Water Policy: Environmental Quality Standards

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Ian Pearson: My hon. Friend is exactly right about the holistic nature of the water framework directive and the importance of the river basin management planning process. The daughter directive—as it is often called—on the priority list proposal fits within the overall architecture of the water framework directive. It will be possible to reach a political decision on the issue at the Environment Council meeting on Thursday. The matter will be subject to qualified majority voting, and all the indications that I have had from the officials who have been doing the negotiations are that a qualified majority exists, with or without the UK’s participation.
To support my hon. Friend’s point, let me stress again that the costs in the original draft impact assessment, which looked pretty scary, are coming down significantly, I think. We will determine exactly what the final costs of implementing the directive will be by exercising a judgment about proportionality. At the moment, some of the costs are unknown. As yet, we have not fully decided what might constitute proportionate costs and we have not reached agreement across Europe about how the water framework directive will be implemented.
Mr. Paice: If we have time, I will return to the drinking water directive, but I am grateful for the Minister’s response. In his previous answer, he referred to diffuse pollution, which is the area that I want to address. Much of the paper refers to end-of-pipe activities, which I assume means, for example, discharge from sewage works, although I have not been able to find a definition. However, a lot of the potential pollution will be diffuse pollution from farmland—pesticides are referred to—or pollution from other sources such as air contamination. In those cases, how will anyone be able to establish the source, take action to remedy the breach, and determine costs? In end-of-pipe cases, it is quite clear who is polluting a watercourse or surface water, but that is not the case with diffuse pollution. What consideration have the Government given to that?
Ian Pearson: The hon. Gentleman makes a good general point on diffuse pollution and on the difficulty of identifying sources. The Government believe in the “polluter pays” principle, but sometimes it is very difficult to identify the polluter.
On end-of-pipe solutions, we are talking really about point-source pollution, which might come from sewage treatment works if they fail to meet environmental quality standards, or from industry discharges. There is now flexibility in the overall proposals that was not there at the start. Background pollution levels can now be taken into account, which was not the case at the start of discussions.
Identifying point-source pollution remains challenging, but we shall need to address it as part of broader consideration of the water framework directive. We want our water bodies to attain good ecological status. Achieving that will require upstream solutions as well as end-of-pipe solutions, and proper and effective measurement systems.
Chris Huhne: May I follow up on a slightly different aspect of the question that was asked by the hon. Member for South-East Cambridgeshire? The advent of climate change is causing substantial variations in water flows in many of our watercourses, and the discharge that is allowed in one year might not be appropriate for another. I think particularly of the chalk stream of the Itchen, which runs through my constituency. Last year, after several years of drought conditions, there were serious issues about discharges from some of the waste water plants into the river; with greater flows, such discharges are easier to handle. What assurance can the Minister give that that concern is reflected in the directive—both from an environmental point of view and also, of course, from a cost point of view?
Ian Pearson: That is a very good point. It is one reason why, in discussions on the directive, it was not regarded as a good idea to set overall maximum levels for application right across Europe.
I draw two distinctions in relation to the hon. Gentleman’s remarks. The precautionary approach that is being taken in the directive should ensure that there is absolutely no risk to human health or to the environment and should enable progress toward good ecological status where that does not already exist. The Environment Agency also applies different consenting regimes for discharges to the environment. For instance, at times of low water flows, the consenting regimes are changed by way of an agreement with the relevant company to reflect the different environmental circumstances. That issue is already dealt with under the existing legislative framework.
Mr. Paice: I am grateful to the Minister for saying earlier that, in part, there will be a significant reduction in the potential cost because he does not believe that the use of carbon granules and things like that will be necessary. I hope that he is right. What assessment have the Government made of the other costs and the impact of the measures that are necessary to meet the new standards—for example, higher carbon emissions resulting from massive increases in the energy consumption of treatment works? Aside from the carbon granule issue, increased energy consumption and carbon emissions raise the old problem of helping the environment in one way and spoiling it in another.
Ian Pearson: I recognise that point fully. The water industry’s carbon footprint is 50 per cent. greater than it was in 1990. We have seen significant improvements in the quality of our rivers, lakes and seas around our coasts, but it has come at a cost of increasing CO2 emissions. Last year, the water industry emitted about 4.1 million tonnes of carbon dioxide, which is a significant amount. As a result of the application of the article 4 provisions, we will be able to take into account the wider costs of implementing policy, which will include—in my view—the cost of carbon in the future. The hon. Gentleman is right that use of granular activated carbon is a very CO2 intensive. That must be factored into any future decisions.
Chris Huhne: In answer to a previous question, I heard the Minister describe the remaining processes to go through before the directive can become EU law. He is correct to point out the possibility of Second and Third Readings in the European Parliament and so on. However, my experience suggests that once the Council has reached a view by qualified majority voting, that is a significant part of the legislative process. The Council is clearly the senior legislative body in the two-chamber arrangement of the European Union. I return to the question that I put to the Minister: can he give us an assurance that the Council will not adopt a common position before receiving the revised figures for the cost-benefit analysis and ensuring that they are published, so that there can be a proper assessment of proportionality? Such a position will become the bargaining position with the European Parliament, and the basis of a significant directive. Will he describe the way in which he could reach a proper assessment of proportionality without those figures?
Ian Pearson: I shall try again to explain some of the difficulties of completing a robust and reliable impact assessment. We are talking about hundreds of sewage treatment works, thousands of water bodies and environmental quality standards that, in some cases, are below the level of detection. The task is hugely complex. It is not particularly unusual for directives to be agreed without the full impact assessment having been completed or the full costs being known—
Chris Huhne: Shocking!
Ian Pearson: It is not an entirely satisfactory situation. The water framework directive was passed in 2000 and we are still discussing how it will be implemented, and those decisions will affect costs, so I cannot give the hon. Gentleman that assurance. I understand that there is consensus among other member states that the directive is in a sufficient state to be passed by the Council.
Angela Eagle: Will my hon. Friend not be seduced by the exclamations of shock from the Liberal Democrat party, since the matter depends on when and where proportionality tests may be applied? We have the water framework directive and proportionality has been there from the beginning—it is part of the DNA of an effective directive. We should conduct proportionality tests when we can sensibly do so. We should not delay making progress on dealing with a series of pollutants that adversely affect human health by waiting to conduct a perfect proportionality test in advance when relevant information cannot be found. Waiting is a way of ensuring that the UK does not take part in the agreement that will clearly be reached at the Environment Council.
Will the Minister reassure me that I have interpreted the directive correctly? The proportionality test should take place when results may be best assessed and when there is sufficient information to enable an assessment, which was the way things were when I was a Minister. The proportionality test makes it possible to base an appeal on common sense and cost when those things can properly be assessed. There is therefore nothing to worry about, and we should stop tilting at windmills.
Ian Pearson: My hon. Friend is entirely right and she makes a good point. In the future, we will be able to determine what is and is not proportionate, but we cannot currently make such judgments in all cases and instances. We have not yet reached the stage with the water framework directive at which we have an action plan for implementation. Such decisions are, in some cases, a number of years away. We will be able to make definitive decisions on the matter only at such a time. I agree with my hon. Friend. that the Liberal Democrat spokesman needs to understand that—I suspect that he does, but that he is trying to make political capital. The measure is not unusual; it is common practice.
I re-emphasise that the costs will be significantly lower than was assumed in the draft impact assessment. The Government will look carefully at how we apply the article 4 provisions of the water framework directive to ensure that we do not take disproportionate action.
Mr. Paice: The fact remains that there is a tremendous difference between tens of millions, as the Minister assumed, and the £1 billion that he has now dismissed.
Chris Huhne: It was tens to hundreds of millions.
Mr. Paice: Yes, but the cost at the bottom end is tens of millions.
Ian Pearson: Let me be clear: the figures of tens to hundreds of millions are based on preliminary and new estimates. I believe that they are on the pessimistic side and that likely future costs will be toward the lower end of the range. I do not wish to mislead the Committee, because some of the costs are currently genuinely unknowable, for the reasons given by my hon. Friend the Member for Wallasey.
On who pays, the general assumption for the water framework directive is that we will work to determine what cost-effective measures can and should be implemented as part of the next price review process. The intention is that PR09—periodic review 2009—will include a figure in water companies’ capital programmes for the implementation of the provisions in the directive. It is not currently possible to say what that figure will be or what will be appropriate, but it is clear that when it comes to implementing the directive overall, there will be costs. We need to have a long hard look at those costs and ensure that we make measured progress towards the good ecological status that is the requirement of the water framework directive.
Chris Huhne: I am a little surprised that the hon. Member for Wallasey takes the view that she does in this matter. I hesitate to believe that she applies that view when she goes shopping, for example, but I think that it would be quite normal for one of her constituents to ask the price of something before deciding whether to buy it. It is only reasonable that we ask the Minister for his best estimate of the price of something before we as a legislature proceed to buy it. I understand that that is the commitment that the Government have made and that the Prime Minister-to-be, come Wednesday, has been extremely keen on evidence based policy making and on taking account of costs, benefits and regulatory impact assessments.
It seems to me to be a matter of some concern that the Minister is, as I understand it, saying that there will be a decision made under qualified majority voting later this week, whether we like it or not and without our having been informed of the revised estimate of costs and benefits. Will the Minister explain what the qualified majority is likely to be, and whether there is any prospect of gathering a blocking minority to delay the decision, at least, until we have the reasonable evidence on which to proceed?
Ian Pearson: The hon. Gentleman is barking up the wrong tree—if not barking. When I go shopping I do not wait to calculate my food bill for the next 20 to 25 years before I make a decision. Implementing the water framework directive is a bit like that. Decisions on its implementation will have to be taken before all the costs over that lengthy period can be calculated or even reliably estimated. I ask the hon. Gentleman to understand and accept that. He is an economist by training and he understands how impact assessments of the type in question are produced. He knows about what reliance is given to certain things, and the sensitivities involved in producing such figures. There are other points in the proposals before us today about the directive on which we could comment more usefully.
Mr. Paice: The Minister referred a few minutes ago, pre-empting a question that I am about to ask, to the fact that some of the proposed levels are below detectable levels. That raised the obvious question of what the point is.
Linked to that question, I want to ask about pesticides and some other chemicals that are, according to the schedule, approved for some uses in this country. The concern has been expressed to me that users, whether in agriculture or in conventional industry, who have permission to use a chemical for some purpose—the Pesticides Safety Directorate having approved it for that purpose, with its potential for residues and water run-off—could be in breach of the directive because of a lack of the necessary tie-up between the current approvals and the EQSs in the directive. That is an issue of joined-up government—making sure that in complying with one regulation, people are not in breach of another. Can the Minister assure us that a debate is taking place with a view to ensuring that people will not inadvertently breach the directive?
Ian Pearson: I can assure the hon. Gentleman that officials are well aware of the issue. I understand that only three of the original 10 pesticides are still licensed in the UK. Those are obviously what he is concerned about. We need to ensure that we take those issues fully into account.
On the point about setting EQSs below the current level of detection, we in the UK do not think that that makes a great deal of sense. It seems strange to have a test if we do not know whether we have passed or failed. However, we did not see any appetite among other member states for moving away from over-precautionary EQSs, and the issue must be returned to at a later point.
Mr. Paice: Let me take the particular example of cadmium. I understand that some of the new EQSs for it will be up to 63 times more stringent than current rules. That prompts the question whether agricultural fertilisers in particular will be in breach. I was not aware of this before, but I understand that they contain a tiny amount of cadmium. Has the Minister or anybody else examined that matter? I know that it has been raised with his officials.
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