Water Bill [Lords]

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Mr. Wiggin: And no compensation.

Mr. Osborne: Indeed. Compensation is an issue that we can discuss later.

A code of practice could make it clear that the Environment Agency could not have a rule of thumb that it could renew a licence only once. I believe that the Minister has already given assurances to the industry on that matter in private meetings, but it would be useful if he could confirm that in public in the Committee.

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Secondly, I should like the Minister to comment on a more general concern. The amendment would require the Secretary of State to

    ''consult with such persons as he considers appropriate including representatives of persons whose business interests are likely to be affected.''

That makes the point about the need to balance our obvious concern to protect the environment with other concerns. Environmental protection must always be balanced by consideration of the needs of economic growth. I am concerned that the Environment Agency will consider only one issue—the impact of water abstraction on the water table and on the environment—whereas it should take other considerations into account, such as local employment, and the provision of essential minerals, quarry products, or agricultural products to the wider economy. Environmental judgments should be made in conjunction with economic judgments, and the amendment would require the Secretary of State, in drawing up a code of practice, to consult with other interests and to take into account those other issues.

Mr. Morley: Let me scotch the rumour immediately, as I was invited to do, and make it clear that licences for quarry operators or other groups will be renewed as long as a need can be demonstrated. In determining whether such a need has been demonstrated, the economic points that the hon. Gentleman made will be taken into account. It is made clear in the Bill that the only time that a licence will be withdrawn is when environmental damage is being caused.

I will also say at this point, although I am sure that we will discuss quarry dewatering later, that nothing in the Bill changes the situation of quarry operators and other operators who hold licences in perpetuity. Their licences will continue in perpetuity. If there is environmental damage, the compensation arrangements will change, but in that case operators can choose to switch to time-limited licences, for which the compensation arrangements are still in place.

The effect of the measures has been somewhat overstated, because if a quarry or other business can demonstrate a continuing need, and no environmental damage is being caused, the licences will continue or will be renewed. There is a presumption of renewal.

On Second Reading, I said in response to a question from the right hon. Member for Skipton and Ripon (Mr. Curry) that there was

    ''a presumption of renewal in the Bill.''—[Official Report, 8 September 2003; Vol. 410, c. 59.]

I will take this opportunity to make it clear that that is not the case, because I do not want inadvertently to mislead right hon. and hon. Members. The presumption of renewal is implicit in the Bill, subject to the caveats that I mentioned earlier, but is not written into it.

Mr. Osborne: Why does the Minister not want to make that explicit in the Bill? Perhaps he could table an amendment to make it explicit.

Mr. Morley: I would not want to do that, because that would remove the flexibility from water resource management. It is a presumption: the conditions for

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granting and renewing licences are clearly laid down in the Bill and are linked with that presumption. If that presumption were to be included in the Bill, that would have many implications that would limit flexibility in water management. I am sure that there will be more opportunity to discuss that matter later on.

The agency has the duty to take into account costs and benefits in relation to a licence application, as well as the impact on rural communities. I can reassure the hon. Gentleman on that point.

I can also tell the hon. Gentleman that ''authority'' does mean the Environment Agency. The word ''authority'' is an amendment issue; it does not affect the principle of the Bill.

10.45 am

I understand the points made by hon. Members. My hon. Friend the Member for Sherwood (Mr. Tipping) made a sensible and reasonable point about the importance of the agency working with local stakeholders; farms, of course, are big stakeholders in water abstraction licences. My hon. Friend has strong connections with farmers in his constituency and he will discuss these matters with them.

The arguments for the amendments are not unreasonable. However, amendments Nos. 225 and 227 would require the Secretary of State to draw up a code of practice for the agency, which would have to have regard to it. But we already have the powers under the Environment Act 1995 to issue directions or statutory guidance to the agency should it become necessary to do so. As my hon. Friend said, we have confidence in the agency's ability to develop its own policies for the sustainable management of water resources and to maintain high standards for the operation of the licensing system. Of course, it is important that local views are taken into account and that there is an opportunity for stakeholders to comment on the development of those strategies.

The agency document ''Managing Water Abstraction'' already exists and has been developed in consultation with stakeholders. Its draft guidance on time limiting, for example, will be varied in light of comments made during the consideration of the Bill and changes deriving from it. The agency is already going to liaise with interested parties, and DEFRA, too, will be consulted about the draft before the guidance is finalised. Following our discussions during the passage of the Bill, the agency will update ''Managing Water Abstraction'' and consult the relevant stakeholders on it. That will be the involvement for which hon. Members have asked and which I fully support.

Amendment No. 226 would amend the test of reasonable requirements which the agency conducts in determining the licence, but that is not necessary. Applicants can provide a business case, including investment and resource implications, when applying for a new licence. If the agency fails to take into account the relevant considerations, including business investment issues, its decision will be open to challenge, and there will be a right of appeal for licences that are turned down.

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Mr. Swire: If a licence is revoked, or is the subject of an appeal, would a company be able to operate during the appeal? What is involved in the appeal process and how long will it take?

Mr. Morley: I am sure that the company can continue to operate pending an appeal. The measures in the process apply over long time scales and it is very clear when they come into effect. There will be adequate notice to abstractors in the case of a licence being revoked , which is unlikely to be common. Revocations will be issued only as a last resort, when serious damage is being caused. Even before a licence was revoked the agency would attempt, with the abstractor, to put in place a management plan to deal with the environmental problems, which would not necessarily mean revoking the licence. Revocation would be the end of the procedure; there would be an appeal process, and the operator would continue to use the licence while the appeal was going through.

Mr. Liddell-Grainger: The Minister is making some interesting points. A plant in my constituency that produces ammunition extracts a lot of water. Occasionally there have been problems, but it has worked with the agency to deal with them. Can the agency consider matters retrospectively? If it is allowed to take past problems into account there is potential for challenges from organisations and even NGOs and others, which could push back the licence. The Minister says that the revocation would not come into force straight away because the licence would run concurrently with the appeal process, but the agency would still have to listen to the cases of many of the stakeholders in a plant.

Mr. Morley: The test is whether damage is being caused. The agency has a responsibility to act reasonably. That would include taking into account any mitigating measures that had been applied in the past. Its best course of action would be to sit down with the licensee to look at ways that the damage could be mitigated. The abstraction rates could be reduced, or water efficiency measures could be put in place. A range of different things could be done to mitigate the problems of abstraction before taking the final step of revoking the licence.

Mr. Osborne: What the Minister is saying sounds reassuring: the agency would revoke a licence only as a last step; it would first sit down with the company, the farmer or whoever to try to sort things out. One would hope that that would happen, but there is no guarantee. If we inserted into the Bill the Secretary of State's code of practice, which the agency would be required to follow, that would be a fall-back mechanism. We would hope that it would not be necessary, but it would ensure that the agency acted reasonably in those circumstances.

Mr. Morley: I have already stated that the agency has a duty to act reasonably, and it can be challenged. If it has not acted reasonably that will be a factor in any appeal process. I mentioned that it has already produced the document ''Managing Water Abstraction'', which sets out the procedures that it follows. There is not much difference between that and a code of practice, apart from the fact that it has a bit more effect than a code of practice.

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Mr. Liddell-Grainger: I have a nuclear power station in my constituency, as the Minister knows. If it were challenged, where would that leave the agency? Everything on a nuclear power station is challenged. If it were shut down and told that it could not extract, there would be a fundamental problem. Certain stakeholders do not want to see that sort of plant anywhere in this country, and they will try to cause problems along those lines. The agency rightly has a duty of care, but it also has a duty of responsibility to something as fundamental as a nuclear power station.

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