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Baroness O'Cathain moved Amendment No. 31:

"(4C) Whenever the Secretary of State determines that compensation should not be paid under this section in respect of the variation of a licence on the grounds set out in subsection (4A) above, the holder of the licence may dispute the determination by referring the dispute to the arbitration of a single arbitrator.
(4D) When a dispute is referred to arbitration under subsection (4C) above—
(a) the arbitrator shall take into account any representations that the Secretary of State, the Environment Agency or the Authority may wish to submit to him; and
(b) in making his award the arbitrator may confirm, revoke or vary the whole of the Secretary of State's determination, or any part of the determination whether the reference relates to that part of the determination or not.""

The noble Baroness said: My Lords, in moving Amendment No. 31, I speak also to Amendment No. 35. I assure noble Lords that I shall be brief. Clauses 25 and 27 will, in prescribed circumstances, empower the Secretary of State to deprive licence holders of rights under existing licences without the payment of compensation. This amendment provides a right of appeal against the merits of such decisions to some independent person or tribunal. It recognises that existing rights are affected.

This is part of a package of amendments on appeals which aim to ensure that there are rights of appeal on the merits of the regulator's decisions to independent persons, taking into account that there are already such rights in relation to the granting of abstraction licences and decisions on competition issues. These amendments, and other appeal provisions, replace what I would refer to as our "jumbo" appeals amendment in Grand Committee. It was somewhat complex and caused some confusion. Instead, specific amendments are proposed to provisions where regulatory decisions affect existing rights or are punitive in nature. I beg to move.

Lord Borrie: My Lords, the noble Baroness, Lady O'Cathain, and, no doubt, her colleagues, have made quite an effort to move away from the so-called "jumbo" amendment tabled in Grand Committee. Looking at this amendment, I think that we can go back to square one and determine whether each of these is justified. Amendment No. 31—I think the same point applies to Amendment No. 35 with which Amendment No. 31 is grouped—deals with the right of the Secretary of State to deprive licence holders of compensation when rights are withdrawn. The basic question is: is that not an issue on which there ought, in all terms of natural justice, to be some sort of right of appeal somewhere?

The idea that there should be a single arbitrator—it does not say who or how he or she would be chosen—presumably would be agreed between the parties, as would be normal. If there was no agreement, one would go to someone like the president of the Chartered Institute of Arbitrators to appoint one. It seems to me a matter of common sense that, when

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anyone has a power of this kind—such as the Secretary of State has here—not to pay compensation on certain grounds, those grounds are challengeable, they are disputable, and someone else should be able to determine whether it is a correct decision or not.

When Ministers and regulators have decision-making powers on matters of policy, it is often inappropriate that there should be a right of appeal because it is a right of appeal from a specialised person with particular powers relating to policy to another person outside the circle. As I have said, that is completely inappropriate. But here we are not talking about appeals on matters of policy, but appeals on whether compensation should be paid on certain specified grounds set out in the statute, which is a matter of interpretation.

Some form of appeal, perhaps that suggested in the amendment, seems quite suitable, while judicial review would be much too narrow and limited because presumably it would succeed only if one could prove that the Secretary of State was acting illegally or had not followed the right procedures. That seems inadequate for the matter raised by the noble Baroness.

6.15 p.m.

Baroness Byford: My Lords, I too support the amendment moved by my noble friend. The noble Lord, Lord Borrie, was quite right to say that a good deal of work has been put into trying to find the appropriate wording. When looking around the Benches, I wonder whether we will have been successful, but we shall know that later.

It is clear that there is a human rights issue here. We have not framed the amendment around human rights, but if someone is to be deprived of their rights to compensation currently in place, I would suspect that the Government have considered it and will have clarified that there is no human rights challenge. Ultimately, however, it is not right for the Government to be judge and jury over their own business. Given that this amendment has not defined or specified exactly who the person should be, it should be something that the Government will feel able to take on board. Provided that the person is acceptable to the two businesses or challengers concerned, then I see no difficulty with it.

We had considered whether we should define the person, but at this stage we felt that the amendment might be more acceptable to the Government if it was left to the Secretary of State or to the Environment Agency to define the single arbitrator.

I am very grateful to the noble Lord, Lord Borrie, for his strong support for this amendment.

Lord Whitty: My Lords, there may be something of a misunderstanding here. Where a licence is revoked or modified, compensation is payable for loss or damage under Section 61 of the Water Resources Act 1991. The same section also provides that any disputes over the amount of compensation, or whether compensation

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should be paid, may be referred to the Lands Tribunal. The tribunal is independent of the Secretary of State and is thoroughly experienced in carrying out such assessments. So in general a system of appeal is already in place.

Clauses 25 and 27 set out a limited and statutorily defined set of circumstances in which compensation would not be payable after an abstraction licence is modified or revoked. If the clauses stand, it is not then a question of judgment or appeal to the Secretary of State, it is a matter of statute.

The amendments seek to amend those clauses to install the principle that the holder of a new licence should not be deprived of abstraction rights without the possibility of a hearing. I accept that principle. However, the Water Resources Act already provides a mechanism for a hearing in such cases. This would take place when it was decided whether to vary or revoke a licence on the grounds set out in the two clauses.

It is important to note that, contrary to the implication of the amendment, Section 61 of the Water Resources Act does not provide for the Secretary of State to make a decision whether to award compensation. As I have said, that would follow as a result of statute in the circumstances set out in these two clauses.

The procedure for deciding whether to vary or revoke a licence is set out in Sections 52 to 54 of the Water Resources Act. Therefore, at the appropriate stage in the decision-making process there is already the chance for a full hearing as to the need for the revocation or modification of an abstraction licence.

Whether or not the interpretation of those clauses is correct is a matter for judicial review, but it is not a judgment or a decision of the Secretary of State that can be appealed against, which I think is the motivation for the amendments.

With that explanation, I hope that the noble Baroness will not press the amendments.

Baroness O'Cathain: My Lords, I am deeply unsatisfied by the Minister's response. I take his point that there is already access to judicial review, but that is both cumbersome and costly. The issue should be taken out of that area.

I liked the comments made by the noble Lord, Lord Borrie, in regard to the Institute of Arbitrators. Whenever that body has been used in the past it has delivered answers that seem to satisfy everyone. A judicial review often gives a "yea" or a "nay" answer, which does not satisfy anyone—certainly not the people who feel aggrieved.

There is a great feeling that the powers are stacked against the water industry. In those circumstances, I should like to test the opinion of the House.

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6.21 p.m.

On Question, Whether the said amendment (No. 31) shall be agreed to?

Their Lordships divided: Contents, 40; Not-Contents, 84.

Division No. 4


Anelay of St Johns, B.
Astor of Hever, L.
Blatch, B.
Brougham and Vaux, L.
Buscombe, B.
Byford, B.
Campbell of Alloway, L.
Colwyn, L.
Cope of Berkeley, L. [Teller]
Cumberlege, B.
Darcy de Knayth, B.
Denham, L.
Dixon-Smith, L.
Erroll, E.
Fowler, L.
Freyberg, L.
Hanham, B.
Higgins, L.
Hodgson of Astley Abbotts, L.
Howe, E.
Jenkin of Roding, L.
Lamont of Lerwick, L.
Linklater of Butterstone, B.
Lyell, L.
Montrose, D.
Newton of Braintree, L.
Northesk, E.
O'Cathain, B. [Teller]
Onslow, E.
Park of Monmouth, B.
Rawlings, B.
Renton, L.
Seccombe, B.
Shrewsbury, E.
Skelmersdale, L.
Sutherland of Houndwood, L.
Taylor of Warwick, L.
Thomas of Swynnerton, L.
Trefgarne, L.
Weatherill, L.


Acton, L.
Alli, L.
Amos, B.
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B.
Bassam of Brighton, L.
Bernstein of Craigweil, L.
Blackstone, B.
Boston of Faversham, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Burlison, L.
Carter, L.
Christopher, L.
Clarke of Hampstead, L.
Corbett of Castle Vale, L.
Crawley, B.
David, B.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Elis-Thomas, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Goldsmith, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grocott, L. [Teller]
Hardy of Wath, L.
Harris of Haringey, L.
Harrison, L.
Hayman, B.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Howells of St. Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Judd, L.
Kilclooney, L.
King of West Bromwich, L.
Layard, L.
Lea of Crondall, L.
Lipsey, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L. [Teller]
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
Massey of Darwen, B.
Milner of Leeds, L.
Parekh, L.
Pendry, L.
Pitkeathley, B.
Puttnam, L.
Rendell of Babergh, B.
Rogers of Riverside, L.
Rooker, L.
Sainsbury of Turville, L.
Simon, V.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Uddin, B.
Walker of Doncaster, L.
Warwick of Undercliffe, B.
Wedderburn of Charlton, L.
Whitaker, B.
Whitty, L.
Wilkins, B.
Williams of Mostyn, L. (Lord Privy Seal)
Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

12 Jun 2003 : Column 436

6.32 p.m.

[Amendment No. 32 not moved.]

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