L.	Thomas of Swynnerton, L.
Hodgson of Astley Abbotts, L.	Trefgarne, L.
Howe, E.	Weatherill, L.

NOT-CONTENTS
Acton, L.	Grocott, L. [Teller]
Alli,L.	Hardy of Wath,L.
Amos, B.	Harris of Haringey, L.
Andrews, B.	Harrison, L.
Archer of Sandwell, L.	Hayman, B.
Ashton of Upholland, B.	Hilton of Eggardon, B.
Bassam of Brighton, L.	Hogg of Cumbernauld, L.
Bernstein of Craigweil, L.	Hollis of Heigham, B.
Blackstone, B.	Howells of St. Davids, B.
Boston of Faversham, L.	Hoyle, L.
Brooke of Alverthorpe, L.	Hughes of Woodside, L.
Brookman, L.	Judd, L.
Brooks of Tremorfa, L.	Kilclooney, L.
Burlison, L.	King of West Bromwich, L.
Carter, L.	Layard, L.
Christopher, L.	Lea of Crondall, L.
Clarke of Hampstead, L.	Lipsey, L.
Corbett of Castle Vale, L.	Macdonald of Tradeston, L.
Crawley, B.	Mclntosh of Haringey, L. [Teller]
David, B.
Davies of Coity, L.	Mclntosh of Hudnall, B.
Davies of Oldham, L.	MacKenzie of Culkein, L.
Dean of Thornton-le-Fylde, B.	Mackenzie of Framwellgate, L.
Desai, L.	Massey of Darwen, B.
Donoughue, L.	Milner of Leeds, L.
Dormand of Easington, L.	Parekh, L.
Dubs, L.	Pendry, L.
Elis-Thomas, L.	Pitkeathley, B.
Evans of Parkside, L.	Puttnam, L.
Evans of Temple Guiting, L.	Rendell of Babergh, B.
Farrington of Ribbleton, B.	Rogers of Riverside, L.
Faulkner of Worcester, L.	Rooker, L.
Filkin, L.	Sainsbury of Turville, L.
Gale, B.	Simon, V.
Gavron, L.	Stone of Blackheath, L.
Gibson of Market Rasen, B.	Symons of Vemham Dean, B.
Goldsmith, L.	Uddin, B.
Goudie, B.	Walker of Doncaster, L.
Gould of Potternewton, B.	Warwick of Undercliffe, B.
Graham of Edmonton, L.	Wedderburn of Charlton, L.

Whitaker, B.	Williams of Mostyn, L (Lord Privy Seal)
Whitty, L.
Wilkins, B.	Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.32 p.m.

[Amendment No. 32 not moved.]

Baroness Miller of Chilthorne Domer

moved Amendment No. 33: Page 32, line 21, leave out paragraph (c).

The noble Baroness said: My Lords, I hesitantly return to the thorny issue of compensation. The amendment relates to the removal of compensation for the revocation or variation of time-limited licences that cause serious environmental damage. As it is drafted, the Bill allows the revocation or variation of any licence for abstraction, without compensation and without a time limit, in order to offer protection from serious damage to any waters or flora or fauna dependent on them.

While that is a welcome provision, a number of environmental organisations feel there is still a loophole because a licence granted with a time limit can continue to operate even if it is causing environmental damage. Continued operation is likely to be the reality if compensation has to be paid under revocation or variation. That position was strengthened by the Minister's reply to a previous amendment—not the one on which we have just voted, but an earlier one. It is difficult to argue that abstraction should be allowed to continue under any licence if it has been confirmed that abstraction is causing serious damage to the environment.

The Government may like to consider that the amendment is all the more necessary, given that the Bill's flexible approach may allow time-limited licences to be granted for quite long periods in some instances. I beg to move.

The Earl of Onslow

My Lords, it has been announced on the television that the office of Lord Chancellor should be abolished. Is it not totally disgraceful that no Statement has been made to Parliament and no discussion has taken place, and that an office of 800 years has been abolished without anyone debating it? At the whim of the Prime Minister, we have altered the constitution. Suddenly we are landed with this, and nobody knows what is happening. It is an abuse of process, of privilege and of office. What can we do about it? I therefore beg to move that the House do now adjourn.

Baroness Farrington of Ribbleton

My Lords, may I respectfully suggest to the noble Earl, Lord Onslow, that if he wishes to raise the issue in the Chamber, it would be wise for him to consult his Leader and Chief Whip and have a discussion through the usual channels rather than seek to use this extraordinary procedure now?

The Earl of Onslow

My Lords, if so, why did not the Government do the same and issue a White Paper showing what they are going to do to the constitution? It is a complete and utter disgrace. I have probably made my point. I am probably out of order. I am probably anachronistic. However, I feel so strongly about this abuse of the constitution, abuse of privilege and abuse of power—all the things on which Parliament is supposed to hold the executive to account. But no one turns a hair. I beg to move.

Moved, That the House do now adjourn.—[The Earl of Onslow.]

Baroness Miller of Chilthorne Domer

My Lords, may I ask the House for some guidance on this issue? I moved my amendment, but the noble Earl, for understandable reasons, has moved another Motion. I am not sure which Motion we are considering.

Baroness Farrington of Ribbleton

My Lords, I think that it must be in order for us to take the noble Baroness's amendment which was before the House.

Noble Lords

Division.

Baroness Farrington of Ribbleton

My Lords, the Motion to adjourn the House must be a divisible Motion if it is objected to.

Lord Cope of Berkeley

My Lords, on the position of order, my assumption is that the Motion just moved by my noble friend is both debatable and divisible and should now be proceeded with. I think that the Deputy Speaker should put the Question, and if Peers wish to take part in a debate, we should proceed to debate the Motion on the lines that my noble friend proposed.

The Earl of Onslow

My Lords, the reason why I do this is not that I feel any great love for the noble and learned Lord, Lord Irvine, although I respect him. I do this not because I have any great love for any successor who may be appointed to his position. I do this because I think that it is completely disgraceful that a constitutional position and constitutional office should suddenly be abolished at the whim of a Prime Minister. All other constitutions have checks and balances in them. How dare he treat this House with such contempt? How dare he overlook the enormous services of someone like the noble and learned Lord, Lord Williams of Mostyn? How dare he behave as he has?

We live in a parliamentary democracy. We live in a democracy honed by centuries of checks and balances. We cannot have arbitrary government, but this is arbitrary government at its absolute worst. That is what my forebear commanded a regiment of parliamentary cavalry for—to ensure that there was no arbitrary government. Suddenly we have arbitrary government at its absolute worst.

In they come, summoned by the Whips. And they sit in a little bloc behind the Minister so they can all be seen on television.

Lord Borrie

My Lords, the noble Earl knows that I normally sit in this place. Noble Lords sitting in front of the noble Earl will confirm that I have sat in this place throughout most of the day.

The Earl of Onslow

My Lords, the noble Lord, Lord Borrie, has been glued to that Bench for as long as he has been in this House. I concede that that is his normal place. But suddenly a block of noble Lords appear opposite. They were summoned in by the Whips. We know the origin of the Whips. They were invented by Walpole who was a beagling fanatic. I refer to hunting whippers-in.

I may be flippant as regards Whips and noble Lords opposite sitting in a bloc in the hope of being seen on television but I am not being flippant when I refer to the abuse of the constitution that we have just witnessed. I am not being flippant when I say that you cannot just change 800 years of British political history at the whim of the temporary—thank God—occupant of No. 10. All occupants of No. 10 are temporary.

Lord Cope of Berkeley

My Lords, unless anyone else wishes to contribute to the debate I should like to make a few points. My noble friend Lord Strathclyde, who would otherwise no doubt speak from this Dispatch Box, is at the moment taking part in a television programme in the north of England.

Noble Lords

Oh!

Lord Cope of Berkeley

My Lords, noble Lords may laugh at that but they know perfectly well that when one is involved in political life one takes on those engagements.

There seem to me to be two aspects of what has occurred this afternoon. First, the Prime Minister reshuffled the Cabinet and moved some people from one department to another. He also moved some responsibilities from one department to another. That is conventional and has happened before. No doubt a transfer of functions order is required to put that into effect but it is within the prerogative of the Prime Minister from the Crown. Secondly, it appears from the television that the Government seem to have said that in future they will not allow the Lord Chancellor to fulfil the role that occupants of that office have fulfilled for many hundreds of years. In effect the Government are withdrawing from the House of Lords the services of the Lord Chancellor as presiding officer. That has potentially many consequences for your Lordships' House and for its future. Those are ultimately matters for the House. The House itself will, I believe, need to reach decisions about what to do.

I am not sufficient of a constitutional legal expert to know whether primary legislation will be involved in the changes being made to the office of Lord Chancellor but I guess that it will be required. It will certainly be required with regard to the appointment of judges. I believe that a new statutory appointments commission will need to be set up. I am not sure how judges will be appointed in the meantime but no doubt we shall be told that.

I am particularly concerned about the effect of what has happened on the House of Lords and its management. As I say, I believe that that is a matter for the House. I also believe that it is a matter on which we should have wide consultation and discussion, perhaps in the appropriate committees of the House or through some other mechanism. We shall need that consultation. It would be extremely helpful if the Government would say what they are doing, why they are doing this to the House of Lords, why this change is being made and what they intend to do about the consequences. The short-term consequences can no doubt be managed in some way or other but deep thought will need to be given to the long-term consequences as regards how the House of Lords will in future function.

The noble and learned Lord the Leader of the House is present and can no doubt guide us on what is in the Government's mind on such matters, so that we can see about future aspects of the House of Lords and how a process of consultation and consideration is intended to be taken forward on what has happened this afternoon.

Baroness Miller of Chilthorne Domer

My Lords, I obviously regret that there are not more experienced and longer-serving Members of these Benches to comment on the matter. I think it regrettable that the announcement was not first made to the House, given that it was of so much importance to it. That mistake having been made, however, I do not believe that it would he in the interests of the House to debate it or to adjourn at this point. simply because of the lack of people whom I know would want to take part in the debate who had no idea that we would now be discussing something of such importance.

Lord Williams of Mostyn

My Lords, the noble Earl, Lord Onslow, said that I had been summoned in by the Whips. I was not. It would have been helpful to have been informed before he attempted his device.

The Earl of Onslow

My Lords, that is exactly my point. It would have been helpful if the announcement had not been sprung on us by television. What is sauce for the goose is, I am afraid, sauce for the gander.

Lord Williams of Mostyn

My Lords, I suppose that that is on the well known constitutional and moral basis that two wrongs do not make a right. At all events, I forgive the noble Earl his unusual discourtesy and shall attend to the facts. I offer a word of advice, if I may: do not believe everything that one hears on the television. I cannot remember how many people have told me today that I was either resigning or had already resigned. As Lord Denning famously said, I have all the virtues apart from those of resignation.

The noble Baroness is quite right: this is not the occasion to discuss something of such importance to all of us. In my experience here, no one side and no one individual has a monopoly of regard for the House. However, I would like to read out the words that were distributed. They have not been properly commented on or properly disseminated. The title is: Reform of the Speakership of the House of Lords". The noble Lord quite rightly said that there must be consultation, which I am sure will chime and echo in the minds of all noble Lords. I hope that I can say that I have never failed to consult on any issue of importance in this House. Frequently, we come to different conclusions, but I do not think that any noble Lord could say that I did not offer a consultative approach.

The statement reads: The Leader of the House of Lords will consult with the other parties"— that of course includes the Cross-Benchers and the noble and gallant Lord, Lord Craig— and the House as a whole, on changes to Standing Orders enabling a new Speaker—who is not a Minister—to be in place after the recess". I come to the all-important phrase that governs all the rest, which is, subject to the wishes of the House". What could be more reasonable and accommodating to the wishes of the House than that? As biblical scholars in my childhood as a Calvinistic Methodist always told me, look at the text and not the commentary.

Lord Denham

My Lords, I am not quite sure from what the noble and learned Lord said whether there will be discussions between the usual channels as to whether the abolition of the Lord Chancellorship should take place, or only as to what should be put in its place.

Lord Williams of Mostyn

My Lords, I am dealing with the question of the speakership of the House of Lords. I repeat that I have been required—willingly so— by the Prime Minister to consult all other parties in the House as a whole on changes to Standing Orders. Some would say—I could not possibly comment—that for a legislative chamber of what we all believe, I as much as any noble Lord, to be of importance to have no voice in choosing its own "speaker" is very curious. I am not sure that I know of any other Chamber in the world that does not choose its own speaker.

It seems to me that most noble Lords—indeed, all of us here—want to make this House stronger, more effective and more efficient. This is an opportunity for us to do so. However, I shall read the words again. Obviously, I speak so softly that those words have not been understood: subject to the wishes of the House".

Lord Denham

My Lords, I am sorry but I wish to press this point. The wishes of this House will be found out as to whether or not the office of Lord Chancellor should go. Is that right?

Lord Williams of Mostyn

No, my Lords. It is a perfectly plain constitutional principle: a Prime Minister may appoint members to his cabinet as he or she chooses, or not. As a matter of pure constitutional principle, to which I know the noble Lord is strongly wedded, the Prime Minister is perfectly entitled to propose these changes which will require legislation; that is to say, they will require the assent of both Houses, as is the case with all legislation.

The specific point about the speakership of this Chamber is dealt with in the paragraph to which I referred. There is nothing new about constitutional change. The noble Baroness, Lady Thatcher, brought about a good deal of it.

Lord Trefgarne

My Lords, I have one small point to make. I do not necessarily disagree with some of the proposals contained in the document that I have only had a change to glance at. However, as my noble friend Lord Onslow said, it is regrettable that we were informed of government thinking in this matter by means of comment on television programmes and a press release that suddenly appeared on the desks of some noble Lords.

There may be some important sense in the proposals contained in the document. I should like to reflect on those and think about them. I have long been in favour of the idea of having a separate supreme court to your Lordships' House, but I hope that the Government will reflect on how irked and irritated many noble Lords feel to learn of the Government's thinking in these matters in the way that I described.

Lord Williams of Mostyn

My Lords, I agree with the underlying theme of the remarks just made by the noble Lord, Lord Trefgarne. As he said, this is not the occasion to have a debate without having first reflected on these matters. If I understand the noble Earl, Lord Onslow, correctly, and he wished merely to register his point, I believe that he has done so. The sense that I have is that your Lordships would welcome a fully informed and reasoned discussion—indeed, I would hope a fully informed and reasonable discussion—when all those who have an interest can contribute.

I take the point made by the noble Lord, Lord Cope. The noble Lord, Lord Strathclyde, was, as always, courteous enough to tell me this morning that he had a prior engagement. It is not a trivial one. He could hardly discharge it without discourtesy. The noble Earl has made his point: it has been heard and doubtless it will be reflected on. It is time to draw the line.

Lord Cope of Berkeley

My Lords, I believe that my noble friend has done more than make his point. He has done the House a service in drawing out of the noble and learned Lord the Leader of the House the description of what it is that the Government have in mind and how they propose to take it further. However, it would have been better if that explanation had not been dragged out of the noble and learned Lord by the initiative of my noble friend. It would have been preferable if the House had been given this information more directly.

I believe that I am right in saying that the noble and learned Lord was reading from a press release from No. 10 Downing Street. Therefore, it would be extremely helpful if, at the very least, copies of that document were made available in the Printed Paper Office as soon as can conveniently be arranged to enable noble Lords to study not only the words read out by the noble and learned Lord but also the surrounding proposals.

We are discussing a very profound change, not only to the constitution but also to the management arrangements of this House, which it is proposed to alter in the future. I believe that I am right in saying that the Lord Chancellor is the second person in the land after Her Majesty the Queen. That is his position. Simply to announce on television that the position no longer exists, and not to tell this House, which will be so deeply affected by this decision in the future, was a discourtesy of a kind for which the noble and learned Lord is not normally responsible. As he himself claimed, he does indeed consult on many matters, and it is very important that on this matter there should be careful consultation. I am grateful to the noble and learned Lord for at least saying that that will be so. He explained that he has taken his instructions from the Prime Minister. I accept that. But it is a matter which deeply concerns the House as a whole, and the House has not been courteously treated this afternoon.

Lord Williams of Mostyn

My Lords, I think that the noble Lord is in error. The second most important person in the land is Williams—Rowan Williams, of course, the Archbishop of Canterbury. Of course a copy of the documents will be made available. But it is idle to attempt to have a debate on matters of importance when very few noble Lords are present. I respectfully suggest again that we ought to draw a line under this. I have taken note of what has been said and shall give it all appropriate attention.

Baroness Byford

My Lords, perhaps I may intervene. We were in the middle of a debate on the Water Bill. Two matters distress me enormously. The first is that this has happened in the way that it has. Whatever the noble and learned Lord the Leader of the House has said, I hope that he does feel that it was perhaps an unwise way to treat this House. Secondly, his colleagues on the Benches behind him were very flippant. That is an attitude that is regrettable. To laugh at the noble Baroness, Lady Miller, as they did—one or two are shaking their heads, but some Members on the Benches opposite did—when she plainly explained that she was a comparative newcomer to the House and was seeking guidance, was a disgrace. I wish to record my regret on that point.

Baroness Farrington of Ribbleton

My Lords, may I just explain? I know that my colleagues were expressing support for the noble Baroness, Lady Miller of Chilthorne Domer.

Baroness Byford

My Lords, I am being told to leave the matter alone. So often in this House we are told to leave matters alone. There is a time and place for everything. The way in which this news has been dealt out to us in the middle of a debate is appalling. I want to express my view on that and to express my distress at the attitude of Members opposite.

The Earl of Onslow

My Lords, the noble and learned Lord gets to his feet and explains why things should change. I do not object to change. In fact, he and I voted for sensible change together—we Welsh. What I object to is the way in which this has been done. By all means, appoint a new Lord Chancellor; then, you say: "We have proposals to do things in this sort of way". The matter is then debated properly, people have their say and it goes through the normal process.

What offends me very deeply is the high-handed, almost Saddamesque way of treating the British constitution. I do not think I have ever been so angry in the 30 years I have been in this House. I love this House. I love the constitution of this country. I love a balanced Whig arrangement. But to be treated like this! A Member on the Benches opposite said in a barracking way, "Shut up!"—in that lovely, old-fashioned House of Commons tradition that we all love and revere, but let us please not treat the constitution in the way it is being treated. Let us not treat this House in the way it is being treated. Let us not just play Pooh-sticks with 800 years of British liberty. I wish to test the opinion of the House.

6.59 p.m.

On Question, Whether the said Motion shall be agreed to?

Their Lordships divided: Contents, 23; Not-Contents, 81.

Division No. 5
CONTENTS
Alton of Liverpool, L.	Freyberg, L.
Brougham and Vaux, L.	Jenkin of Roding, L.
Byford, B.	Marlesford, L.
Colwyn, L.	Montrose, D.
Cooke of Thorndon, L.	Newton of Braintree, L
Cumberlege, B.	Northesk, E.
Denham, L. [Teller]	Norton of Louth, L.
Dixon-Smith, L.	O'Cathain, B.
	Onslow, E.[Teller]
Elton, L.	Park of Monmouth, B.
Erroll, E.	Renton, L.
Fowler, L.	Trefgarne, L.

NOT-CONTENTS
Acton, L.	Borrie, L.
Addington, L.	Bragg, L
Alli, L.	Brennan, L.
Amos, B.	Brooke of Alverthorpe, L
Andrews, B.	Brooks of Tremorfa, L.
Archer of Sandwell, L.	Burlison, L.
Ashton of Upholland, B.	Carter, L.
Avebury, L.	Christopher, L.
Barker, B.	Corbett of Castle Vale, L.
Bassam of Brighton, L.	Crawley, B.
Bernstein of Craigweil, L.	Dahrendorf, L.
Blackstone, B.	David, B.

Davies of Oldham, L.	Lipsey, L.
Desai, L.	Macdonald of Tradeston, L.
Donoughue, L.	McIntosh of Haringey, L.[Teller]
Dormand of Easington, L.
Dubs, L.	McIntosh of Hudnall, B
Elis-Thomas, L.	MacKenzie of Culkein, L.
Evans of Parkside, L.	Mackenzie of Framwellgate, L.
Evans of Temple Guiting, L.	MarandKellie, E.
Farrington of Ribbleton, B.	Massey of Darwen, B.
Faulkner of Worcester, L.	Miller of Chilthorne Domer, B.
Gale, B.	Milner of Leeds, L.
Gibson of Market Rasen, B.	Northover, B.
Goldsmith, L.	Parekh, L.
Goudie, B.	Pendry. L.
Gould of Potternewton, B.	Pitkeathley, B.
Graham of Edmonton, L.	RendellofBabergh, B.
Grenfell, L.	Rogers of Riverside, L.
Grocott, L. [Teller]	Rooker, L.
Hardy of Wath, L.	Russell, E.
Harris of Haringey, L.	Sainsbury of Turville, L.
Harrison, L.	ShuttofGreetland, L.
Hayman, B.	Symons of Vernham Dean, B.
	Walker of Doncaster, L.
Hogg of Cumbernauld, L.	Warwick of Undercliffe, B.
Hollis of Heigham, B.	Whitaker, B.
Howells of St. Davids, B.	Whitty, L.
Hoyle, L.	Wilkins, B.
Hughes of Woodside, L.	Williams of Mostyn, L. (Lord Privy Seal)
King of West Bromwich, L.
Lea of Crondall, L.	Woolmer of Leeds, L.

Resolved in the negative, and Motion disagreed to accordingly.

7.9 p.m.

Baroness Miller of Chilthorne Domer

My Lords, I had concluded moving Amendment No. 33 and had just sat down.

Lord Whitty

My Lords, I apologise to the noble Baroness. The intervening excitement took away from the fact that she had finished speaking. No other noble Lord appears to wish to speak.

Amendment No. 33 deals with Clause 27, which introduces a new power for the agency to revoke, after 2012, any permanent licence causing serious damage to the environment, without payment of compensation. There would be a right of appeal to the Secretary of State or the National Assembly for Wales.

This amendment would extend the provision to some time-limited licences. However, such time-limited licences will already have been subject to rigorous scrutiny by the Environment Agency when they were issued. It is fair to say that the holders of such time-limited licences are entitled to confidence in the agency's decision. It is right that the agency. in turn, should carry the responsibility if the decision subsequently requires review before the licence expires.

There should be no cases where such serious environmental damage arises from a time-limited licence. The essence of a time-limited regime is that it facilitates gradual small-scale adjustments needed to deal with changing environmental factors such as climate change. In the unlikely event of serious damage arising from a time-limited licence that was based on Environment Agency conditions, it is right that the holder should be entitled to receive compensation on the basis of a licence that was granted by the Environment Agency's decision in the first place.

Government policy is to encourage the holders of permanent licences to agree to their voluntary conversion to time-limited status, as we debated earlier. One of the attractions of doing so is that holders would have both notice and compensation were those licences to be revoked. The amendment would cut across the incentive to convert to time-limited licences. For those reasons, I hope that the noble Baroness will not pursue the amendment.

Baroness Miller of Chilthorne Domer

My Lords, I thank the Minister for his reply. It was much clearer than his reply to a similar amendment in Committee. I hope that his optimism about people converting to time-limited licences is borne out. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford

moved Amendment No. 34: Page 32, line 26, at end insert "; and ( ) the licence holder has been informed of the nature of this serious damage and allowed a minimum of six months to devise a means of reducing it to the point where it is no longer serious.

The noble Baroness said: My Lords, this amendment requires that a licence holder has been informed of the nature of the serious damage and allowed a minimum of six months to devise a means of reducing it to the point where it is no longer serious.

Will the Minister define "serious" as used in Clause 27(1)(d)? In Committee, he said: The definitions of 'serious damage' under this clause and elsewhere will be set out in detailed guidance".—[Official Report, 3/4/03; col. GC 178.] After our discussions earlier today, he will not be surprised that I shall push him to define it here rather than wait until regulation. I should hate to think that the comment is founded upon the Government's inability to provide a definition—though I note that Hansard uses the plural, "definitions". If it is not possible for the Minister to tell us today what is meant. I have no doubt that it should be done later, because it affects the clause directly. The clause would otherwise become a meaningless jumble of words, the net effect of which is to allow the authorities to revoke abstraction rights without compensation.

In reading Hansard, at cols. GC 176–179 of the Official Report of 3rd April 2003, I was struck by the stress placed by the Minister on the costs to the agency. He confirms that compensation is such a cost that it is part of the administrative cost, and that it has to be recovered if the agency is to fulfil its duty of recovering all its costs from abstractors. He extols the Government's clause because it, limits the number of occasions that compensation would be payable. Therefore, it would reduce the degree to which any charge would fall on other abstractors". Yet, two sentences later, he says: The clause … would reduce the burden on the Environment Agency's budget because compensation would not be payable in those circumstances".—[Official Report, 3/4/03; cols. GC 177–178.] I am sure that the agency has formulated a definition of "serious"; and that it must at least have estimated the number of abstractions that are causing "serious damage" and should not attract compensation. Will the Minister tell us whether that is a matter of five, 10 or 20 claims, and the estimate of revocations that under the clause would not qualify for any payment? Will he also provide the estimated savings that will result?

I have again received a briefing from the National Farmers Union, which states: The use of the phrase 'serious damage' is not yet strictly defined and, as such, the NFU feels that abstractors are unable to make a judgement on whether their present abstraction activities are causing this level of damage and what remedial action can be taken. The withdrawal of an abstraction licence should surely be the ultimate sanction, backed up by robust and transparent evidence of the quantifiable damage, especially when the right of the abstractor to compensation for such an action is to be questioned. The NFU welcomes the suggestion that an arbitrator should be employed to settle any dispute arising from the withdrawal of an abstraction licence(s) under those circumstances". I beg to move.

7.15 p.m.

Lord Hardy of Wath

My Lords, I am uneasy about the amendment. If it would mean that damage, which could be serious, could continue for six months—therefore having an even more serious effect—I should be uneasy if it were carried.

I have no commercial interest, but I am involved in several conservation organisations, including the Yorkshire Wildlife Trust, of which I am president. I am aware that in many parts of the country, a great deal of damage has been done. with the loss of wetland habitat during the past 40 to 50 years. If present levels of abstraction of water continue, damage will continue in many parts of the country.

To allow serious damage to continue for six months—or even six days—can be harmful. Of course, there may be argument about what is serious. Some members of the National Farmers Union may not consider certain action serious, where ardent conservationists would. I trust that the Government will not be generous to the amendment, if it means that damage that is recognised and understood is allowed to continue while someone is given six months to find a way to reduce the level of damage to slightly less than it was before.

One major purpose of the Bill is to serve the cause of conservation and the English environment. That needs protection; as I read it, the amendment could be utterly counterproductive.

Lord Whitty

My Lords, I agree with my noble friend Lord Hardy that when "serious"—however that is defined—damage is caused or threatened, to give six months leeway is not appropriate in any circumstances. In any case, there is a slight misunderstanding here. If the aim of the amendment is to try to move to a more voluntary system of reducing or avoiding serious damage, it would not achieve that.

Clause 27 as drafted will come into operation only when a damaging licence has already been revoked. It deals with the consequential issue of compensation. It also assumes that that revocation will have occurred only when the damage has actually been done, whereas, on occasion, revocation will occur where damage is threatened, in order to prevent such damage. As my noble friend Lord Hardy said, were we to allow another six months, it is even more certain that the damage would either not be avoided or would have even worse effect.

The clause will have no effect until after July 2012. We hope to have dealt by then with many, if not most, of the problems associated with damaging licences. We also envisage that, by then, the most significant licences will have transferred from being permanent to being time-limited and subject to the sustainability criteria for the longer term. In those circumstances, with a time-limited licence, the clause would not apply. As I said in the debate on the previous amendment, the fact that the clause would not apply should be seen as an incentive to transfer from a permanent licence to a time-limited licence.

The clause would be used only as a last resort and only after 2012, if remaining permanent licensees were causing serious damage or if it could be shown that they would cause serious damage. The noble Baroness challenged me to define "serious". She cannot be serious—in the sense that the term "serious" is used throughout legislation, and, should further elaboration be used, it is always provided in guidance. That will be the case here. There will be different circumstances and different sorts of serious damage that cannot be defined in the Bill, but examples of the kind of damage that we are talking about can be given in guidance.

I hope that, with the description of the limited circumstances in which it would arise and no compensation paid beyond 2012, the noble Baroness will be reassured that it is not a threat to most licensees in any circumstances. If there is a problem with permanent licensees after 2012, it is right that the Environment Agency should have the right to intervene without incurring claims for compensation. Allowing another six months before the revocation became effective would aggravate the situation, rather than resolving it.

Baroness Byford

My Lords, I thank the Minister for his response. In a minute, I shall return to the point made by the noble Lord, Lord Hardy of Wath. By not defining "serious" or not giving some guidance, the Government raise the question of how judgments are to be made if there is no definition of anything. I hope that I can tempt the noble Baroness, Lady Miller of Chilthorne Domer, to add it to her list of definitions, if we manage, at some stage, to get some guidance on it.

The Minister said that the clause would not come into effect until 2012. I accept that, but we are dealing with the Bill now. We are not dealing with what might happen in 2012. We are dealing with the Bill as it is today. If the Government wanted to, they could introduce a sunset amendment to make sure that we had time to find out exactly what sort of definition we wanted. I am not exactly thrilled by the Minister's answer, however kindly he put it. I was serious about "serious", and I hope that, in the mean time. we will have a chance to revisit the matter.

I must say to the noble Lord, Lord Hardy of Wath, that, earlier this afternoon, we considered the whole question of the need to protect the environment. I have said clearly that we would not support any damage being done. It is a question of where the balance lies. If some damage is being done and is seen to be done, it should be stopped straightaway. That is why the degree of seriousness is important. If the damage is acutely serious, it must be dealt with straightaway. There would be no question that my amendment would detract from that. If it is serious but could be put right in, say, a month or two months—

Lord Hardy of Wath

My Lords, I thank the noble Baroness for giving way. She said one month or two months; the amendment states a minimum of six months. That suggests that for a minimum of six months damage would continue or the consequences of damage would be even further extended.

Baroness O'Cathain

My Lords, perhaps I may just suggest to the noble Lord that there are issues here concerning the environment which one could not actually see. If the damage was not very serious—as alluded to by my noble friend—there could be a period in which it would not be seen in less than six months. For example, there could be a seasonal effect. We just cannot be hung up on these phrases, but certainly, at the beginning of today's discussions, we were all of one mind about the problems of the environment and the necessity to keep that central in our minds.

Baroness Byford

My Lords, perhaps I might finish what I was trying to say. This is my difficulty with the definition of "serious". If the damage was what I would call a serious issue that, let us say, could be dealt with within a month, or that the Environment Agency was happy that it was dealt with in the immediacy and then took time to correct the rest of it during the following months, that is the thought behind this amendment. It is not saying to whoever it might he, "You have got six months and you needn't do anything about it at all". I think that the noble Lord has slightly interpreted my amendment in that way. It certainly is not, in any way, meant to do that.

That is why I come back to the need to define "serious". I believe that it is a serious problem, but I obviously do not intend to divide the House at this time of night. That would be very serious. I think that it is something which needs to be addressed; for us to be able to look and say, "How can we best help preserve our wildlife and everything else that goes on, yet not cut the ground underneath people but give them the opportunity to put something right if it is being dealt with in a way which the Environment Agency considers is suitable". That is my dilemma and why I moved this amendment. I hope that the Government might give further thought to it before we meet at Third Reading. If no more noble Lords have any comments to make, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 35 not moved.]

Baroness Farrington of Ribbleton

My Lords, perhaps we may complete Amendment No. 36 because some of the speakers for the Unstarred Question debate are not in the Chamber. We are unable to start until 7.30 p.m. if they are not here.

Baroness Miller of Chilthorne Domer

moved Amendment No. 36: Before Clause 28, insert the following new clause—

"GENERAL PROVISIONS WITH RESPECT TO WATER

In section 6(2)(b) of the Environment Act 1995 (c. 25), at end insert "in particular the efficient use of water by all abstractors". The noble Baroness said: My Lords, Amendment No. 36 is grouped with the response of the Government to this amendment—that is, Amendment No. 160—and our new Amendment No. 160A. It does not appear on the grouping list but, with the leave of the House, it would be helpful to discuss it with the other two amendments.

Lord Whitty

My Lords, with the leave of the House and the agreement of the noble Baroness, it would be helpful if we could degroup Amendments Nos. 160, 160A and 160B. There is an amendment in her name to my amendment and an amendment also, of which I was not fully aware earlier today, tabled by the noble Baroness, to my amendment. When I come to deal with the amendment tabled by the noble Baroness, it would be better to move to something in the area which is covered by those three amendments rather than pursue this one. But it would be better to do that in its place when we reach it on another day.

Baroness Miller of Chilthorne Domer

My Lords, in view of the confusion as regards amendments and the grouping list, I consider that we would be better served to leave this group for another time.

Baroness Farrington of Ribbleton

My Lords, I beg to move that consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.