Examination of witnesses (Questions 240-259)|
TUESDAY 6 FEBRUARY 2001
240. I know you were sitting in the room when
Water UK gave evidence. How do you respond to their concerns regarding
the proposed changes to the licence regime?
(Dr Mance) I was quite concerned by both their written
and oral evidence in that it showed they had not adjusted their
thinking to the framework that has been put in place of drought
contingency plans and water resource plans for each company, which
we have clearly flagged and stated, with ministerial support,
will be the framework for future licence decision-making. We will
not, therefore, be treating isolated licence reviews, revocations
or changes in total absence from consideration of impact on the
company's position in terms of water supply security and their
ability to cope with a major drought. That would clearly be irresponsible
of us and has not been flagged or intended. The whole purpose
of those plans is to enable us to have that long-term framework
241. Do you think there should be any clarity
in the Bill regarding the reform in the abstraction licence so
it perhaps differentiates between water needed for domestic purposes,
ie, cooking, drinking, washing and sanitation, over the other
non-domestic uses, ie, lawn sprinkling and what-have-you. Do you
think within that Bill there should be some differentiation?
(Dr Mance) I am not sure it would be sensible to try
and categorise in the Bill use within the household into essential
and less essential, if you like. I think we would prefer to see
that addressed through a more effective exercise in the existing
statutory duty on the companies to promote the efficient use of
water by their customers, by tariff regimes and by extending that
duty to both Ofwat and other abstractors. A lot of focus has been
on domestic customer and leakage, but there are a range of other
users around, and we would like all of them to have regard to
the efficient use of water. We think that should be a general
issue and would probably be the best way of addressing it, rather
than, in statute, trying to categorise particular narrow bounds.
Being candid, if climate change goes as rapidly as some of the
more extreme scenarios, we could have part of the country in East
Anglia becoming semi-arid in fifty years which would take you
into a totally different arrangement for managing water, and the
more that is fixed in primary legislation, the more difficult
it is to respond flexibly to change in circumstance.
242. On the question of compensation, have you
advised ministers how much you have calculated compensation claims
will come to between the Act coming into force and 2012?
(Dr Mance) As you will be aware from previous inquiries,
we have made the comment that we have not so far forced revocation
and therefore have not been into compensation through the Lands
Tribunal. We have not established, therefore, if you like, a market
value for compensation.
243. Has that been deliberate?
(Dr Mance) Yes, it has been deliberate in as much
as we have managed to deal with some of the worst circumstances
resulting from abstraction and damage to the environment so far
by voluntary change, persuasion, cajoling and doing deals in the
sense of withdrawing licence capacity there and acknowledging
that licence capacity is available elsewhere. Much of that has
been funded through the price review for the water companies.
If you look at the recent price settlement for water companies,
about 100 environmental sites affected badly by over-abstraction
in one form or another, all of it licensedso legalwas
costing about £130 million to correct, so that is just over
a million pounds per site to cover the cost of change and provide
alternative sources of water. I think that gives you some measure
of the likely scale. If you use that as a yardstick, that implies
anything up to about half a billion as the total cost of dealing
244. But you do not intend to use the Lands
Tribunal procedure if you can avoid it?
(Dr Mance) It is a difficult and cumbersome process,
not very efficient to follow. In terms of going through the whole
process, prior to going to the Tribunal, there is a round of appeal
with the Secretary of State by the licence holder. That can take
us into planning inquiry before we even get to Tribunal, so it
is complicated and that is why so far we have sought to do it
by persuasion, an element of trading to negotiate a change on
the ground which avoids us getting bogged down in what is a cumbersome
245. At the end of the day, if compensation
has to be paid, where will that come from?
(Dr Mance) There are two options. Under the present
legislation, it will be paid for through the existing charging
scheme by existing abstractors. The other alternative, if one
went for radical change would be central taxation, but that is
not provided for in the present legislation.
246. Would that be central taxation on money
given to your Agency, ring-fenced, or just for you to take out
of the blocks of money when it comes to you?
(Dr Mance) It could be akin to, say, the contaminated
land grant system where there is a block of money allocated each
year by government where we would put forward proposals as to
where that would be used to deal with removing licence capacity.
It could be as a direct grant to us, ring-fenced for us to use:
there are a number of ways. There was a basic issue to start with
as to whether it should be charged on the existing abstraction
licensing base or come from what appears to be the only viable
alternative in the form of central taxation.
247. Are you satisfied that the provisions as
set out at the moment strike the right balance between abstractors,
customers and protection of the environment?
(Dr Mance) I think if you take account of the framework
of duties we have, and I flagged particularly the one with regard
to water undertakers earlier, plus the fact that there is no intention
to remove the rights of appeal to the Secretary of State on our
decisions, then I believe the framework is sound and robust. I
think what is important is to establish a regime that can cope
with systematic change in rainfall patterns and availability of
water. Having a system introduced in 1963 with many licences of
right which are almost untouchable is clearly not a rational basis
for moving into a period of basic change of both where water is
available and the quantity it is available in.
248. On that point, do you not think it would
be better, if money is to be made available for capital investment
and compensation, to have the money spent on incentives and on
restructuring and maybe trans-shipment, because then you have
semi-arid areas compared with very wet areas? What is your comment?
(Dr Mance) We would love to see the charging base
we operate for abstractions to move beyond cost recovery into
incentive chargings. We have flagged that previously to the Committee,
and the whole issue of being constrained to cost recovery. However,
it does move us into the territory of hypothecation of income,
which then moves into being, effectively, taxation rather than
a cost recovery charge, and that is an area which it has always
proved extremely difficult to make progress in, given some existing
249. Unless there are other ways of doing it.
Is the Agency already telling existing trickle irrigators in areas
of pressure that they will not get licences?
(Mr Williams) We have given that advice in some areas
because, under the proposals, it could well be the case that we
would have to consider refusing licences. The difficulty is the
trickle irrigators, because they are not licensed, have developed
sources which are derogating existing licensed sources, and we
have a duty in the current legislation not to grant licences which
cause derogation. There is also clear evidence that they are causing
250. Where is this clear evidence? I am interested
in this because trickle irrigation is used in many countries,
as you know. It is not only a more efficient way of using water
but certainly, in the countries that I know well, there is no
evidence that it has this effect presumably on land use. Is that
what you are saying?
(Mr Williams) There are cases where trickle irrigation
has gone ahead in areas where we have already said we would not
grant licences for spray irrigation.
251. That is slightly different. What I am saying
is, firstly, trickle irrigation has been known to produce very
(Dr Mance) We do not disagree with that. The difficulty
we have at the moment is that we have a regime where, if a farmer
wants to spray irrigate he requires a licence. He can approach
us for a licence and be told there is no capacity available in
the water course; that to issue a licence would adversely affect
downstream abstractors with existing licences and damage the environment.
They then turn to trickle irrigation because they do not require
a licence and there is no control on it; they remove the water;
adversely affecting downstream abstractors who are dependent upon
spray irrigation. We have at least one instance where a business
has gone out of operation as a consequence having become insolvent
because it has lost its water supply as an upstream trickle irrigator
has removed the flow from the stream.
252. With respect, that was not what I asked
you. One of the reasons you gave was that it was contributing
to a problem presumably in earth terms, in erosion?
(Mr Williams) In terms of impact on the environment,
I am talking about impact on the water environment and reduction
in flows in rivers, which in turn affect the way in which
253. But you are giving the impression that
you have singled out this one particular form of irrigation as
opposed to saying that, where there is a problem already with
the supply of water, this added problem is not acceptable. I think
you have to differentiate between whether you are saying, "We
want trickle irrigation brought within some kind of mandatory
control" which is acceptable and one can understand, in the
circumstances that you outline, that may be necessary, but simply
to give the impression that trickle irrigation itself is not an
efficient way of using water and perhaps not even preferable to
other forms seems to me to be short-sighted.
(Dr Mance) If we gave that impression that was not
the intent. Our concern is that we have competing demands for
water in areas of scarcity and one of them is outwith control
and, therefore, even where we have clearly flagged to the operation
that there is no water available without damage to existing abstractors
or to the environment, they still proceed with trickle irrigation
causing that damage.
254. If they are on mains water, would you take
a different attitude?
(Dr Mance) That would then be an issue of part of
the water company's water resources plan and whether the company
could cope with the quantities.
255. But you would still be involved to a extent,
would you not?
(Dr Mance) To a much lesser extent.
256. So, for clarity, we have an example here
of a fruit farmer in Norfolk. Is this the real hotspot? Is it
East Anglia we are talking about? Is there a geology and rainfall
pattern in the rest of the UK that would be as contentious, in
(Dr Mance) I believe most of the environmental and
abstractor conflict situations that exist already giving demonstrable
harm are primarily in the south east cornerKent and Sussex.
257. So from Kent to Norfolk?
(Dr Mance) Yes. In Kent we have several water courses
which are dry because of the activities of the trickle irrigators
removing all the water.
258. So there is a real conflict between traditional
farming and the expectations of the farming industry, and the
reality of water supply there and the geology and rainfall?
(Dr Mance) Yes.
259. Would the Agency welcome trickle irrigators
being offered an automatic time-limited licence or some other
form of temporary protection powers?
(Dr Mance) In terms of transition arrangements, where
we have got clear adverse impact on the environment, we would
not want long-term transition arrangements; we would want to deal
with the environmental problem relatively rapidly. Balancing that
is clearly the need to look at the impact of that on the existing
trickle irrigation operation and what could be done to mitigate
the fact that they are brought within control and whether that
limits the amount of water that they could take from a stream
without, say, winter storage being available to them. They might
need a year or two to put that in but providing a long period
of transition means environmental damage or adverse impact on
other licensed abstractors downstream would continue.