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'After section 38 of the WRA there is inserted—
"38A Presumption of renewal of licences
There shall be a presumption of renewal of a licence, subject to the provisions of section 38(1A) above, where the Agency is satisfied that—
(a) abstraction under the new licence is environmentally sustainable;
(b) there is a continued justification of need; and
(c) water abstracted under the renewed licence will be used in an efficient manner.".'.

Government amendments Nos. 54 to 58.

Amendment No. 10, in clause 6, page 7, line 23, at end insert—

'(1A) Where the construction of a bore hole in connection with an exempt abstraction could affect the essential characteristics of water resources used by the licensed natural water abstractor, the consent of the Environment Agency must be sought.'.

Amendment No. 24, in page 8, line 5, at end insert

'if it is to address an issue of national importance'.

Government amendment No. 59.

Amendment No. 25, in clause 14, page 17, line 39, leave out 'in prescribed cases' and insert

'where it would be against the interests of national security'.

Government amendments Nos. 60 to 70.

Amendment No. 4, in clause 17, page 21, line 42, leave out 'four' and insert 'six'.

Government amendments Nos. 71 to 73.

Amendment No. 9, in clause 19, page 23, line 31, at end insert—

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

Amendment No. 11, in page 23, line 33, at end insert—

'(5B) In determining the period that a licence under this Chapter shall remain in force, the Agency shall take into account—
(a) the life expectancy of any associated infrastructure works (existing and prospective),
(b) the costs of those works (actual and projected), and
(c) the period over which these costs may be reasonably be expected to have to be recovered.'.

Government amendment No. 74.

Amendment No. 12, in clause 20, page 24, line 27, at end insert—

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

Government amendments Nos. 75 to 82.

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Amendment No. 126, in clause 24, page 31, line 11, at end insert—

'(5A) In this section "loss or damage" shall mean loss occasioned by physical damage to tangible property.'.

Government amendments No. 83 and 84.

Amendment No. 32, in clause 25, page 31, line 43, at end insert

(b) at the end there is inserted "except in the case of licences where water would otherwise be abstracted for use on land which is subject to phytosanitary restrictions.".'.

Amendment No. 33, in clause 27, page 33, line 17, at end insert

'or such later date as the Secretary of State may by order prescribe'.

Government amendment No. 85.

Amendment No. 26, in clause 30, page 36, line 39, leave out '£20,000' and insert '£50,000'.

Government amendments Nos. 117 and 104 to 106.

Mr. Wiggin: The new clause would ensure that the commencement and expiry of abstractor licences occurred simultaneously with planning permission, so that as long as a business had planning permission it should be able to go ahead with abstracting water if it is environmentally safe to do so. If the dates of an abstraction licence are separate from those of the planning permission, the abstraction licence may expire before the planning application. That undermines the long-term certainty of a water abstraction business, restricting its competitive edge. Businesses wishing to abstract should have just one course of action to take. For quarries and mineral water companies, for example, the legislative burden is not sufficiently streamlined and may jeopardise their ability to compete on a level playing field with companies from abroad. The new clause would ensure that the expiration date of a licence must take into account the commencement and expiry dates of any planning permission. That would be fairer on abstractors, who would have a much more stable basis on which to attract investors. Long-term industries such as water abstraction, watercress growers and quarries need assurances of certainty, but the Bill does not offer them. The new clause would provide them with that assurance and with the certainty that they need for long-term investment.

New clause 3 is focused on the quarrying industry and its need for certainty in the renewal of its de-watering transfer licences. It would include in the Bill three clear tests by which a renewal licence may be granted. To make it fair to the industry, the presumption of renewal needs to be made explicit by including in the Bill test renewals such as those set out in "Taking Water Responsibly". The industry is well aware of the assurances that the Minister has given to the House and to the other place. I am also conscious that during the past month my hon. Friend the Member for Eddisbury (Mr. O'Brien) and the hon. Members for Sherwood (Paddy Tipping) and for High Peak (Tom Levitt) have

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taken part in meetings with industry representatives in the Minister's office, and that the assurances given have been confirmed in writing. That may provide safeguards for the immediate future, but they have no long-term credibility. The new clause seeks to redress that. Equally, it would include the steps for appeal and compensation to be taken when a licence is refused renewal under the tests. It is imperative that the presumption of renewal is included in the Bill, not hidden away in statements or policy documents—otherwise, long-term industries will not have any real assurances that their investments will be safe.

The second part of the new clause would ensure that if a de-watering transfer licence is not renewed or the Environment Agency changes the conditions, thereby making an operation unviable, the operator can claim compensation. The problem with the Bill as it stands is that the agency can give an operator six years' notice of non-renewal and simply not renew and not provide compensation. That is unacceptable, especially when the agency is clearly a law unto itself and not directly accountable to the House. The new clause would put in place the genuine assurances of licence renewal, appeal and compensation that the water abstraction sector needs.

Mr. John Bercow (Buckingham): It is clear that the new clause is extremely well thought through, but my brow is furrowed by my hon. Friend's reference to circumstances in which exploration takes place and a licence is not renewed. It sounds deeply unjust. Is my hon. Friend telling me that there is no right of appeal?

Mr. Wiggin: My hon. Friend is right to have a furrowed brow about the Bill. Indeed, my brow has been furrowed for some time. It is especially difficult for those who abstract water because he is right about the difficulties that they will face if their licences are not renewed. There is an appeals procedure but I believe that it is to the Environment Agency, not the Secretary of State.

The Minister for the Environment (Mr. Elliot Morley): It is to the Secretary of State.

Mr. Wiggin: The Minister corrects me, but a lesser agent of the Secretary of State would fulfil the duty. The essence of the problem is not so much that licences cannot be renewed—environmental damage may be taking place—but the lack of compensation. I am therefore grateful to my hon. Friend for his intervention. As usual, with his incisive mind he has put his finger on the nub of the problem instantly.

Amendment No. 10 deals with the fears of drinking water abstractors, who are rightly subject to an enormous number of inspections to ensure that their water quality is the finest. However, if abstractors of less than 20 cu m sink a borehole into the substrata and start abstracting water for use as drinking water, the licensed abstractor's water quality could be affected. The safeguards in the Bill are not quite strong enough to prevent the risk of small abstractors causing damage to the business of water bottling. I am worried about the risk of others sinking boreholes into the same substrata as the original business, thereby damaging the quality of the water that it abstracts.

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Many bottled water companies bottle their water at source and depend on the spring to market and sell the brand—for example, Hildon and Radnor Hills. They cannot move their water aquifer. Water bottling operations are extremely expensive to start up. As long-term investments, they need the protection that the amendment offers. It would enable the Environment Agency to police abstraction for the good of our environmental quality, which must be the overriding consideration. The Environment Agency should monitor abstractors, no matter how small, for the damage that they cause the environment. Damage done to a business aquifer by another drilling into it could take a company out of business. That problem must be resolved but the Bill does not currently address it.

It is vital to support the British bottled water industry. Domestic bottled water companies comprise nearly 80 per cent. of the total that we drink in the United Kingdom. The issue therefore affects us all. Now is an opportune moment to have a quick sip of water. We must not only protect the industry, but ensure its long-term plan for the future.

The licensing that the Bill introduces raises concerns that the scope of the investment will be limited. Small, unlicensed boreholes must not be able to undermine a company's investment. I know that the Minister has sympathy with the point. In Committee, he said that if there were problems the Environment Agency would have the power to lower the existing thresholds to reduce the number of boreholes. He said that the agency had powers to deal with problems should they arise. If so, why does not the Bill include such a provision? We want to prevent damage to the aquifer and ensure that the Environment Agency has more responsibility to protect it. The amendment would protect the important British drinking water industry and ensure the high quality of our environment through giving the Environment Agency such policing powers.

Amendment No. 4 deals with a time limit on licences that will be certain for only 12 years. Clause 17(8)(a) provides for a time limit of four years for those who are not using their licence. That reflects neither the seven-year weather cycle nor the catchment abstraction management strategy. The amendment, which provides for a time limit of six years, takes into account the extended period that allows for crop rotation. That was part of the Government's intention and would also influence their ability to license genetically modified crops.

Reasons for non-use of a licence might be as basic as having sufficient rainfall as to render irrigation unnecessary, or growing another crop on the land due to the basic rules of crop rotation under good agricultural practice to avoid the build-up of, for example, pests and diseases in the soil. A much more serious reason might be a the presence of a notifiable disease such as potato brown rot having resulted in a ban on the extraction of water from water courses for use on vulnerable crops.

In Committee, the Minister managed only to fumble his way through this issue and did not give us a good enough reason why the limit should be four years. He stated that the four-year period could be extended by the Environment Agency if the licence holder had a legitimate case for wanting a longer period, but what

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qualifies as a legitimate case for extension? This is all a bit vague and uncertain, and we should like a provision in the Bill that would clarify the matter.

The Minister's argument in Committee for the reduction from seven years to four was that it struck a balance between meeting the needs of the abstractor and being fair to those who wanted to start abstraction but were unable to do so because others were just sitting on their licences. He then admitted, however, that there had been a grand total of zero incidences of people being denied licences for abstraction because others were holding on to unused ones, thereby undermining his own argument. My amendment to change the time limit from four years to six would allow for changing cycles, which the licence holder would deal with, and bring the provision into line with the catchment management scheme.

Amendments Nos. 9, 11 and 12 also deal with the time periods relating to licences, which are currently too short in that they are meaningful for only 12 years. Amendment No. 9 seeks to ensure that the expiry date on licences takes into account water availability and the investment needs of the abstractor. Amendment No. 11 would ensure that the life expectancy of associated infrastructure works was taken into account by the Environment Agency, in that it should make a decision on the life of an abstraction licence only when it had considered the infrastructure costs and investments associated with the abstraction. That would provide the benefit of a more consistent and transparent framework for decision making. The British Soft Drinks Association is extremely concerned about this matter as that industry is dependent on high-cost machinery, and that is not reflected in the length of time a licence lasts. The length of a licence must take into account the type of investment involved and compensation when licences are cancelled.

Amendment No. 12 seeks to write a presumption of renewal into the Bill. In Committee, the Minister read out the four test criteria for consideration of licences longer than 12 years, as set down in the policy document "Taking Water Responsibly". He also read out two sets of criteria to comfort companies that have a presumption of renewal. These are clear tests, which is why they should be included in the Bill rather than in separate documents, which would be most unfair to companies that would consequently have to ask for investment on the basis of trust, as the abstractors would not be properly financially protected in the legislation. We want to amend this unreasonable and disproportionate provision.

Furthermore, the reason given by the Minister for not putting such measures into the Bill was that the tests for renewal could be changed at a later date, which would create a further fundamental problem for anyone investing in an affected business. The Government have completely failed to consider the effect that this uncertainty would have on businesses that were unable to find willing investors because the measures could be altered. My amendment would ensure that abstraction licences would take into account longer-term considerations by putting the presumption of renewal and the compensatory element into the Bill.

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Amendment No. 32 would retain the seven-year period during which compensation would be available on the removal of a licence due to non-use, plant health reasons or the more normal crop rotation reasons. The Bill would reduce the period from seven years to four.

Amendment No. 33 seeks to ensure that the revocation of any licence causing damage would be undertaken only when a thorough examination under the habitats directive of all sites had been completed, rather than trying to do so on an arbitrary basis on 15 July 2012 as is provided for in the Bill. The Minister and the Environment Agency should have some flexibility in the Bill to avoid a potentially difficult situation in 11 years' time if, due to unforeseen circumstances, the assessment of an abstraction licence had been delayed and abstractors had been caught by a guillotine. The addition of such a measure to the Bill would provide assurances to all those involved. The amendment does not seek to set a later date, or even to remove the right of the Environment Agency to revoke a licence that is causing serious environmental damage; it would simply provide a mechanism for the Minister to delay, should that become necessary.

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