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24 Jun 2009 : Column 263WH—continued
The hon. Gentleman raises some important issues, and I am not going to rehash why we need the measures and what we feel about water. It is sufficient to say that it is a prime Government objective to protect water,
improve the condition of protected sites and enhance biodiversity. We do not resile from those imperatives, and nor would he and his colleagues.
We must put the debate in the context that we have achieved substantial improvement in the past couple of decades. That is good news, but it does not mean that we have succeeded entirely. In fact, the continuing high levels of nitrate in our waters from various sources remain a concern and they are a significant cause of water pollution. The costs for treating water to meet drinking water requirements on nitrates during the period 2005 to 2010 are estimated to be £288 million in capital expenditure and £6 million per year in operating expenditure—not insignificant amounts. The costs of environmental damage to river and wetland ecosystems and natural habitats are estimated to be in the region of £716 million to £1,297 million per year.
This is not entirely about farming, as was rightly pointed out, but we estimate that agriculture contributes approximately 60 per cent. of nitrogen entering our rivers. We cannot get away from that. Therefore, farmers are part of the solution and have a key role in reducing such pollution. Their actions will also contribute to meeting the more demanding environmental objectives of the water framework directive, which is coming down the track towards us.
We carried out a review of the action programme and introduced some changes. The review of nitrate pollution and the effectiveness of the old action programme measures highlighted that we continue to have one of the highest levels of nitrate pollution in Europe. Although the monitoring data suggest that nitrate levels in many surface waters have a downward trend, we have no certain basis on which to conclude that they are significant or, importantly, sustained trends. We do not want ping-pong, back and forth; we need to ensure that the trends are sustained. Our review showed that concentrations remain high and that they are increasing in some areas, particularly in ground waters. That is part of the reason why we increased the coverage of NVZs from 55 to 70 per cent. in England.
During the review, we took on board the views of stakeholders through the consultation process and made a number of significant amendments to our original proposals as a result. For example, farmers told us that the proposed requirement for cover crops to be established on land left bare over the autumn and winter could cause significant practical difficulties, and they were right. We listened to their concerns and as a result removed the measure from the programme.
We also had to take on board concerns raised by the European Commission through infraction proceedings—the dread of any Minister—that were ongoing at the time. We had extended discussions with the Commission, which considered that, up to that point, successive Governments’ efforts to implement the directive were insufficient.
Christopher Fraser:
I have two things to ask the Minister. First, if he could answer in due course the specific points that I raised in my speech, I would be grateful, bearing in mind the time frame. Secondly, in terms of what is going on across Europe, does he have time to address my point about the need for a level playing field? In Northern Ireland, Ireland, Scotland
and Wales, grants are available for slurry storage, but they are not available in England. That is discriminatory to English farmers.
Huw Irranca-Davies: In the time remaining, I will try to answer the hon. Gentleman’s points. If I leave any unanswered, I will ensure that I write to him.
On the issue of gold-plating and what is happening in other European member states, it was clear that we were lagging behind in implementation and in achieving environmental outcomes. The revised action programme brings us more into line with action being taken in other member states. However, I must point out that some of them have more stringent requirements. For example, 12 months’ slurry storage is required in Finland, satellites are used to check compliance in Belgium and applications of fertiliser are restricted below economic optimum in Denmark. I just wanted to put that issue in context.
We believe firmly that the revised action programme measures represent the best possible outcome to advance our aims of protecting the water environment and meeting our legal obligations while taking account of the impact on farmers as well. Their concerns are quite practical. We recognise that farmers may face significant costs as a result of the revised action programme. In some instances, those costs might prove difficult to meet, especially in light of the current economic climate and the recent collapse of Dairy Farmers of Britain.
However, we do not intend to change our position on grant support, and I will explain why. No new Government money will be provided to help with construction of additional manure storage facilities. I heard what the hon. Gentleman said about other countries, but experience indicates clearly that awarding capital grants can, for example, increase storage tank supply prices—we have seen that happen before—and postpone the impact of market forces. Providing grants would also contravene the “polluter pays” principle, to which I think we all generally sign up, and we prefer to avoid putting public funds towards securing compliance with regulatory standards. However, we remain committed to improving how we regulate and enforce regulation and to keeping administrative burdens to a minimum, and we will seek to do so.
For example, we recently announced our success in obtaining a derogation from the livestock manure N farm limit of 170 kg of nitrate per hectare per year, which was one of the more demanding requirements of the directive. I note the hon. Gentleman’s welcome of that announcement. In the short term, it will reduce the economic cost to the livestock industry significantly, by between £16.9 million and £21.7 million a year. That represents about 50 per cent. of the overall cost to the dairy sector.
There are also numerous existing sources of financial support for our farmers, and we need to do our best to highlight them. For example, help is available under the England catchment sensitive farming delivery initiative and the rural development programme. Slurry storage facilities are eligible for plant and machinery allowances such as the annual investment allowance, which is capped at £50,000 per year. Slurry pits also qualify for allowances in their own right under the Capital Allowances Act 2001. In recognition of the fact that farmers will need
time to comply with some of the measures, we have also given them a period of adjustment. They will have until 2012 to comply with the requirement to have extra storage facilities.
Christopher Fraser: Can the Minister confirm what the National Farmers Union and other farming organisations have estimated to be the average cost of extending slurry storage? They say that it will cost about £50,000 per farm. That is a high price to pay and a big commitment to make while not knowing what the outcome will be.
Huw Irranca-Davies: I cannot confirm the exact costs, but as I mentioned in my opening remarks, we recognise that they could be significant. When I was on a farm the other day, I spoke with a gentleman who had purchased the equipment second-hand from another farmer down the road who was upgrading his equipment; he had made a killing on it. Fair dos. I speak from my own family background: farmers can be a good and ingenious lot who ensure that they maximise their economic output. However, the costs could well be significant.
The hon. Gentleman raised a specific point about de-designation. As a result of the latest review, we de-designated some small areas originally designated in 2002, amounting to about 1.5 per cent. of England. That was done on the basis of improvements in the monitoring of ground water quality and the use of hydrological knowledge and data that allowed us to identify more accurately where polluted ground waters and their catchments were.
The review also identified that there are small areas of the NVZs that drain to waters which no longer have nitrate concentrations above the “polluted” threshold of 50 mg. However, I must make it clear that those areas were not wrongly designated. They were correctly identified as polluted at the time of the previous round of NVZ designations in 2002. They were not de-designated following the latest review, owing to issues with sustainability. The data are insufficient for us to be confident that the observed improvement in water quality would be sustained. That might change, but at the moment, if we de-designate, we could well start ping-ponging back and forth. It could be to the disadvantage of farmers if we de-designated them and then had to re-designate them if the improvement proved unsustainable.
We have taken the decision to develop a methodology in good time for the next four-yearly review. I have noted the hon. Gentleman’s comments about timeliness; I will ensure that that is done and keep my foot on the throttle. I also noted the comments that farmers in potential de-designation areas might have to commit to significant expenditure even though the application of the action programme rules in those areas might be short-lived. As the Minister responsible, I recognise that that issue is important and thank him for raising it. We will engage actively with the agricultural industry and farmers in the areas concerned—we know where they are—to discuss the options and how to resolve the situation. We do not want to be impractical; we want to work with them to find a way through.
I reassure the hon. Gentleman that we are continuing our work to improve the methodology in good time to reflect improvements in scientific understanding. We
will develop those improvements in consultation with stakeholders and academic experts, using peer review where necessary.
In conclusion, we are continuing work to ensure that our implementation of the nitrates directive achieves the right balance between achieving sustainable and efficient farming practices, allowing as much flexibility for farmers as possible and minimising unnecessary costs and burdens, and respecting the need to improve water quality through the regulatory framework set down in the nitrates directive.
Christopher Fraser: I am grateful to the Minister for giving way for the last time, as we have a few minutes left and he said “in conclusion”. Will he address my question about closed periods and tell us why the Government are so reluctant to trust farmers to make informed decisions in their farms’ best interests? The Government are being prescriptive. Farmers have had generations of experience, and occasionally Departments have not.
Huw Irranca-Davies: That is a good point, and I apologise for not addressing it. I am glad that we have a little time left. The action programme prohibits slurry applications to waterlogged and frozen land. Farmers need to assess the risk of run-off before applying slurry, using their own judgment, and to apply it only when ground conditions are suitable, but the closed periods are designed to avoid the risk of contamination through run-off of ground water in tricky conditions at certain times of the year.
The hon. Gentleman mentioned sewage treatment works. We implement the European Community urban waste water treatment directive, which sets the standard for treatment at sewage treatment works. We are equally committed to driving that through as well. He was right to make the point that it is not only about what comes from the agricultural industry. That is a significant part of the problem, but it is also about the other ways that we treat sewage.
As has been pointed out, we need to take a proportionate approach to the issue while recognising our rightful commitments to maintaining water quality. We will continue to engage with the industry—I welcome the opportunity that the hon. Gentleman has given us to reiterate that fact—and to work with his constituents and many others throughout the country who, I am sure, share our desire to achieve good water quality standards and ensure that our farmers are assisted with advice, support and, occasionally, through the measures that I mentioned, financial help. They will be signposted towards such help where it can assist them.
11.29 am
Equitable Life
2.30 pm
Mr. Fabian Hamilton (Leeds, North-East) (Lab): It is a pleasure to see you in the Chair, Mr. Caton.
So much has been written and said over the last few years about the collapse of Equitable Life that I begin this debate with some trepidation, especially as the previous debate in this House was barely a month ago and was introduced by the right hon. Member for Haltemprice and Howden (David Davis). Although our political perspectives are very different, he is a Member of this House for whom I have the greatest respect.
Today, I wish to make a further attempt to advance the just cause of many of my constituents who have been so badly affected by what has happened to Equitable Life, and whose lives have been altered radically as a result. I am certain that I am not alone in that. The debate of 19 May showed how many hon. Members take a close interest in the issue. My aim is not simply to repeat that and other debates, but to add something new from the experiences of my constituents, and to give other hon. Members the chance to make contributions.
My most important aim is to persuade the Government to agree to the recommendations of the parliamentary ombudsman’s original report, “Equitable Life: a decade of regulatory failure”, which was published in July 2008. Since the publication of that report, the Public Administration Committee has produced a report entitled, “Justice Delayed” on 11 December 2008 and just last month, on 5 May, the parliamentary ombudsman published a further report, “Injustice unremedied: the Government’s response on Equitable Life”. There is no shortage of reports, just a shortage of justice for those who, through no fault of their own, have suffered huge losses in the life savings that they accrued over years of hard work. Surely that cannot be right.
I admit that, like many hon. Members who until recently knew little about how all this came about, I was not very sympathetic at first. However, as it became clear that, as much as the world’s oldest mutual insurance company had overstretched itself, the real issue was poor regulation, I became more and more concerned and so more and more interested in what my constituents were telling me. I suspect that that experience has echoed around the whole House and that there is not one hon. Member who has not received correspondence from their constituents about Equitable Life. That is reflected by the attendance at this debate.
It may be helpful if I reiterate a brief history of how this disaster came about before I recount some of the personal tragedies that resulted from the poor management and disastrous regulation of Equitable Life.
Sir Paul Beresford (Mole Valley) (Con): I suspect that the hon. Gentleman is right that every MP has constituents with such difficulties. I probably have more than most because of the spread and make-up of my constituency. The damage that this matter has done to people who have worked and paid for their retirement is enormous. I have two points to make. First, we should move the compensation and have it early. Secondly, we should take the partiality of the scheme away.
Mr. Hamilton: I hope that the hon. Gentleman will listen carefully to my speech because it will include many of the points that he has rightly raised. I hope that he will be satisfied that I am pressing for the same things.
Equitable Life was founded in 1762 as a mutual insurance company, based on the ideas of Charles Dodson, a fellow of the Royal Society and a man well ahead of his time. It started selling pensions as early as 1913, but it was not until 1957 that the society started selling its infamous guaranteed annuity rate pensions, which gave a clear and unambiguous return on capital invested, depending on the age at which the policyholder decided to start taking the annuity. That carried on until 1988, when the society realised that its rates were so good and so far ahead of the rest of the market that they were unsustainable. In December 2000, Equitable Life was forced to close to new business. By that time, it had more than 1.5 million members. That is why so many hon. Members have so many constituents who have suffered.
The introduction to the December 2008 Public Administration Committee report stated:
“Over the last eight years many of those members and their families have suffered great anxiety as policy values were cut and pension payments reduced. Many are no longer alive, and will be unable to benefit personally from any compensation. We share both a deep sense of frustration and continuing outrage that the situation has remained unresolved for so long.”
Last month, on 5 May, frustrated that little had happened since her long-awaited initial report in July 2008, the parliamentary ombudsman, Ann Abraham, published a second report, “Injustice unremedied: the Government’s response on Equitable Life”. It was scathing about the inaction on her initial recommendations of July 2008:
“I was deeply disappointed that the Government chose to reject many of the findings that I had made, when I was acting independently on behalf of Parliament and after a detailed and exhaustive investigation.”
Sir Alan Beith (Berwick-upon-Tweed) (LD): I must declare an interest as a small policyholder with Equitable Life, although my policy was nowhere near as large as that of many of my constituents who have been affected.
Is not part of the significance of the ombudsman’s report that it stated that regulatory failure was only part of the cause, and that another part was the appalling mismanagement of Equitable Life, to which the hon. Gentleman has referred? In identifying regulatory failure as a separate matter, she provided the Government with an avenue for what would be reasonable compensation. The Government’s refusal to implement her report is appalling.
Mr. Hamilton: I thank the right hon. Gentleman for that intervention. I will go on to talk about the regulatory failure and why I think that there should be a proper compensation scheme. I hope that I will cover some of the points that he rightly raised.
The conclusion of the parliamentary ombudsman’s report of 5 May stated:
“In this case, I am satisfied that the injustice I found in my report to have resulted from maladministration on the part of the public bodies responsible for the prudential regulation of the Society has not so far been remedied.”
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