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In welcoming the Bill, as I do, I come back to my concern with the Environment Agency-though certainly not with the leadership of the noble Lord, Lord Smith. Over the years, this agency has taken on more and more responsibilities. I would hate it to be in the position that has befallen the Rural Payments Agency, which I have often spoken about in this House. There is also the issue of sheer cost. For example, the process of paying a single farm payment for an English farmer costs £1,740, compared with £285 for a farmer in Scotland. That is crazy. It is absolutely ridiculous. Surely we should have a system in which that could not happen. As the National Farmers' Union has explained only recently in an article in the Daily Telegraph, if we lowered the English cost to £500 per payment, it would save some £100 million. The Bill will involve large costs and I am very anxious that the work involved should be done in a professional manner, as I am sure it will be. That will involve reviewing the costings incurred in the initial stages and then the subsequent ongoing costs.

Those are the clauses in which I am especially interested. I am grateful to the right reverend Prelate the Bishop of Exeter for raising the issues of churches and charities. I am unhappy that, at this stage-though we will discuss it later-the matter is left to the discretion of individual water companies. That should not be the case. Nor do I like the use of "may" in this context; it should be "must". If it is not, this will create a whole area where companies can shrug their shoulders and say, "Well, we'll do it differently here", when I am sure that that is not the Government's intention. With those few words, I say again that I certainly support and welcome the Bill. I hope that it will see the light of day.

5.56 pm

The Duke of Montrose: My Lords, once again I declare that I am a farmer and a member of NFU Scotland. We can all be very grateful to the Government

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for bringing the Bill forward at this time, even though the legislative programme is under considerable pressure. As many other noble Lords have said, this legislation already has quite a history in its consideration at various levels in government; I think that we would all like to see its main points on the statute book. Even so, it leaves some lingering doubts about the outcome of its implementation.

As my noble friend Lord Selborne has just pointed out, there had to be an element of putting the cart before the horse in that, in legislation, a Bill is normally followed by the relevant statutory instruments. In December, we had Statutory Instrument 2009/3042 on the assessment and management of flood risk in England and Wales. On its own, that placed all responsibility firmly in the hands of the Environment Agency. However, that seems to be the point where we were introduced to the concept of a "lead local flood authority". As far as I can see, the definition for that is only given in full legal terms in this Bill, so it appears that the earlier SI will in fact rely on this subsequent legislation.

One thing that the statutory instrument required was the setting up of all necessary flood assessments. Judging from annexe C of the Government's response to the Pitt report, I see that a fairly detailed plan was put in place in December 2008, showing stages of progress and the dates for completion. If all has gone according to that plan, the national flood emergency framework should have gone out to consultation last December. Can the Minister tell us how that most fundamental proposal is progressing?

This Bill goes once again into all the special arrangements for cross-border catchment areas. That will be familiar territory to many of your Lordships who were involved in putting through the legislation implementing the EU water framework directive in what became the Water Act 2003. As the noble Lord, Lord Smith of Finsbury, reminded us, it would have been naïve to think at that time that we had done all the legislation necessary to deal with water. Now we have a new EU measure and a new Bill. Much of that Bill concerned the water industry and, like this one, contained powers and provisions for action in time of drought. Clause 36 contains amendments to the provision for temporary bans on water use in the Water Industry Act 1991. My noble friend Lady Fookes drew attention to Clause 47, on consolidation. Is this provision expected to run in parallel with the provisions in the 2003 Act, and can the Minister be sure that this will not leave room for some confusion?

The Bill sets out to deal with coastal erosion and flooding. It contains some fairly sweeping powers for the Environment Agency and the Secretary of State. The exercise of these powers will enable them to make some sizeable changes in both of these areas. In support of my noble friend Lord Taylor, I come back to the question raised by the NFU of England in its briefing, on whether the Environment Agency will also have regard to the strategic needs of food production. This responsibility, I presume, should rest on the shoulders of the Secretary of State. However, this area can be explored in Committee.

Another aspect that concerns me is flood risk management, which is covered in Clause 7. It is generally thought that to avoid flooding in built-up areas it will

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be necessary to allow flooding in currently rural agricultural areas. We can all be grateful for Schedule 1's provision for the consideration of compensation for any losses incurred by third parties. However, it would be interesting to know whether the Government will consider as part of that cost the fall in value in areas that are to be opened up for flooding, but which are not subject to flooding at present, let alone the task of clearing up the debris that inevitably occurs when flooding is allowed to take place. My noble friend Lord Taylor spoke of Cumbria and Cockermouth. This is currently a major issue in that area.

Payment can well be considered as part of the implementation of the national element of the national risk management strategy. It will not be as easy when these issues have to be considered at a local level and funding provided at that point. I would also probe the practical meaning of Schedule 4 in amending the Reservoirs Act 1975 and introducing a definition of a high-risk reservoir. Is the purpose of this to produce a category of risk that is even greater than was foreseen in the Reservoirs Act as it is? It is my understanding that in carrying out the inspection of reservoirs at present, one of the tasks of the engineer is to specify into which of three categories of risk a reservoir falls. I have had some experience of this. Can the Minister outline how this is likely to change?

6.03 pm

Lord Dixon-Smith: My Lords, I follow every other noble Lord who has welcomed the Bill. It is good to see, at last, an attempt to clarify the strategy and responsibility for flood control and management. There is, so far, an unmentioned and invisible elephant in the Chamber. We need to get it into the open because I am certain that, in due course, it will cause the noble Lord, Lord Smith of Clifton, who will have national responsibility for this beast, a great deal of problems. What we have not so far mentioned, in all this talk of management of risk, is the level of acceptable management which we are prepared to consider and fund.

After major breaches in Essex in the early 1950s, the sea walls were raised. However, the passage of time and weather has now left those walls so that they are in a satisfactory guaranteed state for a once-in-25-years level of flooding. Once in 50 years is very dodgy; once in 100 years large parts of Essex will be under water. The same applies to flood plains. I know somebody who lives in a house that was built in the 16th century. It has never been flooded before. In 2001, that house was flooded, as were a number of others. The Environment Agency locally then said it was a one-in-800 year flood. Subsequently that has been amended to a one-in-500 year flood. But fundamental questions arise from that. Can one possibly rationalise building protection for a one-in-500 year flood? That would be extremely difficult to justify; perhaps it could be justified if the risk were changed to once in 100 years. These are important matters because they affect insurance for individuals. The resident in that house, because it has been flooded, has been designated as living on a flood plain, and the insurance premiums have risen proportionately. This becomes an expensive issue. Is it rational to insure against a one-in-500 year flood? That is a very difficult question to answer.

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The noble Lord, Lord Smith of Finsbury, is back in his place. He, above all of us speaking tonight, will have to wrestle with this issue. He has my sympathies because this will become a very difficult problem, which will involve returning to the whole question of funding this area of work, what we are prepared to pay for and what we are prepared to do. The issue has not been raised and I really thought that this great monster must be brought into the open before anything else, because I am sure that it will engage us all on many occasions in the coming years.

I was interested to observe that in the Bill there are 21 clauses establishing a clear and interesting structure for managing floods, flood risk and flood control. All of a sudden, Clause 22, almost as an afterthought, refers to the regions. One can imagine one of the people responsible for drafting the Bill having a momentary brainstorm and saying, "Oh, my lord, we have forgotten the regions". There is a clear structure that includes the Environment Agency and the lead local flood management authorities. Suddenly in the Bill we find a new category; the Environment Agency must establish regional committees for consultation, whose members may be paid. They have no executive function or responsibility for flood control. If my memory is correct, they may raise a levy, although I am not sure what that will be for, because there is no information in the Bill on that. I ask myself why this peculiar structure has suddenly been added to the Bill. I know that there is a regional structure, but that already exists. The Bill requires the Environment Agency to establish a different structure. We are in some difficulties. It would be entirely appropriate if there were to be the river basin structure that we have been calling for and to which the noble Lord, Lord Cameron of Dillington, referred. But that is not in the Bill. We shall have to devote some time to that tricky constitutional question.

I should declare that I am a farmer in Essex, which is one of the driest counties in the country. Flooding may not be thought to be a huge problem there, but it can be. I wish to talk about Schedule 4 on reservoirs. I have a reservoir which I had built in 1961. It is far bigger than the 1,000 cubic metres that is talked about, so I have a vital interest in it. I built it for irrigation purposes. I am not a big farmer, but in the days when I was irrigating it was not at all unusual for me to use something pushing towards 3,000 cubic metres of water in a season. From the point of view of having a farm reservoir for irrigation purposes, the 1,000 cubic metres limit is remarkably low.

Lord Smith of Finsbury: I thank the noble Lord for giving way, but I should point out that the registration threshold in the Bill is 10,000 cubic metres.

Lord Dixon-Smith: I stand corrected and apologise to the House. I have done what my wife often does-she forgets to add a nought.

My reservoir stores what would otherwise be run-off. I have long argued that there is no shortage of water; there is a massive shortage of conservation. Agriculture is a significant issue as it will be required to increase productivity. The demographic problems that we face

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globally will inevitably mean that we must maximise agricultural output, and irrigation will play an increasingly significant role. The last thing we need is a system that might prove to be a disincentive towards the construction of irrigation reservoirs. I agree absolutely that an inadequately constructed reservoir in a narrow hill valley in South Wales is a danger to the communities below. That was the reason for some of the original reservoir legislation passed in the 1930s. My own reservoir was subject to that legislation and it will now be subject to this Bill.

We need these reservoirs but there is a world of difference between a reservoir in a hill valley and one in a flat arable area. If my reservoir were to flood, which I do not think it will, the only person who would be affected is me. It would certainly flood my field. There is a level of risk. I note that the Bill provides power for the Minister to make regulations and to give guidance, which is an area that we will have to probe at later stages to ensure that it is clear how we define risk.

6.13 pm

Lord Redesdale: My Lords, I start by declaring a couple of interests. I am just about to be made a non-executive director of Watertight, which is a company that deals with making houses secure from flooding-especially sewer flooding-and I am chairman of the Anaerobic Digestion and Biogas Association. I also own a pub in Northumberland. That is not strictly relevant but I thought I would add it anyway.

An interesting way in which to start the debate, which makes it entirely topical, is to note that the front cover of the Bill states:

"Lord Davies of Oldham has made the following statement under section 19(1)(a) of the Human Rights Act ... In my view the provisions of the Flood and Water Management Bill are compatible with the Convention rights".

I mention that because in 2008 we passed the Climate Change Act and I wonder whether it is about time to start to consider whether a declaration should be made by the Minister on whether legislation is compliant with that Act. It would be topical because the noble Lord, Lord Davies of Oldham, did so much to help in its enactment and because there are aspects of it that need to be considered in the case of climate change. The whole issue of flood and water management is based around climate change.

I understand the science of climate change-it is difficult to declare, or for a scientist to claim, that any one of the recent floods has a direct correlation as a climate change event. However, the large number of flooding events can be seen as an indication of a changing climate. The noble Lord, Lord Dixon-Smith, mentioned the problems in Essex: this was very pertinent considering that sea-level rises are about 3 millimetres a year and could well increase. We are standing next to the River Thames: when the Thames Barrier was built, it was not expected to be raised on such frequent occasions, and there is real talk about building a further barrier.

Although it is not in the Bill, I must mention our support for ongoing efforts to build a sewer under the Thames to divert all the flood water that washes so

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much sewage into the Thames on such a regular basis. The noble Lord, Lord Addington, and I saw the direct effects of this when we went out training for the Lords and Commons rowing race just after heavy rains-going down the Thames was a particularly unpleasant affair.

However, I go back to the issue about compliance with the Climate Change Act because I notice that an opportunity has been lost in the Bill. In the Energy Bill that is before the House even further stringent measures are being taken to increase the primary duties of Ofgem to deal with sustainability. The noble Lord, Lord Greaves, discussed what sustainability actually means; many planners and people in local authorities are starting to read sustainability in relation to the issue of carbon emissions. There is a real opportunity here which has been lost. In the Energy Bill we are increasing the duties of the regulator to deal with climate change, but it has been completely neglected in the Flood and Water Management Bill. Before we reach the Committee stage, will the Minister consider adding the wording that is in the Energy Bill to the Flood and Water Management Bill so that Ofwat is given a duty to consider the issue of climate change over and above the cost implications?

This is extremely important. As I mentioned, I am chairman of the Anaerobic Digestion and Biogas Association. Ofwat has taken a strict regulatory viewpoint. I was at a meeting with Ofwat recently where it said it would love to encourage the introduction of renewable energy schemes and anaerobic digestion but it is limited by its primary duties. The Government really will have to think about changing Ofwat's primary duties. The noble Lord, Lord Oxburgh, who is in his place at the moment, introduced a very fine amendment to the Energy Act 2008, which is now raising some considerable issues and is one of the reasons there has been a change in the current Energy Bill. The Government took on board his amendment and introduced a provision that Ofgem has to consider the good of past and future customers.

This could be read across into the Flood and Water Management Bill in an interesting way. I should be interested to hear whether the Minister believes that my reading of this is correct. Under the Flood and Water Management Bill, the Environment Agency is able to direct who should pay for flood defences. I should have thought that under the provisions in the Energy Bill Ofgem has a responsibility, in considering the good of past and future customers, to direct the payment of flood defences for electricity sub-stations-especially after the floods in Tewkesbury, which almost took out one of the sub-stations. This would have left about 250,000 electricity users-though I am not entirely sure-without power for a very long period of time. If my reading of that is correct, then under the Flood and Water Management Bill the Environment Agency, under the noble Lord, Lord Smith, would be able to give direction to Ofgem to require that the energy companies provide adequate flood defences for all sub-stations in flooding zones. If that is the case, the Bill will have quite interesting cost implications.

I very much hope that my reading of this is correct. Obviously, dealing with the regulators is a somewhat tortuous affair but I believe that there could be a case

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for judicial review if they took the opposite view and felt that they were not responsible. If would therefore be helpful if the Minister could clarify the situation. If he is not in a position to do so at the moment, it would be very helpful if he could write a letter on this subject giving me an indication of the situation. However, I very much hope that, having agreed that the regulator in electricity and gas markets should take seriously the provisions of the Climate Change Act, the Government will think carefully about transposing the provisions, which they produced and which were enacted before Parliament, straight across into the Flood and Water Management Bill. From speeches that have been made by many Members of all parties in this House, I am absolutely certain that that would have considerable support.

6.20 pm

Baroness Young of Old Scone: My Lords, I speak as a former chief executive of the Environment Agency and as a current member of the climate change adaptation sub-committee. I thank the noble Lord, Lord Giddens, for his kind words about the current and past management of the Environment Agency.

Seeing this Bill come to the House is a bit like having one's birthday and Christmas rolled into one. It contains a huge number of issues that I have worked on and lobbied for in my many incarnations in the past and which were then supported by the Pitt review and the work of Anna Walker. Therefore, it is a delight to see the Bill finally arrive here.

I want to welcome a few of the cherries in the Bill and talk about some of the areas that I think still need clarification, as well as some outstanding issues that the Bill does not address. First, I very much welcome the proposals concerning reservoirs. There are a number of examples of incidents from reservoirs around the 10,000 cubic metre threshold. It is important to achieve that threshold but then to manage the process on a risk basis, taking into account that risk analysis and making sure that only reservoirs that pose real risks come under scrutiny and that unnecessary regulatory impact is reduced.

Secondly, I turn to the registration of third-party assets. About 55 per cent of all flood defences-for example, railway embankments, house walls, warehouse walls and a variety of other things-are owned by someone other than a public authority. It is important that the Bill brings in a proper registration and management system for those third-party assets, which are fundamental to the future of flood defence in this country.

Thirdly, I turn to a point that has not really been raised so far in this debate-that is, the proposed changes relating to habitat enhancement work. I know that they were rather controversial in another place but I hope that the provisions that are now in the Bill regarding consultation on these works will reassure noble Lords.

Fourthly, the whole issue of sustainable urban drainage and the associated right of connection will, I hope, mean that we can move forward and produce a much more effective process for drainage management in this country. I also very much support the idea of

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social tariffs for water customers and the ability of companies to apply such tariffs. If we are to tackle impending drought in this country, particularly in the south-east, where there are further pressures from development and population, as well as from climate change, we will need to see a very fast move to near-universal metering in areas of water stress. Of course, although metering can reduce the consumption of water by up to 20 per cent, it can produce pressures for poorer households through increased bills. Therefore, it is important that companies are able to offer these social tariffs.

The noble Baroness, Lady Fookes, reminded me of the importance of temporary hosepipe bans. Like her, I am a keen gardener and very much appreciate the work that the Royal Horticultural Society has done in looking at these bans. There is a whole range of other ways in which water can be saved. It is important that those are addressed as well to avoid and reduce the need for other bans. We want to see increased metering, as well as low-flow household appliances and fixtures and fittings. We want building regulations improved so that when houses are being refitted, they are refitted in a water-efficient manner, as well as a whole variety of other mechanisms that would take the pressure off temporary hosepipe bans. However, I appreciate the work that has gone in to clarifying when the hosepipe ban should be applied.

The centrepiece of the Bill is the issue of clarifying responsibilities, particularly giving local authorities responsibility for the management of surface water flooding. I remember well the floods of 2007. One tends to remember events like that and I am sure that many of the people who were out of their houses for many months as a result of those floods, and indeed in the more recent Cockermouth floods, also remember them well. A substantial part of the flooding during the 2007 floods in places such as Sheffield and Hull was caused by surface water. This Bill is long overdue in giving clarity of responsibility to local authorities to tackle surface water flooding in conjunction with the Environment Agency and its responsibility for riverine flooding.

Although I welcome the clarity of responsibility, there is still an area where there is a lack of clarity. I regret that the proposal to clarify the respective roles of the Environment Agency and the regional flood and coastal committees was removed from the Bill as a result of controversy in another place. There is still an element of lack of clarity about who actually carries the can, if that is not the wrong way to put it, in terms of flooding. Sometimes the most effective way of examining whether there is clarity in responsibility is to ask who we would blame if things went wrong.

When I was at the Environment Agency, I felt very uneasy about what could happen when the Environment Agency proposed the regional programmes of flood defence but the committees had the role of approving them. In those circumstances, one could be led to believe that the committee had the ultimate authority and, therefore, would be the body to blame if something went horribly wrong. I assure your Lordships that that is not what happens. What happens is that everybody blames the Environment Agency.

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