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Baroness Miller of Chilthorne Domer: I thank the Minister for that explanation. It indicates why a total river basin management approach is most needed. It will sometimes be difficult to define the benefit of the operation. Much of the time the benefit will be both flood management and field irrigation.

I thank everyone who contributed to the debate. I thank the noble Baroness, Lady Young, for supporting a perhaps limited exemption. I was not sure whether the Environment Agency had the power to create limited licensing exemptions if the circumstances were not defined in the Bill. I shall look at the issue again. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 29:

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The noble Lord said: This is a probing amendment to find out the exact meaning of the phrase that we suggest should be deleted. I have read it many times. On the face of it, land drainage does not include transferring water from one source of supply to another. But transferring water from one source of supply to another mainly to augment the latter will certainly affect land drainage, possibly adversely. With that in mind, we tabled the amendment to clarify the Government's intention in this phrase. I beg to move.

Baroness Miller of Chilthorne Domer: I would welcome further clarification of what is in the Government's mind as regards this subsection.

Lord Whitty: The overall intention of this part of the Bill is to bring all major transfers into the scope of the licensing regime so that there is a means to control them in future. That means restricting some current exemptions. Amendment No. 29 would allow the current exemption of transfer for the augmentation of water levels to remain. That would mean that a significant transfer could be exempt from licensing. I refer not to emergency transfers but to a general one within the internal drainage board. By changing the definition of internal drainage, as this amendment would do, we could exempt significant transfers.

If we are to establish the Environment Agency's control over the whole water supply, the needs of all abstractors need to be balanced, particularly in times of reduced water availability, rather than simply allowing transfers by abstractors for this purpose. That is why we are restricting the number of exemptions and taking a more comprehensive approach to licensing than at present. Any uncontrolled transfer can affect overall water availability. We see no reason to retain that exemption. It would be possible under a licence, but that is not the point. It should not be treated differently from other forms of abstraction.

Lord Dixon-Smith: I am grateful for the explanation. Transferring water from one source of supply to another does nothing to alter the total quantity of available water. I accept that it might remove it from one river where there is a pumping station for supply and transfer it to another where there is not. But I cannot imagine that the internal drainage board would risk moving water unnecessarily from one stream to another. If it moved water to a river of restricted flow that required help, that would probably be beneficial, because it would balance the needs of the two streams. I accept that there is a potential water supply issue. In the light of the explanation, I see that circumstances might arise where the Environment Agency would need to know exactly what is happening. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7, as amended, agreed to.

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Baroness Byford moved Amendment No. 30:

    After Clause 7, insert the following new clause—

Before the introduction of any scheme for extending abstraction licensing to warping or irrigation by virtue of section 7(5) above, the Agency shall consult such bodies appearing to it to be representative of persons whose business interests are likely to be affected by the proposed scheme."

The noble Baroness said: The amendment deals directly with trickle irrigation. I expect that the noble Baroness, Lady Miller of Chilthorne Domer, will wish to contribute following her earlier comments. It is a straightforward amendment, which would require the agency to,

    "consult such bodies appearing to it to be representative of persons whose business interests are likely to be affected by the proposed scheme".

Clause 7 brings trickle irrigation within the abstraction-licensing regime for the first time. Although farmers and growers who trickle irrigate are not opposed to that in principle, they have genuine concerns about the implications for their businesses and how the new controls will be implemented. Trickle irrigation is a sustainable and efficient method of water use, but many trickle irrigators fear that their abstraction licences will be revoked or seriously modified, especially in catchment areas that the Environment Agency deems already to be fully licensed or over-abstracted.

I have received letters from people concerned about the changes. I shall outline some of the potential undesirable effects. The importance of trickle irrigation to unsupported producers of high-value crops such as fruit and vegetables cannot be overstated when the upstream or downstream dependant businesses are taken into account. One soft-fruit producer in East Anglia who is heavily dependent on trickle irrigation estimates that his business contributes some 3.4 million to the local economy. A further example is a soft-fruit grower in Kent who has a wage bill of approximately 2 million. We are therefore not talking about people picking the odd bit of fruit or some vegetables. Without access to adequate water, much of that type of production could be lost.

I received a letter from an organisation in the Norfolk area expressing concern about the particular plan for trickle irrigators as it stands in Grand Committee. It states:

    "Elliot Morley has stated that Defra are still considering whether trickle irrigators could be provided with time limited licences automatically when the current exemption ends. However unless the present rules are amended trickle irrigators have two years to apply for a licence in our case and many cases like ours, the Agency is likely to refuse on the grounds that there is insufficient water".

Given our discussions today and in previous Committees, I accept that the restrictions will not necessarily affect all areas of the UK equally. But it

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would be a disaster for this producer and his 64 employees. It is not just one producer and one employee, but a big rural enterprise. The producer's letter continues:

    "The Bill offers the possibility of the Agency granting a licence in these circumstances, but they need to be willing to use these powers, and what they really need is some clear guidance from the Government on how trickle irrigators should be treated".

There is nothing worse for businesses than to be uncertain about those changes—as noble Lords who have employed people will know—and to be unable to make definite plans.

The producer also gave evidence to the Environment Select Committee, which stated in its Ninth Report into the draft Water Bill,

    "where resources are scarce the needs of trickle irrigators whose use has been notified to the Agency must be considered equal to those of existing licensed abstractors".

The producer states that he hopes that at Committee stage he will be able to ask the Minister to agree to provide trickle irrigators with an automatic time-limited licence so that trickle irrigation licences could subsequently be reviewed on a par with other abstractions as part of the catchment abstraction management strategy (CAMS).

The industry has expressed genuine concerns. I know that areas of the country are affected differently. For example, I was speaking to someone whose son has a horticultural farm in Lincolnshire in an area that does not need trickle irrigation because the land is retentive enough. But dryness in other areas has a great effect on the crops.

My noble friend mentioned that trickle irrigators use a good deal of water. We seek clarity and some steer so that those whose businesses may be affected can plan accordingly. I am sure that the Minister will not be surprised to hear me express yet again my hope that we enable UK producers to compete in a global market rather than restrict them and make things more difficult for them. I beg to move.

Earl Peel: I support the amendment. Trickle irrigation will be brought into the abstraction licensing system for the first time. That is causing much concern among those who have invested in that horticulture system. My noble friend Lord Dixon-Smith pointed out that trickle irrigation was perhaps the most efficient form of water management in agriculture and horticulture. I am sure that the Environment Agency will bear that in mind when negotiating with trickle irrigators for the first time.

We will return to the issue many times when debating the clauses relating to abstraction. But we must take into account businesses' levels of investment, borrowing and business plans. As my noble friend Lady Byford suggested, some of the businesses affected have made substantial investments. Those investments hang on horticultural producers' ability to extract water and use it for trickle irrigation. It is not surprising, therefore, that many involved in the industry are extremely concerned about their future.

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I wish to reiterate a point that I made at Second Reading about encouraging local food production. I can see that the Environment Agency could have difficulties if the Countryside Agency were actively encouraging local production while it found itself in the difficult situation of having to make a decision. But we must not forget that, if a horticultural business employing many people and producing a good deal of fruit or vegetables is put out of business because it no longer has access to water, production will be exported abroad, which will contribute to the balance of payment deficiencies on the product in question. A hugely important point is that that situation would involve the transportation of goods and would therefore create increased pollution. All those issues must be taken into account.

In many cases, that will not be an easy decision for the Environment Agency to take. However, it is essential that the various issues that noble Lords have mentioned are taken into account. Given the circumstances and very real concerns, we should take Amendment No. 30 very seriously. I hope that the Government will accept it.

4.45 p.m.

Lord Dixon-Smith: I, too, support my noble friend, but I do so in a slightly different way. Amendment No. 30 calls for consultation with representatives,

    "of persons whose business interests are likely to be affected".

I should not put words into my noble friend's mouth, but the reality is that we are asking for rather more than that. I think that we are really asking for an assurance that existing users who will come within the scheme in future will be treated similarly to those who already hold an abstraction licence. We have already discussed, although not specifically, whether licences should be automatically renewed unless there are very compelling reasons not to do so. However, if a large or a small business is already a very efficient water user and the resource is already catered for, if not actually licensed, there should be a presumption under the licensing scheme in favour of that business.

It would be another matter if there were subsequently an application for an additional abstraction, for trickle irrigation. That would be a new abstraction and could be treated absolutely fairly and squarely on the basis of whether there was sufficient water for that abstraction to be practical. I think that that is very different from the situation of someone who is already established in business and has the equipment and who has made the investment and got the system working.

I think that there is a very strong point there. I welcome the fact that, as we are in Grand Committee, we shall have to return to this issue. I think that we need to think carefully about the wording of the provision and about what we really want. As I said, I definitely want something more.

There is another side to the issue. Someone who wanted to start up trickle irrigation might have a neighbour who uses spray irrigation. If he could persuade that neighbour to switch to trickle irrigation,

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perhaps enough water could be saved to allow his trickle irrigation too. That would be an amendment of licence. The Environment Agency could perform a very useful function in such situations. I think that we need to think this issue through a little. I support absolutely the principle of what is being said, but I think that we need to determine precisely what we want to do.

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