Examination of Witnesses (Questions 281-299)
HUW IRRANCA-DAVIES
MP, MR MARTIN
HURST AND
MR SIMON
HEWITT
17 JUNE 2009
Q281 Chairman: Now we move on to our
next session on the Draft Flood and Water Management Bill. In
figure one of the Pitt final report on page 136 there is a very
useful diagram which provides an attempt to show what the summary
of legislative links dealing with water looks like at the present
time. Minister, I am not asking that you even look at it now but
I wonder if by any chance, for the benefit of the Committee, you
might redesign this remarkable diagram so that we could have a
look at the before and after effects in terms of the Bill that
you are proposing because the new architecture is something that
I would like to see in legislative form. This Bill is potentially
a very big one, and I say "potentially" because there
are some bits, as we have just been discussing, about Cave and
Walker which are catered for in your consultation document but
which are not, in fact, expressly in the Bill for obvious reasons.
Michael Pitt, in his report, gave a very clear view that he would
like to have seen a comprehensive piece of legislation bringing
together water legislation as it is and then augmented by the
types of measures in your current Bill which have a particular
focus on implementing the Pitt Inquiry. My first question is,
why did you not go for what I might call the encyclopaedic approach?
Why did you choose the one that is before us?
Huw Irranca-Davies: Some of the
aspects of what Sir Michael Pitt recommended we are already getting
on with. There are quite a number that we can get on with regardless
of any legislation, or the need for legislation, so we are getting
on with them straight away. By the way, this does not preclude
the necessity at some future date for a consolidation bill in
effect. In the legislative time available in front of us, and
recognising that there are some areas that definitely need legislation,
what we have tried to do is reduce it to those elements that definitely
need primary legislation now. At some point in the future we might
need to return with some sort of consolidation bill, but what
we have got in front of us now, I think, will take us a long,
long way.
Q282 Chairman: Just before we get
into the real detail of it, help us through the timetable. As
I understand it, you are working towards having some form of finished
Bill by October. Is that still the plan of campaign?
Huw Irranca-Davies: Yes.
Q283 Chairman: Is that the beginning
of October, the end of October or the ministerial middle of October?
Huw Irranca-Davies: I do not think
we have a precise date. It is a ministerial October at the moment.
Q284 Chairman: So sometime between
the 1st and 31st you hope to produce some kind of Bill. In terms
of your working hypothesis, let us take the worst case scenario
that the Bill comes out towards the end of October. If we were
scenario playing through, if Parliament continues into October
and we have the normal what I call cleaning-up/sweeping-up session
you might imagine that might be over by October, and let us assume
we might have a Queen's Speech at the beginning of November and
the House would have its normal one week to debate it, say up
to the beginning of March, when minds might be turning to other
matters, you have got 11 legislative weeks and if you were very
generous and added three more weeks out of March onto that you
might get to 14 or heroically 15. That is pushing it a bit, is
it not, Minister, to get a Bill of this size right the way through
both Houses of Parliament and on to the statute book. Would that
be a fair assessment?
Huw Irranca-Davies: Yes. Let me
try and sketch it out and then I will bring Simon in. The Pitt
Report came through in June 2008, Government response in December,
the Bill published in draft April 2009, sometime in October we
bring it forward, and it has been well discussed now because a
lot of the things within Pitt have a large degree of agreement.
Some things we have already done, such as reservoirs and consultation
is going on on that; others need a little bit more development.
Simon, where do we take it on from there?
Mr Hewitt: You are right that
we retain the ambition, as was said in the Government response
to the Pitt Report, to try and bring all this legislation together
and modernise it, if you like, because some of it is rather old
now. In the area of legislation on reservoirs that is exactly
what has been achieved in the draft Bill in that that repeals
and replaces the existing legislation on reservoirs. In other
areas, partly due to the speed with which we have moved and partly
because there were areas where we genuinely wanted to consult
more openly on some of the propositions that we might want to
legislate on, there is a more open approach and in some cases,
therefore, not even yet the draft legislation in this document
which we are now considering. In terms of where the timetable
goes from here on in, clearly it is going to be partly dependent
on how quickly those issues on which we are consulting now can
be resolved and also exactly which session and how legislation
gets brought forward in future is going to depend on the other
demands on parliamentary time and so on. Yes, we will continue
to be developing the legislation here that we have already got
and developing that which we have not yet started drafting in
this consultation package over the summer.
Q285 Chairman: The reason I am asking
is not to place the Minister in a difficult position in speculating
about the date of the next General Election but to reflect a genuine
view that is coming through from those we have had as witnesses
that they want to see a well thought-out quality piece of legislation
which tries to bring together in a coherent fashion as much of
the future legislation on the water industry as is possible. That
may well be bringing on board elements of Cave and Walker, and
that will take a little time to digest, and not effectively to
be bounced into doing it for the sake of doing it in terms of
having a sort of stripped-down bare minimum Bill, for example
to deal with the Environment Agency responsibilities as defined
by Pitt and the EU Flood Directive and say, "That's the basic
minimum". There is a view, I think, that would like to see
somewhere near a comprehensive finished product. I am trying to
gauge in an ideal world where Defra would like to be on this.
Does Defra aim to have a Bill that is coherent, but recognising
it might not have enough time to get through before the end of
this Parliament, or are you hell-bent on stripping out every bit
using every parliamentary bit of the kit to try and get bits through,
like the European Communities Act, simply because, "I've
got to get it done", the mad rush towards the end?
Huw Irranca-Davies: Our approach
is we want the legislation we are bringing forward to deal with
all of those aspects of Pitt that we can and also, where possible,
and where we have that sort of agreement based on the consultation
going on, elements of Martin Cave and Anna Walker as well. We
would like to see this as a good encompassing Bill if we have
the opportunity.
Q286 Chairman: Would I not be right
in saying that you still have until 2011 to deal with the Flood
Directive because I think up until now I thought the imperative
was sooner rather than later, but you do have a bit of leeway.
Am I not right in saying that?
Huw Irranca-Davies: We are actually
running out of time on this.
Mr Hewitt: My understanding is
that we are required to transpose by a date this autumn. Clearly
it takes a while before you get into infraction proceedings of
any rigour, if you like, but my understanding is that we are required
to transpose by autumn on the Flood Directive. That is one imperative,
if you like. There are several others where, for example, during
the debates around the Queen's Speech for this session most parties
said they would like to see certain provisions coming forward
in the floods area, for example to address some of the things
that Sir Michael Pitt proposed in his report. There is clearly
a balance to be struck between those things which one wants to
get ahead with and those things which are going to take longer
to cook. It may be that you do end up doing legislation in stages.
That is not at odds with the ambition to try to produce some sort
of good quality unified corpus of legislation at the end of that
process because, of course, the later stages can pick up and unify
those things which have gone before, where necessary.
Q287 Chairman: I hear what you say
but, in terms of the Commission, as long as they can see intent
by a Member State and that we are not dragging our heels, and
much of what the Flood Directive requires us to do we are doing
anyway but just have not put it into law, the message goes out
that we are on our way. All I am saying is in terms of the legislative
window, if there was a Bill ready at the beginning of November
you have got about 14 parliamentary working weeks in which to
jam something through or if you wait for another four weeks you
have potentially got a whole year to deal with it.
Huw Irranca-Davies: I may be able
to help with this. Our preference would be to implement via primary
legislation to put it there in a cohesive manner if possible just
to avoid that fragmentation of legislation that you are describing.
However, as the Minister, because of the scenario that you are
painting, if the actual transposition via primary legislation
looked like being delayed in any way then we have that option
in the specific one you are talking about to introduce regulations
under section 2(2) of the European Communities Act. Our preference
is towards a cohesive legislative framework but we do not rule
anything out because if push came to shove we might then have
to be inventive. It is not that we do have to deliver everything
legislatively under this Bill either. As we have described, we
are taking some elements forward already outside of this. As a
legislator I often find it quite odd that some of the things that
I argue for are not, "Let's do it all through the legislation".
Chairman: I concur. I had a very useful
discussion with members of the Environment Agency in the North-West
who seemed to be doing much of what the Bill requires in terms
of cooperation and it is going happily along without the Bill.
We will come to that later.
Q288 Lynne Jones: You published Future
Water with ambitions to reduce water use and although, if
I can just add, the targets for new homes under the Code for Sustainable
Homes are commendable, the target in Future Water is only
130 litres per day which has already been achieved in Germany
and other countries. For example, in Copenhagen they have got
down to 120 litres a day. You have a vision there, and some would
say it is not exactly an ambitious vision, but is this Bill going
to deliver on that vision? Referring back to the discussion we
had a little earlier about water efficiency, and obviously we
are waiting for the Walker review and so on and consulting on
efficiency, how do we get the water companies not to regard capital
investment as the means of delivering on water efficiency, but
looking at their operational spending?
Huw Irranca-Davies: The answer
to this is there is not one single way. This Bill will certainly
help with it. Since 1994-95 we have driven down leakages by something
like 34/35 per cent. That is one aspect. That is the equivalent
of supplying 12 million households. It is also what we do with
manufacturers in the designing of products as well, that is an
important part. It was great to see the work that has been done
recently by the Bathroom Manufacturers Association in having that
voluntary-led labelling scheme to show where there are certain
products that will help individual households improve their own
water efficiency. It is also what we do in terms of incentivising
industry through things such as the Enhanced Capital Allowance
Scheme which promotes water efficiency technology so that it drives
innovation. It is also what we bring forward in the Bill. There
are a lot of ways we do this. Whether or not driving it down to
130 litres per day by 2030 is ambitious enough I do not know,
but we need to have a target that we can not only go for but that
we can achieve as well. I think it is important that we probably
keep that target under review and if we find that we are hitting
it early on then let us see how ambitious we can be beyond that.
It is certainly what we would regard as a pragmatic target because
we know we have still got areas where we need to come up to it.
Martin, I think you wanted to add on that.
Mr Hurst: I think it is pretty
ambitious because we are not the same kind of country as Berlin.
We have got much, much older housing stock, for example, and probably
more things like a lower density of housing, so more gardens and
such like. Just by way of information, I do not think any of the
water companies in the Water Resource Management Plans, even with
the measures they are taking, are expecting to get below 130 litres
per day. We do have an aspirational target in Future Water
of 120 litres per day. We are doing a number of things that do
not need primary legislation. We already have primary legislation
that allows us to change the water fitting regulations, for example,
CLG will do the same with the building regulations, the Water
Resource Management Plans have a quasi-statutory basis and Ofwat
now have a water efficiency target for companies. If you wanted
to do metering on a more compulsory basis more quickly that probably
would require primary legislation. Tariffs for water once you
have metering are another way of getting water efficiency. There
is a lot of good work from Waterwise and such like on household
information. There is a whole panoply of measures out there, some
of which may require primary legislation and many of which will
not. Getting to 130 litres per day, if you talk to the bodies
who are working there, including Waterwise who have a strong water
efficiency commitment, they would say that it is not unambitious,
let us put it that way.
Q289 Lynne Jones: The question is
how the water companies are doing to deliver and the issue of
whether there should be a water efficiency commitment enshrined
in the legislation. I know you are looking at that, but where
do you think we are at?
Huw Irranca-Davies: We are still
taking views on that and considering it. I do not necessarily
want to make a policy decision today. Whether we need that absolutely
statutorily binding element to drive it, it is out there for live
debate at the moment.
Q290 Lynne Jones: I am always very
worried when people say there is a panoply of measures because
that makes it very confusing and I think it needs to be much more
understandable and in your face, in a sense, in terms of how we
go about improving our efficiency, not in terms of just water
use but also companies in terms of dealing with sewerage, drainage
and so on, which is also very heavily energy dependent.
Huw Irranca-Davies: You are right
and it can be as well that because of all of those various measures
we are talking about a lot of businesses will not be interested
in all of them, domestic residences and households will not be
interested in all of them, but the ones that potentially impact
most on them need to be the ones that are driven home. In terms
of individual households it is what they can do themselves, whether
it is through metering or the choice of appliances or new build
homes and so on. That is the most relevant for them. Getting that
message out there through fitters, suppliers, new builds, et cetera,
that is most important for them. For companies it will be a different
approach. Everybody needs to play their part and that is one of
the critical messages at the moment, to come back to this issue
of valuing water. It is getting everybody to play their part—water
companies, individual customers, businesses—and getting
the right message and right tools out there for them to do it.
Whilst what we are describing might seem quite complex, for an
end user it is targeting the right measures at them and getting
the awareness that they can do something themselves.
Q291 Mr Drew: I have got Wales again!
One of the problems with the way things have panned out is that
Wales is starkly different in the way you talked about the water
company. Out of all the comments, the most fearful are those from
Welsh Water who have some views on the way in which the costs
are going to be offloaded onto them. As a Welsh MP, besides the
Minister responsible, and you have already talked about the benefits
of diversity and the social enterprise model, what have you said
to Welsh Water? What ways have you won them round to have us believe
that they will not be disadvantaged by some of the changes that
are being made?
Huw Irranca-Davies: Their concerns
are also concerns that are shared by Jane Davidson, my colleague
in the Welsh Assembly, the Environment Minister. Individually
they have had quite extensive dialogue with Martin Cave, Anna
Walker and others, and our own officials, and I have these discussions
with them as well. What Jane and I are convinced of, and the head
of Dwr Cymru, is that we do not have something here in place which
disadvantages the Dwr Cymru model. Certainly my discussions with
Martin Cave, for example, have been very much along those lines
and he genuinely sees that nothing being proposed there, and there
are slightly different consultations going on in Wales in parallel
to what we have with our draft Bill so that they can feed into
it, negatively impacts either upon Wales as the Welsh Assembly
Government or on Dwr Cymru. As a Welsh MP, as you put it to me,
as opposed to the Minister who also happens to a Welsh MP, I am
particularly seized of the importance that this is not disadvantageous
either to Welsh consumers, Welsh ministers or to Dwr Cymru.
Q292 David Taylor: Trying to calculate
a Net Present Value over a period of 40-odd years is not dissimilar
to the chancellor trying to predict national debt over a rather
shorter period because you are dealing with the difference between
very large numbers which are inherently difficult to predict and
variable to a very considerable extent as well. The figure that
has been seized on is £5.12 billion, but realistically, Minister,
is it not the case that quite often the most favourable figure
has been used in terms of the savings in terms of flood damage
or whatever that might accrue from the work that is done and in
relation to the cost of the work that is done sometimes it has
been the base figure of a range of figures that has been utilised.
You can imagine, can you not, that it would not take an awful
lot of inaccuracy to turn that 5.12 billion into 1.5 billion Net
Present Value or, indeed, to have a negative Net Present Value.
How useful is that measure? Do you expect and plan to have a rather
more sensible range of possible outcomes at the time when the
final Bill reaches Parliament because this is just a working figure
that I feel, I suppose as an accountant but also as a politician,
is not especially useful, to put it mildly?
Huw Irranca-Davies: The straight
answer is yes, we do recognise that the evidence base that we
currently have for some of the policies needs further development
and we do plan to do this as well, including some of the questions
we have asked within the Consultation Document. The proposals
that we bring forward for the final draft Bill and its impact
assessment will benefit from further information that we are gaining
from the responses to the consultation first and foremost and
in some cases through work that is being carried out in parallel
recognising that we need to build on this. The action plan that
we have set out within the draft Bill document sets out some of
the work that we are undertaking on this so that we do have more
robust, more well-informed figures that we can be more confident
with.
Q293 David Taylor: It is stretching
forward the horizon and beyond. It is two generations, 40-odd
years. You will be the Father of the House by the time the end
of this period is reached! Does it make sense to try and predict
the unpredictable when it is in pitch darkness beyond the horizon
with all sorts of uncertainties besetting that figure?
Huw Irranca-Davies: There is a
good tradition of Welsh MPs being Father of the House, I have
to say.
David Taylor: Exactly.
Q294 Chairman: We will take this
as an early bid. I will put my money on now!
Huw Irranca-Davies: Simon, can
you expand a bit further?
Mr Hewitt: One of the key things
we are trying to do in an impact assessment is to see whether
a policy stacks up or not. In one sense, if you have got a Net
Present Value of one billion versus five billion you still have
a Net Present Value against—
Q295 David Taylor: Of minus one billion
or minus five billion.
Mr Hewitt: One of the key things
is how confident one can be about the sorts of assumptions one
is using to drive those figures. That is precisely some of the
work that we are trying to do, for example, around the larger
figures on surface water that are in these impact assessments.
Over the summer one of the things we are trying to do is to get
greater certainty or some better testing of the assumptions we
are using which delivers those rather larger figures to be more
certain about the fact that they do stack up. That is one thing
to say. The other is that we have not just plucked this analysis
out of the air in the first place, largely those particular assumptions
come from the Foresight work which, granted, is long-term and
is subject to quite a lot of—
Q296 Chairman: It is going to change
tomorrow, is it not?
Mr Hewitt: It is said in many
quarters that some of the Foresight work now is looking somewhat
conservative.
Q297 Chairman: Hang on. You are going
to be making an announcement tomorrow in which you are going to
reveal to the world what your new assumptions are for the impact
of climate change, are you not, as a Department? That is right,
is it not? The answer is yes.
Huw Irranca-Davies: Our knowledge
and understanding of the evidence base in this field is constantly
improving.
Q298 Chairman: Do not duck and dive.
I heard that this morning from a Mr Roger Street who is the Director
of the UK Climate Impacts Programme. He said that tomorrow this
is what is going to happen, so you will have updated data. You
have just admitted that what we are seeing before us here is predicated
on Sir David King's Foresight work and not the latest information
that is going to be available with the UK climate change assumptions
tomorrow.
Mr Hurst: Obviously that is right,
but—
Q299 Chairman: Hang on, I want to
know what is right. We are getting some new data tomorrow, are
we not?
Mr Hurst: Yes.
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