Water Bill

Written Evidence submitted by CLA (WB 09)

Introduction

Generally the CLA is supportive of the wider Water Bill which attempts to introduce reforms that will increase competitiveness within the water industry and hopefully that will be reflected in customer water bills as well as making the water industry more sustainable and resilient in the future. More specifically we welcome proposals to develop new water sources which could help the development of non – water company water storage, meaning that in the future farmers and landowners who own storage could be able to sell their water direct to water companies if they didn’t need it and the price was right.

However, there are a number of improvements that can be made and some issues that need addressing.

1. Ensure that the transfer of the abstraction regime in to the Environmental Permitting Framework is only introduced as part of full abstraction reform rather than as a substitute.

Powers to introduce the Environmental Permitting Regime (EPR) for abstraction licensing, flood defence consents and fish passes have been proposed. Initially the CLA was supportive that abstraction reform was not going to be considered directly as part of the current Water Bill and that careful consideration for a future framework was going to be taken forward by a Defra led Abstraction Reform Group. As an organisation we have engaged and participated in this work as it has developed but as this parallel work has rolled out alongside the Water Bill its seems quite possible that there will not be a need for primary legislation to make some of the abstraction reform changes in the future.

The changes that could occur to the abstraction licensing process and the subsequent re- allocation of water rights are of fundamental importance to land managers because they underpin the value of land and business. The CLA is concerned that changes of this magnitude will happen without a full parliamentary debate under secondary legislation. Essentially the Environmental Permitting Regime powers in this Water Bill should not be used to vary licence holders’ volumes without recognising impacts on land values and compensation.

Another important consideration is that although some abstraction licences are not currently being used at all, their existence underpins the value of the business and they are taken into consideration in business plans and mortgage lending. The Government is already mooting that they would neither receive a new allocation or be compensated in any future reform. The CLA believes it is immoral and unjust to introduce a system that redistributes water without recognising existing rights or that land values will be blighted by the change. It is also highly likely that agricultural businesses will be priced out of the market if they lose their existing right to water by other sectors.

The basis for EPR relies upon exempting a number of low impact activities and then requiring a standard permit for agreed activity which can be carried out under it. If you don’t qualify for a standard permit a bespoke permit has to be agreed with the relevant authority.

Abstraction licences are nearly always site specific and require local determination on the basis of hydrology and availability.

Therefore this system moved to the EPR would essentially mean greater costs because each permit would be considered as bespoke and not a standard permit. It is likely they would only meet standard permit threshold criteria if the existing licence was varied. Currently standard permits in the EPR are in the region of £850 and bespoke permits can be from £2000-£10000 depending on the amount of investigation needed to support the application.

In principle the CLA supports the introduction of legislation that reduces red tape. However we do not think the case has been made for EPR introduction for abstraction licensing, flood defence and fish passes. As recognised by the Red Tape Challenge process, environmental permitting has shown when previously introduced that there are actual increases in costs and burdens for farmers and SMEs to meet the new requirements.

Trying to find ways for farmers and land managers to do work on watercourses more easily is a positive step. The pilot studies currently being conducted should help to amend the consenting requirements for flood defence but it doesn’t need the introduction of the high costs associated with EPR to streamline the consenting process.

Contrary to the advice riparian owners are being given they are not responsible for maintaining the banks and bed of the river but they are responsible for not obstructing the free flow of water and this might mean work on the banks and removing the build up of stones or trees to do this.

The responsibility is not the maintenance of river banks to prevent flooding and EPR should not be used to change a riparian owner’s responsibility under common law.

2. The introduction of a new clause to limit the liability in nuisance for a riparian owner

As a result of funding pressures and changes in flood defence policy the priorities of relevant authorities have changed in England. The Environment Agency (EA) and other relevant authorities are withdrawing from long-standing flood defence commitments, which may have been in place for decades if not hundreds of years. This places landowners who own land adjoining rivers in an invidious position. If they fail to take responsibility for maintaining such flood defences - which could run into millions of pounds - they potentially face legal claims in private nuisance from other adjoining landowners, such as home-owners who suffer loss. They can claim under the principle in Leakey v NT [1980].  Th e CLA believes this is hugely unfair. There should be a provision included in the Water Bill that provides that, in the situation where the EA or other relevant authority is withdrawing funding for long-established flood defences, then a riparian owner will satisfy any liability in private nuisance from an affected third-party landowner if he invites such a party to enter his property in order to carry out necessary upkeep of existing former flood defences.

Why the limited liability is needed:

a) A riparian owner may be forced to contribute to the up keep of defences even if he has no benefit when the EA withdraws from long standing commitments. This is unfair because they are forced to do it because of the threat of an undefined liability as a result of a potential nuisance claim. Because of the nature of nuisance it is not possible to define actions that will ensure a landowner has acted reasonably in any given case.

b) The EA withdrawal pits property owner against property owner.

c) House owners will be able to obtain flood insurance in a high risk areas through funding provided through Flood Re ( the insurance industry reinsurance scheme to provide affordable insurance )

d) Just because a house owner has insurance this will not prevent them or an insurance company taking a private nuisance case against a riparian owner

e) The iniquitous position is highlighted further by the fact the Flood Re will only apply to domestic properties. Commercial properties and businesses are excluded which also means land and possibly many farmhouses too.

What is private nuisance?

Private nuisance may be defined as the unlawful interference with a person’s use or enjoyment of land or some right over or in connection with it.

What if a riparian owner didn’t mind their land flooding more often?

Historically there has been no liability at common law for a riparian owner (farmer) to improve river banks to prevent flooding but in Leakey v NT it was established that a landowner should do all that is reasonable to prevent or minimise a risk that is known or foreseeable where damage or injury could occur to another person or his property. So there is recognition that there is a measured duty of care.

Legal opinion suggests that a  riparian owner cannot just inform the other property owners that now the Agency is not doing any further maintenance work they  will not be carrying on with it either. This would leave them open to a private nuisance claim.

How can a riparian owner demonstrate that he has satisfied his duty of care in private nuisance claims?

When the Agency withdraw the riparian owner would need to invite the other property owners affected to contribute a proportion of the expense to maintain the flood defences. If they refused to contribute then it is possible that the riparian owner may have fulfilled their measured duty of care. In this situation the riparian owner could then inform other property owners affected that that in view of the fact that they were unwilling to contribute they would not be carrying out any work themselves.

Even if a riparian owner did not want to continue to protect his own property it is likely that they would need to invite their neighbour(s) on to their land in order to enable them to carry out repairs to the flood defence. In order to secure their position against the possibility of a future claim, it is likely that they would feel required to offer a financial contribution above the top limit of what a court might consider to be reasonable in the circumstances of the case.

If affordable insurance was not obtainable the need for riparian owners to exceed the top end of what might be considered reasonable in contributing to the maintenance of the flood defence works would be exacerbated further.

Why when the EA is withdrawing should a riparian owner be forced via the threat of private nuisance claims to have to provide flood defence to third parties

Because of the nature of private nuisance and the "measured duty of care "there is very little certainty as to when a riparian owner will have taken sufficient actions to protect himself from liability. This has the undesirable consequence of pitting one property owner against another leading to litigation. Therefore greater clarity is required in the law to pin down what would amount to sufficient actions to satisfy the test.

Why would introducing a power to limit liability give clarity?

Because a riparian owner could limit the liability in private nuisance by inviting or allowing others to maintain the existing defence if they wanted to.

There are some 2,700 EA flood risk management systems in England and early analysis suggests as many as 10,000 riparian owners could be affected by nuisance claims from house owners. Notwithstanding the many tens of thousands of houses that will be affected by flooding if defences are not maintained by the riparian owner and the nuisance claims that follow.

This will be compounded in the future as long standing defence is withdrawn and properties are actually flooded.

If government does not introduce powers that can limit liability then it only seems right that the EA continue to maintain the defences for another 25 years so that house owners are given time to prepare for and  mitigate their own risk.

The insurance industry, Flood Re, proposal does not initially require property owners to take steps to mitigate the impact of flooding. It creates a pot of funding that will offer affordable insurance to homes at high risk of flooding. Because a property owner can obtain insurance cover does not mean that a riparian owner would still not be liable to a claim of nuisance from and individual or an insurance company.

Proposed Amendment to the Water Bill

We propose inserting a new Part 5 and clause 48

PART 5

FLOOD LIABILITY

48 Flood liability

(1) The Secretary of State may by regulations make provision to limit the liability in nuisance for a riparian owner when the Environment Agency or relevant Authority withdraws from maintaining flood defences

(2) Regulations under this section are to be made by statutory instrument.

(3) A statutory instrument containing regulations to be made by the Secretary of State under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of both Houses of Parliament.

December 2013