House of Commons - The Water White Paper - Environment, Food and Rural Affairs Committee

The Water White Paper - Environment, Food and Rural Affairs Committee Contents

2 Managing water resources

Abstraction reform

6. Anyone wishing to withdraw more than 20 cubic metres of water a day from a river or aquifer is required to obtain an abstraction licence from the Environment Agency.[9] The current abstraction licensing regime was introduced in the 1960s and was not designed to manage the competing demands for water which we see today. It was widely recognised in our evidence that the current system fails to strike the right balance between the need for a reliable supply of water and the environmental damage caused by abstracting too much water from any one particular source. In extreme cases of over-abstraction, entire sections of rivers may run completely dry. The World Wildlife Fund-UK (WWF-UK) described the environmental effects of over-abstraction, exacerbated by the recent drought, as "devastating"[10] and Action for the River Kennet told us that the situation on their river was "a crisis".[11] Dead fish on a dry river bed

Les Wilson/Action for the River Kennet

7. The White Paper sets out a two-pronged approach to tackling over-abstraction. First, it commits to a comprehensive reform of abstraction licensing over the next 15 years. Second, it proposes measures to tackle site-specific unsustainable abstraction in the shorter term.

LONG TERM REFORM

8. In Water for Life, Defra set out the high-level principles that will underpin reform of the abstraction regime. The new regime will seek to better reflect the availability and value of water, to be flexible and responsive to changes in supply and demand, and to encourage more efficient use of water.[12] Defra intend to consult on detailed proposals for reform in 2013, with legislation to be brought forward in the next Parliament for the new regime to be in place by the mid-to-late 2020s.[13]

9. WWF-UK welcomed the Government's decision to reform the abstraction regime and the overarching principles for reform set out in the White Paper. However, they called for the changes to be implemented to a "much faster timescale", arguing that "the longer action takes the longer water environments are exposed to the risk of damage".[14] They were concerned that momentum would be lost during the lengthy lead-in period. Water companies, on the other hand, urged caution, with Anglian Water welcoming the "thoughtful" proposals which they said would give the industry time to plan for change.[15] Similarly, United Utilities warned that "overnight changes to abstraction can cause quite significant risk to continuity of supply".[16] The Environment Agency also acknowledged the need for a "medium-term" timescale and felt that putting the changes in place by the mid-2020s would "be in good time" to be prepared for the future pressures on supply identified in the White Paper.[17]

10. The recent drought has underlined the importance of introducing a reformed abstraction regime able to provide sustainable and reliable supplies of water. The timescales set out in the White Paper lack ambition and unnecessarily risk further environmental damage. We believe that ten years is an adequate period in which to plan and implement reform of the abstraction regime and recommend that the reformed regime be in place no later than 2022.

11. Even with this shorter timescale, momentum may be lost. We recommend that the Government work with regulators, water companies and environmental groups to produce a workplan setting out key milestones for the duration of the reform period, and annually report on progress against them.

12. Farmers need a reliable and affordable supply of water to provide for livestock and irrigate crops, and they were worried by Defra's suggestion that a new regime would seek to encourage increased trading of abstraction licences. The NFU warned that a new regime should not simply see abstraction licences sold to the highest bidder, fearing that this would lead to a "David and Goliath" like struggle for water in which farmers would be unable to compete.[18] The Environment Agency sought to assure us that they recognised that the interests of farmers should be protected:

Our responsibility is to make sure that, in balancing the competing demands, agriculture does not lose out, and we are determined to make sure we do that.[19]

The Minister told us that the reformed abstraction regime would need to be "equitable and fair" and that Defra was working closely with farming groups to make sure that they had adequate water.[20]

13. We are pleased that the Environment Agency and the Minister acknowledged the importance of ensuring that the agricultural sector retains access to a reliable water supply. As the reforms go through, we recommend that the Environment Agency maintains a constructive dialogue with farmers and food producers, recognising their key role in promoting self-sufficiency and food security.

14. The White Paper suggests that farmers take steps to improve their preparedness for drought by developing their own water supplies, including the development of on-farm reservoirs for water storage.[21] We would be concerned should the Environment Agency's forthcoming safety guidance on high risk reservoirs act as a barrier to the construction of such reservoirs. We welcome the Environment Agency's recent consultation on this matter and look forward to a proportionate approach to risk in the final guidance. Defra has also commissioned reviews of two key guidance documents produced by the Institution of Civil Engineers for reservoirs engineers: A guide to the Reservoirs Act 1975 and Floods and Reservoirs Safety guidance, 3^rd edition. We are disappointed that the review of Floods and Reservoirs Safety guidance is not expected to be completed for almost two years.[22] We urge Defra and the Environment Agency to work with the Institution of Civil Engineers to complete the reviews of both A guide to the Reservoirs Act 1975 and the Floods and Reservoir Safety guidance by December 2012.

SHORT-TERM REFORMS: RESTORING SUSTAINABLE ABSTRACTION

15. Alongside the wholesale reform of the current abstraction regime, the White Paper also sets out how Defra will take more urgent action to tackle abstraction that is already damaging the environment. Currently the Environment Agency's Restoring Sustainable Abstraction (RSA) programme provides a mechanism for licences to be removed where an abstraction is causing environmental damage. Licence holders who object to the removal of their licences are eligible for compensation, which is funded through an annual levy on abstractors (the Environmental Improvement Unit Charge or EIUC). It can take years for the fund to build up enough money to compensate licence-holders, during which time damaging abstraction is able to continue. The RSA process was widely recognised in our evidence as being unsatisfactory, with WWF-UK describing it as having "effectively stalled".[23]

16. The White Paper proposes that the costs of compensating water companies for removal of licences under the RSA programme should be incorporated into the price review process, thus speeding up licence removal.[24] Environmental groups welcomed this proposal: WWF-UK felt that it was "crazy" that the RSA programme currently fell outside the price review process given it incorporated almost all other aspects of a water company's planning cycle.[25] However, both they and Action for the River Kennet (ARK) were concerned that the change might not be implemented in time for the 2014 price review and called for urgency in putting the necessary processes in place.[26]

17. Ofwat gave conditional support to this call, with the caveat that the interests of customers would need to be protected.[27] Defra said that "good progress" had been made and they were "hopeful" that agreement could be reached in time for the change to be reflected in Ofwat's draft methodology for the next price review, due to be published later this year.[28]

18. The current mechanism for the removal of environmentally unsustainable abstraction licences is clearly unsatisfactory and is causing ongoing and severe damage to the environment. We recommend that the White Paper's proposal that funding for the Restoring Sustainable Abstraction Programme be incorporated within the price review process be implemented as a matter of urgency. Defra should work with Ofwat and the Environment Agency to ensure that this change is made in time for the RSA programme to funded from the 2014 price review.

Bulk trading and interconnections

19. At any one time, some parts of the country may be in drought whilst others have a plentiful supply of water. One of the challenges in managing our water resources is how best to move water around the country from areas of plenty to areas of scarcity. Our witnesses pointed out that water is heavy and transporting it over long distances can be extremely expensive.[29] The White Paper notes that a purely local approach to tackling future supply deficits would, given the variation in supply and demand across the country, require the development of expensive infrastructure or severe constraints upon water use in some areas. It proposes an increase in "strategic" interconnections over short distances, for example across the boundary of neighbouring water companies, to incrementally build a more integrated network and to make bulk transfers of water more economically viable.[30] The Environment Agency has been tasked with taking an overview of interconnection options so that, where appropriate, water companies' assessments of whether bulk transfers are viable can be challenged.[31]

20. Our witnesses were generally supportive of the White Paper's approach with Anglian Water describing it as "spot-on".[32] However, it was recognised that it was important for the Government to keep an open mind about the possibility that larger infrastructure or 'mega-structures' may be needed in the future as the impact of climate change becomes clearer. Water UK commented that:

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... 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.[33]

21. Building infrastructure capable of transporting large quantities of water over long distances—a 'national grid' for water—has been proposed in the past but has been argued to be both environmentally and economically unsustainable.[34] The Environment Agency considered the issue in 2011, when it issued a position statement concluding that large-scale transfers to the south of England from the north of England or from Wales were unlikely to be necessary to meet current forecast demand.[35] The uncertainty surrounding future water availability patterns across the country is another factor to be taken into account, with the potential for expensive projects to become obsolete if areas which currently have a plentiful supply of water become drought-stricken in future.

22. United Utilities suggested that there may be an opportunity to build a water pipeline alongside the new High Speed 2 rail line, which might reduce the possible economic and environmental impacts of the project. Whilst they emphasised that this suggestion was part of a process of "putting ideas into the pot" rather than a concrete proposal, we were interested in the suggestion that a more joined-up approach to infrastructure development could make long distance transfers of water more viable.[36]

23. Defra's decision to focus on maximising "strategic" interconnections allowing water to be transferred over relatively short distances is a sensible starting point and we look forward to the Environment Agency's forthcoming overview of interconnection options. Defra should remain open to considering whether large-scale infrastructure may be an appropriate and cost-effective solution in some circumstances. Defra and the Environment Agency should in particular look to exploit interconnection opportunities presented by other large infrastructure projects, thus minimising environmental impact and economic costs.

Floods, drainage and the automatic right to connect

24. Following the devastating flooding which affected much of the country in the summer of 2007, the previous Government commissioned Sir Michael Pitt to review the events which led to the floods and to make recommendations to improve the UK's preparedness for future flooding events. Pitt's report, Learning lessons from the 2007 floods, was published in June 2008 and made 92 recommendations for improving the way in which flooding was managed. All of these recommendations were accepted by the then Government. In January 2012 the current Government published a final progress report setting out the action that had been taken in response to Pitt's recommendations.[37] Five of the 92 recommendations are no longer expected to be implemented fully, or not implemented as originally envisaged by the Pitt Review. Defra's Business Plan commits to completing the outstanding work needed to fully implement the remainder of Pitt's recommendations by May 2015.[38]

25. Pitt concluded that the damage caused by the 2007 floods was exacerbated by rainwater running off into public sewers which struggled to cope with the volume of water being discharged into them. He recommended that the automatic right for surface water drainage from new developments to be connected to the public sewer system be ended,[39] thus encouraging greater use of Sustainable Drainage Systems, or SuDS, which are designed to mimic the effects of natural drainage and include swales, wetlands and underground storage. Pitt recognised that a lack of clarity about who should be responsible for 'adopting' SuDS after they had been constructed was a barrier to their construction. His report recommended that Government resolve the ownership and maintenance issues and concluded that either local authorities or sewerage undertakers would be best placed to fulfil this role.[40]

26. The Flood and Water Management Act 2010 addressed both of these recommendations: placing the responsibility for adopting and maintaining SuDS on local authorities through establishment of a SuDS Approval Body or SAB; and including provisions to end the automatic right to connect by making connections subject to approval by a SAB.[41] Defra has recently consulted on detailed measures for the implementation of these provisions.[42] In Water for Life, Defra says that it is working with the water industry and retailers to provide better information to householders about the benefits of SuDS[43] and will seek to encourage their use "wherever they will be effective".[44]

27. Blueprint for Water, a coalition of environmental, water efficiency, fishing and angling organisations, welcomed the White Paper's references to the benefits of SuDS but argued that it "falls short of providing a full framework to enable the uptake of SuDS including their retrofitting to existing areas where surface water or pollution is a problem". They also pointed to "ongoing policy inertia" holding up the delivery of SuDS.[45]

28. In oral evidence Defra told us that an implementation date for the Flood and Water Management Act's provisions on SuDS had not yet been confirmed but that it was "more likely that we are looking at April 2013 than October 2012."[46] The Minister said that "retrofitting is a key part of our policy moving forward" but noted that retrofitting large SuDS was complicated, although not impossible.[47] He felt that technological improvements would play a part in increasing their uptake:

Technology that can put in a multitude of different weather patterns and the impact that can have down to household level is now available, so that can start informing the retrofitting of sustainable drainage systems, or where there is a bottleneck that causes back flooding of culverts and how you can improve that... I think we will see a lot more houses protected by such means in the future.[48]

29. Five years on from the devastating floods of 2007 we are not convinced that Defra's work to improve the management of surface water has been carried out with sufficient urgency. Defra must ensure that implementation of the relevant provisions of the Flood and Water Management Act is not subject to any further unnecessary delay. The White Paper says disappointingly little about the retrofitting of Sustainable Drainage Systems and we recommend that Defra develop more concrete proposals to encourage this.

FLOOD INSURANCE

30. Insurance for homes at risk of flooding is currently provided in line with a "Statement of Principles" agreed between the Association of British Insurers (ABI) and Government in July 2008. Under the Statement of Principles, insurers agreed to provide flood insurance to the vast majority of households and small businesses in areas of "significant flood risk" where plans exist to reduce the risk below "significant" within five years. With the Statement of Principles due to expire at the end of June 2013, no agreement has yet been reached between Government and the industry concerning its replacement.

31. In Future Flood and Water Management Legislation, we concluded that there was "an urgent need" for agreement between Government and the ABI to be reached, and we noted evidence from the Local Government Association that should the insurance industry's agreement to provide cover to the over 5 million properties in flood risk areas be withdrawn, there was a danger of blight, with significant impacts on the housing market and social cohesion.[49] The challenges associated with providing insurance to homes at risk of flooding serve to underline the need to avoid inappropriate development in flood risk areas.

32. It is deeply worrying that with only a year remaining until the current Statement of Principles on flood insurance is due to expire, and eighteen months on from this Committee's call for urgency in establishing its replacement, Government has not yet been able to reach agreement with the industry. Defra must redouble its efforts to achieve a workable and affordable solution to this issue.

9 There is a very limited class of exceptions which can be found on the Environment Agency website http://www.environment-agency.gov.uk/ Back

10 Ev 62 Back

11 Q 223 Back

12 Water for Life p 23 Back

13 Ibid, p24 Back

14 Ev 62 Back

15 Ev 86 Back

16 Q 177 Back

17 Q 94 Back

18 Ev w50 Back

19 Q 95 Back

20 Q 263 Back