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Lord Dixon-Smith: My Lords, I am grateful to the noble Baroness for her support and to the Minister for his explanation. As a matter of observation, I can say that in my dealings on this matter, a fairly satisfactory and flexible approach has been taken to the whole question. I appreciate entirely that one small bank put across a stream in a narrow valley impounding a certain amount of water might not pose a problem, but if a series of neighbours down the valley were to do the same it could be that no water would arrive at the bottom, which might well cause problems. I accept that there are potential difficulties in the absolute laissez-faire approach we are expounding, but the principle of trying to free from regulation as much as we can is correct. It was for that reason that we tabled the amendment. We shall study the Minister's explanation with some care, but at this stage and at this point in the day I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendments Nos. 6, 7 and 8 not moved.] Clause 3 [Existing impounding works]:

Baroness Byford moved Amendment No. 9:

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Lord Whitty: My Lords, I am in a slightly strange position with regard to this amendment. We looked at the concerns expressed by the noble Duke and other noble Lords in the last debate and felt that they were not valid. Indeed, I believe that the noble Baroness wrote to her noble friend and, I hope, to other noble Lords to explain that the intention was clear. However, while considering the totality of territorial definitions, we have found that we may need to table our own amendments on other issues, including, for example, the fact that the Scilly Isles have been left out of the current legislation as well as one or two other minor points. Therefore, while I do not accept the justification for the amendment, I think that part of it needs to be looked at again, but not the wording mentioned by the noble Duke in Grand Committee, which has been referred to again today. We should like to take the amendment away and come back on the points I have just mentioned rather than those proposed by the noble Baroness.

12.30 p.m.

Baroness Byford: My Lords, that shows how useful these amendments are. I am grateful to the Minister for his comments. Given his undertaking to consider the issue of the right phraseology—presumably throughout the Bill—we are happy to withdraw the amendment. Amendment, by leave, withdrawn. Clause 6 [Rights to abstract small quantities]:

Baroness Byford moved Amendment No. 10:

    Page 7, leave out line 38 and insert—

    "(i) domestic use on the holding;" The noble Baroness said: My Lords, in moving Amendment No. 10, I shall speak also to Amendment No. 11. In the discussions in Grand Committee on a small group of amendments concerning this subject, we gave the example of the historic situation where water abstracted by a farmer had been used to the general benefit of everyone on a holding. The Minister chose to interpret our concern as being solely with the protection of existing rights. That was not our intention. He assured us that the protection is already there, through the Water Resources Act 1991, for rights which existed prior to the 1963 Act. My interpretation of his interpretation is that he believed our concern was too narrow. The amendments relate to new abstraction rights. Many farms still comprise a farmhouse and one or two agricultural dwellings. Indeed, in some cases, such housing is not used for agricultural dwellings. Agricultural workers still grow their own garden produce and there is no reason to believe that a situation may not arise where such a worker would welcome a share in the water abstracted from a nearby river or stream. Farm buildings are also converted and let to tenants, who may or may not be agricultural workers and who may wish to have a garden and therefore use more water. As we understand the terms of the Bill and the Minister's response in Grand Committee, such usage would be prohibited.

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    In Grand Committee the Minister said that, "any abstraction of up to 20 cubic metres per day for domestic purposes, regardless of whether the occupier uses the water, will be exempt".—[Official Report, 27/3/03; col. GC88.] In fact the Bill states that the exemption applies if the abstraction is carried out by or on behalf of an occupier and, "it is abstracted for use on that holding for either or both of the following purposes— (i) the domestic purposes of the occupier's household; (ii) agricultural purposes other than spray irrigation". My question is a minor one. I am sure the Minister will tell me that this comes under "domestic purposes", but presumably gardening or any other such activity by a member of a family, a tenant or anyone occupying such buildings on an occupied holding would be considered as agricultural purposes. It is only a small point and I am sure that the Minister will be able to clarify it.

Lord Livsey of Talgarth: My Lords, a further point needs to be made. Nowadays, many farm buildings are being converted into temporary accommodation—for example, for holiday purposes—as part of the diversification activities of farmers on holdings. Very often the supply of water for such accommodation comes from the same source. What will happen in that situation? The conversions diversify the income flow of farms. As we know, incomes from pure farming are, at the present time, very low indeed and it is important that farmers diversify to ensure that their net income is sufficiently viable to allow them and their families to remain on the holding in the future.

Baroness Farrington of Ribbleton: My Lords, we recognise that the amendments are similar in effect to the amendments discussed in Grand Committee. As I said then, they will not affect the way in which the new exemption for small abstractions applies to supplying domestic properties on an abstractor's land. I should like to clarify the issue of tied cottages on an abstractor's land. Such cottages fall within the meaning of "household" for the purposes of the clause. They will already remain within the exemption. The new exemption will allow any abstraction up to 20 cubic metres. The limitation to occupier's household applies only to the issue of protected rights. Premises which are let will be covered within the limit. All that the amendments would achieve is simply to extend the scope of the protected right associated with such an abstraction. It would extend it from domestic use for the occupier's household only, within the broader definition, to any domestic use on the entire holding of the abstractor. If the intention is to ensure that water abstracted under the exemption for small abstractions can be supplied to any domestic property on the abstractor's land, I have already reassured the noble Baroness that this is provided for in the new exemption. I hope that the noble Baroness will therefore feel able to withdraw her amendment.

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During our consideration of the amendments we have identified a need to bring forward further amendments at Third Reading to ensure that the system of protected rights can adequately deal with changes to the threshold for abstraction licensing. As to the meaning of the terms "gardening" and "horticulture", I believe that they are subsumed within "agriculture" except for those areas where they patently form a part of "domestic". Obviously there is a cross-over point somewhere along the spectrum but I find it easier not to define it in legal terms. It is a common-sense cross-over point.

Baroness Byford: My Lords, having had a late night last night, we are into common sense. I thank the Minister for that explanation. It has helped to clarify one or two of the points we raised. Interestingly, it has stimulated more thought and we shall come back with further amendments at Third Reading. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendment No. 11 not moved.]

Baroness Byford moved Amendment No. 12:

    Page 8, line 2, after "work" insert "provided that such work will not impinge upon pre-existing licensed abstraction producing potable water" The noble Baroness said: My Lords, I return to an important issue that was raised in Grand Committee. The amendment has been brought forward again in order to seek clarification from the Minister. In Grand Committee he stated:

    "I will need to consider the issue raised by the water bottlers because in certain circumstances they have a specific concern. We may be able to deal with that in a different way".—[Official Report, 27/3/03; col. GC89.] For the benefit of noble Lords who did not attend the Grand Committee, perhaps I may raise one or two issues. During the Grand Committee debate there was a query whether the 12-year limit had been specified in writing by the Environment Agency. This time limit and its bureaucratic rationale was set out in detail by the Environment Agency in its policy document, Managing Water Abstraction, which was published in April 2001, and was confirmed again in the written guidance for stakeholders published in March this year. It is the Environment Agency's strength of attachment to the period of 12 years which causes so much concern. During the debate the Minister made some helpful statements about taking investment needs into account. We hope that in the pursuit of these amendments this can be clearly established as a principle. In the Environment Agency's guidance to stakeholders there is no reference to the payback on investment as a criterion for granting longer-term licences and this clearly needs rectification. In Grand Committee I referred to the depreciation accounting practices of the water utilities and it might be helpful to highlight some of the financial commitments there.

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    The first feature is that investment is needed for business expansion, not only in bottling equipment but in new bottling halls, warehouses and connected infrastructure. The payback on such investment, which normally requires bank loans, is usually calculated at 12 years. Obviously, we will be speaking on investment at greater length later. We sought recognition from the Minister that environmental damage could be caused by drilling connected with exempted abstractions. The Minister was opposed to amending the Bill, but our advice from Environment Agency officials is that a legislative requirement to assess the impact of exempt abstractions is essential. I understand that the Government wrote to the Environment Agency on this issue but have not had clarification. Perhaps I can share with the House the technical point that natural mineral waters must be, to quote from the contribution of the British Soft Drinks Association,

    "free from pollution at source" and

    "have a consistent mineral content". I hope that the Minister can deal with this point in a slightly more sympathetic way than was the case in Committee. I beg to move.

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