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Baroness Miller of Chilthorne Domer moved Amendment No. 23:

"(5B) All licenses which were hitherto expressed under subsection (5) of section 46 as remaining in force until revoked shall, over a 6 year period beginning on the 15th July 2012, be reissued to state—
(a) the date on which they take effect, and
(b) the date on which they expire.""

The noble Baroness said: My Lords, this amendment seeks to provide a mechanism for the conversion of permanent licences to time-limited status. In Committee, we said that it was in our view essential to introduce greater flexibility into the licensing system, which is vital if future abstraction management is to take account of such factors as climate change and increasing pressure on water resources.

When such an amendment was moved in Grand Committee, the Minister said that he favoured the conversion of all abstraction licences to time limits but that he would like to achieve this conversion through voluntary means. However, it became apparent, when answering questions about how many permanent licences have been voluntarily converted to time-limited status in the past five years—and I think voluntary conversion only became Government policy from 1999—the Minister replied that he did not know that there were any. In fact, none has been so converted, as was confirmed in answer to a question asked by my noble friend Malcolm Bruce in another place, on 18th July 2002, in column 487 of Hansard.

I do not believe that a voluntary approach gives any incentive for abstractors to convert their licences. A statutory mechanism is therefore necessary, and it is for that reason that I have brought this amendment back on Report. I beg to move.

Lord Whitty: My Lords, the amendment seeks to impose a time limit on all permanent licences that will still be extant in July 2012 over a period of six years after that date. For all the reasons the noble Baroness

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underlined and I underlined in Committee, it will be desirable to move everybody on to a time-limited licence. However, the Government's view, based on legal advice, is that automatic conversion of this sort could have significant human rights implications and also give rise to the potential for substantial compensation costs to be paid by the agency—in effect, by all outstanding and non-time-limited abstractors, theoretically, at least.

The Government have said that we would like to see abstraction licences eventually made subject to a time limit where the cost of doing so is justified. A voluntary, gradualist approach would be preferred; I accept the noble Baroness's indication that there is no voluntary conversion at present, but the Bill's provisions will help to ensure that there is more. The Environment Agency will need to undertake a programme of prioritised conversion of licences, where costs are proportionate to the benefits. It will need to consult on this programme once the Bill becomes law.

There are a number of measures and features of the new system that will encourage such voluntary conversion. For example, the agency will introduce financial incentives to convert, such as differential charging according to licence status. It will be consulting on a new charging scheme in the autumn. Moving to a time-limited licence where at least six years' notice of non-renewal is given will, in future, offer more security, rather than less, than retaining a non-time-limited permanent licence that could potentially be subject to revocation without notice. Removing the right to compensation where a permanent licence causes damage to the environment should also act as an incentive to conversion. Where abstraction under a time-limited licence causes such damage, the agency should, in most circumstances, rightly compensate because it will in effect have been at fault in granting the licence. In those circumstances, there will be some compensation.

If we take the other route, compensation and human rights issues could arise for all those who are converted mandatorily as of July 2012. The compensation in that case could be substantial. A much more gradualist, voluntary and co-operative programme, supported by the measures I have outlined, would be a better approach to this conversion. I hope, therefore, that the noble Baroness will accept that our approach is better than her nuclear option, if I can refer to it in that way, and will be less costly to the Government or the Environment Agency and, potentially, the existing abstractors.

4.45 p.m.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. Of course, I do not want to place unnecessary burdens on the public purse by way of compensation. I merely remain concerned that the voluntary mechanism does not seem very effective at the moment regarding the method of conversion. As for the human rights angle, I think I should take this away and discuss it with my noble friend Lord Lester, who has far more experience in

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that area than I have. The Minister looks excited at that prospect. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer moved Amendment No. 24:

    Page 22, line 33, at end insert—

"(5B) Every licence under this Chapter shall be subject to a duty to use the water abstracted in an efficient manner, so as to further water conservation""

The noble Baroness said: My Lords, there are a number of points in the Bill where we could choose to push for proposals on efficiency. Indeed, we voted on one such amendment this morning, in the name of the noble Baroness, Lady Byford. There are two amendments to be debated later, one in my name and one a government amendment. So I will not speak to Amendment No. 24 at great length but will listen to the Minister's reply and take it into account when we debate Amendments Nos. 36 and 160. I beg to move.

Lord Dixon-Smith: My Lords, anything that encourages the efficient use of water has to be beneficial. To that extent, quite obviously, we would support the amendment if we get no satisfaction eventually as we go through the Bill.

Lord Whitty: My Lords, the noble Baroness is correct that we have tabled Amendment No. 160, which would amend the Environment Agency's general duty on water resources to include water efficiency. That would, of itself, have implications for the way in which the Environment Agency dealt with its licences in a more substantial way than adopting the duty on the agency through the water efficiency measures that would be required by the noble Baroness's amendment. Perhaps we can have that discussion when we reach Amendment No. 160. If the noble Baroness is not satisfied at that point, no doubt we can return to it on Third Reading.

Baroness Miller of Chilthorne Domer: I thank the Minister for his reply and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer moved Amendment No. 25:

    Page 22, line 35, at end insert—

"(6) The agency may licence a number or variety of activities on the same land-holding, by issuing a whole farm licence when it judges that to be in the interests of good regulation."

The noble Baroness said: My Lords, we have heard much from the Government during proceedings on this Bill and during debate on the countryside and CAP reform about a move to streamlining regulations. They have referred to whole farm approaches and so on, so I believe that there is some merit in exploring the matter. The Government decided at Committee stage

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that different licences were still needed for different activities. Exactly when would issuing a whole farm licence make sense?

The amendment would give the Environment Agency power, so that when it judged that it was in the interests of good regulation to issue a whole farm licence, it could do so. Of course, the agency might never judge that that is in the interests of good regulation. However, as we move to one-stop advice for farmers and a system of environmental payments based on whole farm activity, I hope that approach is seen to be a good one. I would not want there to be enshrined in the Bill a necessity for the agency to licence everything in the abstraction and empowerment areas separately, without the power to move on it. I emphasise that the agency would issue a licence only if the agency judged it,

    "to be in the interests of good regulation".

I beg to move.

Lord Hardy of Wath: My Lords, I am a little confused about the last two words of the amendment—"good regulation". As my noble friend said a moment ago, good regulation is the regulation with which the applicant agrees. If the amendment referred to the interests of the community, conservation or good use of water, I would view it with more favour. Regulation should always be good—that should be implicit. We should hear a little more argument in favour of the amendment before we start voting with blanket approval for good regulation.

Lord Whitty: My Lords, of course my noble friend is right that all regulation should be good. However, regulation relating to farmers is regrettably not always applied in the most effective or user-friendly way or with the best outcome. The noble Baroness is right in saying that we would like to move to a whole farm approach. The problem with her amendment is whether one can do that on the unilateral basis of the one dimension of the regulations that applies to farming. The first problem that we have when we develop whole farm approaches to regulation is the definition of a farm. That problem would apply in relation to the application in this case.

As the noble Baroness recognised, in so far as the activity referred to in her amendment relates to the abstraction of water, it is already possible that the agency can grant a licence to the same person, authorising multiple points and purposes of abstraction, provided that it is from the same source of supply. Most farms would be covered by that potential discretion anyway. There is nothing in the application process to prevent a single application from being made for a licence covering applications from all sources of supply. There would be aggregate charging, and no penalty to the licence holder when separate licences needed to be issued, if they were all covered by one application.

In a sense, therefore, the proposal is already a possibility, but one without the total context of the rest of regulation for farmers being covered by a whole

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farm approach. Therefore, reference specifically to whole farm licences in that context is probably not sensible. We would need to wait until we developed the full programme before it made sense.

There will be other forms of activity where multiple abstraction points and potentially multiple sources would also apply. Therefore, the discretion that already applies to the agency would not be limited to farms, in any case. Large factory and commercial sites might also benefit from that discretion. Therefore, the noble Baroness's amendment is premature, but at some point down the line it could fit in more directly with an overall approach to whole farm planning and regulation.

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