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The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): We have had a pretty wide-ranging discussion in the earlier days of Committee about the whole issue of efficiency. In this particular context, the Environment Agency has existing powers. It has the power to impose on any abstraction licence conditions relating to the efficient use of water. The Environment Agency also assesses water efficiency in the grant of every new licence as part of the test of "reasonable requirement". It can also take action to prevent profligate use of water if it should occur. However, all those requirements are clearly tailored to the specific case and give the Environment Agency a right to specific intervention, whereas the general reference to efficiency in the amendment may not be tailored to the individual case. Whatever the general arguments, this is not an appropriate or necessary amendment.

Baroness Miller of Chilthorne Domer: I thank the Minister for his reply. I shall read it along with his replies to all the other amendments that the noble Baroness, Lady Byford, and I have tabled on efficiency and then weigh up where further to take the issue. I am still not persuaded that the Government have yet covered the intention expressed in Taking Water Responsibly. I shall return to the issue on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer moved Amendment No. 57:

"(6) All licences which were hitherto expressed under section 46(5) of the WRA as remaining in force until revoked, shall from 15th July 2012 state—
(a) the date on which they take effect, and
(b) the date on which they expire."

The noble Baroness said: The amendment stands in the name of the noble Lord, Lord Beaumont, who is particularly disappointed that he could not be here to move it himself. He had hoped that we would arrive at it during the previous Committee sitting, but he just missed it, so I am moving it in his name.

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The amendment addresses the need for a mechanism in the Bill for the conversion of permanent licences to time-limited status, to introduce greater flexibility into the licensing system. If the system is to take account of such issues as climate change, we need a level playing field for all licences.

On Second Reading it was pointed out that Article 11(3)(e) of the EC Water Framework Directive requires abstraction licences to be reviewed periodically to meet the standards of that directive. The amendment is but one example of where a mechanism is needed to enable compliance with the directive in this country. By including it in the Bill we would be doing the Government a service.

The amendment would simply anticipate the transposition of the Water Framework Directive. It takes account of the fact that the UK needs to address the issue. It would prevent us being open to costly infraction proceedings, as we have been in the past because we have implemented far too slowly. There would then be sufficient notice for licence holders to comply with the Human Rights Act and the amendment would not deprive holders of their right to abstract.

The amendment cannot be used as a mechanism to revoke or vary licences. It is a modernising amendment to allow the effective management of water resources in the uncertain climatic future. I beg to move.

Baroness O'Cathain: My Amendment No. 60 is grouped with this, so I should like to speak to it. It is again to do with licences and licence renewal and deals with Clause 20. It would insert a fifth condition—that the presumption of renewal should be accepted—after the previous four. That should be put on the face of the Bill.

We had a lot of discussion about this last time in Committee. There seemed to be ideas going back and forth and quite a fog about the whole thing. As I read the Bill, the presumption is that a licence will not be renewed.

In consultation, DEFRA had said that the presumption would be that the licence would be renewed. Government policy, expressed several times, echoed that presumption of renewal, for example in the explanation in the draft Bill in November 2002 and in the consultation exercise in May 2002. How come the Bill now has a presumption of non-renewal?

Of course, if there is evidence that the people holding the licence are not doing a proper job and if they are not protecting the waters, the underground strata or any fauna or flora dependent on them from serious damage we would not expect the licence to be renewed, provided there was an appeal mechanism. But the onus should be on the Environment Agency to prove that.

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As currently drafted, the burden of proof is on the applicant, which is consistent with a presumption of non-renewal. Clause 13(4) on page 15, line 27, shows what I mean.

Lord Livsey of Talgarth: Our names are also added to Amendment No. 60. We were thinking along precisely the same lines that the noble Baroness, Lady O'Cathain, has outlined in some detail. We strongly support the amendment, because renewal is very important unless there is a good reason to deny it. The reason is clearly closely connected with sustainability of the water supply, which the Environment Agency would obviously take into consideration if it was not going to renew the licence. We wholeheartedly support the amendment.

Lord Howie of Troon: When I arrived today, I promised the noble Baroness, Lady O'Cathain, that I would not speak, but I feel that I have to break my word almost at once in order to support her amendment entirely and wholeheartedly. She is quite right. The onus of proof should be on the agency. I do not doubt that for one minute. The agency has to balance the interests of the environment against those of industry. It is a benign agency, as we know, but it might not always be benign. My experience of it is in relation to coastal erosion, on which it has been adamant in its own views rather than mine.

The onus of proof should be on the agency. That should not be done by nods and winks, as it is at the moment. It should be on the face of the Bill. I hope that the noble Baroness, Lady O'Cathain, is not offended that I have broken my word so soon.

Lord Dixon-Smith: After the remarks that I have made in the past, it does not need saying that I support the amendment. I wonder whether the Minister could go into considerable detail on the way in which the system is supposed to work. As I read my noble friend's amendment, it seems to highlight a problem. The Bill talks about a licence, a licence applicant and the possibility of the rejection of a licence. The problems that arise are very rarely going be the result of the actions of one abstractor. Most of the problems that are likely to arise will be the result of the cumulative actions of a whole lot of abstractors. In some cases it may not be possible to enhance flows and the available water resource. The real question is how we administer equitably the problem that is arising as a result of a cumulative effect. That is a very significant issue. We shall need to deal with it and the industry will require considerable assurance on it.

4 p.m.

Baroness Young of Old Scone: Perhaps I can help with a few examples of the successful operation of licence renewal in the past. There are about 3,500 time-limited licences in England and Wales, some of which stretch back as far as the 1960s. In the east of the country, water company licences have been time-limited and have been renewed for over 20 years. Very often, those renewals take place in a process of negotiation and small-scale adjustment with

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abstractors, often acting as a group. For example, sometimes groups of farmers come together so that there can be an equitable solution between them. One example was the renewal of a time-limited licence in the Kidderminster area, which enabled a 10 per cent reduction in licensed volumes at the time of renewal. That helped a very water-stressed area but also gave an equitable share of water to meet the needs of the farmers concerned. The NFU was involved in that process of negotiation. That is the sort of renewal process that works well, in those areas in which time-limited licences have operated for some time. In fact, there have been few or no appeals in most of those renewal processes.

Amendment No. 60 worries me considerably because, at the moment, in making renewals of abstraction licences, the kind of consideration that is taken into account is not simply a burden on the applicant. It is a shared burden between the applicants and the regulatory body. There are four major considerations. First, is the abstraction having an environmental impact and, secondly, is it having an impact on other licensed and legitimate abstractors? Those two assessments are for the regulators to make. Thirdly, information is required from the licence holder about the continuing need for the licence and, fourthly, information is required about evidence of an efficiency programme. The process is balanced between the regulator and the regulated.

Amendment No. 60 seems to negate Amendment No. 56, which related to water efficiency. The presumption of renewal, which is so clearly predicated on environmental damage in Amendment No. 60, would strangely enough put in secondary place the very thing for which I have just heard so much support—the need to introduce efficient use as a clear factor in the process of both licensing and renewals.

I hope that my comments have been helpful in giving some examples and background to the way in which the process currently operates, and would continue to operate, under the Bill.

A further point on Amendment No. 60 is that raised by the noble Lord, Lord Dixon-Smith, about multiple abstractors. Under the Water Framework Directive, these abstractions will all have a common end date within a catchment area. The process will involve adjustments and negotiation to increase efficiency, to target abstraction to the least environmentally damaging place and to ensure that there is a fair share for everyone, especially in water-stressed areas.

In our last sitting, we heard of a number of priorities from several Members of the Committee. We heard about priorities for the quarrying industry, the water industry, food production and market gardening. Not everyone can be a priority. In water-stressed areas, the presumption of renewal cannot allow everyone to end up with exactly the same licence as they had before. That process of considering environmental impact, need, efficiency and the impact on other legitimate

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abstractions must be at the centre of the question, and must be equally balanced. Amendment No. 60 would destroy that balance.

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