Environment, Food and Rural Affairs Committee - Minutes of EvidenceHC 374

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Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 7 March 2012

Members present:

Miss Anne McIntosh (Chair)

George Eustice

Barry Gardiner

Neil Parish

Amber Rudd


Examination of Witnesses

Witnesses: Pamela Taylor, Chief Executive, Water UK, Peter Simpson, Managing Director, Anglian Water, and Steve Mogford, Managing Director, United Utilities, gave evidence.

Q173 Chair: Good afternoon and welcome. Thank you very much for being with us this afternoon and agreeing to participate in our inquiry on the Water White Paper. For the record, I invite you to introduce yourselves, starting with Pamela.

Pamela Taylor: I am Pamela Taylor and I am Chief Executive of Water UK.

Peter Simpson: I am Peter Simpson, Managing Director of Anglian Water.

Steve Mogford: I am Steve Mogford, Chief Executive of United Utilities.

Q174 Chair: You are all very welcome. Thank you very much for participating. To begin with, I am going to ask a couple of questions on drought, and then we will move to the White Paper, and possibly the draft Water Bill as well. Are you confident that the White Paper’s package of measures to address water scarcity will secure England’s water supply in the face of possibly severe and persistent droughts in the years ahead?

Pamela Taylor: The White Paper does exactly the right thing, which is to talk about resilience and the need to tackle climate change. There is no one simple solution to deal with long-term drought; we will probably need a package of measures. Certainly, in the first half of the White Paper, the co-operation, planning and so on is going in the right direction, but we will need to continue to work very carefully with the Environment Agency and all of the players, in the countryside in particular as well as urban areas, in order to ensure that we plan. One of the things we will need to look at is the ability to move water between boundaries of companies, which companies are doing increasingly. We will also need the ability to consider how all of us can look at our attitudes to how much water we use.

As to whether the White Paper will make a difference, it will. Say you are a manufacturer. You have an abstraction licence and some spare capacity, and you come along and pour it into Peter Simpson’s pipes at Anglian Water. Will it be sufficient? That will depend on the nature of the drought we are facing. It will never make up in terms of what we are facing now, for example, but will it be part of a plan to help us face things? Yes, it will have a place.

Peter Simpson: I agree with all of that. One particular aspect that is usefully highlighted by the White Paper is the uncertainty associated with climate change. The Paper goes to great lengths to stress that we need to start planning, not on the basis of the worst drought we have had in living memory, but the probability against the UK climate change scenarios of exceptional droughts in the future. Therefore, it makes more sense to have a strategy of resilience, which is a big centrepiece of the White Paper. Bringing in that uncertainty, as opposed to the historic ways we have planned for drought, which are based on the worst drought we have ever experienced, is particularly useful.

Steve Mogford: I support those views. The key thing the White Paper talks about in the early part is collaboration. The locations for drought are unpredictable. Eighteen months ago we had a drought in the north-west; now we are talking about the south, so this is something that can often be localised and requires a whole series of different solutions. The key thrust of resilience, sustainability and collaboration is a really important feature of the White Paper.

Q175 Chair: Mr Simpson, in the current drought do you have any concerns about the way Defra and the Environment Agency are handling the situation and the speed of the response?

Pamela Taylor: I think we have been very pleased.

Chair: Perhaps Mr Simpson will go first.

Pamela Taylor: I am so sorry. I did not hear. Forgive me, Chair.

Peter Simpson: Quite the contrary. The Secretary of State has shown very strong leadership. She has made it very clear through the drought summits that have been held-remember, there were a couple last year as well as one held relatively recently-that she is expecting companies to work together and collaborate, as Steve has suggested; and also that this affects not just the water sector but many others. That has been very positive, and there is very strong leadership there.

Equally, the Environment Agency has been very helpful. It has drawn the line in the sand very clearly about its environmental responsibilities in terms of protecting the environment, but it has been much more open to different ideas and suggestions as to how we might help ourselves during this period of drought. Overall, I think the message has been very strong from the Secretary of State, Defra and the Environment Agency.

Pamela Taylor: To put it in context, interestingly in the UK we supply 17.5 billion litres of water every day, so we will need to look at the scenarios of climate change. We will need to look at a suite-a menu-of things, such as increased storage, winter storage and so on. It will take quite a broad range of things for us all working collaboratively to tackle this longer term.

Peter Simpson: I know that the Secretary of State and the Minister, Richard Benyon, were particularly pleased with the way the industry was collaborating in advance of the last summit. They were particularly pleased to see that we were already thinking about the summer of 2013, which in many ways is of greater concern, particularly if we have a third dry winter. That collaboration has been enabled by the way they have approached it, but they have been particularly pleased by what has actually been going on.

Q176 Chair: To put a general question on the White Paper, do you believe that the Government’s expectations of water companies are realistic? What do you believe the timetable for implementation of any draft Bill should be?

Pamela Taylor: The timetable is a difficult one for us all, because in a way we have not got to the bit marked "start", and it depends on where you start from. We feel that the publication of the draft legislation would be a start. With this timetable we are also concerned that there should be adequate time to help to develop what I call the second part of the White Paper. That is the more difficult part-the upstream proposals. That is more difficult, unlike the first part, where in the Anglo-Scottish market we can call on the evidence and experience we have in Scotland. We are Water UK, not Water England, so we have a great deal of experience north of the border and can call on experience there.

In terms of the upstream part of the White Paper, we are in uncharted territory, so it is very important that we work collaboratively. We would very much like to see the draft legislation and this Committee being able to look at that, and for it to be done in such a way, as I know the Committee would want, that all the stakeholders including ourselves collaborate to make sure we make the most sensible decisions we can.

At the moment some thought has been given to time scales, but a route map does not exist at all. To be honest, the idea that you would do it all together-the Anglo-Scottish market, the upstream changes and the price review with additional consumer engagement-would, frankly, be madness.

Peter Simpson: I agree with that, particularly the focus on opening up the nondomestic retail market. We compete in the Scottish market through Osprey Water Services, and our experience is that it takes time to set up the market properly. It probably took about five years pre-2008 to get all the basic set-up for that particular market. Some of those things are not there yet, and effective governance of the whole process was particularly important. Alan Sutherland has been very proactive in making sure that all the people who will be involved in the market are brought into what the structure would look like in future. He was very keen to ensure that those affected by the market, i.e. nondomestic retail customers, were equally involved in helping to set it up.

Some of those things are terribly important, and it takes time to get them right. One of our feelings about the time scale is that it will take several years to do it, but it is much better to spend the time getting the set-up right to avoid potentially unintended consequences. Our experience from Scotland is that it took probably five years up to 2008 to get that in place.

Steve Mogford: I would agree. One of the core themes in the White Paper is the potential for unintended consequences. To work through this against an evolutionary timetable, which I think is one of the themes in the White Paper, is extremely important. Some of the aspects of the White Paper are little more than concept. Some of the case for change is as yet unproven, and how we would implement those things has not been worked through. I see a need for a thoughtful timetable based on strong collaboration between the parties.

Chair: That is very helpful. Perhaps we can move to abstraction.

Q177 George Eustice: My questions are also about time scales but specifically in the context of the reform of the abstraction regime. I think it is fair to say the industry generally welcomes the focus on flexibility going forward and the ability to vary the volumes that can be abstracted, but some of the environmental groups have expressed disappointment that this is not going fast enough and we should commence these changes earlier. What are your concerns about starting it earlier? Do you agree with them on that?

Pamela Taylor: We have started, but again it is a question of defining "start". For a year or so we have been working successfully with Defra, the Environment Agency and Ofwat on abstraction licence reform. It is absolutely right that the process is properly thought through. It does not affect only water companies, but businesses and others. It is not just a conversation we can have and get on with it. We are also working in parallel with the Environment Agency, where we talk just about water companies’ abstraction. We have already begun work in parallel with the EA on that to see whether, on a voluntary basis, we can bring forward any of the principles in the White Paper so we can make a difference already ahead of any legislation that is introduced.

Our present approach, which is the work we are doing with Defra, EA, Ofwat and other stakeholders, whom we must not forget, and the research programme, is something in which we have to play a part, but we cannot dictate the pace of it. What we can and are doing in parallel with that is to say that where it affects just water companies, we are already working with the Environment Agency to see what we can do, and obviously we also involve environmental NGOs.

Steve Mogford: To give some examples, for us in the north-west, we have about 350 licences, of which about 250 are under consultation in terms of modification of the abstraction regime. The sorts of things we are talking about involve areas of special scientific interest, but also areas where we have very fragile public supply lines. The types of thing in which we are engaged with the Environment Agency is how we achieve the abstraction change that is being sought but also maintain the public supply through alternative sources, which may be different boreholes, different storage arrangements or different pipelines. We come down to the very practical issues, which then require funding, planning and delivery. I think that overnight changes to abstraction can cause quite significant risk to continuity of supply.

The other issue for us in the north-west is that we are only a proportion of the total abstraction from the environment. An awful lot of businesses abstract. In today’s environment, if you walk into a company and ask it to reduce abstraction over a very short time scale, there is very little it can do either to adjust its processes or, to be honest, fund them in the current environment. Part of it is how do we bring about the desired change without either threatening public supply or damaging businesses?

Q178 George Eustice: You have talked about the importance of getting it right, and we can all agree with that, but as I understand it, it is not really envisaging a change until the mid-2020s, which is quite a long way off. How much conversation do you need? You say you have started a conversation.

Pamela Taylor: Where it would be relatively easy for a company to work with the Environment Agency, we are beginning that work anyway; we are anticipating the legislation and so on because we appreciate the need and the interest, which we all share, to get that right and to get on with it.

Peter Simpson: To add some context, when we look at 2027 and that statement in the White Paper, that envisages where we might get to as the end point, for example maybe an open market for abstraction licences. That is quite significantly different from what we have had before. Therefore, it makes sense to do it over a decent time scale.

Q179 George Eustice: But do you imagine that the new types of licences could start to be introduced much earlier?

Peter Simpson: Potentially, because the piece Pamela is talking about is the current programme. There is already an Environment Agency programme for restoring sustainable abstractions. Steve and our company are looking at where the Environment Agency is saying that a stretch of river is under stress and, therefore, what can we do?

To give you a very practical example similar to Steve’s, in the city of Norwich there is a potential reduction in the amount of water that we as a company may be able to take out of the public water supply of approximately the same amount of water that we supply to that city. If you take that to its extreme, it means no water for the public water supply. Clearly, that is not something where you can click your fingers and say, "Well, that’s the answer; we’ve traded one off against the other." What you have to do is develop the evidence base to make absolutely sure you are talking about genuine amounts of water that if they are not there will adversely affect the environment, and then work out what the infrastructure solutions are to ensure you do not end up with a situation where a city does not have sufficient water supply. That takes time.

Steve Mogford: It would be wrong to assume that everything waits until 2027.
What we are seeing is that work has already begun and there is a progressive amendment of abstraction licences.

Q180 George Eustice: So you see 2027 as the end of the process, not the beginning.

Steve Mogford: Absolutely, and we have already begun.

Q181 George Eustice: That brings me to my other point on sustainable abstraction and the proposal to make use of section 27 of the Water Act 2003 to revoke a licence without compensation where it is causing serious damage. Do you have any concerns about the implementation of that power and its implications, given what you have just said about having to plan for these things? This power will be coming in next year. Is that something that concerns you?

Pamela Taylor: It would certainly be necessary for the Environment Agency to be transparent in the justification and evidence for its decisions, and obviously it will need to allow sufficient time for the changes in the assets to take place, as you have just heard from examples that there may be, particularly as we need to bear in mind that companies have been acting lawfully to date under the licences. We all share the responsibility of looking after the environment while placing that alongside a statutory obligation to supply water to people, because we are put on earth for public health reasons-to supply drinking water and sanitation. Obviously, companies are very used to that balance, which they always have to strike. We will continue to have to do that in the discussions with the Environment Agency.

Steve Mogford: In the current environment, where there are consequences of changing abstraction, that drives a particular behaviour. One is always concerned in any sphere of life if there are no consequences for your actions, but the evidence is that the progress we are making with the Environment Agency is very pragmatic; it is engaged. We are modelling and working through consequences, so at the moment we would not be concerned if we carry on the way we are in terms of working this through properly.

Q182 Chair: Just before we leave abstraction, can we have an assurance that growers and farmers, particularly in the eastern and south-eastern regions, will have access to water for livestock, vegetables and cereals?

Peter Simpson: A lot of the water that is used by farmers in the east of England is abstracted directly from the environment, in which case it is the relationship between the farming community and the Environment Agency that decides the appropriate level of abstraction, for example for irrigation. We have quite a constructive dialogue with all the various sectors in the east of England and the south-east around the challenges we face. In terms of assurances, I think that is a discussion for the Environment Agency and those particular groups in terms of what they are allowed to take out of the environment. It is not within our control.

Q183 Barry Gardiner: I want to talk to you about large-scale transfers, but before I do I want to pick up the issue of abstraction. As to the abstraction incentive mechanisms, looking at the hydromorphological changes to rivers-basically changing the structure and direction of the river flow at various points-how are you going to do that without seriously affecting biodiversity, species and habitat along those river catchment areas? Is there a commitment anywhere that this will be done only where it shows a biodiversity improvement? There are many historical examples where people have decided to straighten out river channels. Hurricane Katrina and the MR-GO channel in New Orleans are a very good example of that. It destroyed all the tupelo swamp that had protected the city for so many years. I see us getting into a position here of thinking, "We’ll increase the river flow here; we will straighten out the channel and do this, that and the next thing," and our focus is so much on abstraction that we lose the wider picture. What commitments have been put in place here?

Peter Simpson: As to responsibility and accountability for looking at flows and biodiversity in rivers, ultimately that comes down to the Environment Agency. I think it is the Environment Agency that is being targeted in the White Paper with respect to potential changes to river flows, the creation of in-river channels and the like. That does not directly fall to water companies. If you like, it is not part of our accountability. We come into it in terms of discussions with the Environment Agency about what role we can play in abstraction, and increasingly what we can do in terms of work around catchment management, but when it comes to deciding what the rivers should look like-you have replayed the words a little-that is really a matter for the Environment Agency, not water companies.

Q184 Barry Gardiner: I have to say that does not reassure me greatly, but I leave that on the record and move on. Mr Mogford, I want to explore a discrepancy between United Utilities and Water UK on the issue of largescale transfers. My understanding is that you have proposed a north-south pipeline to run alongside High Speed 2, which might cost about £2.6 billion but you think it is a once in a lifetime opportunity to have minimal local environmental impact but maximum effect. Of course, Water UK has set its face against these large-scale transfers. Perhaps you would play out before the Committee your fight, with one of you in the blue corner and the other in the red corner.

Steve Mogford: Why do you think Peter is sitting between us?

Barry Gardiner: You stay out of it!

Steve Mogford: I would like to put the HS2 pipeline idea in context. Peter mentioned earlier that one of the things water companies had been doing was working together to look at the opportunities to deal with both the current potential drought situations and also the longer term. Of course, we are sitting in the north-west with normal reservoir levels and a healthy position at this time of year. What we were doing essentially was looking at ideas that might contribute longer term to this issue. Clearly, HS2 is a very long-term project and would not make any contribution to the immediate issues. The thing that triggered the idea was a look at activity in China. China has put pipelines over very long distances to feed its coastal cities. We have been looking at the cost of that. We also did some work on putting a pipeline between Manchester and Liverpool, so we had current experience of being able to do bulk transfer between cities.

To put this in context, the size of a pipeline of that nature is unlikely to make a massive difference. To give you an idea of scale, having talked to my colleagues in Thames Water, I think London consumes about 2,300 megalitres of water per day. A pipeline that supplies 30 megalitres of water is a very small contribution to that overall demand. The truth of this issue for us-I think there is no difference between ourselves and Water UK in this matter-is that the solution to long-term climate change will be a combination of issues. Some of the things that we are contemplating now are very much about trickle effect and moving relatively small quantities of water relatively short distances, but freeing water further across the geography to be able to move it across boundaries, with the assistance of small bulk trades between different companies.

I think the high-speed line affords us an opportunity to say: are there services that we wish to put with it? There are lots of engineering issues involved in putting a pipeline next to a high-speed line, which I am sure will be debated elsewhere. This was just putting ideas into the pot, but the more immediate challenge and solutions will be around trickle effect and also storage.

Q185 Barry Gardiner: Maybe we can come to storage later. I think you are being very nice to Water UK, but it is on record as saying that it would be economically and environmentally unsustainable to do what you suggest and have those long-range transfers. You say this is far into the future, but we are already talking about 2027 scenarios. I want to see HS2 used for all sorts of biodiversity improvements, migratory corridors and so on. When these opportunities arise, is it not absolutely essential that we do not just say, "We can think about that later," as you have just done?

Steve Mogford: No. I think ideas of this nature need to be tabled, discussed and either adopted or discounted, and they are. When we looked at a drought in the north-west 18 months ago, we were thinking of laying a pipeline along the hard shoulder of the M62. It took us seven or eight years to lay the pipeline that we eventually did. These are long-range projects. They are also insurance policies simply because, if you look at future scenarios, the probability of water shortage is as high in the north-west as in the south. These are things that could well be localised. It does not mean it has to be in the south or the north; it could be all over the country. An infrastructure project of that nature would need to be properly considered, costed and looked at against the other options. It is a long-range decision, and an insurance policy.

Pamela Taylor: As the blue corner, if I may, our comments related in general to the generic idea of a national grid, which, if you began from the beginning and tried to set it up, would indeed be costly and carbon-intensive. Of course, one of the problems is that it costs megabucks to pump water around, but one thing we have said to Defra is that as an industry we would be very happy, should this become Government policy or should they want to explore it as a possibility, to look at what Steve has called insurance mega-structures. You might want to think further outside the box and ask what kind of projects and connections, in addition to bulk trade and interconnections that of course we are focused on in terms of resilience, would be a sensible idea or possibility, or how we might look at it. While we have not said that a national grid would be a good place to start, we have said to Defra that these insurance mega-structures would be a possibility and would need to be looked at, and if they were to be looked at, we certainly as an industry would be happy to do that.

Q186 Barry Gardiner: You are open-minded on HS2.

Pamela Taylor: Exactly.

Peter Simpson: In terms of the White Paper, in this area we very much agree that the immediate opportunities are to look at the strategic interconnections between companies and the ripple effect. With respect to the summer of next year, one of the pieces of work we are doing particularly with Yorkshire and Severn Trent is to look at opportunities to allow those companies to release some water to Anglian using existing interconnections. I think the White Paper is spot-on in that respect, and also spot-on in that it creates a role for the Environment Agency to take an overview across the country to look at these sorts of opportunities. That seems like a fairly sensible place to go.

Q187 Amber Rudd: I want to ask about water metering. Do you think that the White Paper should have contained more ambitious proposals to increase levels of water metering at a faster speed?

Pamela Taylor: We think the White Paper has got it just about right when it comes to metering. Obviously, metering is a fair way to charge for water services, and it makes it easier for customers to understand their water use and make informed choices about the way they use water. We would like all customers to use water wisely for as much of the time as they possibly can. It also helps with tariff structures, because meters could be used in terms of affordability, tariff structures and so on. That would be a contribution to the social challenges faced by people.

But the transition to metering needs to reflect local circumstances, which will vary from company to company. Companies will need to take account of their water resources, their current level of metering, the cost and benefits of going further with metering and also improvements in metering technology. We think that the White Paper has got it just about right, and it does not seek to impose and pretend that two companies, which may be experiencing very different circumstances, are the same because clearly they are not.

Q188 Amber Rudd: Mr Simpson and Mr Mogford, do you support the pace at which we are trying to get metering done?

Peter Simpson: For us, in the next three years Anglian Water will have 80% of its domestic customers metered. That has been terribly important for us in a waterscarce area. Having pursued this particular agenda for the best part of 20 years, we know that for every meter put in, we see a reduction in consumption of about 10%. That is an important part of our demand management strategy, but we also accept it is horses for courses; the same approach will not necessarily work across the country. We are convinced that it is right for us, but we also accept that different approaches will work in different areas.

Steve Mogford: From surveying customers, we have a high degree of scepticism about water metering. I think the White Paper got it right, in that we could have seen quite an adverse public reaction among our customers to imposed water metering. In the north-west area we have about 13% of the population but 52% of the most deprived wards. I think people are more comfortable with the certainty of the present billing arrangement, particularly when they see meter charges rising quite significantly in other utilities. There is nervousness and distrust of water metering, and in that sense you see a different picture in different parts of the country.

Q189 Amber Rudd: I would also like to ask you about the mistrust we sometimes see among customers regarding leakage and their confidence in the water companies themselves, with a slight emphasis on the water companies "allowing all this water to leak, so why should we try to conserve water?" Do you feel the message is getting over to people? Do you feel they have a point because not all leakage targets have been met?

Steve Mogford: There is always more we can do to educate the public on leakage, particularly the economic implications of it. As a business, since about 199293 we have virtually halved the leakage, going from 960 megalitres down to 464 megalitres, which is our target. We have met our leakage target over the last six years. We have been trying to engage the public in leakage through the use of things like free leak lines, particularly at periods of drought or freeze-thaw, when we have very high leakage levels, and through the way we publicise the opportunity to report and advise us on leaks.

All of us have an economic level of leakage set. If we were to look to drive out leakage to the absolute maximum, we would be doubling the water bill for our customers. There is a point at which you can only go so far on leakage for it to be an adequate economic approach and for it to be affordable for our customers. Perfection would cause a very expensive water bill.

Pamela Taylor: We understand where customers’ attitudes come from in that regard. We also do not make excuses when companies miss the targets they have agreed with the economic regulator, so we are certainly not stepping away from that at all. One thing to bear in mind is that when the weather causes bursts, water companies have people out there round the clock, even checking empty workplaces for signs of bursts-for example, during the Christmas break. One thing people forget is that leakage on customers’ and businesses’ pipes count against water companies’ leakage targets as well. This is something we all have to do in terms of safeguarding, minding and looking after the infrastructure, but this is customers’ money we are using, so it is perhaps for us to continue to have that engagement with customers regarding what is appropriate in terms of the amount of their money we spend on leakage.

Peter Simpson: It is absolutely right that we are held to account, and customers look to us and say, "You must have your own house in order before you start making demands on us." We are very clear about that. Bear in mind that last year’s winter was exceptional. For Anglian, around Christmas and New Year we were putting more water into supply than we would normally on a peak summer day. There was an exceptional level of leakage caused by that. It was minus 19 degrees consistently in parts of Lincolnshire and that area. These things had never been seen in living memory. We recovered the leakage that resulted from that in eight weeks, but there is no doubt that additional water was leaked in the year.

To set the context, as a company we are leaders in terms of leakage levels in the industry. We are right at the forefront, and we should be, because we are in the most water-scarce area. This is related to Steve’s point about some of the economics. I spent quite a lot of my career working round the world in Asia, central Europe and North and South
America. It is also quite important to contextualise where we sit as a country. The International Water Association has recently done some work to try to regularise the reporting of leakage across lots of different countries and companies. It is all reported differently round the world. Having taken on that mantle, it has come up with something called the infrastructure leakage index, which is basically a common way of looking at it. That shows that the water companies in England and Wales are among the best in the world. When we say that Anglian as a company has a low level of leakage, that is true, but it is also true on a global scale.

When you look at countries like Australia, where you might anticipate a real focus on leakage, in that particular comparison it is in the same band-band A, according to the World Bank definitions-but slightly behind where we are. It is not easy to get all of that message across to customers, and one of the biggest challenges we face is how to communicate that. We all recognise that one visible leak that is not repaired undermines everything I have just said and all the messages we send out to customers as to what we want them to do in terms of water efficiency. That is a clear challenge we have to take on.

Q190 George Eustice: In some of your written evidence you have talked about a disconnect. You say half the White Paper talks about competition and the other half talks about having a holistic approach and collaborative working. Can you explain in a little more detail why you think the two are mutually exclusive?

Pamela Taylor: The first part of the White Paper describes the world rather as it is now, with water companies taking responsibility for ensuring that they safeguard water in its raw state in the catchment through to treatment and the quality in customers’ taps. A classic example of that would be catchment management, when the water company works long term over many years to improve the quality of raw water in that environment. That includes many stakeholders: local conservation groups, environmental groups, landowners, local government, farmers and so on-whoever is relevant in that catchment. We were way ahead of regulatory incentives in doing that. We did it because it was the right thing to do.

The second part of the White Paper opens up the world I have just described to competition, so we need to work together with others, as we set up this new way of working and the introduction of competition, to try to limit, with new contracts, people coming in and so on, and how complicated that might be and how expensive it might become. Take the example of XYZ water company. Would it be interested in joining in and spending money on local catchment management? Would that be part of its business plan? I am not ascribing to them unworthy business practice. What I am saying is that any new entrant would just be responding to the market incentives being offered at the time, so it is for all of us to ensure we safeguard that if we think it is important. Of course, we accept the principle of new entrants and competition, in which case the question is how do we work together to make sure we can bridge the gap?

Q191 George Eustice: Ofwat and the Environment Agency disagree with that argument for the reason that you are still separating the wholesale operation from retail competition, so all the upstream work about collaborating and managing water resources will still be handled by privatised regulated monopolies. The only competition is at the retail end, and even then it is only with businesses, not domestic customers.

Pamela Taylor: That is correct for one part of the White Paper and that is indeed our point, but for the other part it is envisaged that there will be competition at each stage. What we are saying is that we need to look at how it is introduced. It seems to us that the sensible way to do that is to ask what needs to be safeguarded. In that part of the White Paper where we are saying this works well with integrated companies, what do we need to safeguard? Once we have decided that, how do we go about introducing the competition that is being talked about in such a way that is not undermined?

At the moment the White Paper is very light on detail in that regard. That is not surprising because it is not being done, but it is up to us to play our part in making it happen. The point you are talking about is the retail part, which would not be the problem. What we are talking about is my being able to pitch up with a spare pint of water that I might have from my abstraction licence if I were a manufacturer, and pop it into the pipes of these two companies here, or XYZ Ltd’s reservoirs. That is the point we are talking about. Of course, we accept that it will have to happen. It is a question of how we manage it in such a way that the work currently being done to integrate, protect and plan is safeguarded.

Q192 George Eustice: But if there is a market incentive to supply that water, does it not encourage working together?

Pamela Taylor: Not necessarily. It depends on how those incentives are constructed. If the incentive encourages somebody to pitch up, forget the environment and just go for one or two jolly good interesting, easy business customers, and that’s it-thank you and goodbye; but if the incentive is part of protecting the environment and catchment, it is a very different feel.

Peter Simpson: Internationally, if you think of comparable examples you might find a build, operate and transfer contract, so company A is incentivised to come in and build a treatment works and supply an amount of water to a city. The contract is all based on how much water they provide at what quality, and it is a take or pay contract. They are all over the world. The problem is that it ignores a lot of the things Pamela has been describing. It does not very easily allow that integrated approach to look at things. You have to think through those things very carefully. It is one of those areas where we are saying there is very little definition in the White Paper at this stage, and it needs a lot of careful thought; otherwise, there could be potentially unintended consequences, which nobody wants.

Q193 George Eustice: In your view what would it look like? What could the Government change in their current proposal that would reassure you?

Peter Simpson: In my view, it would probably be much more sensible to do this in a step-by-step fashion and focus on doing a few things really well first. I think the whole issue of setting up the nondomestic retail market is a big deal. It is a difficult thing to do and will take time. A lot of people talk about the experience in Scotland. The reality is that Scotland has 130,000 customers. If we apply that to England, that will go up to 1.3 million or 1.4 million, so it is a question of a scale-up from a pilot plant to a full-fledged operation. You go from a state-owned wholesaler, if you like, to 21 different wholesalers; in fact it is more than that, because insets are being granted all the time, so that number is ever increasing. So, a relatively simple set of tariffs organised in Scotland becomes at least 21 sets of different wholesale tariffs in England.

As part of the feedback, our suggestion is that we do a few of these things in order and sensibly, and let’s start off with non-domestic retail competition. Let’s think it through and work together and get something that works, not try to do all the bits at once. To think of the example I have just given, in Scotland there is not the wholesale piece-the upstream piece Pamela talked about. There is no model to follow there. Therefore, it is really unchartered territory. My view is that we should start with something where we have some experience. Work together and get it right, and then we can think about the next steps we want to take, not try to do it all at once.

Q194 George Eustice: Again, it is timing; you put it off. You seem to be saying that you do not want to start the upstream competition yet. You want to do the inset stuff first.

Peter Simpson: My view is that you do not start it at the same time. Do these things in a logical order. Who is asking for competition the most? Non-domestic retail customers in particular are pushing very hard for it; that is their view. We need to put the effort into getting that bit right and to do that bit first. All I am saying is that is a big thing and it is not easy to do. I base that on our experience in Scotland-what it took to do it there, our role in that and where it has got to.

Q195 Barry Gardiner: Of the £600 million transferred through a charging system based on rateable value, at least a third of it was progressive, wasn’t it? Therefore, doing away with it will mean that it is quite regressive in its effect. You will remember that the Walker review in 2009 suggested that of the £600 million transferred between customers, charging on a rateable value basis, £180 million-about one-third-was going from rich to poor people; the rest was transferred from people to people who were much the same, and in some cases it was going from poor people to rich people, but that was very much the minority, because you were charging on the basis of the value of the house.

Pamela Taylor: Yes.

Q196 Barry Gardiner: How are you going to make good that regressive change in charging? How will you ensure that you are meeting needs? Mr Mogford said that his own region in particular has a high concentration of very poor areas. Some people would say, "Isn’t it stupid of your company to have chosen that particular area as a privatised company?" Some people would say this was just a problem of privatisation, but you are now not able to get the same public cross-fertilisation and subsidy going on.

Steve Mogford: The way we have looked at this is essentially in being able to deal with affordability. There are a number of elements to this. First, there is a continual pressure on efficiency. If you look at the drivers of efficient operation through our regulatory contracts, there is a lot of pressure continually to improve efficiency through comparators. Very much linked to the point you make about the demographies of the different communities we serve is the concept of a social tariff, which is contemplated in the White Paper. That concept is more acceptable in some areas than in others because of the proportion of wealthy to not wealthy, which is the point you are making. Because of those differences in demography, we have to take different approaches.

I will let Peter speak for himself, but I know from conversations we have had that social tariffs may find greater acceptance in his region than in mine, as served by United Utilities. In dealing with communities that have difficulty in meeting their bills, we have to use different tools and techniques, perhaps in the way we help people who are struggling to come back into payment, for example by way of the charitable trusts that we fund and are there to support people who have difficulty to get back into payment. These are areas where there is an element of horses for courses in the way we deal with the different demographies we serve.

Q197 Barry Gardiner: From the public’s point of view-at the moment they do not have any real choice in this matter; unless they move house, they are not going to shift between you- what they want to know is that if they are a poor family in a poor area, they will not find that the cost of their water per year will go up by quite a bit. I saw the percentages in the papers: 23% of households pay more than 3% of their incomes, and 11% pay more than 5% of their incomes on water, and that is going to rise, isn’t it?

Peter Simpson: I have a few observations. It is quite a complex question, and it has a number of different definitions.

Barry Gardiner: Absolutely. It is a complex thing.

Peter Simpson: Speaking for Anglian, first we think that metering is pretty important. Obviously, that takes out a lot of the things you are talking about.

Q198 Barry Gardiner: You are not talking about rising block tariffs on the back of metering, are you?

Peter Simpson: No, we are not.

Q199 Barry Gardiner: Why? From an environmental and water efficiency perspective and a poverty angle, it makes sense, but you are not promoting that.

Peter Simpson: Because we have done quite a lot of work, looking particularly at Australian companies, on what the signals are and what size the blocks need to be before there is an effective reduction in the amount of water used. We are not convinced that will lead to reduced water consumption. To return to your original question, from our point of view the answer is metering, because we think that is the fairest way to pay.

Q200 Barry Gardiner: If metering is not going to reduce consumption, remind me why we are doing it.

Peter Simpson: You were talking about rising block tariffs and their impact.

Q201 Barry Gardiner: So you think the meters will be a better indication to a household than the fact that they start paying a lot more money once they go over a certain usage per annum.

Pamela Taylor: It is the only way they would know.

Peter Simpson: We know from fitting meters generally that every one we fit means a reduction in consumption of about 10%. That is why we have been pursuing that quite intensively. Your question about rising block tariffs was an add-on to that. We are not convinced that approach makes that much difference over and above having a meter in the first place.

To go back to your original point about affordability more generally, there is a point about metering as opposed to basing it on rateable value (RV). Another particularly important point is that we offer a range of different tariffs to customers, which again helps in these situations.

Pamela Taylor: If they are on a meter.

Peter Simpson: Yes. To come to Steve’s point about affordable tariffs, which is flagged in the White Paper, we think water companies should be given the option, as is writ large in that paper, to implement affordable tariffs if they think they are right.

In our case, in 2005 and 2010 we tried to introduce our affordable tariff, which was called the Passport tariff, and that would have meant a 25% reduction in water bills for those customers in receipt of certain income-related benefits. We did more than that; we spoke to the wider customer base and surveyed them to ask essentially whether they would be prepared to have a 1% increase in their bill to enable that to happen. Two-thirds of our customers said they would. That is something we would like to be able to do, but in the past it has been vetoed particularly by Ofwat. As a result of this White Paper, we are particularly keen to see that water companies are given the ability to implement social tariffs if they think that is the right thing to do, and that it is not vetoed either by the Consumer Council for Water or Ofwat.

Pamela Taylor: We need to target in order to provide the assistance, so we need information as to who are the hard-pressed customers if a company wants to devise such a tariff. As we know, at the moment the Government, in particular the DWP, hold that information; we do not. Unless and until we get that information, we have our hands tied behind our backs.

Q202 Barry Gardiner: That is a pretty disingenuous response from all three of you, if I may say so.

Pamela Taylor: No, you may not!

Q203 Barry Gardiner: I tell you why. The summary of the report by the Department in October last year said that the consensus among the water companies was that increased support for customers facing affordability issues "could be best achieved by additional Government funding". Not one of you has mentioned that.

Pamela Taylor: We were talking with you in the context of the Water White Paper.

Q204 Barry Gardiner: But we are talking in the context of what you can do about affordability of water, and your response to the Defra proposals was that the Government should put in more funding. You have not said that to this Committee, nor have you said how likely you think that will be in the present financial plan. How likely do you think it will be that they do what you said in your response to that October report?

Pamela Taylor: I must apologise. I was answering, clearly wrongly, in the context of what we have in the White Paper now. Therefore, taking that as a given, how do we implement and move on? Social tariffs can help when it comes to the water bill customers are finding difficult to pay, but we cannot solve the broader affordability problems; only Government can do that. We have not moved away from that at all. I apologise that we were talking within the context of the White Paper.

Q205 Barry Gardiner: Let us go to likelihood and probability. This is your solution for affordability. The first thing to happen is that Government must put in more money. Can you quantify how much, and how likely you think that is in this spending round? If this is not a realistic proposition, we have to look at something else, and that puts the onus back on you, doesn’t it?

Peter Simpson: We are talking about various submissions, and one that was made on behalf of the water industry. If I talk about what we have said as a company, we would like the ability to implement a social tariff. We have not said anything beyond that. We have researched it; we understand our customers’ appetite for that and we are comfortable that the majority are with us. Given that approach, we would take it and move forward. We think that would make a very significant difference in our case. That is us and with our level of deprivation, if you want to use that word, in our part of the world. It is different for different companies, and I can speak in this case only on behalf of Anglian.

Q206 Chair: Do you operate your current tariff from a charitable trust?

Peter Simpson: We have an arrangement similar to Steve’s for people who are in a very difficult position.

Steve Mogford: United Utilities is not at the moment seeking Government subsidy or support. I am conscious of the fact that for one particular region that is contemplated. The issue for us, as with Peter, is that for customer acceptability in our region, a social tariff does not have the same level of acceptance, but we want to be able to continue to explore the different schemes we have, whether it be charitable trusts, different tariff arrangements or a series of mechanisms. The key point, which Pamela made, is that it would be extremely helpful for us to understand the communities that we should be targeting. Therefore, the relationship with the DWP that energy companies, for example, are developing is something we would like to extend to water companies.

Chair: That is very helpful. Perhaps we can move on to bad debt.

Q207 Neil Parish: Basically, they reckon that about £15 goes on every bill in the country due to bad debt. Of course, water is always seen as very much part of life, so you cannot cut it off. We have been discussing that there are a lot of people who cannot pay, but there are also quite a lot of people out there who won’t pay. So why should the good people who pay their bills turn round and pay for those who won’t? What measures would you like to see to help encourage those people who can afford to pay but just won’t pay?

Pamela Taylor: Take them out and thrash them. No, you are absolutely correct.

Neil Parish: I could not agree with you more.

Steve Mogford: I think one of the tangible measures that the Government could take is to proceed with the view that requires landlords to advise on tenant arrangements, because one of the irritants for us is being able to understand who is the tenant in a particular property and then to bill appropriately. Certainly within United Utilities, and I think it is the same industrywide, we are very supportive of the move to place that obligation on landlords.

Pamela Taylor: The biggest problem is that 80% of people in water debt live in rented properties; that is Ofwat’s figure. So asking landlords to provide the contact details of those tenants seems a very sensible, small and simple thing to do as they have the information. We are even going to the expense of setting up a national web portal in order to make that very simple for them because, as you say, why should families and pensioners be asked to pay an extra £15 for landlords avoiding a small administrative burden on what is, after all, a commercial undertaking? We are looking for Defra to come forward and stop delaying on the implementation of this measure, which in fact was passed in the last Parliament with crossparty support. We just need Defra, frankly, to get on with this so that we can get on with it.

Peter Simpson: In playing our part there, we recognise that the whole administration around this could be quite complex. As Pamela said, that is why we have come together to create this industry portal. For Anglian, just to put a number on it, 70% of our bad debt relates to people who are in tenanted property, so it is the lion’s share.

Q208 Neil Parish: Does Scotland have a different policy? Is there anywhere in the United Kingdom that has a different policy towards getting these bad debts paid or not?

Pamela Taylor: Because of the way in which we are structured and because of the way in which we bill customers, we cannot borrow from the model either in Scotland or in Northern Ireland.

Q209 Chair: So we do not need any new legislation; the Government just needs to apply the 2010 Act?

Pamela Taylor: All it is doing at the moment is delaying implementation of the measure that the last Parliament passed, as I say, with crossparty support.

Q210 Chair: I remember it well. Do you know why?

Pamela Taylor: No. I can take a guess that this is a regulation and it is waiting in the queue for one to go out before one can go in. But really and truly, this is a situation that is not getting better; it is getting worse, and the idea that people who may well be hardpressed or pensioners are picking up this bill is just not on.

Neil Parish: Surely, madam Chairman, we can press for this, can’t we?

Chair: We do not need to. I will just do a question, but that is very helpful. If we could now turn to market reforms.

Q211 Barry Gardiner: What are the key risks that Defra and Ofwat should have in mind when introducing market reforms, and how can these best be managed?

Pamela Taylor: I think that the Government has already identified the biggest risk-which does not have to materialise; it is very important for us to say that-that needs to be managed, and that is ensuring the confidence of investors as we implement the recommendations in the White Paper. We are absolutely clear that there are three major parties when it comes to investor confidence: one is the Government, another is the regulator and the other is the regulated. Of course, we take that responsibility very seriously, as indeed does our regulator, and we are very pleased that the Government does, too.

What we do not want to see is that investors either walk or that they cost the additional risks if they perceive additional risks. As we know, what investors do, because that is their business, is cost risk. So if they were to think that the way in which we were carrying out the implementation of the White Paper, in their perception, was increasing risk, then they will either walk or they will increase costs. We do not want that, which is why we are so keen to implement this White Paper as constructively and co-operatively as we possibly can.

As we know, the industry is debt-financed, and we are going to need to invest as an industry over £22 billion over the next five years and, of course, if customers had to pay for that on a pay-as-you-go basis, the bills would not be worth thinking about; it would just not be possible. We have to make sure it is done in such a way that the cost of borrowing money for companies does not increase, because a one percentage point increase in the cost of capital results in a 5% increase in customer bills. We know the Government does not want to see that. That is not why they produced their White Paper. We know our regulator does not want to see that and we certainly do not, so there is a big responsibility on us to get this right.

Q212 Barry Gardiner: We have spoken before about the way in which if Ofwat were more relaxed about companies using green infrastructure, soft engineering rather than concrete and steel plant, the amount of capital that you need to invest could come down substantially. What representations are you and the industry making to them to allow that, which would achieve a benefit for you as a company, a benefit to your consumers in lower cost, but also a benefit to the environment in far more environmentally friendly soft green engineering?

Pamela Taylor: Absolutely, and as I mentioned earlier and, indeed, Chair, as we have discussed before, a classic example of this would be catchment management. We were ahead of the regulatory curve on that in terms of pushing, pushing, pushing for it. You can understand, I guess-well, I am kind enough to say that now that we are making progress, but I was not kind enough to say it at the time-the reluctance of an economic regulator when you are saying, as a company, "Please may we invest this amount money and we are not sure precisely what the outcome will be or when it will be and how you might be able to evaluate it, but we want to have a go at this." Companies together and as individual companies did a lot of work to move Ofwat, and we have been pleased that we have seen that movement.

Q213 Barry Gardiner: Perhaps you could feed this in then, as a case example, to the Treasury’s Green Book task force?

Pamela Taylor: Yes, indeed.

Q214 Chair: On the regulatory aspects, do you have a view on who the regulator should be for the shared market? At the moment we have WICS, who is the regulator for the Scottish market, and Ofwat for the English market. Should it be one of them? I do not want to put words into your mouth, Mrs Taylor.

Pamela Taylor: This is such a difficult thing for us all to grapple with. As we were exploring earlier, we are Water UK, so we know very well what has happened in Scotland, and there you were talking about a Scottish market, so it was highly appropriate that the Scottish Government said, "This is the policy direction of travel. You, dear Scottish regulator, the WICS, get on with it and deliver it." When you are talking about an AngloScottish market, you cannot say that completely, as a Westminster Government, to Ofwat, the English regulator, because we are talking about an AngloScottish market. Obviously, as the person who runs Water UK, I have a great interest in terms of Scottish Water and the market there, and not undermining or damaging that by inappropriately introducing an AngloScottish market.

Obviously, companies south of the border also have an interest in making sure that the market they are part of continues to function well as we expand it. So we do not know yet, and it is something we are all going to have to grapple with: how, in some way, we permit Defra Ministers and Scottish Government Ministers to hold the ring in a governance way-because obviously water is a devolved topic for Scotland-that permits the Water Industry Commissioner for Scotland to do what is right for Scottish Water and the scene there, for Ofwat to do what is right here and to ensure that where it is appropriate for setting up the AngloScottish market, they work together.

We must not forget the companies themselves, because I was corrected recently by Alan Sutherland, the Water Industry Commissioner for Scotland, when I said 80% of the work will be carried out by the water companies. He said, "No, it is well over 90%." So we have to come up with something. We do not yet know what it is, but if we at least agree that those are the principles, we are on the way.

Steve Mogford: Chair, I am not sure that the solution necessarily has to be one or the other. I think, as Pamela said, a good governance structure will ensure that we are doing things in the same way where we need to, and that we have consistent policies. I think we have very clear collaboration between both regulators, the Government and industry on both sides of the border, so I do not think it naturally necessarily leads you to a single regulator. It is about governance and collaboration.

Q215 Chair: In terms of the White Paper and the regulatory aspects more generally and looking ahead to the draft Bill, would you expect the Bill to look at aspects of the Pitt Review that require possibly further legislation, as well as the Walker, the Cave and potentially also the Gray Review on regulatory aspects?

Pamela Taylor: Well, Chair, as you know, we have history here in terms of it always being exciting and challenging and wonderful to have proposed new legislation, and we all work out how best that can be done. Hopefully, we get crossparty support, we make sensible recommendations, we get things passed and that is marvellous. But then we do not see them implemented. You are absolutely right, and we do not stop reminding our sponsoring Department that in fact there are still things that have not been carried forward from before, things that were worked through very carefully with the help of this Committee’s predecessors and so on, and we really, really do need to see that carried forward.

It will be for Defra to say whether or not it includes that in a draft Bill, but of course we also have to bear in mind that were they to include it in a draft Bill, when they introduce something in terms of the Bill, as we know, things have a knack of dropping off. So that is something that we will not stop on, regardless of whether we see it as part of a draft Bill or whatever. We will still be pressing for that.

Chair: That is very good news.

Q216 Neil Parish: Just to go back to competition, I am quite wedded to private companies competing with one another, and I am not quite so convinced it is going to frighten off all your investors to have a little bit of competition between companies; it could actually bring down consumer prices in the end. I am just worried about private companies acting as monopolies.

Pamela Taylor: We can certainly understand where you are coming from. As I said, investors can either walk-which means they are just not up for it, and they will not stick around and argue, because they do not have to; they can take their money not just elsewhere but anywhere in the world-or they can cost that risk, because that is what they do; that is their business. We do not want them to do either of those things, because we do not want there to be increased risk.

Q217 Neil Parish: Other private companies have to do that. Why are you different?

Pamela Taylor: Only because-and you are absolutely right to challenge on that-it is then passed on to customers, because as I mentioned, for every one percentage point the companies pay in terms of an increase, that is 5% on customers’ bills, and we are not looking for that. What we want is a perfect way forward, and we are not going to give up on this, which is that the competition is introduced in such a sensible, co-operative and collaborative way that the investors are not spooked, they do not walk and they do not increase.

Q218 Barry Gardiner: Despite the Cave recommendations, there is not going to be legal separation. In the absence of that, what steps will need to be taken by your companies to ensure that new entrants are treated fairly?

Peter Simpson: We have a fair bit of experience of this, not just through our experience in Scotland but also through the competition that already exists in the water industry.

Q219 Barry Gardiner: In Scotland, Business Stream said that legal separation was essential, didn’t they?

Peter Simpson: Yes they did, and we have Osprey Water Services, which sits within Anglian Water and is a separate legal entity but a lot of communication goes on between the companies. Where we have learnt most lessons, though, is probably the inset regime in England. There, we have had to introduce, as a company, very strong equivalence processes to ensure that as a wholesaler, if you like, to new entrants, when we have competition of a retailer here and another retailer coming in here, the wholesaler is giving them the same approach and the same answer. So the company’s own retailer, if you describe it like that, is not preferentially selected because of knowledge or information that it has otherwise.

As a company, what we have done is taken a lot of experience from British Telecom and the change in the telecoms market, and we have implemented a lot of the same equivalence processes to deal with the issue of inset competition to ensure that new water entrants who come into our area have the same approach from us as, if you like, the monopoly in the area that our own downstream company entity would have. It is building on that, so I think we have some relevant experience.

Steve Mogford: I think it is also important to recognise that there are many different views on legal separation. There are some that express a view that it is essential, and others that say it is not necessary. I have heard Martin Cave himself say that whilst preferable it is not essential to deliver the outcomes that we want. The industry, for a whole variety of reasons, has established very good practice in the way that transfer pricing occurs and the way that costs are allocated.

In many ways, what I would hope is that we go through this implementation and we create a level playing field for both the incumbents as well as the new entrants to compete in, rather than simply attracting new entrants. One of the core points there for me is the cost principle, which I think has been established as a law that Government has said is anticompetitive and that therefore it will repeal, but I think there are some very important principles in the cost principle that have to be retained. One is certainly that costs are allocated fairly, but also that domestic customers, through introducing attractive margins for retail competition, are not subsidising big business. So I think we are very interested, in setting this level playing field, in what is going to replace the cost principle rather than its repeal itself.

Barry Gardiner: Thank you, that is very helpful.

Q220 Amber Rudd: We have run over time, so please just one or two sentences for your answers. The final question that I wanted to ask is: when should the competitive retail market, do you think, open up for business?

Pamela Taylor: When it is ready.

Chair: How long is a piece of string?

Pamela Taylor: There is only one place that we can learn from, and that is Scotland. We are really keen to get on with this and to ensure that it is a credit to us all. We have suggested that what we should do is find a way-preferably Defra should lead on this but if not we are happy to work with all the stakeholders-and produce a route map with indicative times next to it: so, all the steps that need to be taken, the indicative times and let’s get on with it.

Q221 Barry Gardiner: Chair, could we ask for the rising block tariff modelling to be made available to the Committee?

Chair: Indeed, that would be very helpful.

Peter Simpson: Yes.

Chair: Pamela Taylor, Peter Simpson, Steve Mogford, thank you very much indeed for being so generous with your time in contributing to our inquiry. We have learnt a lot.

Examination of Witnesses

Witnesses: Dr Rose Timlett, Freshwater Programme Manager (UK Rivers), WWFUK, Dr Geoffrey Findlay, Chairman, Action for the River Kennet, and John Lawson, Technical Adviser, Action for the River Kennet, gave evidence.

Q222 Chair: I welcome you most warmly. Thank you very much indeed for being with us this afternoon and participating in our inquiry on the Water White Paper. Please state who you are and your position for the record, starting with Dr Timlett.

Dr Timlett: Thank you for inviting us here today. My name is Rose Timlett and I manage WWF’s UK Freshwater Programme.

Dr Findlay: Dr Geoffrey Findlay, Chairman of Action for the River Kennet–ARK for short.

John Lawson: I am John Lawson. I am Technical Adviser to Action for the River Kennet, and by profession I am a civil engineer specialising in water engineering and associated environmental management.

Q223 Chair: We are all very grateful to have you here this afternoon. In the short term, do you think that the drought review that the Government conducted is having an impact in minimising the consequences of drought?

Dr Timlett: We are in the middle of quite a significant environmental drought, and we have been seeing the effects on the environment for some months now. At the moment, the latest Environment Agency reports show that pretty much every river in the south, the east and the midlands is either notably or exceptionally low, but most of them are exceptionally low. There are many impacts that are associated with low flows and dried rivers, which I am sure Action for the River Kennet will go into, but it is worth noting that although this is a shortterm effect, the impacts on the environment will go on for a long time; it is going to take many years for the environment to recover. While we cannot control the weather, we can control how we use and manage water. The drought symptoms that we are seeing in rivers at the moment are a symptom of the unsustainable and outdated way that we are managing water, and it is with considerable urgency that we need to reform.

Dr Findlay: I absolutely agree with what Dr Timlett has said. What the drought has done is to draw attention to a problem that has been long in the knowing. Action for River Kennet was formed nearly 20 years ago now, and was drawing attention to the effects of abstraction and repeatedly making the point. We went through a public inquiry, in which the Environment Agency lost to Thames Water, because there was an inadequate value attached to the River Kennet.

Our frustration, therefore, is-it gives us no comfort to say it-that we have been warning about this. It is now a crisis. I do not like to use the word "disaster" too much, but it is an impending disaster, a potential one. My colleague, Charlotte Hitchmough, who directs ARK, described it recently, having been working on the River Kennet, as watching a car crash in slow motion. I would love to tell you a lot more about that.

Chair: I am afraid we do have rather a lot to get through.

Dr Findlay: Understood.

Q224 Chair: Can we look at the future of drought management? Do you believe that the package of measures in the White Paper to address water scarcity will be enough to secure England’s water supply in the face of severe and persistent drought?

Dr Findlay: As we said in our written evidence, in principle yes; our problem is with the time scale, at two levels. There is an immediate issue with our own particular river system, which we can talk about later: the abstraction of the River Kennet. But we are struck, I think, by the relatively leisurely timetable presented in the White Paper compared with the evidence given as part of the documentation, the Environment Agency’s two papers under the Case for Change, which I find create a sense of urgency that I do not find in the White Paper.

Dr Timlett: We have heard a lot about resilience already this afternoon, and we completely agree with that, but to get better at managing drought, there are two things we really need to do. We need to develop resources and we need to cut waste in order to allow us to have sustainable levels of abstraction whilst meeting people’s demands. So we need to invest in the system. In total, if everything in the Water White Paper was implemented quickly, we would be really, really happy. I guess the key concerns for us are around putting off some key decisions until the next Parliament, and whether that will cause a lack of momentum in the whole process; and the fact that we are not going to see changes or completely change to a sustainable abstraction system for 1520 years. Also it is still really unclear to me how, without water metering and much greater effort on demand management, we are going to start to address the fact that a third of the water that we take out of the environment is currently wasted.

Q225 Chair: Thank you. Just generally on the Water White Paper, are you pleased with its contents? Do you believe it is overambitious? Do you believe it is deliverable? Are there any omissions-something that is not in the White Paper you would have liked to see in it? I think, Dr Timlett, you addressed this, but Dr Findlay, Mr Lawson, would you like to give us an idea of what the legislative timetable for implementation of any draft Bill should be?

Dr Findlay: I am struck by the good intentions in paragraph 2.12, which sets out all the things we would like to achieve. I am then disappointed when I turn the page and find that Defra says, "We will consult on detailed proposals for reform in 2013." It is not obvious to me why we have to wait another nine months to even start on consultation. This is the familiar theme, which we will all come on to, of urgency. There is an immediate urgency for us.

One of the areas where the White Paper is weakest-we might want to come back to this later-is on metering. Clearly, we were listening to the debate you were having just now with the water companies. I did note just now that, in terms of the pagination, two pages of the White Paper are taken up with watersaving hints like brushing your teeth and this sort of thing. There is one very short paragraph on metering, and even that is what I would call halfhearted to say the best. I contrast that with the evidence from a disinterested party such as the Chartered Institute of Water and Environmental Management (CIWEM) and Lord Krebs, who speak very strongly on metering. I do not know if you want me to say more about metering now or later.

Chair: We will come on to it.

Dr Findlay: Fine.

Q226 Chair: Dr Timlett, were there any omissions in the White Paper?

Dr Timlett: We have talked about metering and demand management, but just briefly, we are completely supportive of the principles for the change in abstraction reform that are set out in the White Paper. The thing that we keep coming back to is the timetable. In the White Paper it is split up: there is the current problem-the legacy of unsustainable abstraction, and then this future world, if you like, of abstraction reform. They have dealt with them separately. It is unclear at the moment how we are going to resolve that legacy issue in terms of improving and injecting some life into the current Restoring Sustainable Abstraction programme.

Chair: That brings us neatly to abstraction.

Q227 Neil Parish: Talking about abstraction, you are saying the time scale for the longterm reforms is too slow, but is there a risk that if we rush them we do not get them right? What else would you like to see? When you talk about metering, I know people do not like to pay a lot for their water. Take South West Water, where people pay an awful lot for their water; they are much keener to have meters and cut down the amount they pay.

Dr Timlett: We understand that you need time to plan a transition to the new licensing regime, and we are not calling for the changes to be brought in overnight, but what we are worried about is if the delay is not spent wisely. The delay is meant to be for people to work hard, to think about how they plan their systems to either develop new or alternative resources, including getting things in the river basin management plans and the water resource management plans. What we are worried about is that without legislation in the draft Bill there is not enough of a signal in order to make people make the best use of that delay. We are worried that people will just sit on their hands waiting for something because they are not sure if it will ever happen. What we would like to see is framework legislation in this year’s draft Bill that gives powers for the reform of the abstraction regime, but making it clear that it will take time to plan the transition, setting out a timetable in the Bill for secondary legislation or the results of the consultation to be fed into guidelines, for example.

John Lawson: I would like to go back, if I might, to the drought of this year. Can I say one or two things about that, because I think it is highly relevant?

Chair: Very briefly, yes, of course.

John Lawson: The first thing is that it is going to get worse in 2012. We are now in March. The period of recharging aquifers will come to an end in three or four weeks. The rivers are already exceptionally low and the ones that are fed by groundwater are going to get much, much worse in the course of the summer, so we have a serious problem. You asked whether we are happy with the measures that the Government and others are pursuing for drought management, and I think the answer to that is no, because the drought plans that we are seeing pursued by the water companies are focusing on how to supply customers, which is fair enough, but there is no focus at all, as far as we are aware, on how we can reduce the impact on yet more low flows in rivers. There are a number of things in the case of the Kennet, for example, which could be done, practical measures that we have been making some suggestions for but falling on slightly deaf ears, I think. I think that there should be much more of a focus, particularly from the Environment Agency, not just on worrying about the customers, but worrying about the rivers: are there things that could be done during this summer to alleviate impacts on rivers that are going to be highly stressed?

Q228 Neil Parish: You talk about the Environment Agency; they have identified sustainable abstraction areas and restoring it, but have they not identified these sites or are they just not doing anything about it?

John Lawson: A bit of both. For example, the River Kennet, as I am sure you are aware, is dry above Marlborough and it is going to be staying dry the whole summer, basically. If Marlborough was to be supplied from the existing boreholes further down the river, that would relieve the pressure on the upper part of the river. That is probably physically possible to do and we have suggested that to Thames Water, but that is not something that is on anyone’s agenda; it is just not being thought about. There are other measures as well; for example, the lower part of the Kennet is very severely affected by interaction with the Kennet and Avon Canal. Well, I think there should be serious consideration right now of not operating the canal at all this summer. That is something which British Waterways are thinking of in terms of, "Well, if it gets really bad we might have to stop things." I think that the Environment Agency and British Waterways should be thinking about that right now, worrying about the environment and not just about customers and boat users.

Q229 Neil Parish: Naturally, you are worried about the habitats within the river and restoring it and retaining that habitat. Do you believe the Kennet is under real pressure at the moment?

John Lawson: Massive pressure. Yes, massive pressure.

Q230 Neil Parish: Can I ask you just one last slightly broader question? One of my pet subjects is that we do not make enough use of recycled water, not only for human consumption but also for growing crops. There is also pressure in many parts of the country, perhaps not necessarily the Kennet. Do you think we should be putting more pressure on water companies to recycle water and then use that for growing crops? What I rather fear is that we will import food from countries that are even more waterstrapped than we are and we are taking their water.

John Lawson: I agree completely on the point about recycling. Although it is something which is being paid lip service to-for example, by Thames Water-I do not think that they are really pushing hard, because they would rather have a big new reservoir near Abingdon, which is better for their bottom line. But in the case of the overabstraction issue, there is a big solution for the Kennet, which again we have put forward, which in effect would have Swindon being supplied further down the system. The more you push the abstraction down the system, the less pressure there is on the upper system. If you can supply Swindon from lower down the Thames near Goring, and the infrastructure is largely in place to do that already, you could then switch off the abstractions in the upper Kennet supplying Swindon completely. That would be a form of water recycling, because the water would all finish up back in the Thames and go on down to London.

Q231 Neil Parish: Right. Is that different water companies or not? Would that mean reacting between two different water companies?

John Lawson: No, it is all within Thames Water’s ambit.

Neil Parish: I know the White Paper talks about sharing of water between companies.

Q232 Barry Gardiner: Can I just ask how important you think the White Paper’s proposals are to incorporate restoring sustainable abstraction programmes within company water resource management plans?

Dr Timlett: This is something that we think is very important. What we were quite pleased to see in the Water White Paper was recognition that the RSA programme is not effective at the moment and is slow. For example, sometimes it has taken decades for the Environment Agency just to agree that there is a problem and then change the licence. For example, the River Mimram in Hertfordshire, the National Rivers Authority recognised it as one of the worst cases of overabstraction back in the early ’90s; we have finally got to the stage where everyone is agreed that the licence needs to change, but we are still not in a situation where we know when it is going to be changed. This is a problem that has taken a long time, 20 years or more, and it is not just a couple of rivers: there are 260 abstractions that are affecting sites across the country where RSA has effectively stalled. We would like to see urgency injected into this, and we think that adding RSA schemes into water resource management plans and then funded under the price review is a really sensible way to do that.

Q233 Barry Gardiner: Why do you think under the proposals for the environmental improvement unit charge they are saying that the funding has to be put in first from the companies, and they are not setting a time scale for that to be put in place? If there is a problem with getting that from the companies why is the Government not doing it and then recouping those funds from the companies?

Dr Timlett: The problem with the RSA scheme is that it is pretty much the only water company scheme that is funded on a pay-as-you-go basis, whereas everything else, as you heard from Pamela, is funded on a debt basis. That is why it has taken so long. It just seems crazy that you have Ofwat and the price review to deal with everything in a water company’s plans, from pollution and sewage to developing new resources, and yet RSA schemes are dealt with separately. That is what is taking so much time. Unfortunately, we have not yet heard from Ofwat that they are going to allow RSA to be included in the price review. It was suggested in the White Paper but it was not a clear commitment, and we are just a bit worried that the companies are drawing up their plans now, and if Ofwat leave it too late to tell them, it will just cause more delay.

John Lawson: We are delighted to see that replacing supplies that have been lost through licence abstraction reductions can possibly be funded through the price review. That is great, although, as Rose has said, we would love to see that as a commitment for the next round. But there is a secondary issue there, and that is that one of the ways of reducing the impact of abstraction is to reduce the abstraction, but another is the socalled hydromorphological changes that you refer to in your Paper. First of all, hydromorphological changes are absolutely a second best; for example, if the river is dry, making it narrower does not help a great deal. We have a superb photograph we would like to show you of exactly that situation right now.

Chair: Unfortunately we cannot write that into the record, I am afraid, but we can receive it as written evidence.

John Lawson: Okay. In your proposals, the hydromorphological changes, if they are deemed to be the better solution, would not be paid for through the price review; they would be paid for through the EIUC, but why? There is no logical sense in that. We know that the EIUC is not working. It is a disaster. It has taken more than a decade for the Kennet solution, which has been agreed, to come to fruition, so why not just handle the whole lot through water company customers’ bills?

Q234 Barry Gardiner: Thank you for that. By the way, they are not our proposals-we are the Select Committee; they are the Government’s proposals. I wonder if you want to add something on the question that I put to the previous witnesses about the effect on habitat and biodiversity from changes in hydromorphology.

John Lawson: Yes, they do have some effect. If you have water in the river and it is not enough, if you narrow the river then the flow velocity will improve and there will be an environmental improvement associated with it. But that is a very simplistic approach, because it rather assumes that you have a constant flow in the river all the time, which you do not have, of course. Coming back to the point of reductio ad absurdum, if the river is dry it does not help you at all. So it is second best and if a solution can be obtained by reducing the abstraction or stopping it altogether, that really should be the top priority.

Q235 Barry Gardiner: Just to challenge you on one thing, obviously you are absolutely right that if you narrow the river, the flow of that river is improved, but you have no more water. If there is any gain in water it is simply through loss of evaporation and draining into the surrounding area, and that then does have an impact on the environment, does it not, and the habitat?

John Lawson: Yes it does. Improving the velocity of flow does have quite a big improvement, to be fair, but as I say it is still no good if the river is dry.

Dr Timlett: I understand the argument. If you have a concrete trapezoid channel, as much flow as you put down that it is not going to be good for wildlife. On a case by case basis, what needs to be done is work out what is the best solution, not necessarily the cheapest solution but the most effective. There are places where that could be valuable, but-

Q236 Barry Gardiner: But effective for what? Effective for abstractions or effective for the environment as a whole?

Dr Timlett: Effective, for example, for meeting the requirements of the water framework directive. We want to see good ecological status. We want to see thriving fish populations, thriving invertebrate populations and plants. There are places where habitat restoration alone will do that, and there are places where it will not-on the Kennet is a good example. There is also the risk that you could, potentially, normalise the overabstraction problem. By making these rivers smaller, you are saying it is okay, and if you take that to the worst example with all the water scarcity pressures we are facing, you will have rivers pinched out of the landscape completely.

Q237 George Eustice: I want to come back to the point about abstraction. I do not know if you heard the previous witnesses who talked about the time scale, saying that they have started already in that they have started the conversation at least, and that they envisage starting to switch to the new regime much earlier. They were aiming to complete it by 2025, not start it. Is that your reading of the current plan? What comment have you got on that?

Dr Timlett: It is great to hear that from the water companies, but just going on the RSA example of how long it is taking companies to start thinking about these problems and implement them, it is worth saying that the Kennet and many of these other rivers have not had a solution timetabled yet; we are still waiting. It is great that they are talking about it, but we are just worried that there will be lots of talking and the action will be in the last five years. The real worry about that is that as well as the impacts on the environment, it is going to be expensive, because if you wait and you need to bring alternative supplies online within a fiveyear period, you are only talking about expensive things like desalination. The ideal solution is for everyone to start working towards it now, realising that it is going to happen and that they need to implement it.

Q238 George Eustice: They claim they are doing that, but given your experience, what is a realistic time scale? If they pulled their finger out, got their act together and said, "We are serious about doing this", what is your view? Having seen the situation of the Kennet, how quickly could it be done realistically?

Dr Timlett: We see what is possible in terms of the fiveyear planning cycle-just how much water companies are able to bring online in five years. What we would like to see is the next round of river basin plans and water resource plans including these kinds of changes, so it is not just left to some distant round of plans; it starts to be done in the next round.

Q239 George Eustice: If there was a clear commitment to get the management plans reflecting the change with immediate effect, that would be a step forward, would you all agree?

John Lawson: Yes I would, provided the solutions could be funded through the price review. By and large, the solutions to overabstraction tend to be quite small schemes that can be implemented fairly quickly once you get round to it. All the delay in these schemes arises from the process that you have to go through before you can have an agreed solution rather than just getting on and doing it. Once you have agreed it and have the funding, it just goes ahead.

Q240 George Eustice: The other thing the Government is talking about is obviously using section 27 of the 2003 Water Act to be able to revoke licences in the most extreme situations, which presumably might even include something like the Kennet if it is running dry. How confident are you that that will be a solution to this problem?

Dr Timlett: In principle, I think it is an effective solution. Originally, when it was part of the Water Act in 2003, the idea was to have it come into effect 10 years hence in order to give people time to plan and transition. However, the problem is that they have only just brought the consultation out-a few weeks ago-so all of this time no one has been able to plan because no one really knew what "serious damage" was.

We have serious concerns about whether what’s proposed in the consultation is actually going to be effective. Section 27 says, "Protect from serious damage" and the way the consultation was written almost ignores the "protect from" bit; it is "wait until we have had serious damage", which is defined as "local extinction of species and destruction of valuable habitats", and then take action, which is completely the wrong way round as we see it. We would like this to be a precautionary approach rather than waiting until the damage has occurred.

John Lawson: I have some concerns about the phrase "without compensation", because I think if you take something away without compensation you are immediately heading towards a confrontation, and that means delay. If you want to get the problem sorted quickly, it is much better for people just to be able to be paid fairly, probably through customers’ bills, for whatever is needed, and then get on with it. So I do not really understand "without compensation". It sounds dramatic-"we will teach these people a lesson"-but what purpose does it serve?

Q241 George Eustice: Probably the Treasury insisted on it; there is no money for compensation. They are consulting on the principles at the moment. What should those principles be? You make a very good point, Dr Timlett, that it should be preventing damage rather than just after the event action. What other principles would you include? At what point does it trigger this section 27 action?

Dr Timlett: It is a really subjective thing, and even when you read the consultation you are still not necessarily wiser. I think it needs to be done on a local basis as part of, potentially, a local catchment approach where people could say, "Is this serious?" For example, I am sure that the Kennet guys would argue that it is serious on the Kennet if the river is dry, but I am not sure if that would pass the criteria in the consultation document. So we would like to see more emphasis on a precautionary approach, but also we would like to see recognition of what is possible in terms of the monitoring systems that we have. We do not want to see "We need this amount of evidence, but we are only collecting that amount." Nothing will ever pass the tests.

John Lawson: I think the two key words that Rose has used there are "subjective" and "precautionary". I think the precautionary principle does need to be applied, and so does judgment. The danger in all this is that if you try to define in very numeric terms that if the phosphate level is only above this can you deem it to be seriously damaged, you will never reach agreement on what serious damage is. If you just allow expert judgment to be used and a consensus is reached that "this is a problem", and that judgment is then allowed to be used to drive a solution, it would be a much better approach than trying to rigorously define "serious".

Q242 Amber Rudd: Could we turn to the issue of metering? Could you let me know how important you think it is, and whether the White Paper has got the timing right in terms of the proposals?

Dr Timlett: Yes. To be honest, we are completely disappointed with the metering policy in the Water White Paper. Given all of the evidence from the Walker Review, recommendations from this Committee and others, and support from NGOs, from WWF to Age UK, about the fact that metering is the fairest and most sustainable way to pay for water, we would have liked to see more-at the very least, some real, clear, positive statements that metering is needed and that it has benefits.

It is not clear to me how we are going to address the issue of affordability without a widespread metering strategy, because we have this mixed system and, as you said before, we have this system where the RV is not progressive. It is also not clear how we are going to address demand management and wastage without metering, because we know that not only does metering really make sure that water efficiency works, it also helps companies find and fix leaks.

The other point that I think is missed is that by 2015 half of England and Wales will have a water meter, so we are already getting there, and just with business as usual optins we will get there in the next 15 years. The evidence suggests that we could get there much more cheaply and in a more strategic, rolled-out approach with greater public communication if we did it in a joined-up way.

Q243 Amber Rudd: I did not understand that last bit. What do you mean by a joined-up way? The message that we have been getting from the Environment Agency and the water companies is that everybody is committed to metering; everybody understands the benefit for efficiency and for clarity and for transparency, but it can only go so fast because it is a big job.

Dr Timlett: It is a big job, but one of the problems, we think, at the moment, which the Water White Paper did not really address, is the cost benefit argument for metering. At the moment, you have a real capex bias, which has not been addressed, and the fact that we just place so little value on the water we abstract. Abstractors are only paying an admin fee to take water out; they are not paying the cost to the environment. All the time that you are not factoring in that cost, it is always going to be cheaper to take more water or leak more water than it is to put in demand management measures.

Q244 Amber Rudd: What other steps should the Government, the regulators and the water companies be taking to improve efficiency and reduce demand, apart from the metering?

Dr Timlett: This whole issue about the value of water is key, because it is going to change the whole ballgame on all sorts of demand management if we get that right. The abstraction incentive mechanism that was in the Water White Paper, which is about valuing water in operations, so a company able to abstract water from a place where water is more available rather than a place where water is scarce, is a start. But that kind of shadow price, or mechanism, also needs to be part of the planning and investment process as well as the daytoday operations.

John Lawson: I would also like to put in a plug for smart meters and rising block tariffs. I know there was some evidence earlier suggesting that it does not always work, but there are other places in other parts of the world where they say completely the opposite. I think the Government should be seriously pursuing that idea and getting to the bottom of what the best way is. That can be linked to the concept of water having a higher value during times of drought as well.

Q245 Barry Gardiner: Yes. I am just nodding in agreement with that last sentiment. That is why I asked for the modelling that had been done, because I suspect that the modelling that has been done was pretty particular in the way that they had managed it.

I want to turn to catchment management and the White Paper’s proposals to increase competition in the sector. Do you think that they are going to have any negative implications for catchment management and for the environment?

Dr Timlett: In terms of the market reforms and competition, we see them as a means to an end and not the end in itself. The end should be sustainable, affordable water. Anything that encourages resilience, or companies to take water from where it is available and less water from where it is scarce, is a good thing, but as well as the nuts and bolts of that, you also need the management systems to allow companies to do that.

Barry Gardiner: My question was about competition in particular.

Dr Timlett: The point on competition would be that we need to make sure that we have safeguards in place if you are looking at wholesale competition, so that you do not end up exporting more water from overabstracted or overlicensed catchments into other places.

John Lawson: I think Rose has just touched on the point that I wanted to make: there are many licences at the moment that are not fully used. For example-this is a good example-in the little River Og, which is a tributary of the Kennet, there is a licence for 8 megalitres per day, but they are only currently taking about 3 megalitres per day. That 5 megalitres per day could be traded, and Thames Water would be perfectly entitled to trade it, presumably, under the proposals that you have in mind, but that would be quite disastrous for the river. So I think there is a potential for licences that could be damaging at the moment, but actually are not, suddenly becoming damaging because someone sells them on to someone else who will use them, so that really needs to be watched.

Q246 Barry Gardiner: Excellent point, thank you. What are the benefits of catchment management? I want to give you the opportunity to set that out to the Committee. How far do you think that they rely on voluntary organisations such as ARK?

John Lawson: We absolutely welcome the catchment management approach. I think it is terrific. The river basin management plans that were produced in 2009 were verging on a disaster, because there was nothing concrete coming out of them, and getting it down to a catchmentbased approach is marvellous. I am sure that is the way ahead. Getting voluntary organisations or organisations that have an interest in individual rivers is the key to making it happen. I am thrilled that ARK is involved in that process, but we do have some reservations about how well it might work. We are very happy to see that you have a proposal that in 2013 there should be a review of these pilot catchments. What I would really urge is that that review should be independent-when I say independent, I mean independent of the Environment Agency-and that the criteria against which the success of these catchment management plans are judged are all to do with action and timetables and commitment. One of the big weaknesses of the river basin management plans is that they are very light on timetable and commitment.

Q247 Barry Gardiner: The catchment walking proposal to identify misconnections and so on is a hugely labourintensive operation, is it not?

John Lawson: Just the kind of thing that volunteers could do.

Q248 Barry Gardiner: Indeed, and you would see that very much as a role for ARK?

John Lawson: Yes.

Q249 Barry Gardiner: I have a similar catchment area that I have been looking at for years in my own constituency, so I am very familiar with all the missing connections there and so on, but do you have a concern that if your volunteers were to be used in that way, to go to householders and say "We have been doing our catchment walking and we have identified that your foul sewer has been misconnected here rather than your surface sewer and you should get that fixed and put right", some volunteers might get into a spot of bother? What are the risks here for volunteers doing that catchment walking?

John Lawson: I would see the catchment walking as being a broader thing than just simply looking for misconnections, and I would share your concerns about whether lay people can identify some of these things that are, at the very least, proper plumbing and probably water company issues. But there are many other problems in the river basin that, by doing catchment walkovers, you can identify and set the wheels turning for doing something about them. If one is using volunteers, there would need to be careful management around it with appropriate levels of professional input as well, so that you are not entirely volunteers, which is what we do, to be honest.

Dr Timlett: To follow on from that, I think it is incredibly important that we do not take advantage too much of the millions of people and the time, effort and energy that they are going to put into this. They must have the right support and backup from the Environment Agency and Defra. Catchment walking, in particular, is a good example of where you need really clear roles and responsibilities. For example, if you walked over a catchment and you found a pollution discharge from a business park, it would be the Environment Agency’s job to follow that up, not necessarily a volunteer, because that is a regulatory role. That is really important.

Chair: I thank you very warmly indeed for being so generous with your time. If we can take the photographs we will write them into the record. You have been an enormous help and we are very grateful to you. Thank you very much indeed.

Dr Findlay: Thank you, and we would love to invite you to come and see the river some time, if you can, any of you.

Chair: Thank you very much. That is very kind.

Prepared 4th July 2012