Examination of Witnesses(Questions 8-19)
TUESDAY 11 MARCH 2003
RT HON
ALUN MICHAEL
MP, MR COLIN
JONES AND
MR ROBIN
EVANS
Chairman
8. Good morning, Minister. Is there anything
you would wish to say to us as an opening comment?
(Alun Michael) I think it might be helpful to give
a little background, in the sense that the purpose of the Water
Grid partnership is that it is a joint venture, set up by British
Waterways with Anglian Water, Bristol Water and Partnership UK
as a water services business. The idea is to use private sector
finance and expertise to significantly increase the value of current
water sales and generate additional income in excess of £8
million from year ten. The purpose of that is to reduce the burden
on the public purse of maintaining the canal network. The venture
is also expected to enhance competition in the water industry
and has been welcomed on those grounds by OFWAT. I think it would
be important to point out that the joint venture does not create
rights to do anything, because that was clearly a concern on the
part of English Nature, and is reflected in the earlier questions
of members of the Committee. All transfers of water in the canal
system remain in the ambit of British Waterways, and they are
regulated in that respect by the Environment Agency. In the event
that there were any proposals of that sort, English Nature would
actually be a statutory consultee and would have an input. So
I think it is fair to say that using the expertise of English
Nature informally and in an expanded way is worthwhile, but there
were more safeguards in the system than perhaps were thought at
the time that there were apprehensions.
9. Obviously there are one or two things that
we want to get on the record today, and rather than have correspondence
backwards and forwards, and particularly because we do have to
work to a very tight schedule on dates laid down by the legislation,
we thought it would be useful to have English Nature and yourselves
before us. Indeed, the answers from English Nature have eliminated
a few questions that we would have wanted to ask you. If the draft
order is not made, would the Water Grid PPP be unable to undertake
all the activities necessary to make the joint venture company
work?
(Alun Michael) Yes, but the point is that the flexibility
that is provided is in relation to financial arrangements, not
in terms of things like water abstraction.
(Mr Evans) I think the market has shown, and all our
work has shown that transfers of raw water and sales of raw water
are not viable. The way to compete in the market, the way to make
Water Grid work and to get the full environmental benefits of
treating grey water and recycling water, is that we have to be
involved in the treatment of water, and that is what the RRO allows
us to do; it allows British Waterways to be involved in a venture
that treats water, and therefore it is quite right to say that
if the RRO is not passed, the Water Grid will not achieve all
that it aspires to do.
10. Having said that, can you confirm that such
water transfer as it is proposed the Water Grid PPP would involve
could proceed regardless of whether the proposed draft order is
made?
(Mr Evans) British Waterways already transfers water
around the system. It sells about 900 mega-litres of water a year,
and has done so since the days the canals were first created.
So water transfer is possible and we do it every day; we transfer
it for water sales, but we also transfer it for navigation. Every
time a boat goes through a lock, a very substantial amount of
water is transferred, and in fact, the amount of water transferred
through lockage, i.e. navigation, far exceeds any water
transfer that we do at the moment through sales, or that we plan
to do. So water is transferring every day on the system, and yes,
it is quite right to say that if the RRO does not proceed and
if Water Grid does not proceed, there would still be transfers
on the navigation. What I would say is that all those transfers
are still part of our discussions with the Environment Agency.
(Alun Michael) So the regulation does not change,
does it?
(Mr Evans) The regulation does not change. We have
rights to abstract water for navigation without obtaining a licence,
but all water abstracted, put into the system or taken out of
the system for water sales is licensed and regulated by the Environment
Agency.
Brian White
11. If the order did not happen, for whatever
reason, basically, you just need to be more creative in the way
that you operate, would you not, as many local authorities are
when they do joint ventures?
(Mr Evans) I do not think that is true. The market
to sell water is to sell to users who want water at different
grades. At the moment, the vast majority of consumers—industrial
consumers and commercial consumers—have to buy their water
at potable standard, what comes through the mains, and they are
charged a very high price because it is all treated.
12. But your partners already have that, do
they not?
(Mr Evans) We are not allowed to participate in the
partnership if it treats water. That is the point of the Regulatory
Order. We cannot venture with anyone who treats water because
we are not allowed to do it.
13. So that is the key point of the Regulatory
Order?
(Mr Evans) That is the key point of the RRO, that
it will allow us to partner with someone who treats water.
14. So there would be practical difficulties
if the RRO did not go through.
(Mr Evans) There would be very considerable difficulties.
Chairman
15. At the moment, the Board is empowered to
abstract and sell untreated water from any inland waterway owned
or managed by the Board for any purpose under s.10(3)(d) of the
1962 Act. This proposal, would you confirm, is authorising the
Board to abstract water from sources other than from any inland
waterway owned or managed by the Board; purchase water; treat
water; sell any water other than untreated water; and treat and
dispose of effluent?
(Mr Evans) That is absolutely correct. The only thing
I would re-emphasize is that it is all within the regulatory framework
and only with the Environment Agency's licence and agreement.
So we have no extra powers to go ahead and do something outside
the regulatory framework.
Brian White
16. Can I move on to some of the environmental
considerations? There was a lot of concern about the independent
environmental consultants' report, and we have heard about it
from English Nature. Can you just tell us more about what the
conclusions of that report were?
(Alun Michael) Can I just make the point that, of
course, British Waterways had consulted the Environment Agency,
which again, as we have emphasized, is the regulatory body, so
that process was certainly going on.
(Mr Evans) As I think I mentioned last time I was
here, the main concerns about water transfer are the transfer
of diseases from one part of the network to another, the transfer
of alien species from one part of the network to another, and
if very large changes in the rate of flow were brought about,
that could affect still water habitats: where plants grow in still
water, if water starts to go at a faster pace, those habitats
might be affected. Those were the three main concerns. The environment
report that we independently had undertaken showed that all those
concerns were real, but they were all manageable, and that it
was very difficult to give a carte blanche that this is
OK because every incident would have to be treated and investigated
in its own right, and it all depended on where the water was,
the quantity of water, and what the habitat was, because in some
areas you could transfer very considerable amounts of water over
a short distance and have no effect because there were no alien
species, no fish disease and no still water habitats; in other
areas we would have to have much more care. So the conclusion
of the report was very much that everything is achievable, everything
is manageable, but on each and every occasion there has to be
an environmental impact assessment and we would have to look at
it, and that of course we would have to do for the Environment
Agency, because they would not give us the authority to abstract
either way without that environmental report.
17. One of the concerns was that certain environmental
groups did not have access to that. Can you confirm that they
would have access to the independent consultants' report, and
also that where you have the individual project assessments, that
that information would be available to concerned bodies?
(Mr Evans) The Environment Agency would itself make
it part of their consultation, because when they go and consider
an application for a licence, they then have to consult themselves,
and they would be consulting with those bodies.
(Alun Michael) I think it should be clear that there
is a requirement by the Environment Agency to advertise in relation
to an application for abstraction, so that is the point at which
wider bodies other than the formal regulator, which is the Environment
Agency, would have an opportunity of scrutiny. That is not to
say that there is not an advantage of more informal scrutiny which
was indicated has come out of the discussions over the last week
or two.
18. One of the things that the Department said
is that where there is adverse environmental impact, the individual
projects will not go ahead. Can you confirm that, and can you
set out the safeguards that would prevent somebody coming in at
a later date and being very gung-ho?
(Alun Michael) Let me deal with that in general terms.
The separation of responsibilities between different members of
the DEFRA family—the Department itself, where as in the
case of this order there is a need for ministerial agreement and
so on; the Environment Agency, with its very specific responsibilities;
English Nature, again with very specific responsibilities—does
provide checks and balances, depending on what it is that is being
agreed. I can understand members of the Committee focusing on
the environmental issues here, but of course, the order does not
change the environmental arrangements or the regulation, but should
there be anything that arose, it would have to go through the
normal system.
(Mr Jones) There are two aspects to that. One is that
British Waterways has anyway its own environmental statutory duties,
so I suspect it would not promote such a gung-ho proposition.
If it did, as you say, the checks and balances, as the Minister
was saying, are there. The Environment Agency itself would not
give approval, and there is a process whereby these proposals
are advertised, and other parties, including statutory consultees
like English Nature, have a chance to pitch in with their views.
But ultimately, the regulator, who is independent of British Waterways,
decides.
19. That includes local people in the area where
the project is?
(Mr Jones) It is publicly advertised.
(Mr Evans) Can I just say that the whole success of
British Waterways depends on maintaining the network in its present,
historic environment, and that is why 10 million people come to
the waterways today, because they are what they are and they contain
what they contain. British Waterways could not, would not—it
would be folly to—begin to destroy what is so wonderful
about them for a short-term gain in selling some water. It would
make no sense whatsoever. So we uphold the heritage and the environment
very highly, and we spend a lot of time and effort on making sure
that we improve it. There is no way that we could be involved
in anything which would reduce or destroy it.
Chairman: I live near the Long Mile in Burnley,
which is one of the major features of the Leeds and Liverpool
Canal.
|
