Water Bill
Baroness McIntosh of Pickering Excerpts(10 years, 4 months ago)
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Hywel Williams
Alas, I am not surprised at all by the complete lack of Labour MPs from Wales in the Chamber. They might still be celebrating, who knows?
In conclusion, if the coalition Government are unwise and refuse to accept the new clause and we are forced to press it to a Division, I expect the main Opposition party, which is also the Government party in Wales, to join us in the Lobby. After all, this is not just a Welsh test for the coalition Government. It is also a test for the Opposition in this place and for their friends in Wales of their consistency and commitment to the people of Wales. Are they serious about devolving power to Cardiff, or is this to be a case of echoing St Augustine: “Make me pure, but not yet”?
Miss Anne McIntosh (Thirsk and Malton) (Con)
It is a pleasure to follow the hon. Member for Arfon (Hywel Williams), who moved his amendment so eloquently.
I want to speak in support of two little amendments that have been grouped under the heading “Regime of the water industry”. New clause 2 and amendment 12 have been tabled in my name and those of a number of colleagues on the Select Committee on Environment, Food and Rural Affairs. We followed the proceedings in the Public Bill Committee with great interest, but chose to bide our time until the remaining stages before we entered into the legislative process, having done what I thought was a welcome piece of work in the pre-legislative scrutiny of the draft Bill.
New clause 2 specifically considers the possibility of allowing a retail exit. It would empower the Secretary of State to make provision by regulation for the transfer of an undertaker’s assets and liabilities associated with its non-household retail business into a separate company. Regulations would be made in the normal way by statutory instrument and would make provision for any transfer to be subject to the approval of the Secretary of State and such safeguards as may be specified in the regulations. Amendment 12 would amend clause 80 by inserting the relevant section on retail exit.
We considered retail exit during the pre-legislative scrutiny. Inevitably, a number of companies may not necessarily fail but will regrettably have insufficient customers to allow them to stay in the market. New clause 2 and amendment 12 would simply recognise that impact and allow companies to function in what would be considered a normal competitive market. An exit clause such as we propose would facilitate new entrants, particularly larger ones, into the water and sewerage retail markets.
We recommended in our report during the pre-legislative scrutiny that the Bill should include such provisions to enable incumbent companies to exit the retail market voluntarily. It would be helpful to hear from the Minister whether he is minded to accept new clause 2 and amendment 12. During our inquiry, both regulators—Ofwat, which covers England and Wales, and the Water Industry Commission for Scotland—said that incumbent companies and, indeed, new entrants were united in calling for the Bill to include an exit route.
During the Public Bill Committee, Opposition Members proposed a new clause to allow incumbent companies to choose whether to provide to the retail or wholesale market only, subject to approval by the Secretary of State. Regrettably, the Opposition’s new clause was defeated in a vote. New clause 2 would have a different effect from the new clause proposed by the Opposition in Committee, as it would specifically enable companies to exit the retail market by transferring their retail contracts and liabilities—that is, their retail business—to a third party where they chose to do so. That would open up the market to new entrants who hold a retail authorisation, by allowing them to acquire whole retail businesses, rather than acquiring one contract at a time. That would allow economies of scale.
Alison Seabeck (Plymouth, Moor View) (Lab)
The hon. Lady is without doubt an expert in these matters, given her role on the Select Committee as well as the all-party group. On the basis of the work done by her Committee, will she give the House a sense of the amount of interest in entering the market and the number of people involved?
Miss McIntosh
I am grateful to the hon. Lady for her good services to the all-party group, where we serve as fellow officers. We hear of many entrants, but obviously, until the law is in place, it is difficult to put a number on that. I am sure that my hon. Friend the Minister will have heard and can perhaps comment, as he is closer to the issue.
We suggest that if existing companies are unable to compete with new entrants who want to come in for very good reasons and lose customers as a result, it makes sense to allow an exit strategy. I personally feel that we heard no compelling evidence during the pre-legislative scrutiny of the draft Bill and during our consideration of the water White Paper to suggest that the reform should not include a retail exit strategy. That is why we feel honour bound to come forward for the sake of the Bill’s completeness.
New clause 2 would give all undertakers the power but not the obligation to transfer their non-household retail business to a different company. It would give the Secretary of State the power to make any such transfer subject to approval and any necessary safeguards to ensure an orderly exit from the market. I hope that the House will be able to support the proposals because much of the Bill is silent on these matters and we want to use the new clause and amendment to give it more teeth.
There are several arguments in favour of allowing such a retail exit. For example, an exit clause is needed to allow the market to function normally and competitively. Additionally, a company should be able to organise its business in the way it considers best in the interests of its customers and shareholders. An exit clause would facilitate new entrants, especially larger ones, into the water and sewerage retail market because they would not need to win one contract at a time. Without new clause 2, I understand that economies of scale would work against new entrants and either prevent them from entering the market or, at the very least, reduce the benefits that they could provide to new customers due to higher costs of entry. I hope that my hon. Friend the Minister agrees that the proposal is helpful and that he will be minded to accept it. It would not be in the interest of companies or their customers to force companies to stay in a market in which they have few or no customers.
The general thrust of the new clause goes to the heart of this group of amendments dealing with the regime of the water industry. We should learn from what has happened in Scotland. I understand that DEFRA has stated that it intends to create a market in which access is regulated—in other words, with the rules of entry clearly set out and adhered to by all market participants. The reverse side of the coin is that if the rules of entry are to be set out, the House would, I am sure, want rules of orderly exit to be set out. I am not saying that exit would happen in many cases, but it is important that such rules are on the statute book.
Following our pre-legislative scrutiny, we said that as much detail as possible should be set out in the Bill so that the House could consider it. It is wrong—I part company from my hon. Friend the Minister in this respect —to leave too much to regulations, given that many of us with a great interest in this subject will not be selected to serve on the Delegated Legislation Committees that consider them. As the Bill does not provide for retail exit, the strategy is too open. It could be argued that the Government’s approach is based on the premise that parties in the retail market should be left to negotiate among themselves about matters such as service and price, but that could be set out in the Bill.
Considerations of price, service levels and the ability to respond to difficulties go to the heart of why it is important to have a competitive market in England, as has been achieved in Scotland. There must be a way of policing a situation in which incumbents are simply slow in responding to requests for information or services from new entrants. It is important not only to facilitate the path for new entrants, but to allow for an exit strategy and to bring about a competitive market. The Bill is completing its remaining stages in the House today, but little is known about upstream competition. The Government are asking that we take an awful lot on trust, but it would be better if the Bill provided for a definite exit strategy, which is why I commend new clause 2 and amendment 12 to the House.
John McDonnell (Hayes and Harlington) (Lab)
I am pleased to follow the hon. Member for Thirsk and Malton (Miss McIntosh). I see in the national press that she has had a little local difficulty. I hope that she can resolve the matter, because she would be a loss to the House if she were not returned at the next election—unless of course she were replaced by a Labour Member.
I want to speak to new clause 14, which is in my name. It suggests to the House that before we move forward with further legislation, we stand back and look objectively at the performance of the water supply industry since 1989 when it was privatised. I am not part of this common agreement among some parties in the House that privatisation and competition have been a success and are the way forward. In fact, I deeply regret what has happened since privatisation.
Thomas Docherty (Dunfermline and West Fife) (Lab)
May I take this opportunity, Madam Deputy Speaker, to wish you and all hon. Members a happy new year? I hope that all hon. Members have had a peaceful and enjoyable break and have returned refreshed and looking forward to this busy year.
Unfortunately, the festive period was not a happy experience for many households up and down the country. Many hon. Members spent a great deal of their recess dealing with the impacts of the recent weather events on their constituents. It is therefore appropriate that later we will discuss a series of amendments on the clauses that will help to provide support to many of those affected households. I look forward to having that debate in more detail, but for the moment I want to focus on the new clauses in the first group of amendments.
Last year, in his now infamous letter to water companies, the Secretary of State trumpeted water privatisation as
“one of the greatest success stories of privatisation.”
If one measures success by the payouts made to investors, it is without doubt a great success story. Let me echo the thoughtful remarks by my hon. Friend the Member for Hayes and Harlington (John McDonnell) and pick out a few examples of the dividends paid out since 1989. Severn Trent Water has paid out £6.2 billion in dividends, Thames Water has paid out £6.3 billion, the north-west’s United Utilities has paid out £7.3 billion, and Anglian Water investors have recouped some £6 billion. Overall, a staggering £40 billion has flowed into the pockets of investors. It is fair to say that many customers would not share the Secretary of State’s appreciation for his wonderful friends the chaps running the water companies.
Indeed, their view is shared by many of the coalition’s own MPs. I am disappointed that the hon. Member for Skipton and Ripon (Julian Smith) is not present. In last year’s excellent debate on the water industry he said that
“Yorkshire Water…is exploiting my constituents and people across Yorkshire.”—[Official Report, 5 November 2013; Vol. 570, c. 213.]
I do not know whether the Chair of the Environment, Food and Rural Affairs Committee shares that view of Yorkshire Water.
Miss McIntosh
Any company that is prepared to invest £1 million in improving the provision of water to Filey has to be congratulated, so I congratulate Yorkshire Water on that. Does the hon. Gentleman agree that this Government’s arrangements leave Yorkshire Water and other companies free to raise money on the markets in a way that otherwise would not be possible?
Thomas Docherty
I do not want to get sidetracked by a debate about the merits of privatisation—I think you would pull me back in line if I did so, Madam Deputy Speaker—but I will just point out to the hon. Lady that Scottish Water, which is owned by the state, has invested more per connected property, I think, than any of the English water companies, with the exception of South West Water, so I am not entirely convinced by her argument.
To go back to the comments made by the hon. Member for Skipton and Ripon, despite paying out hundreds of millions of pounds to investors, Yorkshire Water has paid next to nothing in corporation tax over the past few years. I am not singling out Yorkshire Water in particular—it is clear that its behaviour is no better or worse than that of any of its competitors. The problem lies with the culture of water companies themselves. They have behaved in an unacceptable manner towards their customers for too many years. It is clear that they have come to regard customers as nothing more than cash cows, and many have paid little or no attention to customer complaints. That is why we believe it is in the interests of hard-pressed customers that the industry be subjected to greater scrutiny.
New clause 11 in particular shines a light on the opaque world of the companies’ financial and business practices. This is not an unreasonable or overly bureaucratic requirement. For many years, water companies voluntarily produced reports such as those that the new clause would require of them; yet, strangely, in recent years they seem to have got out of the habit of providing that information to customers, the regulator and the Department.
It is also worth noting, before the Minister replies, that Ofwat’s Scottish counterpart, the Water Industry Commission for Scotland, requires Scottish Water to produce the relevant information on an annual basis. Therefore, we believe that this is not an onerous or bureaucratic requirement.
New clause 12 would require Ofwat to pay far more attention to the problem of affordability of bills. I am conscious that we will have a wider debate about affordability when we discuss the second group of amendments, but Ofwat’s current interpretation of its role as an economic regulator is far too narrow. Both household and business customers feel that they are an afterthought, and the new clause makes it clear that Ofwat must have due regard to the cost of bills when setting the prices in future review periods. Labour believes that during a time of unprecedented squeezes on household budgets, much more must be done to help hard-pressed customers. Our two new clauses are important measures that would ensure that water companies served their customers’ interests, not the other way around.
We will, unsurprisingly, support the Select Committee’s new clause 2 on retail exit if it is pressed to a vote. We welcome the fact that the hon. Member for Brecon and Radnorshire (Roger Williams) appears to have had a change of heart over the festive break. During the Bill’s Committee stage he did not vote in favour of Labour’s proposal, but we very much welcome his change of heart. If we do not get an opportunity to discuss the proposal today, we hope that the other place will note that even members of the Bill Committee have signalled that they believe, on reflection, that it is a sensible and worthwhile measure. I will not repeat the discussion we had in Committee, but I think it is fair to say that, based on the signatories to the new clause, the proposal has cross-party support, which we welcome.
We will also support the Government’s amendments. I am slightly surprised that they felt the need to table a series of amendments, but not as surprised, I suspect, as the Minister when he was informed by his civil servants. The Minister has told us many times that he is lucky enough to be half Welsh, so one would have thought that he would have noticed the impact on Wales of the new clauses tabled by the Government in Committee. I hope he will explain how that slightly embarrassing oversight occurred.
We hope we will have an opportunity later this evening to press our new clauses to a Division. We welcome the spirit in which this first part of the debate has been conducted and I do not wish to detain the House any further at this point.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
New clause 7—National affordability scheme—
‘(1) The Secretary of State must, by order, introduce a National Affordability Scheme for water.
(2) The National Affordability Scheme must include an eligibility criteria, determined by the Secretary of State, in consultation with—
(a) the Water Services Regulation Authority; and
(b) the Consumer Council for Water.
(3) An order under this section—
(a) shall be made by statutory instrument; and
(b) may not be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.’.
New clause 8—Billing information: affordability—
‘Any company providing water services to a residential household must include on its bills—
(a) details of any tariffs provided by that company;
(b) a recommendation of the lowest possible tariff for each residential household; and
(c) information regarding eligibility criteria and how to make an application for assistance under Water Sure.’.
New clause 9—Provision of information to water companies: landlords—
‘(1) The Water Industry Act 1991 is amended as follows.
(2) After section 207 (Provision of false information) there is inserted—
“Provision of information to water companies: landlords
Where a water company does not have information about a resident in a property that is using water, if the occupants of that property are tenants, the landlord must, on request, provide to the water company contact details for the tenants.”.’.
New clause 10—Water companies: recovery of losses—
‘(1) The Secretary of State, or the Authority, may prohibit losses to a water company due to non-payment of bills from being recovered through charges on customers.
(2) This section comes into force on the day after the Secretary of State has laid before Parliament a report setting out how water companies have failed to take action on these matters,’,
Amendment 9, in clause 80, page 124, line 1, at end insert—
‘(e) section [Provision of benefits information].’.
Miss McIntosh
I wish to consider new clause 3 and amendment 9, which seek to address legislation already on the statute books in the Flood and Water Management Act 2010. I remind the House that the cost of bad debt to each household in England is approximately £15 per annum, and in times of great hardship and a period of austerity, which the Government are dealing with through the actions we continue to take, it is incumbent on the Government to consider every opportunity to defray the costs to each household in that regard.
New clause 3 seeks to provide benefits information by allowing the Secretary of State to regulate to
“make provision about the disclosure of benefits information about occupiers”
to water and sewerage companies in connection with the revised part of the Water Industry Act 1991. It goes on to state that
“‘benefits information’ means information which is held for benefit entitlement purposes by the Department for Work and Pensions.”
Amendment 9 would make the consequential change to the current clause 80, to allow the provision of benefits information. I sat where the hon. Member for Dunfermline and West Fife (Thomas Docherty) is currently sitting and followed the passage of the Flood and Water Management Bill as closely as he is following the passage of this Bill. I have been very taken with the idea of trying to reduce bad debt in this way. Recently, I was most fortunate to receive a written answer from the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Hemel Hempstead (Mike Penning), who helpfully told me that at present the legislation does not permit the transfer and provision of benefits information by the Department for Work and Pensions in the way I wish. He did not say it could not be done; he said only that the current law does not permit it. We are where we are.
Mr John Redwood (Wokingham) (Con)
To help the House, will my hon. Friend explain what kind of information she would like to see transferred and how it would help?
Miss McIntosh
I hope that my right hon. Friend will bear with me as I take the House through it.
In the Environment, Food and Rural Affairs Committee report on the draft Bill, we reiterated our previous recommendations that the Department should implement without delay the existing provisions of the Flood and Water Management Act 2010 on bad debt, to which I have referred. In our view, it is unacceptable for honest customers to be forced to subsidise those who can pay but refuse to pay their water bills. To answer my right hon. Friend’s question, the specific provision is section 45 of the 2010 Act, which introduces new section 144C to the Water Industry Act 1991. That is what we propose in new clause 3, which would require landlords to arrange for information on their tenants to be provided to water companies.
Instead of implementing the existing bad debt provisions, the Government currently rely on a voluntary approach, whereby landlords share information on tenants on an online database set up by the water companies. Before I go further on the voluntary approach, it might be helpful to ask my hon. Friend the Minister this question: what is to prevent a customer who happens to be a tenant from marking on their electricity bill the fact that they have no problem with it being made known to the electricity company and the Department for Work and Pensions, whichever works best, that they are in receipt of benefits? The Environment, Food and Rural Affairs Committee was fortunate to enjoy the company of the hon. Member for Dunfermline and West Fife for a time. I am sure he remembers our exchange, but the Committee has great difficulty in understanding what the problem is for the Government—either the Department for Work and Pensions or the Department for Environment, Food and Rural Affairs—in permitting that flow of information.
The House will recall the tragic case of an elderly couple who sadly passed away because they could not afford to pay their utility bills for heating. No one had informed the electricity company of that fact. I believe that what is good for electricity companies—in law, such information can be provided to those utility companies —should be equally good for the water companies, which are also utility companies. They should have access to the same information.
A close reading of proceedings in Committee shows that Water UK acknowledged the new database for landlords and tenants, but claimed that
“experience has shown that a voluntary approach simply does not work.”––[Official Report, Water Public Bill Committee, 3 December 2013; c. 15, Q19.]
It gave the example of Northumbrian Water. It has had an easy-to-use website for landlords to provide information for two and a half years, yet only 7% of all rented properties have been registered. That is a problem and this is a matter of some urgency. The Government need to press ahead—the House would support that.
In Committee, the Opposition tabled a new clause that would have meant landlords providing contact details of their tenants to the water companies, but it was voted down. The Environment, Food and Rural Affairs Committee produced a report on the water White Paper—we have worked hard on the issue and I hope we have made a positive contribution. My hon. Friend the Minister nods because he, too, was a member of the Committee when we adopted the report. I find myself in good company this evening. The report recommended that DEFRA work with the Department for Work and Pensions to ensure that all means-tested benefits claimants are given the option to consent to the sharing of their data with their water company for the purposes of help with affordability issues.
I and hon. Members who have put their names to new clause 3—a number are members of the Environment, Food and Rural Affairs Committee—believe that there is a difference between electricity and gas bills and water bills. If people do not pay their heating bill, their supply can be cut off, whereas if people do not pay their water bill, the water company is simply not permitted to turn off the supply of clean water going in or prevent waste water—sewage—going out, for reasons of hygiene and good health.
Dan Rogerson
I thank my hon. Friend for his intervention. He is absolutely right to point out that what is proposed is a new bold national scheme built on profits that might or might not go up or down in accordance with the markets and through the price review process. Although I accept that the intention of the hon. Member for Dunfermline and West Fife is, as always, to be helpful, I feel that his scheme could use a little work and I therefore urge my hon. Friends to resist it should he seek to press it to a vote.
Let me move next to new clause 8, also tabled by the hon. Gentleman. It would place a legal requirement on water companies to include information in their bills about the WaterSure scheme, but, as I have said—I provided information to this effect to the Committee—all water companies already do so voluntarily. He made a point based on anecdotal evidence. I would be happy to see that evidence and I am sure that he will want to share it with us, but I think we should base our policy making on the evidence provided to us, and the Consumer Council for Water has been quite clear that companies provide such information to customers.
In addition, new clause 8 would place requirements on water companies to provide information about tariff structures and the lowest available tariff, a point picked up on by my hon. Friend the Member for Sherwood (Mr Spencer). The proposals simply fail to reflect the realities of the water sector as opposed, for example, to the energy sector. Water companies do not have complex tariff structures. The sole choice for the majority of household customers is whether to pay according to the amount of water they use through a metered tariff, which is particularly prevalent in areas such as my own, or according to the rateable value of their home through an unmetered tariff. The cheapest option for each household will therefore depend on the location of the property and the amount of water used by the household.
Many smaller households with low water use can benefit from a meter. Water companies are required to fit a water meter free of charge on request and they also advise customers on whether they might benefit financially from the installation of a water meter. A further point to bear in mind about the operation of WaterSure is that it caps the bills of eligible customers at the average of the metered and unmetered bill for the area. That could, in effect, put the bills of some eligible customers up and it is therefore not surprising that they have chosen not to apply for WaterSure.
There is no evidence, in my view, that further regulation is required in this area. As I have noted, all companies already include details of WaterSure in their household bills and they also all provide details of the support available to any customer struggling to pay their bill. Legislation to require the companies to do something that they are already doing voluntarily would be redundant.
The Consumer Council for Water works closely with the companies on the format of their bills. Its expert advice, as we discussed in Committee, is that one of the biggest risks in using water bills as a means of communication with customers is information overload. I do not, therefore, consider the new clause to be necessary.
Let me turn next to new clause 9, also tabled by the hon. Gentleman. We discussed an identical clause that he tabled in Committee. Section 45 of the Flood and Water Management Act 2010 already enables Ministers to introduce secondary legislation that would require landlords to provide water companies with personal details about their tenants or become liable for paying the bill. That was a point that the Chairman of the Environment, Food and Rural Affairs Committee was keen to emphasise, given her involvement with the passage of that Act.
Following extensive consultation with the industry and with landlords’ organisations the Government took the decision that a voluntary approach would be more suitable. During consultation, landlords argued that the additional regulatory burden would be disproportionate as they are not the source of the problem we are trying to tackle. At the same time, the evidence provided by the water sector to support the case for additional regulation was not sufficient to make the case for additional regulation of millions of small and micro-businesses.
The Government simply do not believe that more regulation is always the answer. As we discussed in Committee, good practice in tackling bad debt is not applied consistently across the water sector. The hon. Gentleman quite rightly took great pains to point that out. The significant variation in performance between companies tells us that the focus should be on driving better standards across the sector rather than regulating landlords.
One reason we do not propose to bring forward the bad debt regulations on landlords is that we do not wish to endorse the argument that performance on bad debt is not within the control of water companies. We think there is more that the companies can do to collect their debts and we want them to focus on that rather than look to the Government to solve the problem for them.
Of course, the real drivers of company performance are the incentives and penalties set by the regulator so I am pleased to be able to report that Ofwat has changed its approach to bad debt in the methodology it is using for the 2014 price review. The new approach will enable it more effectively to bear down on the costs of bad debt. It is doing so by insisting that the companies demonstrate that any increase in bad debt is genuinely beyond their control and that they have taken all available steps to control it. Unless they can prove that that is the case they will not be allowed to include it in customer charges. We are already seeing our focus on the industry’s taking responsibility for tackling bad debt bear fruit. As I mentioned in Committee, the industry is working with landlords’ organisations to establish a new voluntary scheme that will enable landlords to provide information about their tenants direct to water companies swiftly and easily.
Miss McIntosh
I am most grateful to my hon. Friend for giving way, but before he concludes his remarks he must say what the Government object to as regards the 2010 Act. I do not personally subscribe to the data protection argument if someone is genuinely in need.
Dan Rogerson
The Chair of the Select Committee is quite right that I have yet to respond to that aspect of her argument and I will seek to do so, I hope to her satisfaction, once I have made my closing remarks on new clause 9.
The industry is working with landlords’ organisations to establish the new voluntary scheme that will enable landlords to provide information about their tenants direct to water companies swiftly and easily and that approach has the support of Water UK and the main landlords’ organisations. The new database will launch in March next year and I believe that it should be given time to work. For those reasons, I believe that new clause 9 is not necessary.
Dan Rogerson
I am seeking to point out that there are a range of benefits and a range of circumstances for people. The hon. Gentleman highlights one benefit. Of course council tax benefit no longer exists in this country in the format that it does in Scotland, as we have now moved over to local council tax forms of support, so there is a different system, which would not necessarily translate across. The hon. Gentleman is keen always to learn the lessons of Scotland, but some of these things do not apply simply, given the different frameworks following the devolution settlement.
We place emphasis on locally designed social tariffs developed in close consultation with the customers who will ultimately foot the bill, as opposed to crude, centrally imposed eligibility criteria. Although I very much thank hon. Members for their new clauses and understand their aspirations in tabling them, I would urge my hon. Friends to resist them.
Miss McIntosh
We have had a fruitful debate, but I express my disappointment that my hon. Friend the Minister has not seen fit to take a simple measure that already exists on the statute book and is not intended to be regulatory. He will, of course, have opportunities in the future to appear before the Select Committee that I chair and that will give him plenty of opportunity to explain at greater length why he is unable to support these new clauses. It is my fervent wish that such new clauses might perhaps find their way on to the notice paper in another place. However, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 4
Sustainable drainage and automatic right to connect
‘The Secretary of State shall by order made by statutory instrument implement the provisions of section 32 and Schedule 3 of the Flood and Water Management Act 2010, and any other provisions as the Secretary of State considers appropriate in connection with the coming into force of those provisions, no later than the end of the period of one month beginning with the date on which this Act is passed.’.—(Miss McIntosh.)
Brought up, and read the First time.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following: new clause 5 —Abstraction reform—
‘(1) The Secretary of State shall by regulations make provision to introduce a reformed abstraction regime.
(2) An abstraction regime under subsection (1) must—
(a) be resilient to the challenges of climate change;
(b) be resilient to the challenges of population growth; and
(c) better protect the environment.
(3) An abstraction regime must be introduced no later than the end of the period of seven years beginning with the date on which this Act is passed.
(4) Regulations under this section—
(a) shall be made by statutory instrument; and
(b) may not be made unless a draft of the instrument has been laid before and approved by a resolution of both Houses of Parliament.’.
New clause 6—Onshore oil or gas activities—effect on water environment—
‘In Part 1 of Schedule 5 of the Environmental Permitting (England and Wales) Regulations 2010 there shall be inserted after paragraph 13 the following—
“Onshore oil or gas activities—effect on water environment
13A (1) Without prejudice to the operation of Regulation 35(2) and paragraph 5(1)(d) of Schedule 10 and of Regulation 35(2) and paragraph 7(j) of Schedule 20, the regulator shall refuse an application for the grant or variation of an environmental permit or for the transfer in whole or in part of an environmental permit if—
(a) the regulated facility to which the application for or transfer of the environmental permit relates is to be carried on as part of an onshore oil or gas activity; and
(b) the regulator is not satisfied that the applicant or the proposed transferee has made or will make adequate financial provision for preventing or mitigating pollution of the water environment, by ensuring all of the following—
(i) operation of the regulated facility in accordance with the environmental permit;
(ii) compliance with any enforcement notice or suspension notice or prohibition notice or mining waste facility closure notice or landfill closure notice which may be served on the applicant or transferee by the regulator under these Regulations;
(iii) compliance with any order of the High Court which may be obtained against the applicant or transferee under Regulation 42 for the purpose of securing compliance with any of the notices listed in sub-paragraph (ii).
(iv) compliance with any order of any court issued under Regulation 44 against the applicant or transferee; and
(v) recovery by the regulator of its costs upon any exercise of its power against the applicant or transferee under Regulation 57;
(c) for the purpose of this paragraph ‘onshore oil or gas activity’ means any activity for the purpose of exploration for or extraction of onshore oil and gas;
(d) for the purpose of this paragraph ‘adequate provision by way of financial security’ means financial provision which is sufficient in value, secure and available when required.”.’.
New clause 13—Unlawful communications—
‘(1) Section 109 of the Water Industry Act 1991 (sewerage: unlawful communication with public sewer) is amended as follows.
(2) Omit subsection (1)(b).
(3) In subsection (2)(a) after “close”, insert “or redirect”.
(4) In subsection (2)(b) omit “from the offender”.
(5) At the end add—
“(4) The expenses are recoverable from—
(a) the offender; or
(b) the owner of the drain or sewer.
(5) A person who obstructs a sewerage undertaker in exercising a power under subsection (2)(a)—
(a) commits an offence; and
(b) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.”.’.
Amendment 2, in clause 21, page 62, line 19, after ‘undertakers’, insert ‘and highway authorities’.
Amendment 3, page 62, line 22, after ‘undertaker’, insert ‘or a highway authority’.
Amendment 1, page 62, line 23, at end insert—
‘(2A) Highways authorities must include in schemes for the construction of new roads, drainage systems with a specification designed to decrease the risk of flooding of public sewerage systems.’.
Government amendments 55 to 57.
Amendment 5, clause 51, page 107, line 5, after ‘premises’, insert ‘and small businesses’.
Amendment 6, page 107, line 7, after ‘premises’, insert ‘and small businesses’.
Amendment 8, clause 53, page 107, line 37, after ‘made’, insert
‘which shall include the occurrence of a 1 in 200 year loss scenario’.
Government amendment 58.
Amendment 7, clause 69, page 119, line 37, at end insert ‘“small businesses”.’.
Amendment 10, clause 80, page 124, line 1, at end insert—
‘(f) section [Sustainable drainage and automatic right to connect].’.
Amendment 11, page 124, line 1, at end insert—
‘(g) section [Abstraction reform].’.
Miss McIntosh
I shall try to keep my remarks brief, but this is the first occasion that I can remember when there has not been a parliamentary week between the completion of the business of the Public Bill Committee and consideration on Report and Third Reading. I should therefore like to pass on my thanks not only to the Committee staff who have accommodated our being able to table amendments in a timely fashion, but to all those involved in the House service who have enabled us to have amendments before us to debate this evening.
I shall go through the new clauses and amendments first and then give the reasons for them. I, along with a number of members of the EFRA Committee, have thought it fit to assist the Government yet again, and I hope that we have more success with this round. Anyone who knows me even remotely will know that I am becoming a compulsive obsessive on sustainable draining systems and that I will never pass over an opportunity to discuss SUDS. So, under new clause 4, we seek to introduce the sustainable draining system, which is woefully late. It was already given statutory powers under the Flood and Water Management Act 2010, and in new clause 4 I link that to the end of the automatic right to connect.
I should like to pay tribute to a great Yorkshireman, Sir Michael Pitt, who after the surface water flooding of 2007 attempted to get on to the statute book under the 2010 Act—the then Government’s legislation—the end of the automatic right to connect. I would go further with substantial developments than I have had the opportunity to do here. I should personally like Yorkshire Water and other water companies, as well as drainage boards, to be given the right to be statutory consultees on major new developments on the same basis as that enjoyed by the Environment Agency following the 2010 Act.
Thomas Docherty
It is worth pointing out that local authorities in Scotland place great emphasis on the opinion of Scottish Water, which is, indeed, treated as a major statutory consultee when local authorities are making decisions about developments.
Miss McIntosh
As a non-practising Scottish advocate, I would always say that the Scottish legal system has a great deal to commend it, but Scotland needs to remain part of the United Kingdom to allow us to benefit from that.
Miss McIntosh
Indeed, that is a different argument.
I shall give our reasons for new clause 4 in a moment. Abstraction reform forms the basis of new clause 5, in which we would return to what was in the White Paper, where the Government waxed lyrical on abstraction regimes. We particularly call for the abstraction regime to be introduced no later than the end of the period of seven years beginning on the date on which the Bill is passed and comes into legal effect.
Amendments 2 and 3 would insert into clause 21 the relevant language of “undertakers” and “highways authorities”. I am attracted to amendment 1, tabled by my hon. Friend the Member for Sherwood (Mr Spencer), and look forward to his speaking to it in due course. Amendments 5, 6, 7 and 8 would include small businesses in the flood reinsurance scheme, for reasons that I shall give in a moment.
Sheryll Murray (South East Cornwall) (Con)
Does my hon. Friend agree that the Flood Re clauses will help the people whom the Minister and I met in Looe last Saturday who were unable to get insurance because of repeated flooding? Flood Re will give them the opportunity to obtain realistically priced insurance.
Miss McIntosh
Our thoughts are obviously with my hon. Friend’s constituents who were sadly inundated during the recent flooding. I look forward to hearing further from her during the debate, as well as the Minister’s response.
Amendments 10 and 11 are consequential amendments to clause 80 arising from new clauses 4 and 5.
Before I explain why the amendments and new clauses are important, I should point out that we have seen three types of flooding in the past three or four months. The most recent examples have been of coastal flooding, but the Yorkshire and East Anglia coasts suffered tidal surges before Christmas to devastating effect; more than 80 houses were evacuated at Filey in my constituency and a number more in Whitby. However, we have become more accustomed to surface water and river flooding, and surface water flooding has been on the increase, and has become more of a problem, since 2007.
I want to hear from the Minister why SUDS have been delayed. The latest we heard was that there was an implementation date of April 2014. People have been trying to convince me that Brawby in my constituency suffered in 2013 not from flooding but due to surface water running off from fields and roads into the combined sewerage pipe, which then spilled water from the sewerage system back on to the road. In that case, the water did not go into anyone’s house, but at Castlegate in Malton when exactly the same thing happened—water ran off the road into the combined sewers—water then entered a house.
The missing link is an audit of existing SUDS and an examination of future SUDS when major developments and roads are built. However, from my experience, and given what we heard during the statement on the floods, there is a further problem to deal with. If water runs off a highway, it is the responsibility of the county council, the unitary council or the Highways Agency itself. However, if that water then runs into the combined pipes, it suddenly becomes the water company’s problem, although what has happened is not its fault. I hope that that unacceptable situation can be addressed through the measures that I and other members of the EFRA Committee have tabled, or through amendment 1, which was tabled by my hon. Friend the Member for Sherwood. If fields are saturated, as is the case at present—it was the situation in my constituency between September 2012 and March 2013—highways authorities must take responsibility and create a SUD to take the excess water. I accept that such a process would involve cost, but I applaud the Government’s approach on partnership funding, so we could look to public sector partners, or be more imaginative by looking for private sector partners, such as local businesses that might be interested in investing. However, we cannot allow a situation to continue in which surface water running off a road becomes the responsibility of a water company and thus forces it to take preventive measures, given that the highways authority—whichever one it might be—should accept responsibility for it.
The EFRA Committee’s report following our pre-legislative scrutiny of the draft Bill highlighted concern about the delayed implementation of the provisions on sustainable drainage systems in the Flood and Water Management Act 2010—it is now four years since that Act was passed. The Committee also criticised a lack of urgency on improving the management of surface water in its report on the water White Paper, so I hope that my hon. Friend the Minister will be able to clarify what has been happening and why the process seems to be so complicated. As the Committee has not been convinced that the Department’s work to improve the management of surface water has involved the urgency that constituents throughout the country would expect, new clause 4 would require the Government to implement the relevant provisions of the 2010 Act within a month of the Bill being passed.
Miss McIntosh
It is always a delight to be supported by the hon. Gentleman.
The current system for managing abstraction of water from rivers and aquifers was introduced in the 1960s, and does not effectively address the severity of pressures on water resources caused by increasing demand from a growing population and an increasingly varied climate. The current system does not help abstractors to trade water effectively or provide an incentive for them to manage water efficiently. The current weaknesses in the system mean that it could start to constrain economic growth, reduce the resilience of the water supply and lead to environmental damage.
I note that the reasons and need for abstraction reform are acknowledged and discussed in the Government consultation “Making the most of every drop”, which was published last December. When my hon. Friend the Minister replies, will he address the issue of why there was so much emphasis on abstraction and resilience in the water White Paper, and why we lost that emphasis in the draft Water Bill and, to a certain extent, in the Bill before us this evening?
The detail of a new abstraction regime will need to be developed following the end of the Government consultation, which was launched on 17 December. Following the conclusion of that consultation, which will not be until March, DEFRA will have to produce legislative proposals and secure space in the highly charged legislative programme before a new regime can be introduced. Once again, these amendments are intended to be entirely helpful and constructive.
During the Committee stage, the Opposition tabled a new clause to provide that upstream reform may not be implemented until new primary legislation on the licensing of abstraction has been passed, and five years has expired to allow for its implementation. Sadly, that proposal was voted down.
New clause 5 would require the Secretary of State to introduce a reformed abstraction regime within seven years of the Act being passed—by 2021. That was on the basis of the evidence that we received, and we believe that that is the most accurate and cost-effective timetable for all the parties involved.
The abstraction reform must be resilient to the challenges of climate change, or extreme weather conditions, and population growth and better protect the environment. Those high-level requirements are entirely in line with the key commitments regarding abstraction reform in the water White Paper.
Let me turn now to upstream and abstraction reform. In our pre-legislative scrutiny report on the draft Water Bill, the Select Committee called on the Government to make clear in the Bill the key principles that underpin the introduction of upstream reforms. Further work needs to be undertaken to establish how upstream reforms can be introduced in a way that will preserve investor confidence, ensure that customers do not face increased bills and maintain resilience in the sector. I was extremely pleased to see the emphasis on resilience in the water White Paper.
Upstream reform aims to encourage upstream competition. I am talking about the input of raw or treated water into a water company’s network or the removal of waste water or sewage for treatment. Clause 1 unbundles all the existing licensing structures so that new entrants can sell raw or treated water into an incumbent’s network. It also looks at the wholesale authorisation to input water into a part of the system. The Environment Agency’s statistics show that on average, between 2002 and 2011, only 45% of the annual total of water licensed for abstraction in England and Wales was actually abstracted. Therefore, if all of this unused but already licensed water was abstracted, there could be a significant deterioration of the environment. We hope that when the Government look at abstraction and upstream reform, they will bear these thoughts in mind.
One other aspect of upstream reform and abstraction that the Government should consider is, very topically, the role of water companies and other private sector companies in flood prevention and in protecting homes and businesses from floods. The Minister will be familiar with the work of his Department in the Natural Environment White Paper, which looked at a project known as ScaMP—Sustainable Catchment Management Programme—involving United Utilities in Cumbria. Surely there must be much more scope for the type of partnership approaches we have seen in Pickering where the first soil of the reservoir will be dug tomorrow.
I will conclude my remarks by looking at flood insurance. Amendments 5, 6, 7 and 8 seek to amend clauses 51 and 53. The Select Committee took a lot of evidence in relation to Flood Re and the potential for reinsurance companies. Given how deeply wedded the Government are to Flood Re, I hope that they have not closed the door completely on reinsurance. In summing up this debate, perhaps the Minister will inform us how the state aid application to the EU Commission in Brussels is going to enable Flood Re to come into effect according to the Government’s timetable.
Clause 51 and the amendments we propose to it would have the effect of bringing small businesses within the ambit of Flood Re. There is considerable doubt and anxiety that small businesses will not be covered under the new Flood Re proposals. The impact that flooding can have on small businesses is clear. In 2001 and 2005, a dental practice in my constituency was flooded twice and the dental chair and all the computer equipment had to be replaced each time.
Roger Williams
I am sure that many Members will have a deal of sympathy for my hon. Friend and her concern for small businesses. I guess that the difficulty in getting this into legislation will be how to define a small business. Perhaps she has some ideas on that.
Miss McIntosh
Like my hon. Friend, I merely shadow DEFRA so I do not have the definition to hand, but I am sure that the Federation of Small Businesses will have a definition. I think it is generally deemed to be a business that has fewer than 50 employees, though many small businesses employ five or fewer or are often a single employee. The example I cited was that of a small dental practice with two or three dentists. The knock-on effect on an independently run, stand-alone dental practice of fitting, for the second time, a new dental chair and computer equipment goes beyond what would normally be expected. The knock-on effect on the insurance premium and excess for that dental practice was considerable and, possibly, unaffordable.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Is it the hon. Lady’s understanding that not only would small businesses and micro-businesses in commercial premises not be covered by Flood Re, but people who run businesses from their own homes would find it almost impossible to get insurance under the arrangements as they stand?
Miss McIntosh
I welcome the hon. Gentleman’s intervention, but I believe that homes generally are covered. Our Government have persisted with his Government’s arbitrary choice of 2009 as the relevant year, although this is a new Bill and we have a still relatively new coalition Government. I was very taken by what the hon. Member for Stoke-on-Trent North (Joan Walley) said in a previous debate about 2009 having been plucked from the air as an arbitrary date, and many people will not realise that homes built after 2009 on a floodplain are simply not covered by insurance. One of the purposes of tonight’s debate is to entice the Government to seek a different year—it could be 2013 or 2015, but let us be imaginative.
Sheryll Murray
Will my hon. Friend clarify the difference between an insurance policy that covers a business premises and one that covers a private home? Insurers, and the Association of British Insurers, would probably find it difficult to distinguish if we were to include small businesses, but because her amendment is well intentioned, I am sure that she will be able to clarify her differentiation.
Miss McIntosh
I am sure that the Minister will be well aware of the point that my hon. Friend is trying to make. There is great concern among the farming community that farms may be excluded whereas the farm house may be included. I commend my hon. Friend’s knowledge, because she worked in the insurance industry for a time. We need to know whether farms and people working from their own homes are going to be included, and what the position will be for small businesses, because this could put them out of business in some of the areas that we have seen flooded over the past two years in repeat flooding incidents. It has also been brought to my attention, although, unfortunately, too late to have tabled an amendment, that there is concern that blocks of flats—leasehold flats—may be excluded from this arrangement. That may be news to the Minister as well, but before Third Reading he might like to ponder whether such blocks will be excluded.
Our amendments to clause 51 address concerns relating to the exclusion of small companies such as charities and, as I have mentioned, farms under the new Flood Re proposals in the Bill. Any business based in a property that is primarily a residential one, and on which the occupier therefore pays council tax, would fall within the Flood Re scheme. Any business based in premises used primarily for business will not be covered. It is extremely important that we understand these issues. For the first time that I can remember, under the Flood Re scheme, once it is up and running, the Government will be added as an insurer of last resort if in the three years before the fund has built up we suffer an exceptional one-in-a-thousand-year incident.
In the Public Bill Committee, the ABI stated that Flood Re is not the solution for small businesses and that there is not a sufficient evidence basis for providing insurance cover for small businesses. The Federation of Small Businesses is concerned that small businesses that have affordability problems will not be covered, other than in respect of the insurance premiums or excess that they might seek to defray. Although they do not pay council tax, they do pay business rates and therefore could be rated in a similar way to household customers under Flood Re. There remain a lot of known unknowns with Flood Re as to why a council band rate has been chosen and which particular band rate has been opted for, but that is a separate debate. If there is a lack of evidence, further investigations and monitoring should be conducted with regard to small businesses and how they might cope with sourcing flood insurance in the free market.
Our amendments to clause 53 would have the effect of ensuring that insurance companies cover for any liability in excess of a one-in-200-year loss. Our amendments seek greater clarification of the Government’s role in this scenario of a one-in-200-year loss, and, in particular, how the taxpayer would be protected. As I have mentioned, the Government will, for the first time, be the insurer of last resort. In later years, after the fund has built up, I do not believe that that will be a problem, but we are seeking the Minister’s reassurance about what the implications will be in respect of the first three years. In Committee, the Minister confirmed that there is no Government liability for Flood Re and that the Government have made it clear that Flood Re is not guaranteed above the one-in-200-year level, so he might just like to revisit that and clarify the point.
Our amendment 8 would put the Government’s commitment in the Bill and create certainty for all concerned as to who will assume the additional liability. A one-in-200-year loss scenario would be the total value of claims from households reinsured through Flood Re that, during the course of a year, actuaries would not expect to be exceeded in 99.5% of years. Expressed in a different way, that would mean that the actuaries would be 99.5% confident that the limit would not be exceeded in any one year. It is important to note that that is not the same as a one-in-200-year flood event; the ABI has estimated that this would mean flooding six times worse than that experienced in 2007. Obviously, neither the Minister nor the insurance industry will yet be able to say what the cost of the recent floods has been, but I hope that he will see fit to lend his support to our amendments, and I commend them to the House.
Joan Walley
I am fortunate to follow the hon. Member for Thirsk and Malton (Miss McIntosh), who speaks with the greatest authority on these subjects, as I am sure everyone in the Chamber would agree. I particularly share her concern about drainage and surface water, and I agree with the points she made earlier about the need to ensure that highways authorities also have statutory duties, so that we can deal with this issue in a joined-up way. The debate on this group of provisions is important because we have had pre-legislative scrutiny by the Environment, Food and Rural Affairs Committee of the draft Water Bill and subsequent debate in that Committee. When the Minister addresses the various comments that have been made, we will see the extent to which the Government are listening to what Parliament is saying about the amendments. There may not necessarily be agreement on all of them; I am talking about the amendments that seek genuinely to try to improve matters on the whole issue of water. We have an opportunity to put in place legislation that is fit for purpose, so I hope that improvements will be made.
Dan Rogerson
In the time available I shall seek to respond to as many points as I can. The Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), has been a strong advocate of and campaigner for sustainable drainage over many years, and the Government are pressing ahead and implementing the requirement to secure approval for sustainable drainage systems for new developments under schedule 3 to the Flood and Water Management Act 2010. Regrettably, it is looking increasingly unlikely that we will be in a position to ensure that the scheme comes into force this April, which was our preferred date for implementation as stated previously. I accept that that will be a great disappointment for the hon. Lady and other hon. Members, but I remain committed to introducing the legislation at the earliest opportunity. I plan to lay the relevant affirmative regulations by April, to underline the Government’s commitment to addressing flood risk.
I share the hon. Lady’s frustration that the process has been so protracted, but we are working with developers and local government to develop the processes, standards and guidance that are an integral part of a new SUDS approvals and adoption regime, rather than just imposing them. That takes time, but it is time well spent if the end result is an approach that is fair to all parties and successful from the outset because local government and developers are fully prepared to take on their respective new responsibilities.
Amendments 1, 2 and 3 address flooding on highways or that caused by the run-off from highways. The causes of flooding can be complex and it is difficult to make a general statement about them. There are already legislative powers to ensure that highway surface water drainage does not pollute or flood, and section 100 of the Highways Act 1980 enables the local highway authority to take action related to the drainage of highways—for example, it can construct drains or erect barriers on the highway or adjoining land to divert surface water into an existing drain.
The majority of new road drainage systems are not connected to the public sewerage system. Typically, they discharge under designated conditions, either to a watercourse or a storage pond with controlled exits to a watercourse, or alternatively soak into the ground in a designed manner. A decision to connect new highway surface water to a combined or foul public sewer can be made only subject to an agreement with the receiving water authority. There is no automatic right to connect new highway drainage to the public sewerage system. We recognise, however, that in some cases local flooding may be exacerbated by drainage from existing highways, and as I have said, the 2010 Act places a duty on lead local flood authorities to develop a local flood risk management strategy for their area. I hope hon. Members will be reassured by that.
Let me seek to address the points raised by the Chair of the Environment, Food and Rural Affairs Committee about flood insurance, and amendments 5, 6 and 7, which relate to small businesses. Flood Re has been specifically designed to recreate the current cross-subsidy in the domestic home insurance market. There is little evidence that the same type of cross-subsidy applies in the commercial insurance market, and the majority of business insurance policies are already priced to risk. A recent English business survey of more than 9,000 businesses in England found that fewer than 1% of businesses had experienced difficulty getting property insurance in the last year due to the risk of flooding, and that no businesses had been refused insurance cover due to such a risk.
As outlined by the Association of British Insurers in its evidence session, businesses tend not to face the systematic issues that householders experience. We must also remember that Flood Re is funded through a levy on all household insurance policies. We have deliberately set that at £10.50, which the ABI estimates is the same as the current cross-subsidy. Widening Flood Re to include small businesses would significantly increase costs. We do not want someone living in a council tax band A property, for example, to subsidise the cost of insuring a private company that potentially earns up to £1 million a year. I am also mindful of the need to comply with state aid rules. Government intervention to support business would be carefully scrutinised and at greater risk of rejection—I know the hon. Lady is familiar with that issue.
On flood insurance and amendment 8, which was tabled by the same group of hon. Members, we are clear that we are talking about a one-in-200-year annual loss, not a one-in-200-year flood event. If Flood Re is legally responsible for claims above a one-in-200-year level, the cost of the liability could be prohibitive. Likewise, if the Government took on a liability beyond a one-in-200-year level, we could expose the taxpayer to extremely large and unpredictable costs. In such a catastrophic situation, many more homes than would be insured by Flood Re are likely to be affected. That is why the memorandum of understanding says that the Government of the day would work with Flood Re and representatives of the insurance industry to decide how any available resources should be distributed to Flood Re customers if flooding exceeds such a level.
Government amendment 58 is a technical one. On the issues raised by the hon. Member for Stoke-on-Trent North (Joan Walley), the Chair of the Environmental Audit Committee—we discussed them in Committee—the Government remain convinced that the existing provisions would be helpful enough in terms of the checks on companies’ financial probity and their technical ability. However, she rightly raised issues that could be addressed following Lord Krebs’s intervention in his letter. I am pleased to hear her calling for things such as betterment, meaning better quality reinstatement, and more information to customers, for which Lord Krebs has also called. Many hon. Members would like to include that in discussions with the ABI.
On misconnections, the hon. Member for Edmonton (Mr Love) is aware that local authorities currently have the power. We are not convinced that giving the power to companies would be helpful. His points are on the record and it is right that the Government take account of what he has said. I am happy to talk to him in future to see that we get the right response.
There is only a very little time for me to respond to all the points hon. Members have made on abstraction. My predecessor as Minister, my hon. Friend the Member for Newbury (Richard Benyon), has rightly said that there is agreement in the House that we want progress. Action is taking place under the existing regime—the Environment Agency has changed 77 licences since 2008, returning around 75 billion litres of water per year—but we need to go much further. That is why we are consulting. The process is under way and will lead to legislation, hopefully with the support of all parties, to reform that complicated system. However, we need to do that properly. I do not believe it is appropriate to do it in the way suggested in the new clause.
Finally, Government amendments 55 to 57, which I have tabled, seek to clarify the resilience duty. We want to make it absolutely clear to hon. Members that we are covering environmental sustainability. I hope the changes we are making to the resilience duty will reassure hon. Members who believe that we need to elevate the sustainable development duty that we are looking at environmental resilience as well as social and economic resilience.
Miss McIntosh
We have had a good debate on Flood Re. The Environment, Food and Rural Affairs Committee wanted to flag up the point that the proposals do not reflect the value for money of other aspects of Government policy.
We have also had a good debate on abstraction, but the jury is out. The Bill would be a retrograde step if there is a severe drought between now and whenever the Government introduce provisions.
Obviously, both personally and on behalf of the Committee, I am disappointed that the SUDS provisions will not be in place. The House would wish to record its disappointment and the fact that, if the regulations will be introduced only in April, there is time before those who must apply them are in a position to do so.
However, mindful of the opportunities that hon. Members have had to debate the matter, and that the Bill must continue its passage, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 7
National affordability scheme
‘(1) The Secretary of State must, by order, introduce a National Affordability Scheme for water.
(2) The National Affordability Scheme must include an eligibility criteria, determined by the Secretary of State, in consultation with—
(a) the Water Services Regulation Authority; and
(b) the Consumer Council for Water.
(3) An order under this section—
(a) shall be made by statutory instrument; and
(b) may not be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.’.—(Thomas Docherty.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Miss McIntosh
We have had a good debate today. I welcome the Bill and thank all those involved in preparing it, including my right hon. and hon. Friends. Obviously, a lot of work remains to be done to it in the other place, and we will watch those developments with interest.
I welcome the introduction of retail competition. The Select Committee would like to have seen the primary duty of sustainability in preference to resilience. I believe that too much detail has been left to be fixed at a later stage. I enjoyed the comment from my hon. Friend the Minister on not wanting to rely too much on regulation, because just about every clause calls for implementing regulation to be drafted. We will leave that conundrum with him.
Competition is to be welcomed. It should lead to greater efficiency. In particular, I hope that both the current 2014 price review and the competition provisions permitted following the Bill will lead to more innovation, not least following these weeks of sustained and considerable flooding across the country. I applaud the Government’s search for a partnership approach and for more private enterprise funding for flood prevention measures. I hope that the water companies will step up to the plate in that regard and that other private sector companies might help to fund schemes from which they might benefit.
I believe that there are still opportunities to write other provisions into the Bill before it receives Royal Assent, not least with regard to the partnership approach to flood prevention measures, which has been mentioned this evening, but also for increasing the amount of maintenance that can be done by internal drainage boards. We await the results of the pilot schemes, whereby DEFRA is allowing landowners to permit their own maintenance to be done on the watercourses locally, to see whether that scheme can be rolled out.
It is a joy to me that tomorrow we will see the Pickering pilot project in my constituency reach its final phase with the cutting of the first sod of earth, which will enable the reservoir to be built. It is a great disappointment for me personally, as I am sure it is for many in the country, that the sustainable drainage systems, which are left over from the Flood and Water Management Act 2010, will still not be on the statute book by April this year. SUDS, on their own, will do a huge amount to prevent surface water flooding from entering sewerage systems through the combined sewage pipes that we have heard so much about today and that can cause sewage spills on to roads and, regrettably, into homes and other properties.
Perhaps the most innovative aspects of the Bill that are to be welcomed are those relating to flood insurance. I commend Flood Re, but I hope that the Minister will have listened carefully to the concerns that have been raised today, not least from the Select Committee. We expect to see the same respect and acknowledgment of value for money in that as in other schemes. We will be looking to see that that is confirmed as we go forward.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
My hon. Friend praises the SUDS system, but will she take into account, and ask our hon. Friends on the Front Bench to take into account, the fact that we may be building up considerable liabilities for ourselves in future if SUDS systems are inadequately designed by developers who have clever consultants and local authorities do not have the expertise to vet whether those systems are adequate in the type of floods that we are seeing at the moment?
Miss McIntosh
My hon. Friend will have an opportunity to read our proceedings tomorrow and see the debate that we have had on SUDS. For reasons that the Minister has not rehearsed in full, the SUDS regulations will not be on the statute book by April. I am sure that there are very good reasons for that, including those that my hon. Friend raised, but I do believe that SUDS will have a substantial role to play.
If the flood insurance system leaves out leasehold flats, that will be a matter of concern.
Dan Rogerson
I am grateful to my hon. Friend for giving way on this point, as I did not have the opportunity to deal with it on Report. I assure her that householders living in those sorts of properties would have access to the contents aspects of flood insurance if they were council tax payers.
Miss McIntosh
That will be very welcome news. As I said, I was alerted to this problem after the time for tabling amendments had expired.
What we have seen this week and saw in the weeks running up to Christmas shows the scale of the challenge that we face. I welcome the all-party approach that we have seen across the House today and in Committee, which I was not at liberty to participate in. That is a very good basis on which the Bill can go forward from this House, and I commend it to its future stages.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Fishing Industry
Baroness McIntosh of Pickering Excerpts(10 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Miss Anne McIntosh (Thirsk and Malton) (Con)
I congratulate the hon. Member for Aberdeen North (Mr Doran) and others on securing this timely debate. I thank the Backbench Business Committee for allowing the debate to take place in the Chamber so that there can be more contributions than there have been in such debates in Westminster Hall.
I welcome the Minister and the shadow Minister to their new responsibilities. I thank them for the contributions that they made as members of the Environment, Food and Rural Affairs Committee and remind them that they both participated in our excellent report in response to the proposals for the reform of the common fisheries policy.
I join the hon. Member for Aberdeen North in commemorating those who have lost their lives in the fishing industry. Fishing and farming are the two most dangerous industries and they both suffer fatalities and other losses. We should recognise that element of the work that fishermen do in bringing the fish to our plates. I pay tribute to my hon. Friend the Member for South East Cornwall (Sheryll Murray) who, despite the personal loss she suffered, continues to take a great interest in the fisheries industry.
Today’s debate is timely, and I pay tribute to fishing ports across the country. The port of Filey has historically enjoyed coble boats—that is why we have Coble Landing—and when I was first elected, six families still depended on fisheries off the North sea coast from Filey port. Sadly, however, for a number of reasons—not least that they needed a trailer to bring the coble boats on to shore—the cost has been prohibitive, and I understand that they now fish mostly out of Bridlington, which I think is the largest shellfish port in England, if not the UK.
The historic common fisheries policy agreement that was agreed by the European Parliament this week is to be welcomed and paves the way for new reforms to take effect on 1 January 2014. Notwithstanding that, I wish my hon. Friend the Minister well in his overnight negotiations. I hope he will be well equipped with refreshments to keep himself in good order, as he will obviously need to be on top form.
Neil Parish
Does my hon. Friend agree that although it is great that the European system is now grinding into place to ban discards—I wish the Minister well in that—the process must be kept going and indeed sped up? My knowledge of the EU, and I suspect that of my hon. Friend, is that it will take an awfully long time to get to a situation where we can stop discarding healthy fish. We need to speed up the system.
Miss McIntosh
I am grateful to my hon. Friend, and I agree with him. The opinion of the Environment, Food and Rural Affairs Committee on this deal was published in February 2012 and the Government response in July 2012. It has taken three years of difficult negotiations, and I commend the fisheries Minister and his predecessor on the lead we took in securing a significant reform of what was deemed a fundamentally flawed common fisheries policy.
Let me say why the reform is so important. My hon. Friend the Member for Tiverton and Honiton (Neil Parish) and the hon. Member for Aberdeen North mentioned discards, and it is key that we do not replace discards at sea with discards on land. The Committee’s report concluded robustly that we must be imaginative about bringing fish on to land—having been born in Scotland, disappeared, and then returned there, I can say that different fish are eaten in Scotland from those eaten in England. If we can extend the palate and consumer taste to different types of fish and create new markets for existing fish, that would be a great way forward. As the report noted, celebrity chefs and others have a part to play in that by creating a novelty feature for dishes such as pollock, which I am sure would not be so widely eaten had it not been for chefs and others paving the way.
Mr MacNeil
The hon. Lady calls for us to be imaginative in dealing with some of the problems that fisheries throw up. Twenty years ago I fished for spurdog as a targeted fish, but things have moved on and, as I said earlier, it is now a non-targeted fish often caught in nets. Spurdog comes in on boats, but under the landing obligation it looks as though it can be neither landed nor discarded. We will certainly need some imagination in dealing with spurdog that we cannot land or discard.
Miss McIntosh
Perhaps the hon. Gentleman will join me in tasting some of that to see whether it is edible, and we could look at creating a new market.
As the hon. Member for Aberdeen North said, the key points of the next stage of reform include a ban on the wasteful practice of discarding at sea perfectly edible fish for which there is no current market, a legally binding commitment to fishing at sustainable levels, and decentralised decision making that allows member states to agree measures appropriate to their fisheries.
One of the most exciting parts of this reform is that for once we are going to focus more on the science—I think we have gone wrong with previous reforms of the commons fisheries policy because we have not done that. I am an avid watcher of “Borgen”, the Danish television programme, and I will include in my remarks one or two references to Denmark. I am half Danish—I am very proud of that—and I studied in Denmark. As part of our report the Committee had the opportunity to visit Denmark and see practices that I hope will transform the regional control aspects. Science is particularly important there because Copenhagen is home to the headquarters of the International Council for the Exploration of the Sea—ICES—and if we followed more of the scientific base that it spends a long time producing, I believe we would all benefit.
The health of fish stocks is assessed every six months by ICES, and the EU published an overall assessment of its advice in October 2013. It stated—this is from a Library note so it must be true—
“that 39% of EU fish stocks are still over fished,”
but that is down from 86% in 2009. In spite of that reduction in overfished stocks, the assessment goes on to say that trends giving rise to concern include, for instance, the fact that
“the number of stocks under an advice to reduce captures to the lowest possible level… had increased.”
I am sure the Minister will wish to focus on that. Being optimistic, as the hon. Member for Aberdeen North concluded, Seafish, the industry body for the UK, has said:
“there is reason for cautious optimism in the industry as we continue to see iconic stocks such as cod in the North Sea move towards recovery.”
We must not rest on our laurels, and it is essential we follow the science. Where I would like the science to lead, and where I believe there is an example we can follow, is regional control, and I have a question for the Minister about that.
I also worked for a number of years in Brussels in legal practice, and we must understand how we can get round the problem of fisheries still being an exclusive competence of the EU. If that situation remains, how shall we achieve regional control in practice? I believe that is a legal problem and not insurmountable. Again, I will turn to Denmark, because Denmark and Sweden have established regional control around Danish and Swedish waters that works extremely well. That is down to the size of the nets and meshing they use, and how they fish particular fisheries—I will not go into too much detail because it is well established. I hope the Minister will confirm that that model will be used. I understand that the new common fisheries policy brings decision making closer to the fishing grounds, clarifies the roles and obligations of each of the players, and ends micro-management from Brussels, and that the Commission will agree with fishing nations in the region about the general framework, principles and standards, overall targets, performance indicators and time frames. Crucially, however, member states within that region will co-operate at a regional level to develop the actual implementing measures. If it can be established, and all member states in the region agree to the recommendations being transposed into rules that will apply to all fishermen in the region, it will be a real game changer.
Richard Benyon (Newbury) (Con)
My hon. Friend is making a superb speech. She mentioned two key elements to reform, but does she agree that there is a third? History might reveal that that third element—a legal requirement to fish sustainably, to fish to maximum sustainable yield—is even more of a game changer. Is that not a key reform that will get our fisheries back on an ecosystem management basis?
Miss McIntosh
I am grateful for that intervention, and it gives me the opportunity to record my thanks to my hon. Friend for the hours he spent on the groundwork to achieve an historic agreement. Sustainability is key, and sustainability will be proved by following the science. We went too far away from the science in the past; we need to hold to it in future.
Mr MacNeil
Does the hon. Lady agree that the idea of regionalisation, as described by the EU, is perhaps one of the tremendous ways that the EU misleads us? The first meeting on the regionalisation of the north-west waters took place in Dublin on 12 November. The group includes the UK, Ireland, France, Belgium, Spain and the Netherlands—a pretty big region. We had thought that regions would be smaller than states, but at EU level they are multi-state organisations. It is better than what we had, but it is by no means local control—it is still a horse-trading arena.
Miss McIntosh
The hon. Gentleman does the House a great service by pointing that out. I had understood that regions would relate to borders contiguous to the sea within which there would be fishing. We cannot get away from the fact that Spain had historical rights to fish in our waters before 1973. That is something the Minister will have heard about, and I am interested to know how Spain manages to muscle in. I pay tribute to my Spanish friends, in case they are reading this or watching it on television—we have an agreement not to discuss fishing, Gibraltar or Las Malvinas.
Kelvin Hopkins (Luton North) (Lab)
Is the next logical step to make the regions the traditional fishing waters of each member state?
Miss McIntosh
Much as the hon. Gentleman is my friend, I am always cautious when he tempts me to go in a particular direction. If I may, I think we shall discuss that over a cup of tea.
Neil Parish
My hon. Friend talks about Spain’s access to what, historically, were our waters. One problem is that once there is a common fisheries policy everybody muscles in, nobody more so than Spain. Spain will hoover up fish not only off our shores, but off Africa and anywhere she can find them. She is a menace and I am quite happy to say that in this House.
Miss McIntosh
As some of my best friends are Spanish, I hope they are not following the debate too closely. I am sure Spain would wish reciprocal access rights for our fisherman in its waters. Perhaps we can reach agreement on that basis.
The new laws will allow countries working together regionally—under my definition of regionally, which does not necessarily include Spain—to move away from micro-management to true regionalisation and, as my hon. Friend the Member for Newbury (Richard Benyon) said, to a legally binding commitment to fish at sustainable levels.
Our report was so good that I would like to highlight one or two points. We called for decentralisation, rather than the Commission handing down, and for more research into selective fishing methods, which are important. We called for a cipher mechanism to reallocate fishing rights away from slipper skippers, and we called, again, for a register. My hon. Friend the Minister would not forgive me if I did not mention again our call for a register of who owns the current quotas.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
The hon. Lady is making an excellent speech. My understanding is that the register was due to be published before the end of 2013. I am conscious that we are almost halfway through December. Is it still on track?
Miss McIntosh
The Minister and the House will have heard what the hon. Lady says. I await the Minister’s reply with great interest. The House sits for another whole week and I am sure we stand prepared to hear from the Minister on his return not just that he has brokered a good deal for Britain, but that he wishes to publish the register of fisheries.
I am grateful for having had the opportunity to speak. I pay tribute to those who fish our waters and put themselves in harm’s way to bring fish to our plate. I pay tribute, too, to those who called for this debate. I wish the Minister great success in his negotiations on Monday.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
I commend the hon. Member for Aberdeen North (Mr Doran) and others for bringing this issue to the House and the Backbench Business Committee for supporting it. It has been a very detailed first fisheries debate for me, and it has provided a welcome opportunity to cover a range of important matters.
As the hon. Gentleman said, it is important that we take this opportunity to remember the four fishermen who have lost their lives in this past year in their line of work at sea and in the harbour. This is a stark reminder that fishing remains the most dangerous occupation in this country, as numerous Members have mentioned, including my hon. Friend the Member for St Ives (Andrew George) and the hon. Member for Tynemouth (Mr Campbell). I was particularly struck by what my hon. Friend the Member for Totnes (Dr Wollaston) said about Andrew Westaway in her constituency. We must remember the courage and sacrifice of individual fishermen, who put their lives in danger to bring food to our tables, and of their families who support them. I remind people of the plug given to the Fishwives Choir by my hon. Friend the Member for South East Cornwall (Sheryll Murray). I know that the House will want to join me in remembering the bravery of our fishermen and the incredibly difficult and dangerous work that they do, and in sending our sincere condolences to all those families and friends who have suffered losses.
Many important points have been raised, and I want to pick up as many of them as I can. First, I want to put on record the sheer importance of this industry to the UK. We have more than 6,400 vessels and nearly 12,500 fishermen, and we produce 627,000 tonnes of fish per year with a value of £770 million. This industry is incredibly important to the UK.
The single biggest development this year has been what I regard as a quite radical reform of the common fisheries policy. I congratulate my predecessor, my hon. Friend the Member for Newbury (Richard Benyon), on his tireless efforts on this front, especially on managing to reform the broken common fisheries policy—a measure that was voted through and agreed by the European Parliament on Tuesday. The reformed CFP, which includes three major UK priorities, has three key elements: first, an end to the wasteful practice of discarding; secondly, an end to the one-size-fits-all approach, with regional decision making; and finally, a commitment to fish at sustainable levels. I want to say a little about each of those important areas in turn.
On discarding, it has been an absolute scandal that we have had these regulatory discards whereby perfectly healthy fish are thrown, usually once dead, back into the sea. A number of Members have raised concerns about the discard ban, but it is important to recognise that to make it work there will be new flexibilities in the quota system. There will be inter-year flexibility so that quota for a species can be moved from one year to the next, and there will be some limited interspecies flexibility so that if a fisherman finds he is catching far more haddock than he expected, he can offset some of that haddock against his cod quota. We also recognise that there is much we can do with improved net gear. Big progress has already been made on this, and organisations such as the Centre for Environment, Fisheries and Aquaculture Science have done a lot of work on it, but there is certainly further to go.
I have always thought that regional decision making is important, because I am of the view that a small number of member states with a shared interest in a fishery and in seeing it fished sustainably are much more likely to come up with coherent management measures than any haggling among a group of 28 countries. The move to regional co-operation is, therefore, very important. It will make it easier to get agreement and we will end up with more coherent policy making.
A number of Members have raised concerns about how that will work. The fact is that, technically, it will remain a European Union competence. We have seen it work. When I attended the Fisheries Council in October, a similar process took place for the Baltic sea whereby those countries with a direct interest in that water came up with an agreement; they got there in the end. I think that that combination—of individual member states deciding management measures among themselves and the Commission standing behind that process and providing the ultimate check to make sure that they are fishing sustainably—works.
The third point—this is really important, as the former Minister, my hon. Friend the Member for Newbury, made clear—is about the legally binding commitment to fish sustainably. This is the essential bit that makes everything else stand up. All these things together represent a radical change in the CFP. This means that we have flexibility to ensure that a discard ban works, a legally binding commitment to fish sustainably, and more local decision making. We have further to go and I am looking forward to the next one to two years, when we can really work on making sure that we implement the measures properly. This has been a very important step forward.
Miss McIntosh
What reassurance is the Minister able to give the House that the Commission accepts that this will now be—dare we say it—a shared competence?
George Eustice
It is important to recognise that the setting of the total allowable catch will remain a European competence, but the management measures will be decided by the member states. On the signing of those management measures, the Commission’s role will be to ensure that we are fishing sustainably. There is an issue—my hon. Friend highlighted this—that, legally, a competence can reside either directly with the Commission or directly with member states. A hybrid system is difficult, but I think our agreement enables us to do that. The Commission can use mechanisms to make agreements between member states legally binding.
Water Bill
Baroness McIntosh of Pickering Excerpts(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Paterson
I am happy to answer the hon. Lady. We are completely clear that we will not allow the procedure to go ahead if it is going to cause environmental damage. We have to respect a whole range of directives pertaining to water. We are absolutely clear that we will not weaken or dilute—to use a watery phrase—the robustness of our regulation. We will completely lose public confidence if we do that. This has to be done in a robust manner.
The hon. Lady should look at examples that I have cited, such as Wytch Farm, which has been extracting hydrocarbons for decades without any environmental damage at all and which is very close to some very sensitive environmental sites. If this is done professionally and regulated properly, the hon. Lady should have nothing to fear. I am as keen as she is to protect our wetlands, including mosses, and I am clear that we will not dilute in any way the rigour of our regulation.
To return to abstraction, I know that some people—we have heard from some of them—think that we are not moving fast enough. Reform of the regime is complex. It has been in place for 50 years and the changes will affect the businesses of abstractors up and down the country—businesses that require water for public supply, electricity generation, manufacturing and irrigation. We must get this right. Shaping a new regime involving up to 30,000 abstractions is complicated, so we will consult on our proposals soon.
Reform of the abstraction regime is only part of the story. We are taking action now to reduce the damage to rivers, such as the chalk streams that support some of Europe’s unique habitats. We are using and improving the tools we have now to vary and remove damaging abstraction licences. For example, we have already made changes to protect the River Darent and the River Itchen.
In this Bill we are making it easier to tackle damaging abstractions in advance of our wider reform by making funding of schemes to restore sustainable abstraction quicker and easier. We will not take any risks with the introduction of upstream reform. We have looked carefully, with both Ofwat and the Environment Agency, at the concerns that have been raised. I am satisfied that there are robust regulatory safeguards in place to prevent upstream competition from leading to environmental damage. We will also co-ordinate implementation. The new upstream markets will not open before 2019 and we expect to implement abstraction reform in the early 2020s so that we can make sure that these reforms are carefully co-ordinated.
Resilience was a central theme of our water White Paper and it is a central theme of this Bill. We listened to calls in pre-legislative scrutiny to make sure that it is also central to the way in which the sector is regulated. We have strengthened Ofwat’s role in safeguarding long-term resilience. The Bill includes a new primary duty to take account of environmental pressures, population growth and demand on our essential services. I know that some are keen for Ofwat’s existing sustainable development duty to become a primary duty. We have looked at the arguments for that change. People want Ofwat and water companies to address longer-term challenges and deliver a better deal for customers and the environment. We want to achieve that, too.
Miss Anne McIntosh (Thirsk and Malton) (Con)
If we really want to improve environmental stewardship, I would argue, as others have done to the Select Committee, that the statutory duty on sustainable development will put the Government in a better place than resilience.
Mr Paterson
I am grateful to the Committee Chair for all her hard work. We have looked at the issue and believe that resilience means a stronger focus on longer-term planning and investment. By creating a new overarching duty specifically designed to increase the focus on long-term resilience, I think we will deliver what the Committee has been looking for. Resilience also means protecting the water resources that are so critical to current and future supplies. As I have said, ultimately 95% of water runs out to the sea, and the Bill will help to manage it more effectively.
Just as water reform measures will help our supply systems and environment to deal with water shortages, we must also be prepared for flooding. I have seen for myself how devastating it is to be flooded. This time last year, I visited Exeter and Kennford and saw the impact of the floods on people’s homes, lives and families.
Maria Eagle
If the hon. Gentleman is slightly more patient, he will hear what I have to say in the rest of my speech on those and other matters, but the Secretary of State was on his feet for 35-plus minutes, so the hon. Gentleman has not been waiting too long yet.
It is time for a wider review of whether we have the right balance between Ofwat’s regulatory role and the need for a powerful champion for consumers. The review should consider the future relationship between, and roles of, Ofwat and the Consumer Council for Water. I believe there is a need for a proper ombudsman role because adequate powers of redress for customers do not currently exist. The Bill should have established such an arrangement rather than simply arranging for it to be possible at some undefined point in the future.
The Government should also consider accepting the Consumer Council for Water proposal for it to be given enhanced rights to be consulted on each water company’s charging scheme and any changes to it, and a continual scrutiny role to “find and fix issues”, as it puts it, as they arise. I believe there is merit in those proposals and hope Ministers agree.
The second major change the Opposition want during the passage of the Bill is the introduction of a clear legal requirement on water companies to sign up to a new national affordability scheme. When I raised that with the Secretary of State last Thursday, he responded:
“The Government encourage water companies to introduce social tariffs for vulnerable consumers and to reduce bad debt.”—[Official Report, 21 November 2013; Vol. 570, c. 1350.]
However, it is absolutely clear that his encouragement is not enough. Just three companies have introduced social tariffs, with fewer than 25,000 customers receiving assistance. Considering that Ofwat estimates that 2.6 million households, or 11%, currently spend more than 5% of their income on water, it is clear that only a tiny fraction of those struggling are being helped.
Miss McIntosh
The hon. Lady will recall that the Flood and Water Management Act 2010 contained provisions for social tariffs, but the Department for Work and Pensions refused, as it continues to refuse, to allow the information relating to benefits to be released. I cannot understand why that is the case, but why did Labour Members not push harder for that information to be released when Labour was in government?
Maria Eagle
The hon. Lady has a point, and I will shortly say something about what I believe we ought to do about it.
It is not good enough that so few customers can benefit or receive assistance when they have genuine hardship in paying. It is time to replace voluntary social tariffs with a national affordability scheme, funded by the water companies from their excess profits. We need to end the postcode lottery that means that the help one can get depends on where one lives, and we need the Government to set clear eligibility criteria.
In response to my question last week, the Secretary of State said:
“The shadow Secretary of State has to recognise that the schemes that help some water bill payers are paid for by others.”—[Official Report, 21 November 2013; Vol. 570, c. 1352.]
Of course, that is the Government’s approach because he is not willing to stand up to vested interests. He is not willing to say to the water companies that they cannot continue to pay out almost every pound they make in dividend payments—£1.8 billion last year—and leave it solely to other customers to fund measures to help those in need. The Government should finally drop their opposition to a national affordability scheme and require the water companies to step up and meet their social obligations.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I welcome the Bill and would like to thank both my right hon. Friend the Secretary of State and the hon. Member for Garston and Halewood (Maria Eagle) for their kind words about the work that my colleagues and I have done on the Select Committee on Environment, Food and Rural Affairs. We must have done something right, as no fewer than four of our erstwhile colleagues serve on either the Government or the Opposition Front Bench. We shall obviously continue to maintain our rule of scrutiny with ever-increasing vigilance.
Today is the anniversary of the floods in Malton, Old Malton, Norton, Brawby and elsewhere in my constituency. In fact, I had to take a 10-mile detour because there was a lake outside my office, which I could not access as I normally would. The floods started in November and went on, intermixed with snow, until about March or April. It is therefore timely that we debate the Water Bill today. There is much in it to commend. It has been a long time in progress and, as the hon. Lady said, there remains a great deal of unfinished business from the Pitt review, the Walker review and the Cave review and, indeed, the Flood and Water Management Act 2010. The largest and most significant recent development since 2007 has been surface water flooding. It is a new threat, particularly with water running off the road in just about every constituency of every Member who has spoken in the debate thus far.
Nia Griffith
Given that the Flood Re scheme does not apply to properties built after 1 January 2009, does the hon. Lady agree that planning authorities need to be ever more vigilant not only in refusing to build on floodplains but in avoiding the knock-on effects of building in certain places that can have devastating effects on existing properties?
Miss McIntosh
I am grateful for the intervention, but I think the hon. Lady misses the point that so many other people do. Water running off the road in this way is a new development. While the water is on the surface of the road, it is the responsibility of the highways authorities, whether it be the Highways Agency, the county council or the unitary council. As soon as that water runs off the road and goes into a combined sewer, it most frequently becomes the responsibility of the water company.
I believe that the Government should look at the possibility of creating a statutory responsibility on highways authorities—and should be supported by the whole House in this—for surface water while it is on the road. [Interruption.] The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall (Dan Rogerson) mutters under his breath, “What will the cost be?” I do not care what it will be: if we are to have sustainable drainage systems, we have to look at creating a system that will retain the surface water on the road and stop it going into the combined drains and sewers. That has been happening since 2007, for nearly seven years. Surface water has been mixing with sewage and coming into homes, such as the home of Mr and Mrs Hinds, causing health-related and very antisocial problems. Successive Governments have failed to deal with the issue, but I believe that the Bill presents us with a unique opportunity to sort it out.
According to the Environment Agency, 2.4 million properties in England are at risk of flooding from rivers and the sea, 1 million of those properties are at risk of surface water flooding, and a further 2.8 million properties are at risk of surface water alone. The agency estimated that the cost of the 2012 floods was £600 million. I agree with my right hon. Friend the Secretary of State that we need not just to grow the economy, but to limit the damage caused to it by floods.
It is regrettable that the sustainable drainage system that was envisaged in the Flood and Water Management Act 2010 has still not been implemented. I understand that discussions are taking place and that it is all very difficult, but we must get our heads around this. It is not impossible, although the difficult aspects may take a little longer to address. I urge my hon. Friend the Minister to rise to the challenge, and to introduce SUDS before April next year. It is unacceptable for my constituency and others elsewhere in the country to face a possible flood threat this very week because we have not put secondary legislation on to the statute book.
I am at my wits’ end because we have still not implemented the Pitt recommendation that the automatic right to connect should be removed. Sustainable drains are a significant aspect of that. The Environment Agency is already a statutory consultee, but we have not accepted that water companies should have the same status. I believe that they should be able to say, frankly and honestly, that in the case of major developments, there should be no ability to connect without a significant new investment.
Andrew Percy
Proposals for new housing in Goole pose the double threat of river and surface water flooding, and are therefore unacceptable to local communities. Goole has been flooded for about five of the last eight years. We want sustainable drainage systems, so that if the new housing development proceeds, it will have no further impact on our already creaking drainage system.
Miss McIntosh
I hope that we will all continue to press the Government to proceed with SUDS.
As for abstraction, I can only support what other Members have already said. Abstraction has an important part to play in resilience in times of drought and, potentially, in times of floods, when there are competing demands for the water supply. I urge the Government to show a greater sense of urgency. My right hon. Friend the Secretary of State said that they would be consulting shortly, and it would be helpful to know when that consultation might take place.
The water White Paper, which we also scrutinised, placed great emphasis on the importance of resilience and the need for innovation to improve it, but I think that the Bill has toned down that emphasis slightly. I hope that the Government will find renewed enthusiasm for resilience. There will always be competing claims from the farming industry and angling, but we must not forget jam-makers such as those whom I visited in the constituency of my hon. Friend the Member for Witham (Priti Patel), as well as brewers and other industrial users.
The role of the Environment Agency has been extremely positive, and fewer properties have been built on functional floodplains since it became a statutory consultee. However, I believe that it could do much more to share information, particularly mapping information. It is extremely frustrating for constituents not to be able to access a single map. Sir Michael Pitt—from east Yorkshire—was very clear in that regard, and I think that we owe him a great debt of gratitude for the work that he has done. I believe that there should be a one-stop shop for our constituents, and that they should be able to know exactly where to go.
Mr Graham Stuart
Does my hon. Friend agree that not only is mapping important, but it is important for maps to be updated quickly? Following the completion of a £3 million flood defence scheme in the village of Burstwick, in my constituency, it took more than a year for maps to be updated, and during that time residents were still being asked for higher insurance premiums because the insurance companies did not have access to the information.
Miss McIntosh
My hon. Friend has eloquently re-emphasised the point that I was making.
Diana Johnson
Does the hon. Lady share my concern about the fact that the Environment Agency will not be producing its compound risk maps until the end of 2015? It is taking far too long to convey the necessary information to insurance companies and to constituents.
Miss McIntosh
I do regret the amount of time that it is taking.
The Select Committee was very disappointed to hear how little maintenance and dredging of watercourses has been taking place. While it is always pleasing to see capital expenditure increase, the evidence that we heard was more than anecdotal: it is an absolute fact that, were there to be regular maintenance and dredging of the main and even the minor watercourses, floods could be prevented. I urge the Government to spend more than just £20 million per annum in England for that purpose. I also urge them to allow the drainage boards, which do such excellent work, to keep the money rather than passing it to the Environment Agency, and to agree a work programme with the agency but use their own drainage board engineers for the maintenance and dredging.
Neil Parish (Tiverton and Honiton) (Con)
I agree wholeheartedly that drainage boards could do much more work. The money that they spend often goes a great deal further than the excessive amount spent by some public bodies. As the Secretary of State is aware, the Parrett and Tone rivers in Somerset are completely silted up and they need to be dredged quickly.
Miss McIntosh
I am sure that the whole House, including the Secretary of State, has heard what my hon. Friend said. Dredging little and often can prevent floods. The drainage boards have an army of volunteers, a huge fount of knowledge and, probably, more engineers than the Environment Agency.
I am delighted that the Government have authorised the pilot schemes, and the Select Committee will observe the outcome very closely. I commend the Pickering pilot project, which is one of those schemes at which this country excels. It has already slowed the flow, it is creating new peat bogs, and it is holding water back so that it cannot flood Pickering. If we can succeed with a combination of slowing the flow and building a reservoir, not only will Pickering be safe from flooding, but the benefits of the pilot can be used elsewhere, and resilience to flooding and possible water shortages can be improved.
I believe that the 2014 price review gives us an opportunity to invite Ofwat to reward innovation, which it is not doing at the moment. Ofwat should invite water companies to show that they can bring positive benefits to consumers by creating innovative flood defence and water supply schemes like the Pickering project, and to include such proposals in their business plans. I regret that that did not happen in earlier price reviews and this is a unique opportunity to do that.
I also invite the Government to engage much earlier with EU directives. I yield to no one in respect of the benefits they can bring, but they can be very costly. If we sign up to very short-term, tight timetables, that adds to the costs. My right hon. Friend will be aware of the EU water framework directive, the bathing water directive, the drinking water directive, the urban waste water treatment directive and others. We have to get in there early and put our views across. Their aims and objectives are laudable, but they must be affordable and done on a realistic timetable.
Mr Graham Stuart
My hon. Friend made an important point about dredging. It is essential to ensure that unnecessary costs are not imposed on those who try to carry it out. South Holderness drainage board raised money locally to dredge Stone creek and Hedon haven, but then found that the Marine Management Organisation —which, as on previous occasions, would not have charged the EA anything—imposed a cost of several thousand pounds on the drainage board and then at the end more than doubled that amount, imposing a crippling cost on local people raising local money to try to do the right thing.
Miss McIntosh
I thank my hon. Friend for that.
I want to mention briefly some new aspects of the Bill and some omissions. On the omissions, bad debt costs each and every household approximately £14 a year. That is unacceptable. We need secondary legislation to progress this matter, and I urge the Government to bring that forward as swiftly as possible.
On social tariffs, I fail to understand why successive Governments have had difficulty in releasing information on benefits. In response to a recent question to the Department for Work and Pensions, the following answer came back from the Minister of State, my hon. Friend the Member for Hemel Hempstead (Mike Penning):
“There is no legislation in place currently”—
well, I knew that and I told him that, but it is always good to know I was right—
“that would permit the release of benefits information to water utility companies: it is likely that new legislation would be required to enable the sharing of benefits data with water utility companies on this scale.”—[Official Report, 18 November 2013; Vol. 570, c. 681W.]
I urge my right hon. and hon. Friends to put pressure on the DWP to release that information so that we can make the best possible tariff available to the appropriate customers at the earliest possible time.
On insurance, the Select Committee came down in favour of Flood Re, but there are a lot of unknowns, and I do not believe we know any more about the known unknowns than we did before this debate started. For example, under Flood Re, why have we chosen household bands as the basis for insurance levy scales? If there is a database, where is it? What is the definition of uninsurable properties? Are small businesses excluded? If they are to be excluded, why are they excluded? It has been put to me that farms might be excluded. Obviously, that would not go down well in my area. I would quite like to know before the end of the evening whether farms and small businesses are going to be excluded.
The memorandum of understanding between the Government and the insurance industry commits the Government to take primary responsibility as an insurer of last resort in an extreme flood event while the fund is growing. We need greater clarity this evening, before the Bill goes on to Committee, on precisely where we are in that regard. The House would also like to know whether the Bill achieves the normal historical value for money requirement in respect of such proposals.
The Select Committee welcomes the commitment to open up the retail market to competition by 2017, but we believe the case for upstream reform needs to be made more vigorously. We need to know precisely what the implications are for customer bills. It has been put to us that there might be de-averaging of household bills. We also need to know the implications for national resilience of upstream reforms, including in respect of climate change and population growth. We note that the start date is two years later, but the House would like to know whether it is feasible at all and whether we even need primary legislation.
It is true that the Select Committee came down in favour of functional separation between the wholesale and retail arms and in favour of a voluntary exit strategy. We would like to hear a little more when the Minister winds up about why the Government are against that.
Members on both sides of the House are interested in cost of living issues, of course, and we need greater assurances on the impact on householders. The Flood Re levy has been set at £180 million per annum, which is £10.50 per customer, for the first years. We also need to know the timetable for the application for state aid. It would be helpful to know that we are going to be in a position to have signed off on state aid before this Bill leaves the House and achieves Royal Assent and, more importantly, by the start date of 2017. Concerns have been expressed about stranded assets and the impact on household customers generally, particularly from the Flood Re insurance levy, and the formalising of the cross-subsidy that has existed under the statement of principles.
To conclude, the potential risks of de-averaging prices in respect of household customers and upstream competition must be addressed. On the comparative merits of the Ofwat duty, we would prefer sustainable development as opposed to the Government’s proposal of resilience. That needs to be explored. We also need to look at possible greater resilience in terms of both water supply and the use of abstraction, and we need the review of abstraction policy sooner rather than later. We applaud the sustainable development and wider environmental aims of biodiversity protection and climate change mitigation, but I personally would argue that this should be addressed through Ofwat’s primary duty of sustainable development. The Government need to explain how the transition in the insurance sector from the cross-subsidy being formalised in Flood Re to an eventual free market will be managed. I believe this is too important to leave to secondary legislation and we need more details in the Bill.
I give the Bill a warm welcome. I have highlighted a number of concerns which I hope will be addressed and I look forward to hearing the rest of the debate.
Mrs Emma Lewell-Buck (South Shields) (Lab)
The Bill does not excite people or generate much interest outside the House. Right hon. and hon. Members who have been involved in previous debates on this issue have shown that they have a depth of knowledge that spans time frames that go back much longer than I have been in the House. However, my constituents have concerns about their rising water bills, and because of their worries and sleepless nights, I am speaking in this debate.
The Bill provides an opportunity to introduce measures to help those who are struggling to pay their water bills and measures to toughen the regulatory regime under Ofwat. In announcing the draft Bill, the previous Secretary of State, the right hon. Member for Meriden (Mrs Spelman), said that it would ensure
“that the water industry continues to provide an affordable and clean water supply”.
Earlier this month, a spokesperson for No. 10 said that the Prime Minister takes the price of household bills seriously:
“The Prime Minister wants to see household costs across the piece being reduced as low as possible. The intention is to try to reduce the burdens on hard-pressed families.”
It is therefore reasonable to ask why the Bill delivers so little for those people. It will not help families who are faced with rising water costs; nor will it empower Ofwat to become the champion for the consumer that it needs to be.
For those who, like me, are new to Parliament, I will remind the House of some of the history of water affordability. The only time when water charges have been reduced was under the last Labour Government. The average water bill in my constituency is now £359 per year and has increased nationally by almost 50% since privatisation was introduced by the Conservative Government in 1989. At the same time, regional water companies made £1.9 billion profit last year. I and my colleagues in the Labour party have been campaigning hard on energy prices, but the situation with water bills is no better—indeed, some would say that it is worse.
Although households spend less on water as a flat figure, the proportion of a water bill that goes towards company profits is three times higher than for an energy bill. As with energy prices, the rising cost of water far outstrips both earnings and inflation. Water is a natural resource; it is essentially free; and it is essential for our survival. Management of that natural resource therefore needs to be conducted with some kind of social responsibility.
During a cost of living crisis, affordability must be the absolute priority, and the Bill must do more to ensure that water companies’ profits are not put before the needs of consumers. The coalition agreement clearly stated that the Government would
“examine the conclusions of the Cave and Walker Reviews, and reform the water industry to ensure more efficient use of water and the protection of poorer households”.
That is one statement that they have not been able to delete.
In 2009, the Consumer Council for Water stated that
“many low income customers continue to pay their water bills even where it becomes unaffordable to do so”.
It claimed that people tend to
“cut back on water usage or sacrifice other essentials such as food or heating in order to ensure their bill is paid”.
The problem now in my constituency is that people are already cutting back on food, heating and water. Since the Government continue to legislate in a way that exacerbates poverty, what are my constituents supposed to do? What should they cut back on next—fresh air perhaps? They have nowhere left to go.
Miss McIntosh
I am following the hon. Lady’s contribution with great interest, and she is a leading member of the Environment, Food and Rural Affairs Committee. Water, however, is not free. Drinking water must be processed, as must the foul water that comes from every home. I hope that she will take the opportunity to go to a waste water treatment plant and see the full gamut of where a lot of the costs come from.
Mrs Lewell-Buck
I thank the hon. Lady for that intervention and I will take up that offer. I was being glib when I said that water is free. I meant that to most people, including my constituents, water falls from the sky and is therefore free, but I understand the hon. Lady’s point.
People in my constituency are clear in the knowledge that water bills are likely to rise in the future due to a growing population, climate change, the replacement of water infrastructure and additional environmental standards. Under the previous Labour Government, the Walker review, which was published in 2009, advocated affordability and made a number of recommendations to ensure that water remains affordable for all. Two years later, the current Government published a consultation on those proposals and rejected universal discounts, which they cited as “unaffordable”, for people on low incomes and minimum discounts for low-income households with children. Instead, the Government opted for WaterSure and social tariffs, and repeated that intention in the “Water for Life” White Paper.
WaterSure intends to cut costs for households that have a water meter and more than three children under 19 years old and that claim a range of benefits including council tax benefit, housing benefit and employment and support allowance. The scheme ensures that those families pay only the average for their region, so adding approximately 40p to the bills of those customers not on the scheme. Water Direct is another scheme whereby the Department for Work and Pensions subtracts money from the benefits of those who are in debt to their regional water company and sends it direct to that water company. What is not clear, however, is how such schemes are likely to be affected by the introduction of universal credit, and that creates uncertainty for a number of families.
Social tariffs allow water companies to develop tariffs in consultation with customers, with the intention of helping the most vulnerable. However, the Government’s implementation of those tariffs falls a long way short of dealing with the scale of the problem. In evidence to the Environment, Food and Rural Affairs Committee, the Consumer Council for Water estimated that to “effectively address the problem” of affordability would cost anywhere between £162 million and £447 million. The Walker review’s estimate was £340 million, yet it predicted that social tariffs would generate only £36 million a year, adding that that was
“significantly short of what is needed to address affordability”.
Even that limited impact may not be felt in the majority of regions.
Rather than take strong action to ensure that companies have a duty of affordability, the Government introduced tariffs on a voluntary basis from April this year. So far, only three companies have taken that up. Northumbrian Water—my local provider—certainly found little appetite among customers for the implementation of a social tariff. That is hardly surprising when so many people are already struggling to afford bills with stagnating wages. In constituencies such as mine, such a tariff would make water less affordable for even more people.
It is no surprise that the Government’s light-touch solutions have done little to help consumers. Citizens Advice has expressed disappointment that the Government’s guidance for social tariffs is “lacking in detail” and that water companies have been given freedom to ignore it completely with little or no justification. It is no coincidence that Citizens Advice has reported increasing numbers of people coming to it with inquiries about water debt. It is not only Citizens Advice that recognises the problem. This afternoon, I spoke with Northumbrian Water, which is anticipating a rise in debt over the next year, linked to the severity of public sector cuts in our region. It now works closely with Citizens Advice, recognising that if someone is struggling with their water bill, they are likely to be struggling with other bills as well. In short, it is a wider problem than just water bills—it is a cost of living crisis.
The Government clearly do not recognise the need for decisive action. Last week at DEFRA questions, the Secretary of State said that he had written to water companies, calling on them to consider the pressure on household incomes and advising that the Government encourage water companies to introduce social tariffs. As Secretary of State, should he not be doing more than just encouraging and advising? Is simply writing to the water companies the best he can do?
The United Nations recognises water as a basic human right that should be
“available, accessible, safe, acceptable and affordable for all without discrimination”.
Why then are the Government not committed to ensuring just that—that water is affordable for all?
Dan Rogerson
I agree that, as my right hon. Friend the Secretary of State said, we need to capture more of this water and make it work for us in such a way that we can improve environmental outcomes as well as resilience. That is very much what we want to happen.
Miss McIntosh
In terms of capturing water, is my hon. Friend going to deal with SUDS and surface water, because I know that he will care as passionately about this in his new position as he did when he was a member of the Select Committee?
Dan Rogerson
I had a premonition that I might get such an intervention from my hon. Friend, the Chair of the Select Committee. I know she is pleased that we are, as a Government, making progress towards implementing this process in April 2014. She would like it to be sooner, but we have to make sure that we get it right. The views of the Select Committee have been very useful in making sure that we get it brought in adequately.
We heard a couple of very specific questions on market reforms. My hon. Friend the Member for St Austell and Newquay asked about small charities that operate from residential properties. The reform would affect non-domestic properties, so if a charity is operating from a property that is primarily residential, it will not have access to it, but it will be open to it if it is operating from other premises.
On abstraction reform, I entirely agree with Members’ comments about the need to tackle abstraction, which is damaging our rivers. We are tackling this in two ways. First, we are taking action using the tools already available to address over-abstraction. The Environment Agency has reviewed thousands of abstraction licences and has changed about 80 of them, returning 75 billion litres of water per year to the environment in England. That is equivalent to the annual average water use of a city larger than Birmingham. There is clearly a lot more to do in the individual catchments that have been mentioned, and we have to take account of the stress that is put on them.
The Bill will also help by removing water companies’ right to compensation to ensure that the funding of these schemes moves into Ofwat’s price review process, which is a far better way of tackling over-abstraction. In the longer term, we need a reformed regime fit to face the future challenges, and we will publish a consultation on possible options in December. [Interruption.] These reforms will affect a range of businesses, so we need to get them right.
Oral Answers to Questions
Baroness McIntosh of Pickering Excerpts(10 years, 5 months ago)
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Mr Paterson
I am grateful to the hon. Gentleman for his question. Unfortunately, he did not listen to my preceding answer, which was that under the watch of his Government—because Ofwat did not do its job and because, as with the banks, the last Government did not regulate properly—bills went up. We are fully conscious of the impact of bills on our hard-working constituents. We have a robust regulator in Mr Jonson Cox. It is clear from his statements and negotiations that he expects water companies to hold or reduce prices, while continuing with the enormous investment that privatisation has brought. Do not underestimate the £116 billion that has been brought into the industry, which will make it efficient and keep bills down.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Does the Secretary of State agree that a large component of the increase in the cost of water bills comes from European directives, such as the waste water directive, the urban waste water directive, the bathing water directive and the drinking water directive? All of us would support those directives, but will he commit to the earliest possible engagement of the Department and Ofwat in limiting the cost of implementing them?
Mr Paterson
I am grateful to the Chair of the Select Committee for that question. She is absolutely right that we are bound by European law and regulation in this area of competence. We intend to regulate the industry in conformity with those laws. There is a balance to be struck. As I have mentioned, since privatisation, £116 billion has been brought into the industry. We have improved the quality of our rivers and water enormously, but we have to respect the impact of bills on our hard-working constituents.
Sir Tony Baldry
The pay of clergy and how clergy are organised is a matter for the diocese and the local bishop. The hon. Lady has kindly written to me about this issue, which is causing her concern. I will, if I may, take it up with the Bishop of Lichfield and come back to her.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Local churches are at the heart of rural life. We have parish priests who are asked to look after sometimes four, five or six parish churches. Can we keep that situation under review? We want to keep the parish churches open, but it is more than humanly possible for one person to nurse so many parish churches.
Sir Tony Baldry
Those are all challenges that we face. How we maintain and keep churches open in rural areas and ensure good ministry for new housing estates in urban areas are the responsibilities of diocesan bishops. We are fortunate in having some excellent new stipendiary clergy coming forward and a large number of self-supporting ministers who support the work of the Church of England. The point that my hon. Friend makes is a good one. Essentially, the Church of England has to be a national church, serving all parts of the country, and we are determined that it should continue to do that.
Natural Capital (England and Wales)
Baroness McIntosh of Pickering Excerpts(10 years, 6 months ago)
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Barry Gardiner (Brent North) (Lab)
I refer Members to my declaration in the Register of Members’ Financial Interests.
I would normally congratulate the hon. Member for Beverley and Holderness (Mr Stuart) on securing the debate, but of course he spilled the beans and said that I was the one, when I was on the Back Benches, who went before the Backbench Business Committee. I congratulate him instead on his excellent speech. I also want to take this opportunity, which is the first I have had, to welcome the Minister to his new role and to pay tribute to his predecessor, the hon. Member for Newbury (Richard Benyon), who was not only unfailingly courteous but totally committed to this agenda.
Every society is defined by two things: what it creates and what it refuses to destroy. The only thing that sets us apart from our natural environment is our ability to reflect on our own place within it, but for all our cleverness we remain dependent on the extraordinary bounty that nature provides. The food and water that sustain us, the air that we breathe, the raw materials that we use as fuel and clothing or to construct our homes are only the most obvious of nature’s benefits. Equally important are the processes and services that purify our water, break down our waste, pollinate our crops and provide us with recreation and aesthetic or spiritual fulfilment. We have the right to use and enjoy the benefits of that natural capital, but that right gives us no licence to prevent our children from exercising a similar and equal use and enjoyment in the future.
It is one of the imperative responsibilities of Government to be good stewards of the present and even better guardians of the future, yet the facts show how far we are from being good stewards. In the UK our native flora and fauna have been in decline for over 50 years. Agricultural intensification in the 1970s is often pointed to as a key turning point, but the truth is that for more than 200 years, as we chopped down our forests and used coal to drive the world’s first industrial revolution, we moved from a pastoral agrarian society to an advanced city-based economy that has failed to value biodiversity. In that time hundreds of species of plant and animal have been lost from our country. We need a radically different approach not just to halt, but to reverse that decline.
One of the great advances in these two centuries is the progress we have made in classical economics. When Adam Smith wrote “The Wealth of Nations” or even when Karl Marx wrote “Das Kapital”, they understood capital to mean simply plant, machinery and money. But we have come to understand that there is such a thing as human, social and intellectual capital. We have come to realise that a well-functioning judicial system or an excellent education system are just as much a part of the wealth of a nation as its roads, its ports or its factories. The irony is that economists and economies have not yet caught up with the most important capital of all—natural capital. Virtually every other form of capital is derived in some way from natural capital and we can define it as the benefits that accrue to human society from the different species of life that inhabit the natural world.
The right hon. Member for Meriden (Mrs Spelman), to whom I pay tribute, spoke about pollination services. I remember that in 2006, when I was Minister with responsibility for biodiversity, I put £6 million into the Department’s budget submission for research into diseases in honey bees. When it came to agreeing DEFRA’s budget, the Treasury was not impressed. It insisted that times were hard and that with my £6 million it could create a new community hospital for people’s diseases, rather than worrying about bee diseases. I of course told the Treasury officials that I would be happy to cut the £6 million, but I asked them if they were aware that it would cost them £194 million a year. I explained that a recent National Audit Office report had pointed out that diseases in the honey bee population had reduced the pollination services that bees were able to carry out. This had reduced the yield from our arable crops, which in turn had reduced the revenue paid to the Exchequer by £200 million a year. The Treasury gave us the £6 million.
The thing about Treasury officials is that they are simple beasts. They do not want to know about the environment or ecosystem services, but show them a way to save money and they become entirely reasonable. Classical economics values things in a very simple way. Take forests, for example. Classical economics simply adds the sale price of the timber that can be harvested and the alternative use to which the land may be put and says that this is the value of the forest. What utter nonsense. The true value of a forest lies in far more than that. Forests stop soil erosion. They prevent flooding by absorbing moisture and they control climate, often regulating local as well as global weather patterns. They are a source of medicines and food and they have recreational and aesthetic value, and all that is before we even begin to consider sequestration.
In the millennium ecosystem assessment, 1,360 of the world’s top scientists showed that classical economics captured only one third of the actual value of the services that forests provide. The same is true for rivers, reefs, salt marshes, mangroves and all other natural ecosystems. We fail to factor their actual economic value into our policies and decision making, but because most of the other services that they provide are not bought or sold in markets, they are not normally taken into account, so the forests, reefs and rivers are lost or degraded.
Another important consideration is that those wider benefits, although immensely valuable, do not accrue to an individual property owner. The benefits are experienced by the community at large. They are regarded as free goods by the wider community and the wider economy. In classical economics such free goods are called externalities, and because they are not directly captured by the landowner they do not feature directly in the landowner’s decision of how and whether to dispose of them.
We use nature because it is valuable, but we abuse it because it is free. A nation’s GDP certainly increases every time money changes hands, but a growing GDP does not always create wealth. Many economic activities actually deplete wealth. The irony is that nations count that depletion as income, whereas they should see it as liquidation of capital. In fact, the TEEB—The Economics of Ecosystems and Biodiversity—report, edited by Pavan Sukhdev, has already shown that at current rates of decline the cumulative loss of ecosystem services from 2000 until 2050 will be equivalent to losing 7% of global GDP. Here is the challenge: how do we explain to those focused on GDP growth that they would make better economic decisions if they properly accounted for the very real value of natural capital?
Miss Anne McIntosh (Thirsk and Malton) (Con)
I bow to the considerable knowledge of the hon. Gentleman, who has just left the Environment, Food and Rural Affairs Committee. This Government have been very clear, as indeed were his Government, about wanting to put natural capital at the heart of their economic thinking. With regard to climate change that is very obvious, but in some Departments it is less so, so how do we value the natural capital input?
Barry Gardiner
The hon. Lady, whose chairmanship of the Select Committee is redoubtable, is absolutely right that that is clear in certain Departments but not in others. The way we value the input, as a number of Members have already indicated, is precisely the way contained in the natural capital committee’s first report to Parliament. The first thing we have to do—I will move on to this in more detail a little later—is to get each Department to create an inventory stating what capital it owns, what capital it affects and what capital it influences. Once we get Departments to look at it in that way, they can feed that into the Treasury so that better cost-benefit analysis is done and better economic decisions and policies are made.
Some of our political colleagues act as if they are still living in the 19th century. They believe that economic prosperity and environmental protection are destined to be in conflict with each other, but in fact the opposite is true. In 2011 the green economy made up just 6% of the economy, but it accounted for 30% of all growth.
Those on the economic right fall into the trap of thinking that the environment is the enemy of growth, but it is not. Their conclusion is that we must sacrifice the environment in order to achieve growth. But for those of us on the economic left there is an equivalent trap. Some on the left actually seem to agree with the economic right. Their claim is simply put the other way around: that economic growth is the enemy of the environment. Their conclusion is that we must sacrifice growth to achieve environmental protection. Both are wrong, of course, and they are wrong because they are locked into the same language of economic growth and environmental protection. They have failed to move into the new paradigm of economic wealth and environmental sustainability. There is a reason for that: the new paradigm requires a proper understanding of the value of natural capital, and not just an understanding of it, but a proper accounting of it.
What competent business would fail to carry out a proper inventory of its assets? Yet that is precisely what we as a country have done. We have not looked at the stocks and flows of natural capital and properly assessed them. In the UK we are beginning to introduce a fundamental change in environmental policy. Instead of focusing on individual species or habitats, we are pioneering an approach based on whole ecosystems. We commissioned the UK’s national ecosystem assessment, which has established that 30% of the UK’s ecosystems are in decline and that many others are only just holding their own against an increasingly hostile background of rising population, consumption and pollution. However, the Government have not yet taken the important step of instructing all Departments to create an inventory of the natural capital assets they own, utilise and affect. The Minister should speak to his colleagues in Government to ensure that that happens.
Quantifying the problem is the beginning of a solution. In the national ecosystem assessment, we have begun to put a value on the contribution of ecosystem goods and services to human well-being. The market has long known how to exploit the benefits of nature, whether by dumping waste at sea or chopping down rainforests with no thought for the wider damage that it was doing. But now, the most progressive businesses are beginning to understand the importance of sustainable supply chains. They are beginning to see the business imperative to reduce their own corporate risk profile and are now seeing genuine advantage in being net positive for the environment.
The establishment of the natural capital committee in response to the United Nations convention to combat desertification conference of the parties in Nagoya in 2010 is a significant and positive move on the part of the Government. I welcome it. I pay tribute to the right hon. Member for Meriden for how she steered the issue through Government. She also established that the committee should report to the economic sub-committee of the Cabinet. Her officials had put to her that it should report to her as Secretary of State, but she decided that it should report elsewhere, knowing full well that a Secretary of State for Environment, Food and Rural Affairs was perhaps less powerful than the Chancellor of the Exchequer. She played a significant role in ensuring that the natural capital committee had the prospect of real success and traction. My hon. Friend the Member for Stoke-on-Trent North (Joan Walley) was entirely right to say that we should also have had a Treasury Minister on the Front Bench this evening.
Food Contamination
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Miss Anne McIntosh (Thirsk and Malton) (Con)
I welcome you to the Chair, Mrs Osborne. Together with colleagues from the Select Committee on Environment, Food and Rural Affairs, I am delighted to have secured the debate. I welcome my hon. Friend the Minister to his new position and congratulate the hon. Member for Ogmore (Huw Irranca-Davies) for retaining his as shadow Minister.
The Minister is new, but we look forward to hearing his remarks in summing up the debate. I take this opportunity to thank him, in his individual capacity, for the contribution he made and excellent work he did on the Select Committee. I remind the Chamber—and, perhaps, the Minister—that he contributed to and supported the conclusions of both the reports and the Government responses, which we received just as he was vacating his position. I hope that he will keep some of his enthusiasm and vigour in summing up today.
I would like to talk briefly about the history—a previous Committee report is also of interest. The United Kingdom decided to impose a moratorium on desinewed meat production in this country, which had huge implications—not only for my constituency, but for parts of Northern Ireland. Newby Foods was told that it could no longer produce desinewed meat, which led to a loss of 30 jobs near Thirsk.
Since we conducted our report and reviewed the UK Government moratorium, which was imposed as a short-term measure at the will of the European Commission in Brussels, the Government have clarified desinewed meat from poultry and pork as being from non-ruminants, so that that process may continue. However, will the Minister continue to make the case to the European Union for desinewed meat production from lamb and beef to be allowed to continue, as well as from pork and poultry?
That information is relevant to the debate, because we concluded, in, I believe, March 2012—this was based on an assertion in evidence from a predecessor of the Minister; it was perhaps two farming Ministers ago—that ceasing production of desinewed meat could lead to mislabelling and the contamination and adulteration of meat, with cheaper cuts of meat substituted for the meat that is on the label.
Miss McIntosh
Perhaps I could set the scene in terms of the food industry. As of last year, there were more than 490,000 food businesses in England. In 2011-12, spending to protect consumers from food incidents was £241 million, 75% of which was spent by local authorities to enforce food law.
One issue the Committee identified was that the Food Standards Agency reports to three key Departments with responsibility for aspects of food policy. Furthermore, there has been a marked fall since 2009-12 in the number of local authority food samples tested. In addition, there are 12 different national and European databases on food intelligence.
Let me record a little of the history. In November 2012, there was a routine meeting between the Food Safety Authority of Ireland and the UK’s FSA. At that meeting, the Irish FSA mentioned that it was developing a new methodology for checking the composition of meat products. The first question the Committee asked—we are asking it again today—was why it took two months for our own FSA to authorise and conduct any testing.
Tests then found that there had been contamination; it was small in the UK, but it was widespread in the EU. In the UK, horse and pig DNA were found in a variety of beef products, including samples of Findus lasagne, which contained more than 60% horsemeat; Aldi lasagne and spaghetti bolognese, which contained between 30% and 100% horsemeat; and beef products certified as halal and supplied to prisons in England and Wales that contained pork DNA.
Those findings emerged only after extensive testing of beef products across the EU and by local authorities and industry in the UK. The EU tests revealed that 4.66% of products contained more than 1% horse DNA. The UK incidence of contamination in products tested was less than 1%. Although the contamination was small, and the principle was that this was a labelling and a fraud issue, there could so easily have been a food safety scare and a food safety scandal.
Complacency is not the best word to use, but we have seen no sense of urgency among the Government, which is why we welcome my hon. Friend’s appointment as Minister. The Secretary of State or another Minister told us in evidence that the perpetrators of this crime—if it was a crime, and everyone generally understands it is a crime—would face the full force of the law. What arrests have therefore been made? What is the role of Europol and, possibly, Interpol? What charges and prosecutions have been brought by the City of London police to draw a line under this issue?
If we are to boost consumer confidence, which I think we all want to do, we must show there is no further contamination and no prospect of further contamination. We therefore need to know at what stage the contamination and adulteration entered the food supply chain. We talk a lot in the two reports about controls in the food chain, to protect consumers from contaminated and potentially unsafe food, which did not work in the case in question.
Perhaps the most worrying aspect of the matter, as something following on from the BSE crisis, is that every 10 years we have either a food scare or a food crisis. In the early 1990s, it was BSE; in 2001, it was foot and mouth disease; and in 2012—we know that it started in 2011—it was the scandal to do with horsemeat contamination and pork DNA being found in halal meat. That was completely unacceptable.
One worry is identifying the supply chain, and traceability, and we drew some clear conclusions from the evidence. The chief executive of the FSA told us the contamination and adulteration could have been going on for almost a year, from March 2012, when desinewed meat production in this country was banned—there was also a so-called ban in the EU, although we believe it was being produced in the EU.
We concluded that the system for food traceability, including the requirement that at every stage in the supply chain operators must keep records of the source and destination of each product, has been breached; that retailers and meat processors should have been more vigilant about the risk of deliberate adulteration; and that trust is not a sufficient guarantee in a system where meat is traded many times before reaching its final destination. We have also noted our concern about the length of supply chains for processed and frozen beef products. We welcome the efforts of some retailers to shorten those whenever possible.
Huw Irranca-Davies (Ogmore) (Lab)
I commend the hon. Lady for securing the debate. Perhaps I can bring together two strands of her thinking. There will be public discontent if only a relatively few small players are investigated and prosecuted and become scapegoats for the industry. If larger players—whether they are meat processors, retailers or others—can be proved not to have used due diligence, or to have been negligent, ignorant or downright culpable, the size of the operation or its importance to the European market should not preclude investigation, including by Governments working together, if necessary.
Miss McIntosh
I welcome that intervention. The hon. Gentleman’s Front-Bench colleague, the hon. Member for Brent North (Barry Gardiner), led a line of questioning in that regard, and we met a brick wall. I agree that the action taken should not be symbolic, against small retailers. We must go through the supply chain. When a major supermarket takes a supply chain on trust year after year, without inspecting identities and its integrity, there is definitely something wrong. As to traceability and the so-called labelling issue, I confess to being disappointed with the Government response. We have identified a problem of traceability and labelling, and I urge the Minister to go a bit further, so that we have concrete suggestions.
I have mentioned the number of relevant businesses and the food industry’s importance to the economy. We must accept, with respect to testing, the need for a risk-based assessment, but when we are told that there is a risk in a particular country we need, for goodness’ sake, to wake up, liven up and respond, because of the potential for a problem in this country.
The people we need to go out and do testing—the first in line—are food analysts. We learned in evidence that most of those are in the Association of Public Analysts. I want to dwell on that point for a moment. We found out that insufficient testing has been done by local authorities since 2009. We need to accept that, although testing must be risk-based, there should be some random testing to ensure that nothing slips through the net.
We also identified an acute potential shortage of public analysts. I want to take issue with the Government response to our second report at point 13:
“Officials from both FSA and Defra meet regularly with representatives from the Association of Public Analysts and local authorities to ensure sufficient laboratory capacity exists and suitable methods are in place”.
I want to quiz the Minister on that. The Association of Public Analysts has meetings with FSA officials twice a year. That is not “regularly”—it is only every six months. One meeting was attended by a DEFRA official, the implication being that the other was not, and laboratory capacity is not discussed. Even if it were discussed, it is not within the gift of individual public analysts, or the association, to prevent laboratory closures or to ensure sufficient capacity.
The Government response is flawed because it does not deal with the Committee recommendation that they should ensure that there are sufficient properly trained public analysts. Why does that matter? It is not only the Committee, which heard powerful and compelling evidence about it, that concluded that it is important. The National Audit Office report, published earlier this month, leant heavily on—I would like to think—our work and on the report’s conclusions and recommendations. It stressed, as we did, that budget cuts coupled with a two thirds rise in reported food fraud have increased the risk of another horsemeat scandal. The NAO also said that the cuts in testing led to a loss of intelligence information, so that the Government
“failed to identify the potential risk of adulteration of beef with horsemeat, despite indications of heightened risk.”
The NAO report questions whether there will be sufficient capacity to respond to future incidents. I am mindful of what the previous Secretary of State, my right hon. Friend the Member for Meriden (Mrs Spelman), said about DEFRA being the fourth emergency service, and of the possibility that, given the dramatic decline over recent years in the number of public analysts and laboratories, there will not be the capability for detecting food fraud. I urge the Minister to respond to that concern.
I have covered the question of Europol, Interpol and our police bringing people to book, and discussed traceability. I want to make a final point. There is a richesse before us, and I could dwell on every recommendation and conclusion; I am sure that the Minister will remember the passion with which the Committee adopted the recommendations. I want now to focus on what the FSA’s role should be.
In our first report, we conclude:
“Whilst Ministers are properly responsible for policy, the FSA’s diminished role has led to a lack of clarity about where responsibility lies, and this has weakened the UK’s ability to identify and respond to food standards concerns.”
We found that the FSA and Government reacted in a “flat-footed” way and were
“unable to respond effectively within structures designed primarily to respond to threats to human health.”
We did not much care for the Government response, but I am sure that the Minister will try to justify the rather disappointing response that the
“Machinery of Government changes in 2010 led to some changes”.
The response went on to tell us what they were.
In our more recent report, to which we have only recently received the Government response, we reiterate our previous conclusion and confirm that we need greater clarity about the role of the FSA in major incidents. The point is that we accept that this is primarily a food-labelling issue, but there is the suggestion of fraud, to which the hon. Member for Ogmore (Huw Irranca-Davies) referred, on a massive scale, and we need the reassurance that the FSA is, in my words, fit for purpose. However, the Government response does not fit the bill.
We are told:
“The Government is concerned that the Committee may have misunderstood”—
I say to the Minister that that is a very dangerous allegation to make—
“the status and constitution of the FSA.”
We know, as the response states, that the FSA,
“as a non-Ministerial government department, does not report to any other department. The FSA is accountable to Parliament and reports…through Health Ministers.”
The National Audit Office confirms our initial conclusion that the problem is that the FSA reports to three different Departments. That is a source of concern. It is compounded by the fact that we are having review after review after review. We came to conclusions quite early on—in March, I think—about our fundamental concerns. We are now hurrying towards the end of the year. We have the benefit of Professor Pat Troop’s response to the incident. Her conclusions back up entirely what we say.
The question for the Minister is why the Government are not responding to our conclusions, to the review by Professor Troop and to the National Audit Office findings, but have called for another review. This is something that we used to say in opposition; it is not unfamiliar to me. Under the last Administration, as I am sure the hon. Member for Ogmore will remember, if there was a problem, we would have a review, then another review and then another review. Now, we need to see some action, so the fact that the Elliott review has been set up, will make an interim conclusion and will report finally only in the spring of next year is very disappointing and missing the point.
I would like to draw the strands together and confirm that this is not the time for another review. We need a fundamental rethink on the infrastructure, composition and role of the Food Standards Agency, what its relationships with the Departments are and who goes out and gives explanations to the public and to the industry in the event of an incident.
We need to see some movement on reducing the likelihood of future contamination by improving the traceability provisions and ensuring the integrity of each supply chain. It is very pleasing that in local butchers’ shops in my constituency and, I understand, across the country and in farm shops and at farmers’ markets, the purchasing of food has gone up incrementally. Everyone is buying local, because they know what they are buying. They know that it is beef or whatever the label says. As I said, that is very pleasing, but we need to restore public confidence in what is a multi-million-pound industry through supermarkets. We also need to look at the vexatious issue of there being a shortage of analysts and insufficient testing to put the consumer mind at rest.
I commend our two reports to the House. I have dwelt on three issues, but I would like to bring to the attention of the Minister and the shadow Minister our main concerns, which are set out in all our recommendations. Those have been supported by Professor Pat Troop’s review. She does not disagree with them one iota. We have also had the very powerful—it uses very strong language—report from the National Audit Office on “Food safety and authenticity in the processed meat supply chain”. I therefore now say to the Minister that this is a call for action, rather than for another review.
Huw Irranca-Davies
The Minister is a collective author of one of the reports, and there is no way in which he would seek, for whatever reason—under pressure from officials or his Secretary of State, or the lure of the red box or the trappings of a Minister—to resile from the positions that he laid out so very recently. He is a good and honourable man and will stand by his words.
This is a timely debate to look back at the lessons learnt to try to avoid repeating the same mistakes and to return confidence to an industry that was shaken badly. To put it bluntly, consumers were tricked, deceived and defrauded by criminals operating within or alongside the food chain. It is the same food supply chain that we trust to supply safe, nutritious, affordable food and drink to our household tables, our schools and hospitals, and our care homes and cafeterias. That supply chain betrayed us—nothing less. It would be wrong, particularly while criminal investigations are ongoing, to delve too deeply into specific companies and individuals. I think the public and consumer organisations will be rightly outraged if the criminals who infiltrated the supply chain are not brought to book. If complicity or duplicity is identified within the supply chain itself, those companies and individuals should also be brought to book.
Miss McIntosh
It would be interesting to know what the hon. Gentleman’s potential future Administration would do to check the integrity of the supply chain. I am mindful of the fact that it was a Labour Government who set up the Food Standards Agency, and one of the difficulties that I highlighted is that it reports to at least two, potentially three, Departments. I take the hon. Gentleman’s point about the retailers, but we rely hugely on the work of the FSA to test the supply chain.
Huw Irranca-Davies
I welcome the hon. Lady’s intervention and the focus that she and the Select Committee have put on not only the FSA, but the overall issue of food governance and the integrity and coherence of it. We have repeatedly made it clear from the early days when its responsibilities were split up that we had concerns about what might happen. Her Committee’s report and the report of the National Audit Office have made it clear that those concerns did not cause the crisis, but contributed to a delayed reaction, which I will come to in a moment. There is confusion at national, local and intergovernmental level. I shall not call for a review today. I shall echo her call for action and for the Government to introduce proposals to change the structure of food governance.
Tesco, the UK’s market-leading supermarket, notably and admirably fessed up to its responsibilities. It said, “We get it.” It took out full-page advertisements coinciding—coincidentally, I am sure—with the NFU conference in February, and it is seeking to re-engineer its supply chains and get closer to primary producers. It has a way to go, as has already been mentioned. I visited Tesco’s headquarters and we went through this in detail. Although it has a journey to make, I do not doubt its sincerity and ambition to do so. It is consumer-focused; there is a reason why it is doing this. Other large retailers have already developed shorter supply chains or other methods of ensuring the provenance of their food.
In the early stages, many took a different approach and frankly said, “Not us, guvnor.” They pointed to abroad or to smaller suppliers, international criminals, other third parties and, frankly, anybody but themselves. It is clear that the criminal activities of some have damaged public confidence in the whole supply chain. The Environment, Food and Rural Affairs Committee spoke for many in the country, when it reported that it could only
“conclude that British consumers have been cynically and systematically duped in pursuit of profit by elements within the food industry.”
Whether that was criminality, negligence, complicity or failure of due diligence through the whole supply chain, from major processors and supermarkets down to the very small players, all were to varying degrees at fault in causing the failures, and all have responsibility in rectifying them and restoring trust and confidence.
I welcome the letter that I received yesterday from ABP, a dominant player in the UK and European beef processing market, which tells me that it supplies more than 20 countries and has a network of over 15,000 farmers. In the letter, the company acknowledges—it cannot deny—the presence of horsemeat in some of its frozen beef products over the past year, but states:
“It was certainly not an activity sanctioned by ABP in any way at any level”.
It goes on to make it clear that the company is not subject to any ongoing investigations.
In some ways, it is unfair to pick out ABP, because it was not alone in a complex and vulnerable supply chain that put beef adulterated with horsemeat and, for good measure, with trace elements—thank goodness, only trace elements—of phenylbutazone or bute into our homes, hospitals, schools and canteens, as well as, through food distribution companies, into Royal Ascot and the royal household. When it comes to food adulteration, we are genuinely—and right royally—all in it together.
As the hon. Member for Thirsk and Malton said, those who came out well from the crisis were the butchers, local abattoirs, and those in local food networks and short supply chains, whose customers could prove where their food came from and what it was. The upside of the crisis is that it has reignited a major debate about our relationship with the food we eat, which I hope will lead to changes in how we produce and value our food.
Much of the modern supply chain is long, complex and international, with multiple handling and processing operations and multiple opportunities for adulteration. The lesson for those in wider supply chains, especially the major and dominant supermarkets, processors and distributors, is that no one can escape responsibility for the mess we got ourselves into or avoid responsibility for restoring trust in those supply chains. It is not good enough to say, “It wasn’t us, guvnor,” because as far as the consumer is concerned, it was.
I want to turn to the issues of food governance identified by the Select Committee’s two reports and highlighted in a timely report by the National Audit Office, on 10 October, entitled, “Food safety and authenticity in the processed meat supply chain”.
I tell the Minister that the Government must clearly now take responsibility: they are also in the dock and must fess up. They must answer criticisms of their role in failing to ensure effective governance of the food manufacturing sector. Although I commend the industry for working alongside UK, Irish and EU agencies to strengthen the testing and tracking of food products in response to the horsemeat crisis, I cannot yet commend the UK Government, whose response to the crisis was hampered by structural problems of their own making. The Environment, Food and Rural Affairs Committee, of which the Minister was a member, put that succinctly in its first report, stating that
“the current contamination crisis has caught the FSA and Government flat-footed and unable to respond effectively within structures designed primarily to respond to threats to human health.”
The National Audit Office’s No. 1 key finding was:
“A split since 2010 in the responsibilities for food policy in England has led to confusion among stakeholders and no obvious benefit to those implementing controls.”
That split in responsibilities is, of course, the one that was devised and implemented in 2010 not by the Minister, who is only just in post, but by his coalition Government. They are the architect of their own misfortune, but more importantly, of what others have described as the flat-footed response to the food adulteration scandal. The food sector and the consumer deserve better. It is not the fault of the FSA, but of the Government who split its responsibilities.
Miss McIntosh
I congratulate my hon. Friend on his first outing as Minister. There is some common ground between us, but there are still areas of disagreement. Nevertheless, we have had a very good debate and exchange this afternoon.
It was remiss of me not to thank all those who participated in our inquiry, including the witnesses, who gave both oral and written evidence. I will momentarily point out to my hon. Friend the Minister that his name is recorded in the formal minutes of both reports and we were delighted to have his support.
Dan Rogerson
The hon. Lady is absolutely correct. When I was responding to the hon. Member for Ogmore earlier, I thought that he was referring to the NAO report when he talked about “two reports”, rather than the two phases of the work that the Committee did.
Miss McIntosh
Anyway, a week is a long time in politics.
I will just go through some of the points that have been made. Regarding traceability and the supply chain, I think that the Minister has taken the point, and we need to process that.
On insufficient testing, we concluded—although none of us spelled it out, and it was remiss of me not to do so—that the FSA at the moment does not force the industry retailers to carry out testing. It would be good if we could agree that the Department should look into that and consider giving the FSA a steer on it. Perhaps the Elliott review will do that, and say that large retailers must carry out regular DNA testing of meat ingredients for frozen and processed meat products, with the cost being borne by themselves—the industry—and not by the consumers. That point has been echoed by hon. Members throughout the debate and I think that consumers will respond to it. We insisted, in our conclusions, that the results of the tests ordered by the FSA should be submitted to it and that a summary should be published on the retailer’s website.
There must be change in respect of issuing horse passports. There is a worrying increase in numbers of horses in my county, let alone between Northern Ireland and southern Ireland.
We need to deal with insufficient testing by retailers, including supermarkets, especially those who do not do it at all. I will be pleased if the Elliott review addresses the issue of analysts. I welcome what the Minister said about strengthening intelligence sharing.
Dan Rogerson
I should like to mention a couple of points that I did not talk about directly in my remarks. The issue of horse passports will be settled at European level, but the Government are keen to engage in that process and see what can be done, as long as it is proportionate, to ensure that we get it right.
The NAO considered capacity in terms of analysts, although it did not say that there was a lack of capacity. The FSA holds that under review, so we will keep a close eye on that.
Miss McIntosh
I am most grateful to the Minister. Although it would be hugely expensive to deal with, there is concern about abattoirs slaughtering both cattle and horses. We need to be aware of that.
There is a real issue about the governance and structural problems. I poked fun at the shadow Minister, the hon. Member for Ogmore, about how his Government set the structure up. However, it is possible that we have been seen to compound that situation. We will be able to draw a line under this matter only when we can say, hand on heart, where contamination, adulteration and lack of authenticity entered into the food chain. The sooner we can see prosecutions of the perpetrators from the big retailers, the more it will boost consumer confidence.
I endorse comments made about the processed foods that have been a cause of concern. At the heart of our report was concern about processed foods and frozen foods.
I am delighted that the Minister, and the shadow Minister, gave us a hearing today.
Question put and agreed to.
Oral Answers to Questions
Baroness McIntosh of Pickering Excerpts(10 years, 7 months ago)
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Dan Rogerson
I entirely understand what the hon. Lady has said about the cost of living. We are all aware of the problem. I represent an area in which incomes are very low, and in which water bills are a significant issue. It is clear from our discussions with Ofwat—my right hon. Friend the Secretary of State has engaged in some recently—that it understands the importance of the issue, and believes that the benefits to water companies of, for example, low borrowing rates should be passed on to customers. I am pleased that companies are considering the introduction of social tariffs, and I shall continue to keep the matter under review.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I congratulate all who have been elevated to both Front Benches. We look forward to the return, in the very near future, of those of them who have served on the Select Committee—[Laughter]—in their ministerial capacity.
Will my hon. Friend use his good offices to press Ofwat to ensure that the 2014 price review enables the necessary investment to be made in the infrastructure and in innovation? May I also tease out of him the date on which the Water Bill will be given its Second Reading, and can be scrutinised by Parliament?
Dan Rogerson
I thought for a moment that my hon. Friend, who chairs the Select Committee, was petitioning the Prime Minister to summon us back to it, and that our tenure on the Front Benches might be very brief.
The timing of the Bill is, of course, a matter for those who manage our business. I look forward to debating the issues with colleagues in the House and, subsequently, in Committee.
What my hon. Friend has said about investment in the sector is crucial. We have already managed, through our regime, to deliver huge investment in water infrastructure. We now want to establish a regime which, while being fair to customers, also attracts further investment, so that we can have an industry that is fit for the future.
Miss Anne McIntosh (Thirsk and Malton) (Con)
5. What recent discussions he has had with Natural England on bats in churches; and if he will make a statement.
The Second Church Estates Commissioner (Sir Tony Baldry)
I understand from Natural England that the licence application for St Hilda’s in my hon. Friend’s constituency was submitted last Monday and a decision is expected this week. Following the granting of a licence, the work would start on site next week, blocking the access points of bats. The application is for the exclusion of bats from the interior of the church only, so this solution is intended to allow the interior of St Hilda’s church to be completely free from bats, while allowing their continued use of the exterior of the building.
Miss McIntosh
It is a source of some cynicism that the licence was issued or applied for only after my question regarding bats having the run of the church, St Hilda’s at Ellerburn, appeared on the Order Paper. As £30,000 of taxpayers’ money has been spent conducting a survey which has as yet led to no result, will my hon. Friend exert all his influence on the Department for Environment, Food and Rural Affairs to issue the licence so that the congregation can meet and use the interior of the church free from intrusion by bats?
Sir Tony Baldry
My hon. Friend makes a good point. It is worth recording that this one single parish church has had to spend tens of thousands of pounds so far just to get to this position. We have to improve the whole situation in relation to bats in churches. It is not a joking matter. Churches are not field barns; they are places of worship, and it cannot be right that bats can be excluded from reopened railway tunnels and the living spaces of domestic homes, but it is so difficult for active community buildings such as churches to resolve such an issue.
Oral Answers to Questions
Baroness McIntosh of Pickering Excerpts(10 years, 10 months ago)
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Mr Paterson
The hon. Gentleman knows that I am a strong supporter of being able to make more decisions on these matters in this House. It might reassure him to know that this reform means that a lot more decisions will be made locally, so there will be, in effect, an English CAP and each of the regions, which were very keen to be able to make decisions, will have power to decide on all four regulations.
Miss Anne McIntosh (Thirsk and Malton) (Con)
The key will be how the reform is implemented in this country. Will the Secretary of State assure the House that the active farmer will remain the main beneficiary, particularly those in the uplands, tenant farmers and commoners whose animals graze on common land?
Mr Paterson
Emphatically, yes: I am very happy to confirm to the Chair of the Environment, Food and Rural Affairs Committee that, as we work out the detail of the implementation of the reform in England, our drive will be to ensure that the agricultural sector gains from it. As I made clear in my comments on pillar two, we want to direct this towards rural areas in a way that benefits the rural environment and rural farmers.
Sir Tony Baldry
My concern with the hon. Lady’s approach and the Bat Conservation Trust is that they seem to think that this is an issue that can somehow just be managed. I have to keep on saying to her that this is not an issue that can be managed. Large numbers of churches are being made unusable by large numbers of bats roosting in them. Churches are not field barns; they are places of worship. Following my debate in Westminster Hall, I had a number of letters from clergy up and down the country saying how distressing it was for them, before they could celebrate communion on Sunday, to have to clear bat faeces and bat urine off the altar and the communion table. That is not acceptable.
Miss Anne McIntosh (Thirsk and Malton) (Con)
May I take this opportunity to thank my hon. Friend the Second Church Estates Commissioner and the Under-Secretary for helping St Hilda’s, Ellerburn? It is a matter of urgency that the congregation can reclaim their church from the bats.
Sir Tony Baldry
Absolutely. My hon. Friend makes an important point. [Laughter.] This is not a joking matter. This is serious and people have to understand that. I am grateful for the attention paid to this issue by the Under-Secretary. We are making real progress, but we need to ensure that places such as St Hilda’s, Ellerburn can continue to be places of worship and are not closed as a consequence of bat faeces and bat urine.
Common Agricultural Policy
Baroness McIntosh of Pickering Excerpts(10 years, 10 months ago)
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Mr Heath
The hon. Gentleman is right that it is a long, hard business to reform the CAP. The sadness is that occasionally within negotiations some member states want to turn the clock back, and even to forgo the reforms that have already been accomplished, so I will not pretend anything other than that this is a long, hard process and the advantages and the movement forward that we gain are not always as far and as quick as we would wish them to be.
We want to see an efficient and responsive agricultural sector not just across the EU, but globally, and the CAP should be central to helping us achieve that. It is therefore essential that the CAP continues to reform and to reduce reliance on damaging direct subsidies that do not offer good value for money or deliver the public goods we want. The UK has worked extremely hard to engage with like-minded member states throughout the ongoing negotiations to ensure that the CAP continues on the path of reform, but we know that other member states and elements in the European Parliament are determined to turn the clock back and reverse some of the hard-won reforms of MacSharry and Fischler. We simply cannot allow that to happen.
I will touch on a few of the priority areas that will be the focus of our negotiating efforts over the next week. First, market intervention remains a prime concern. As we all know, the CAP has made great progress over the years in reducing reliance on expensive and trade-distorting measures that interfere with the market and helped to create the butter mountains and wine lakes of the past. I was therefore very disappointed when in March the European Parliament voted through amendments that would move EU agriculture away from market orientation. Those proposals would increase budget pressures for old-style market support. That is not an acceptable use of taxpayers’ money. It hits consumers twice; they pay for their food once through their taxes and again at the tills.
The EU sugar regime, for example, constricts supply in the market and adds costs for British food and drink producers and ultimately for the consumer. The combined effect of EU beet quotas and high tariffs on cane imports means that the current EU regime has driven up the wholesale price of sugar by 35% and added 1% to the food bills of hard-pressed families. Members states had previously agreed to end the restrictive sugar beet production quotas by 2015, but there has been incredible pressure to unpick that agreement. In our compromise in March, we agreed a partial extension of sugar beet quotas to 2017. I am disappointed that Members of the European Parliament voted to extend the quotas further to 2020. That is unacceptable. The situation is compounded by the lack of a level playing field for sugar cane imports, something we are working to change. We need to remain fully committed to moving the CAP in the right direction towards greater market orientation. Nothing must be left to chance. Butter mountains and wine lakes must remain a thing of the past.
I know that many hon. Members have an interest in the proposed greening of the CAP. The Government believe that the CAP should reward farmers for the public goods they deliver, such as environmental benefits and protecting and enhancing wildlife. Pillar two of the CAP is the best place to fund that, which is why at the European Council in February the Prime Minister secured the additional flexibility to be able to transfer up to 15% of our direct payments budget to fund our rural development and environmental programmes.
Miss Anne McIntosh (Thirsk and Malton) (Con)
My hon. Friend will be aware of the concerns of the National Farmers Union and a whole alliance of farming organisations in that regard, and not just in north Yorkshire. Bearing in mind that our farmers already commit to many greening policies through stewardship schemes, 15%, or even 11%, would be unacceptably high and would make our farmers uncompetitive.
Miss McIntosh
The Minister said that only the devolved Administrations will be allowed to tailor their schemes to the needs of their own farmers, but that would be inherently unfair on the English farmer. I hope that he will agree that this is a wonderful opportunity to revisit some of the schemes, because some of the active upland farmers, who are often tenants, have been disadvantaged by the way in which the current schemes operate.
Mr Heath
I hope that I have not misled the House in any way on this. We will bring forward our own proposals that will apply to England. I was simply making the point that the devolved Administrations would not have to conform to an English model. They will be able to devise their own schemes that will work best for them.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I congratulate my hon. Friend the Minister on giving the House the opportunity to discuss the Committee’s two previous reports on this matter, and it is a pleasure to follow the hon. Member for Ogmore (Huw Irranca-Davies). I congratulate the Minister on the position he has reached in the negotiations, and thank my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice) for his sterling work in commencing proceedings. I will stick to English, Mr Speaker, tempting as it is to break into French, Danish or Spanish, as I think your strictures on timing would preclude that. I spent a number of months working on the first ever co-decision procedure on road transport as a Member of the European Parliament, and although I am delighted that the democratic arm of the European Parliament is participating in the negotiations, that obviously adds an extra dimension to those negotiations.
I thank hon. colleagues from all sides for the work they have done with me in looking to the next round of common agricultural policy reforms after 2013, and I will dwell for a moment on the background to our current position. I represent a deeply rural constituency—having moved from the Vale of York to Thirsk, Malton and Filey—and a greater upland area than I represented previously, as well as lowland areas. The backdrop of the wettest autumn, with substantial flooding in my constituency and many other parts of the UK, followed by the coldest spring has had a huge impact on the harvest. We are expecting a smaller harvest and I understand that less milk was produced. Most worrying is that the harvest is expected to be down by potentially 30%, and as I understand it, for the first time in 11 years the United Kingdom will be a net importer of wheat.
Against that backdrop of depressed farming incomes, and the implications for food security, I would like to press the Minister on certain issues, particularly the greening of the common agricultural policy. As a number of hon. Members have said, UK farmers already green to a much greater extent and at some cost to themselves. In particular, I draw the attention of the Minister and the House to the position of tenant farmers across this country—not just those in the uplands of northern England—who seem to have a unique position in the European Union. The Committee’s report “Farming in the uplands” stated that the Committee is conscious that the position of tenant farmers is unique to UK agriculture, and that the impact of any reform on that group should not be overlooked by either the Commission or DEFRA. We concluded that tenants—and indeed commoners, many of whom I represent—might be disadvantaged in accessing agri-environment schemes.
The concerns of tenant farmers about some other reform proposals are wider and reflected by the Tenant Farmers Association. Those concerns include that farmers might be disadvantaged by the proposed entitlement scheme, that only those who made a valid claim on at least one hectare of land in 2011 under the existing single payment scheme will be eligible for direct payments under the new regime, and that some landlords may use that to capitalise inappropriately on changes brought under existing tenancies in order to bank land ahead of any new regime. On the other side, the CLA has said that it is not aware of such things, but I hope the Minister will keep the matter under review.
Tenant farmers have also raised concerns about the active farmer proposals on which the Minister might like to update the House. Wildlife trusts, and others, have said that the proposals are potentially unworkable and catastrophic for the management of the land. The costs of administering some of the present schemes for tenant farmers are prohibitively high, with lawyers being retained and up to 30% of the agreement used just to administer the scheme. This debate is therefore a useful opportunity to review the position of tenant farmers under the CAP.
In response to our debate on interventions and a potential transfer from pillar one to pillar two, will the Minister state whether he proposes that the measure will be subject under pillar two to co-financing? I know it is the view of the NFU and others that it should be, but the question that the House must address, and the Minister answer, is whether the Treasury will be prepared to co-finance. We have a comprehensive spending review next week. Will there be money if there is a 13% reduction in the CAP budget?
That is another argument in favour of the status quo. I am slightly arguing against myself, because Filey and other parts of the Thirsk and Malton constituency receive rural development funds through the LEADER programme, which is all to the good—obviously, I am here to help Filey to receive more in that regard. I hope that the Minister will address that. He touched on the 13% reduction in the CAP, but we have let to learn what the reduction in DEFRA’s budget will be.
I have discussed the position of tenants, the weather conditions and the drop in farm incomes, which in turn has food security implications, which I hope the Minister will address, as well as updating us on active farming.
I shall say a few words about ensuring that there is no discrimination against the UK farmer. I understand that Scotland currently receives 16% of the UK pot of money, yet produces less than 12% of the UK’s agricultural output. We need to be aware of that and restore the balance between Scotland and England, particularly for the border regions of Northumbria, Yorkshire and County Durham, which are affected by the imbalance. Decoupled direct support plays a pivotal role, but we should not put further pressure on farmers in England, and there should be no further modulation. Any increase in voluntary modulation from 9% to 15% would be resisted by farmers. Many of the farming organisations have lobbied vigorously in that regard.
The Minister and his predecessor, my right hon. Friend the Member for South East Cambridgeshire, argued that there should be no distortions and no negative impact on competitiveness in any switch from direct payments to rural development. I therefore hope that the Minister can conclude that there will be no extra burdens on English farmers from the negotiations.
The proof of the success of CAP reform for the UK farmer will be in the way it is implemented in England. I am conscious of the roles that DEFRA and the Minister play—they both negotiate on behalf of the UK but have specific roles in relation to English farmers. I make a plea from the heart on behalf of those I represent and the wider farming community that our farmers are rewarded for their toil. The House needs to ensure that it sends the message that we intend to continue to be self-sufficient in food and remain a major exporter. A drift towards being dependent on imports is a drift in the wrong direction.
All power to the Minister’s elbow. We will continue to monitor developments extremely closely. The Committee wants to establish a greener, simpler CAP, with emphasis on the simpler, and a CAP that is competitive and provides for farmers and rural communities.
Roger Williams (Brecon and Radnorshire) (LD)
I draw the attention of Members to my entry in the Register of Members’ Financial Interests.
Miss McIntosh
On a point of order, Mr Deputy Speaker. I omitted to refer to my entry in the Register of Members’ Financial Interests.
Sir James Paice
On a point of order, Mr Deputy Speaker. May I too apologise for forgetting to refer to my entry in the Register of Members’ Financial Interests?
Common Fisheries Policy
Baroness McIntosh of Pickering Excerpts(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Richard Benyon
I thank the hon. Lady for her congratulations. I would also like to pass on my congratulations, and those of everyone in the House, to the hon. Member for Luton South (Gavin Shuker) on his happy event.
On exemptions to the discard ban, we believe that the maximum 5% de minimis contains so many caveats that it will be used only in exceptional circumstances: where the discard plans are part of a multi-annual plan; where they are co-decided; and where there is scientific evidence to support them.
In certain fisheries, changes in behaviour can be driven only through a land-all policy, and we were absolutely determined about that: it is the right approach and one that has proved to be a driver for change in other areas. It should not take away, however, from the fact that the industry has made huge strides in reducing discards. Around the coast in all parts of the United Kingdom, there are wonderful stories of leadership from the industry. I want to build on that.
The hon. Lady asked about a maximum sustainable yield. We have committed to imposing one by 2015, where possible, and by 2020 in any event, and I will be very open with the House about our progress on that, but she will understand that it will have to be on an almost annual basis, as we announce our fishing opportunities each year. There is now a firm driver and legally binding commitment to achieve such a yield.
The hon. Lady also talked about marine conservation, which is an absolute priority for us. We have had conversations with France, through the Joint Nature Conservation Committee, because we do not want to look at this issue through the myopia of an English or UK solution; our approach has to be ecologically coherent, which means talking to countries such as France, Ireland and others. A provision in the text allows us to ensure that any conservation measures we introduce beyond the six-nautical-mile limit will have to be obeyed by fishermen from all countries in the EU. That is a big win.
The hon. Lady talked about the needs of the inshore fisheries sector. She will be aware that we have taken steps to improve the fishing opportunity for this sector, and we will continue to do so, although I am wary about this question of 96% and 4%, because the inshore fleet would not be able to access many of the 96% of quotas held by the larger fishing vessels. She is right that there is a disparity, however, and we are trying to address it. I can also provide confirmation about our plans to publish a register of who owns quota and has access to fishing opportunities in this country—I must correct that: they do not own the quota; the country owns the quota. This is a national resource. However, the register of who holds quota will be published by the end of the year.
I entirely agree about the importance of bearing down on illegal, unreported and unregistered fishing. It is vital that we use every tool in the box to stop people fishing illegally. They are stealing fish from legitimate, law-abiding fishermen. Technology is working in our favour, however: through vessel monitoring systems, e-logbooks and a range of other enforcement measures, we can protect honest fishermen and catch and prosecute those who break the law.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I congratulate my hon. Friend on all he has achieved and on the news that the register of quota will be published by the end of the year, which will help under-10s and others in coastal areas. Alarm bells started ringing when he said that legal effect would be given through either European law or national measures. Can he assure the House that where a regional agreement is reached, the Commission will no longer intervene?
Richard Benyon
My hon. Friend raises a very good point about regionalisation—and one that detained us a long time as we tried to find a solution. Under the Commission’s original text, which could have had a centralising effect, if the countries around a sea basin—the North sea, for example—failed to agree, the power to decide on the technical measures would have been taken by the Commission. We thought that that was wrong, so we developed—under the leadership of my Department, I have to say—an idea that found its way into the text. Under this provision, a measure becomes law where there is agreement among all the countries fishing a particular sea basin, and where they cannot agree, the matter is determined by co-decision. That is a much better way forward. Throughout these discussions, I have always said, “I would never start from here”. We are trying to improve something that is very, very wrong. We are going to make it halfway right, however, and there is still much more work to do.