APPENDICES
CORRESPONDENCE CONCERNING THE PROPOSAL
A. Letter to the Committee Specialist from
The Wildlife Trusts 16
B. Letter to the Committee Specialist from
English Nature 18
C. Letter to the Committee Specialist from
the Department for Environment, Food and Rural Affairs 19
D. Further letter to the Committee Specialist
from the Department for Environment, Food and Rural Affairs 21
Appendix A
Letter to the Committee Specialist from
The Wildlife Trusts
Proposal for the Regulatory Reform (British
Waterways Board) Order 2002: The Wildlife Trusts response
Thank you for your invitation to provide further
comment on proposals to amend the British Waterways Board's statutory
powers to enable the Water grid PPP to be implemented.
General Comments
It is clear that The Wildlife Trusts, English Nature
and the Environment Agency share concerns about the potential
environmental impact of redistributing water through the waterways
network.
As outlined in our initial response neither DEFRA
nor British Waterways (BW) have consulted on the potential environmental
impacts of a water grid and the mitigation measures that may be
put in place. Indeed the proposal was presented as Government
Policy and comments on the desirability were actively discouraged
in the PPP consultation.
Having reviewed the statement accompanying the regulatory
reform order I can only conclude that the issues raised in our
submission have not been fully answered by DEFRA.
DEFRA's comments the Wildlife Trust's Response:
DEFRA's response to The Wildlife Trust's response
(Appendix E) has three main points:
i) BW will be subject to the same regulatory
control as other abstractors as administered by the Environment
Agency. The Wildlife Trusts accept that
the Agency has the ability to grant or refuse abstraction licences
that will feed the proposed water grid. However, unlike piped
distribution systems, the canals that are being used to transfer
water are not purpose built and have significant intrinsic environmental
value.
We would not question the Agency's role in managing
the abstraction of water, but we are far less certain about their
ability to control the fate of the canals through which water
will be moving and the ecosystems they support.
It is unclear, for instance, if the Environment Agency
would be able to refuse an abstraction licence on the grounds
that the engineering works required to transfer sufficient water
across the canal network would cause unacceptable damage to biodiversity
in the canal or neighbouring land.
Similarly the Agency's pollution prevention powers
are aimed at controlling the discharge of poisonous and noxious
substances, not preventing subtle changes in water chemistry,
the spread of disease (e.g. crayfish plague) or proliferation
of invasive species all issues that pose a significant threat
to the biodiversity of wetlands.
ii) BW will remain bound by its existing
duties under the BW Act (1995) and the CROW Act (2000):
The Wildlife Trusts accept assurances that the regulatory order
will not alter BW's existing duties. However these duties are
not absolute, they require the Board to
"have regard to the desirability of protecting
and conserving buildings, sites and
objects of archaeological, architectural, engineering or historic
interest.." s22 1(a) British Waterways
Act 1995
"to take into account any effect which the
proposals would have on the beauty or amenity of any rural or
urban area or on any such flora, fauna, features, buildings, sites
or objects" s22
1(c) British Waterways Act 1995
"¼.have
regard , so far as is consistent with the proper exercise of those
functions, to the purpose of conserving biological diversity in
accordance with the Convention." s74(1)
of the Countryside & Rights of Way Act (2000)
Therefore the BW Board must consider conservation
and biodiversity alongside its other duties allowing a wide interpretation.
What The Wildlife Trusts are interested in is how the PPP may
alter this interpretation.
For instance DEFRA's response fails to address the
conflict of interest that will arise by making BW a major shareholder
in a company that will exploit BW assets and whose activities
and impacts will be regulated by BW. An analogy would be making
the Environment Agency a major shareholder in the water industry.
The Wildlife Trusts remain concerned that the PPP
will create an incentive for BW to approve schemes because it
will profit from them. At the same time BW will be discouraged
from curtailing an operation that proves to be damaging, because
it will stand to lose money as a shareholder. This perverse incentive
could act to undermine the way these general environmental and
biodiversity duties are applied and, therefore the standards achieved.
iii) Each new water grid proposal will be
subject to an Environmental Impact Assessment.
An EIA in itself cannot protect the environment. Its value is
dependent on the quality and scope of the work undertaken and
the policy and regulatory framework within which the information
is used.
As outlined in our original response The Wildlife
Trusts were not consulted during the preparation of the environmental
assessment of the PPP and have been denied access to a copy. As
such we cannot comment on its scope of the issues considered,
the range of mitigation measures proposed or how the independent
consultants employed reached the conclusion that there were "no
insurmountable environmental problems" associated with the
PPP.
This approach sets a poor precedent and DEFRA's response
says nothing about how BW are to carry out future EIAs or how
members of the public and other stakeholders are to be engaged
during their preparation.
Accountability for Environmental Damage &
Wider Socio-Economic Concerns
DEFRA's response also fails to address The Wildlife
Trust's comments regarding the blurring of accountability for
environmental damage and the costs that this could impose on the
taxpayer or other third parties.
Swansea City Council raised similar concerns to which
DEFRA responded that "Any additional operating costs attributable
to the activities of the water grid PPP will be payable by it"
(Annex E). However we remain unconvinced that such a simple
answer can really answer the complex issues of liability and cross-subsidy
that the PPP could create.
For example one of The Wildlife Trusts major concerns
is the spread of invasive species that could not only wipe out
native wildlife and biodiversity but also damage riparian land,
canal structural integrity and choke waterways.
While it may be possible that the PPP could be made
to contribute to the management of such problems during its operation
what will happen when the PPP ceases trading? Would BW, and ultimately
the tax payer, have to finance these new management burdens in
perpetuity while the PPP company carries only limited liability?
We do not believe these questions have been answered.
The risks posed are not purely environmental, they
will also be borne by the leisure and tourism industries that
rely on the high quality of the waterways network. There is no
evidence that DEFRA have considered what impact the disruption
and potential environmental damage created by the PPP will have
on these industries.
Of course DEFRA may argue that BW will remain bound
by its statutory duties however, as outlined above, a new profit
motive may alter the way in which they are interpreted. The creation
of a PPP will require BW to balance its own interests in seeing
PPP profits rise against less tangible environmental, economic
and social benefits enjoyed by businesses and communities that
rely on the waterway's high quality environment.
Conclusions
The Wildlife Trusts urge the Government to think
again about the desirability of promoting a water grid based on
the waterways network. Any proposals should be developed through
public involvement and scrutiny and enshrine the principles of:
Protection & Enhancement:
The waterways network is a unique publicly owned asset. It is
essential that the environmental value of these water bodies and
the leisure industry they support, is not put at risk by proposals
for water transfer.
Sustainability: Any proposals
for water transfer should only be approved where it is shown to
be the most sustainable option. All proposals should be reviewed
in light of alternatives e.g. waste minimisation, leakage reduction,
best practice and the risks posed to wider social, economic and
environmental interests.
Openness: As a public
corporation British Waterways should act openly, engaging and
consulting all stakeholders in the development of proposals.
Independence: The role
of BW as guardian, manager and de-facto regulator of the waterways
must be underpinned by its independence from the company(ies)
seeking to profit from water transfers.
12 February 2003
Appendix B
Letter to the Committee Specialist from
English Nature
Regulatory Reform Order (British Waterways
Board) 2003: English Nature Further Comments
Thank you for your letter of 29 January 2003 concerning
English Nature's response to the Defra consultation on the Water
Grid Public Private Partnership. We welcome the opportunity to
clarify the comments made in our response and to comment further
on the Regulatory Reform Order.
Consultation and environmental appraisal
First, we would like to take this opportunity to
reiterate the general point made in our initial consultation response
regarding the desirability and environmental implications of water
transfers per se. The Defra consultation paper stated that:
"¼this
consultation does not concern, and comments are not invited on,
the substance or merits of the Water Grid PPP itself, the promotion
of which is already settled government policy."
At the basis of our concern is the fact that there
has been no consultation on the proposal to set up a water grid
for public and private supply using the canal network or any appraisal
of the potential environmental impacts. Such a policy raises a
number of questions about the sustainable use of water resources
and the long-term viability of transferring water between regions
and river basin catchments.
We draw attention to the Defra Policy Guidance Policy
Appraisal and the Environment (8 April 1998), which states
that an environmental appraisal should be carried out "whenever
a policy or programme has a significant effect on the environment
" (para 5.1). The policy guidance sets out how an environmental
appraisal should be undertaken and recommends that consultation
may best be undertaken on the announcement of the intention to
introduce a new policy (para 7.1).
The Defra response seems to indicate that there will
be no environmental appraisal until the Water Grid PPP is ready
to implement a particular transfer scheme. At this point in the
process, we contend that it will be very difficult properly to
consider options which might be more environmentally acceptable
- other than the use of the canal network for providing the necessary
supplies of water.
Statutory duties of the joint venture company
In response to comments by Southern Water, Defra
indicate that the Water Grid PPP will be in the same regulatory
regime as any other private water supplier. Our first concern
is that the joint venture company will not have the same statutory
duties as water companies to further the conservation and enhancement
of Sites of Special Scientific Interest and to consult English
Nature before undertaking any activities likely to affect an SSSI.
There is nothing in the proposal to make the Company subject to
the relevant sections of the Water Industry Act 1991 or of the
Countryside and Rights of Way Act 2000.
Secondly, creation of the joint venture company will
result in a situation where British Waterways is expected to regulate
the activities of a company in which it has a substantial commercial
interest. The joint venture company may enter into commercial
agreements to provide water, which could constrain other uses
of the waterway network, including nature conservation.
The need for Environmental Impact Assessment of
water grid transfers
Defra's response explains that it is anticipated
most transfers will be of a local nature and that all individual
schemes will be subject to an environmental impact assessment.
Defra also highlight the role of the Environment Agency in regulating
water grid proposal through the Water Resources Act 1991.
Although "local" water transfers do not
necessarily have the strategic implications associated with large
inter-regional transfers of water, there is still considerable
potential for adverse impacts associated with inter-catchment
transfers of: water of different chemistry; invasive species;
waterborne diseases; and pollutants. With respect to regulation
by the Environment Agency, their powers are currently limited
to licensing abstractions and consenting discharges; the Environment
Agency may not be in a position to control transfers where there
is a risk of invasive species transfer is considerable or where
large water movements might adversely affect waterway flora and
fauna.
We believe that the environmental risks inherent
in canal transfers need to be examined at the strategic policy
level, before a decision is made to set up the commercial infrastructure
and to define environmental responsibilities.
17 February 2003
Appendix C
Letter to the Committee Specialist from
the Department for Environment, Food and Rural Affairs
Proposal for the Regulatory Reform (British
Waterways Board) Order 2003: request for further information
Thank you for your letters of 28 and 31 January.
The Department's response to the Committee's questions is below:
Does the Department consider that the passage
of this proposed Order would make the establishment of the joint
venture company a 'fait accompli', as English Nature suggests
would be the case?
No. The new powers sought by the proposed Order concern
the treatment of water once abstracted and not the establishment
of the joint venture company. The company - Watergrid - was established
under British Waterways' existing powers on 19 November 2002,
as noted in the explanatory statement. Accordingly the suggestion
of a "fait accompli" is a misunderstanding of the purpose
of the proposed Order. The establishment of Watergrid is not dependent
upon the passage of the proposed Order. It has already been agreed
by Ministers. The proposed Order merely gives British Waterways
the powers to develop Watergrid successfully by removing technical
obstacles.
Does the Department agree that there has been
no opportunity for interested parties to comment on the environmental
implications of developing the public/ private partnership?
The Department considers these comments flow from
a misunderstanding of the purpose of the proposed new Order. The
new powers sought relate to the treatment of water after transfer
and abstraction, and the Department considers it has consulted
fully and taken proper account of responses relating to the new
powers sought.
The concerns expressed by English Nature and the
Wildlife Trusts relate to the environmental implications of transferring
water via the waterways network. This is a separate (and existing)
activity, and is not dependent on the new powers being sought.
The transfer of water for the purpose of abstraction
for treatment and supply (by entities other than British Waterways)
has taken place on the inland waterways network for many years,
and the current rate of abstraction is about one third of its
historic peak. That activity could continue and grow (whether
managed by British Waterways or Watergrid) in the absence of the
new powers sought by the Order. The new powers sought would enable
British Waterways to participate in more of the supply chain,
and thus enable the public sector to derive a greater share of
the economic value created by the use of the inland waterways
for this purpose.
It is nevertheless recognised that the planned business
of Watergrid will result in an increase in current abstraction
levels (an increase of 50% by Year 10 is planned, though this
would still only be around half the historic peak). Thus, although
such an increase could take place whether or not the new powers
sought for British Waterways are obtained, the Department fully
acknowledges the need to consider the environmental implications
of any development of the Watergrid business.
As part of the business case for Watergrid, British
Waterways were required to satisfy Ministers that environmental
issues had been taken fully into account. The business case included
a report by independent environmental consultants which concluded
that significant adverse effects were unlikely or could be mitigated;
where this was not possible projects would not go ahead. As you
know from our appearance before the Committee, British Waterways
consider that there are potential environmental benefits arising
from the activities of Watergrid.
In practice interested parties will have the opportunity
to comment on the environmental implications of any new abstraction
projects developed by Watergrid as they will be subject to licensing,
and must be advertised. All comments received will be taken into
account by the Environment Agency before the Agency determines
a licence application.
British Waterways will also make information from
the environmental consultants' report on Watergrid available to
English Nature and the Wildlife Trusts.
If the proposed draft order were made, to what
further consultation would any proposals to exercise the Board's
additional powers be subject?
The exercise of the proposed additional powers would
not be subject to further consultation as they relate only to
the treatment of water not its abstraction. However any new abstractions
of water for treatment, and associated water transfers, would
be subject to consultation as outlined above.
Can the Department clarify the extent to which
(if at all) the Board would be exposed to additional risks and
liabilities as a result of the new powers it would acquire if
the proposed order were to be made, in respect of the operation
of:
— the existing joint venture company;
and
— the Board itself?
The only completely new activity that would arise
as a consequence of British Waterways acquiring the additional
powers sought in the proposed Order is the treatment of water.
Primarily such treatment would be carried out for industrial users
at levels of purity less than potable quality. It is proposed
that treatment would be undertaken by Watergrid which will have
access to the necessary technical expertise through its water
industry participants. The relationship between British Waterways
and Watergrid would be governed by various commercial agreements.
British Waterways would only be exposed to the legal
or regulatory risks associated with water treatment activities
if it undertook those activities directly. As explained in the
explanatory statement, such direct participation is only intended
to take place where British Waterways has to exercise its remedies
in the event of default of Watergrid under its commercial agreements
with British Waterways. In that event it would be the intent of
British Waterways to transfer the rights of Watergrid under the
commercial arrangements to another entity, and only to undertake
the activities of Watergrid under its available powers as a temporary
measure. During such period British Waterways would have access
to the necessary technical expertise to properly manage that business
in a manner which minimises any potential additional risks and
liabilities. Such risks are not disproportionate to the risks
that British Waterways manages daily in its stewardship of its
national inland waterways network.
I hope this response clarifies the position in relation
to the points the Committee has raised.
19 February 2003
Appendix D
Further letter to the Committee Specialist
from the Department for Environment, Food and Rural Affairs
Proposal for the Regulatory Reform (British
Waterways Board) Order 2003: request for comment
Thank you for your letter of 24 February, enclosing
responses from English Nature and the Wildlife Trusts on which
you invite the Department's comments.
I believe that I dealt with all the substantive issues
fully in my letter of 19 February. The proposed Order would remove
a technical obstacle preventing British Waterways from treating
water after abstraction. The powers sought do not relate to the
establishment of the joint venture company, nor to the environmental
implications of transferring water via the waterways network.
Transfer of water for abstraction and treatment already
takes place (and has for many years). Presently, treatment of
abstracted canal water is undertaken by others but if the Order
is made British Waterways will be empowered to participate in
that activity (and so enable the public sector to derive a greater
share of the economic value created, for investment back in the
waterways). Ministers have already approved the formation of the
joint venture company under existing statutory powers.
Given the technical nature of the Order, and the
fact that we consider it has no implications for the points raised
by English Nature and the Wildlife Trusts, the Department sees
no need to make any changes on account of their responses. Accordingly
we commend the Order as drafted to the Committee.
The Department has been keen to ensure British Waterways
takes environmental issues fully into account in developing the
Watergrid project. As I indicated in my letter of 19 February
an independent consultants' report was commissioned on the likely
environmental effects of the project. This concluded that significant
adverse effects were unlikely, or could be mitigated. Furthermore,
with the UK implementation of the EU Water Framework Directive,
the Environment Agency will have significantly enhanced regulatory
powers to ensure the avoidance or mitigation of any adverse effect.
British Waterways actually expect there to be environmental benefits
from the activities of Watergrid due to the more efficient use
of water, for example.
British Waterways will be meeting English Nature
on 6 March to discuss the ecological implications of Watergrid.
They also intend to share information from the consultants' report
with the Wildlife Trusts, and to discuss the detailed points which
they have raised.
I can confirm that my Minister, Alun Michael, is
available should the Committee wish to take oral evidence on 11
March.
27 February 2003
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