Water Bill
Baroness Northover Excerpts(10 years, 1 month ago)
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Baroness Northover
Baroness Northover (LD)
My Lords, in moving government Amendment 88A, I wish to speak also to the rest of the government amendments in the group.
This group of amendments includes the government response to the Delegated Powers Committee on the flood insurance clauses. There are also a few minor changes, including some further transitional measures, to improve the Bill.
The first set of these amendments—Amendment 88D and Amendments 90C to 90G—is in response to the Delegated Powers Committee’s recommendations on the flood insurance measures. The Government take these points very seriously and have tabled amendments to take them into account. This includes using the affirmative resolution procedure for all regulations and placing some of the definitions in the Bill. Following the committee’s report on the amendments, we nevertheless take the view that Clauses 58 and 61 should remain affirmative on the first exercise only. The amendments also provide for some of the definitions to be amended by regulations.
We agree with the committee that the definitions are important and we take its point about defining them in the Bill. However, we remain of the view that the definitions of “flood”, “household premises” and “relevant insurer” are best set out in regulations, which are more flexible, should we need to change them over the lifetime of the measures. We hope that, by defining these terms in regulations that will be subject to the affirmative procedure, we have reassured noble Lords of our intention that Parliament is able to scrutinise these definitions fully in due course.
We thank the committee for recommending that the powers to share information on council tax data are subject to the affirmative procedure. However, to meet the commitment to establish Flood Re in 2015, we need to release the information immediately after Royal Assent, and have therefore decided to address the committee’s concerns by placing the powers in the Bill to ensure that Parliament can scrutinise them now. We hope that noble Lords understand the rationale for this, due to the challenging timetable to deliver Flood Re.
Although Amendments 90CA to 90CD provide for rather than mandate the release of council tax data in the Bill, I should make it clear that the Government are committed to doing so, and to do so swiftly following Royal Assent.
Insurers will be required to have in place appropriate but proportionate security measures for the protection of the data disclosed pursuant to this clause. As much of the data to be disclosed at this stage are already in the public domain, it has been agreed that the controls are sufficiently robust for additional criminal sanctions not to be required. However, the amendment also allows for the application of a criminal sanction at a later stage, should the Government need to regulate for the release of additional information. It is right that we have the powers to protect the release of further information in future, but the criminal sanction is not automatic and we will consider whether one is necessary, following consultation.
On Amendment 90A on Flood Re’s reserves, we have previously discussed amendments to the rules surrounding the scheme’s reserves, and will come on to discuss reserves later in this debate. Having consulted further, and to ensure that this power in Clause 53 cannot compromise the sound operation of Flood Re and its orderly management, we are tabling this small change to make clear that the scheme administrator’s consent is sought before making regulations in this area. This consent means that the scheme administrator is able to object to any prudentially unsound proposals, as well as to make representations as to the retention of some or all of the reserve. Consequently, there is no longer a need for a requirement to consult the Prudential Regulation Authority as well. I reassure noble Lords that both the Prudential Regulation Authority and the Financial Conduct Authority will continue to be closely consulted on this and all other regulations made in relation to the Flood Re scheme.
Amendment 88B covers the eligibility threshold and is intended to ensure that the legislation properly reflects the operation of the Flood Re scheme, and the way the insurance industry operates.
Amendment 90T addresses the risk that secondary legislation made at the end of the life of Flood Re could be seen as hybrid. We have every intention of carrying out a full consultation before making that secondary legislation to ensure that any private interests are properly considered.
Amendment 90L is intended to ensure that employment contracts within the scheme are transferrable, where they otherwise might not be. I reassure noble Lords that this amendment is not intended to enable the transfer of reserves required to be retained for prudential regulatory purposes.
In addition, the Government have also tabled a small set of minor and technical amendments to the Bill. We have also corrected an error in Schedule 3 to the Flood and Water Management Act 2010 to ensure that unused bond funds, called in by a SuDS approving body, can be returned to the right person.
Finally, Amendments 91B to 91D provide the Secretary of State with powers to introduce provisions to allow Ofwat to revoke existing water supply licences as part of the transition to the new water supply licensing regime. The power provides flexibility for Ofwat to allow existing licences to continue until new licences are available or until they are revoked on a specified day.
Amendment 91B enables the licence modification powers to work in such circumstances. The order can provide for more detailed arrangements to be set out in a scheme produced by Ofwat, subject to the requirements of the Secretary of State’s order. The order also provides for compensation to be payable to the holders of revoked licences. The measure of compensation may depend on various factors, including, for example, whether the licence holder qualifies to hold a new licence in the reformed water supply market.
The amendments also make transitional provisions for existing sewerage arrangements with incumbents that become licensable arrangements under the new sewerage licence. Compensation is payable if it is no longer possible for some sewerage arrangements to continue because a licence is required. Again, the qualification of the operator for a licence would be a relevant factor. Amendment 91C corrects a small error in paragraph 6 of the schedule. I hope that noble Lords will be happy to support these amendments.
Earl Cathcart (Con)
My Lords, this is the first time that I have spoken on this Bill on Report, so I should declare that I live in a band H property on my farm in Norfolk, I have a bore hole and I have spent about 30 years working and underwriting in the insurance industry. I am happy with these government amendments, but will the Minister clarify government Amendment 90L to Clause 70? I am afraid that I did not quite catch the Minister’s assurance about capital, so I am asking her to say it again, please. The current wording is far from ideal, in that it could potentially raise the possibility that Ministers could access Flood Re’s funds when the scheme is wound up, irrespective of their being needed for, for example, meeting regulatory run-off requirements.
I understand that Defra has said that an override to access Flood Re reserves is not the intention of the amendment to Clause 70. However, the concern is that in 20 or 25 years it could easily be interpreted as an opportunity to grab funds from Flood Re. Will the Minister make clear that the amendment is not intended to apply to Flood Re’s reserves or capital? That would be most useful.
The Earl of Lytton (CB)
My Lords, this is the first time that I have spoken at this stage of the Bill and I, too, must declare that I live in a band H property. However, I also have a professional interest in parts of the Bill by virtue of being a chartered surveyor. I certainly welcome the proposals for the affirmative resolution procedures outlined by the noble Baroness and agree that the disclosure of council tax information is necessary. However, I have one query, which relates to Amendment 90CD. Could the noble Baroness confirm that the normal process of disclosure will generally relate to the identity of the property and its council tax band rather than the identity of the chargepayer, the latter being something that is normally held by the billing authority? If I have missed some point about the disclosure, and where the identity of the individual can be discovered, perhaps she would put me out of my misery.
Baroness Northover
I hope I can put everybody out of their misery, which probably reflects the fact that I rattled through this in six minutes. First, I will take up the points made by my noble friend Lord Cathcart. We will come to a further discussion of reserves later, in which I am sure he will be interested. I make it clear that Amendment 90L is intended to ensure that employment contracts within the scheme are transferable, where otherwise they might not be. I reassure him that the amendment that he mentioned is not intended to enable the transfer of reserves that are required to be retained for prudential regulatory purposes. I hope that reassures the noble Earl on that particular point. I probably just went too fast on that one.
I am very grateful to the noble Lord, Lord Whitty, for his general support for these amendments. In response to the points he raised, I recognise fully, as a member of the Government, that the best thing to do when the Delegated Powers Committee comes forward with recommendations is to agree. However, he will also be aware that there are times when the affirmative procedure is used in the first instance and not thereafter because it is not anticipated that there will be significant changes later. I am sure that the noble Lord, Lord Whitty, will be very familiar with that pattern.
The noble Lord asked about hybridity. I will just go back to my original comments on that and then come to what I have been handed by way of inspiration. Amendment 90T addresses the risks that secondary legislation made at the end of the life of Flood Re could be seen as hybrid. The noble Lord thought that we had indicated in some way that we were just sweeping that aside—at least, I understood him to indicate that. I repeat that at the end of Flood Re we have every intention of carrying out a full consultation before making secondary legislation to ensure that any private interests are properly considered. I hope that the noble Lord is reassured on that point.
Perhaps I may write to the noble Earl, Lord Lytton, with further details on the point that he raised. I am sure that we can reassure him.
I am just checking to see whether I have covered everything. I trust that I have and am sure that noble Lords will make it very clear if I have not. I hope that, on that basis, they will accept the government amendments that I laid out at such speed.
Baroness Northover
“(3) The Secretary of State may by regulations make provision as to levels of reinsurance premiums payable by relevant insurers under the FR Scheme, and may make different provision for different purposes.”
Baroness Northover
Baroness Northover
“( ) Regulations under subsection (1) may require the FR Scheme administrator to provide the following information to relevant insurers who have issued insurance policies that are reinsured under the FR Scheme, so that those insurers may supply the information to holders of those policies—
(a) information about how to find out about the levels of flood risk to which an area in which household premises are situated is subject and how any flood risk may be managed;(b) information about the FR Scheme, including information about the effect of section 51(2)(b) (transition to risk-reflective pricing of flood insurance for household premises).”
Baroness Northover
My Lords, in Committee, the noble Lord, Lord Krebs, tabled an amendment which sought to require the Flood Re scheme administrator to increase awareness among the beneficiaries of Flood Re about their local flood risk. We are very grateful to the noble Lord, Lord Krebs, for highlighting this important matter. In Committee, we explained that we agreed with the intention behind the noble Lord’s amendment and agreed to consider this further and return to it on Report. We think it is important that policyholders whose buildings, contents or combined insurance policies are ceded to Flood Re know about their flood risk so they can take simple measures such as signing up to free flood warnings as well as investigating longer-term options for managing their flood risk.
To plan for the future, these households also need to understand the likely impact of the transitional nature of the Flood Re scheme, which is subsidising their premiums. I am therefore today bringing forward Amendment 90B, which would allow the Secretary of State to require Flood Re, through regulations, to provide information for relevant insurers to pass on to their policyholders who will benefit from Flood Re. The information would cover the Flood Re scheme, flood risk and actions that householders can take to reduce the risk and impact of flooding. Our expectation is that standardised information will be sent to the customer by the relevant insurer that is ceding the policy to Flood Re. This makes sense because it maintains the relationship between insurers and their customers. Flood Re will need to work with the flood risk management authorities in the UK to ensure the information about flood risk is accurate and appropriate.
As a consequence of this amendment we are also making three other minor amendments, Amendments 90H, 90J and 90K, which affect Clause 69 and give the Secretary of State powers to make regulations defining “flood” and “flood risk” in the context of Flood Re and not just in the context of the flood insurance obligation, as was the case previously. I beg to move.
Lord Grantchester
My Lords, I rise to speak to Amendment 90CE, which is grouped with these amendments. I was slightly confused as to whether the Government were putting their name to our amendment, because I noticed that we have a little “g” in front of our Amendment 90CE. But I will take that as a misprint and that I must still convince the Government of the merit of the case.
The amendment would put in place regulations that would add clarity to set the date of commencement for Flood Re. It would also create a database of properties at risk of flooding and indicate whether the property is covered by the flood scheme. The amendment will insist that the database must be set up before Flood Re starts, as that would be logically helpful.
I begin by welcoming the Government’s helpful concession, particularly in Amendment 90B, which sets out regulations to allow insurers to provide information to policyholders in the scheme. We are glad that the Government have listened and acted on our concerns expressed in Committee with the introduction of their amendment, but we still feel that it does not go far enough. Delivering information to those already in the scheme—that is, policyholders—is helpful as far as it goes. Although it is important that insurance companies are well equipped and able to deliver information to policyholders in relation to the flood scheme and how they can protect their properties adequately, we believe that the database proposed by our amendment would be a lot more useful, primarily for potential homeowners but also for mortgage lenders. It has become much more difficult of late for people to get mortgages and it is even more difficult to get a mortgage if the mortgage lender is at all concerned about damage from flooding. As such, information should be provided to homebuyers at the start of their journey of finding a home rather than further along the process, after they have agreed with the vendor on a purchase or when they are at the stage of consulting mortgage companies after engaging solicitors. The database must be accessible to everyone and allow them to check whether a property for sale or rent is covered by the scheme and highlight its risk to flooding. This would prevent the all too recognisable reality experienced by people in the recent flooding whereby home owners were blindsided by their properties flooding and then found themselves caught when their insurance companies reassessed their policy terms. The database would also avoid the scenario whereby a home owner may believe that they are covered by Flood Re when in reality they are not.
It is a very straightforward amendment, which brings the whole subject of the database and properties into the public domain. It would add transparency and clarity to the scheme. At present, with the complicated nature of the scheme, especially in terms of eligibility, we should do all that we can to assist those potentially affected by the scheme by making them all the more aware of where they stand with regard to flood insurance on the property that they are inquiring about, not just once they become policyholders. We have already heard today of the complexities behind the scheme as regards leaseholders, as well as the exclusions for small businesses and other aspects.
Baroness Northover
My Lords, I thank the noble Lord, Lord Grantchester, for tabling Amendment 90CE, which proposes a publicly searchable database of flood risk. I am desolate that I must disappoint him as we cannot accept the amendment even though it does have a little “g” in front of it. Nevertheless, we agree with the intention behind the amendment that households that are ceded to Flood Re should be made aware of their flood risk. Knowing about flood risk is essential to helping affected households to manage their flood risk effectively, both in the short and long term. That is why we have recently published a note entitled Homebuyers and Their Flood Risk, in which we have explained the information currently available to prospective homebuyers.
It is a well established principle of the conveyancing process that the onus is on the buyer of a property to conduct their own searches and investigations into the potential risks to that property. In England, the Environment Agency provides a freely accessible resource of flood risk information for any area. Anyone may use this service to identify whether their post code is at risk of flooding from rivers, the sea or surface water. Similar resources are available to households in other parts of the UK. Should a household wish to identify flood risks specific to their property, commissioning a flood risk survey from a suitably experienced professional would identify the ways in which water can enter a property and what measures could be taken to prevent or limit possible damage. We believe that requiring Flood Re to help insurers guide their customers to information about flood risk and how to manage it will add significantly to public awareness of flood risk. That is why I moved Amendment 90B and I thank the noble Lord, Lord Grantchester, for his welcome of it. I hope therefore that noble Lords are willing to accept the government amendments in this group and that the noble Lord will be content not to move his amendment.
Baroness Northover
Baroness Northover
“(1) The Commissioners for Her Majesty’s Revenue and Customs may disclose relevant HMRC council tax information to any person who requires that information for either of the following descriptions of purposes—
(a) purposes connected with such scheme as may be established and designated in accordance with section 51 (in any case arising before any scheme is so designated);(b) purposes connected with the FR Scheme (in any case arising after the designation of a scheme in accordance with section 51).(1A) A person to whom information is disclosed under subsection (1)(a) or (b)—
(a) may use the information only for the purposes mentioned in subsection (1)(a) or (b), as the case may be;(b) may not further disclose the information except with the consent of the Commissioners.”
Baroness Northover
Lord Whitty
My Lords, Amendment 90DA is relatively straightforward. Clause 63 provides for reviews and appeals against premises being deemed not eligible to be entered in the register of those covered by Flood Re. As it is written, Clause 63 indicates that when the register is drawn up there is a list of which households are either in or out, according to the risk assessment at the time.
This is a 25-year scheme and things will change over 25 years. My amendment is designed to add to the provisions of Clause 63 and appeal against the removal from that list at a later stage. It is really a tidying-up. However, removal from the list could arise for a number of different reasons. It could be because the insurance sector had decided that the risk had changed; but that could be because the Committee on Climate Change—the noble Lord, Lord Krebs, is no longer in his place—had advised of a change and that there was less risk in that particular area. It could be that the Environment Agency’s map had changed. It could be that the aggregated data from the insurance companies showed that that type of property was at less of a risk than it was assumed to be at the beginning of the scheme, bearing in mind that we are potentially 25 years on. It could be that resilience had been provided on some other basis—for instance, a flood defence scheme may have been built down the road—or that the catchment management in that area had significantly improved and diverted the flood away from that property to somewhere else. In an urban area, it could be that there had been major investment in the drainage system, which meant that the property was significantly less susceptible to surface flooding. There are all sorts of reasons why, objectively, the flood risk might diminish. Regrettably, in the light of the macro information from the Committee on Climate Change, it is more likely that a property will be drawn into the list than drawn out of it; but there will be such exclusions.
There could also be exclusions that are more esoteric to the insurance industry, in the sense that if insurance companies were insisting, as a condition of continued insurance, that that resilience measure should be introduced at the expense of the householder, one way or another, and the householders were not prepared to provide for that level of resilience expenditure, then either the offer, or renewal, of insurance would be taken away or the excess would be put at a level which the premium payer was not prepared to pay.
There are all sorts of reasons why a property might end up being removed from that list. If that is the case, there has to be the equivalent appeal against that in a situation where one is excluded from the list from the word go. As I read it, Clause 63 provides only for exclusion from the register in the first place; it does not provide for removal from the register. My amendment seeks to correct that gap. I beg to move.
Baroness Northover
My Lords, I thank the noble Lord, Lord Whitty, for this amendment. As we have previously discussed, a rigorous regulatory and dispute resolution regime for the insurance industry already exists, to ensure that insurers treat their customers fairly. Flood Re will not change the direct relationship between the insurer and the householder. Where households do not feel that a complaint has been treated fairly, they can contact the Financial Ombudsman Service, which offers a free dispute resolution service for people who wish to complain about how their insurance company has treated them. While the Financial Ombudsman Service is equipped to deal with individual complaints, the Financial Conduct Authority has a statutory objective to protect the wider interests of consumers and ensure that firms are giving a fair deal to their customers.
We need to remember that Flood Re is a voluntary scheme: insurers are not obliged to use it. We therefore maintain that there is no need for a specific appeal mechanism for Flood Re per se. Flood Re is not based on a register of properties; it is a voluntary scheme and so there are no grounds for an appeal mechanism.
However, the noble Lord is emphasising concern about who might be excluded from Flood Re over time. As was said in the other place, the memorandum of understanding agreed between the Association of British Insurers and the Government last year talked about genuinely uninsurable properties. As my honourable friend the Parliamentary Under-Secretary of State for Water, Forestry, Rural Affairs and Resource Management said, there will be no such thing as a genuinely uninsurable property at the start of Flood Re. However, there might be a case that over time, if householders choose to take no action to tackle their flood risk, Flood Re might seek to find a mechanism whereby they no longer benefit from the public subsidy. We have reflected further on that issue, working closely with the ABI. I can reassure noble Lords that our focus is on supporting households to become more resilient, not on excluding them from the Flood Re scheme.
As householders with policies ceded to Flood Re will be benefiting from subsidised insurance, important signals to them about flood risk—for example, the price of insurance and the levels of excess charged—will be lost. We have therefore agreed with the industry that Flood Re will provide information to insurers to pass to householders about flood risk, Flood Re itself and how to reduce the likelihood and impact of flooding. An amendment to that effect has been tabled.
We are continuing to explore with industry how people could be incentivised, perhaps, for example, by Flood Re paying for a survey after a property has flooded a number of times. My noble friend mentioned that. This would depend on Flood Re having sufficient reserves. Another incentive could be to increase the excess after repeated flooding.
There are a number of practical considerations to work through. However, there is a clear commitment between the Government and the insurance industry to putting in place an incentive-based approach rather than an exclusionary approach. I hope that noble Lords will also agree that the approach we have outlined strikes a fair and appropriate balance between supporting householders at high flood risk and the affordability of the scheme as a whole, and that the amendment will therefore be withdrawn, bearing in mind what I said at the beginning about the direct relationship between the insurance company and the householder and the means of redress that they can avail themselves of.
Lord Whitty
My Lords, I thank the noble Baroness for that reply but I am not sure that it entirely meets the point. As a former chair of Consumer Focus, I am very familiar with the steps that people can take to obtain redress from financial services agencies, including the insurance industry. I am perhaps slightly less sanguine about the effectiveness of it but that is a different matter. However, the fact is that the Bill provides for a register and, in Clause 63, provides for people to appeal against a body being excluded from that register in the first place. Unless I am completely misunderstanding the issue and what the noble Baroness said, I took it she accepted that there was a possibility of someone being excluded in one of the situations that I described—namely, when the insurance company’s request that the householder introduced some resilience measures at their own expense as a condition of continuing to have that insurance could lead to their exclusion from the list. All I am saying is that if there is an appeals process at the beginning, why is there not one all the way through? I may have misunderstood something that the noble Baroness said and the purpose of Clause 63.
Baroness Northover
Perhaps I can clarify at least one point in relation to Clause 63 and the register. Clause 63 relates to the flood insurance obligation. It is not relevant to Flood Re. However, I am happy to write to the noble Lord to clarify this area.
Lord Whitty
That would be useful for all concerned, so I will shut up. I am very grateful for the Minister’s offer to write to me. I beg leave to withdraw the amendment.
Baroness Northover
My Lords, I thank my noble friend for raising this issue again and other noble Lords for contributing their expertise. As we previously explained in Committee, the Government value and support the important work that internal drainage boards, IDBs, undertake to manage water levels, reduce flood risk and protect critical infrastructure. We want to ensure that they can carry out their work without unnecessary hindrance. Defra has also developed a close and constructive working relationship with the Association of Drainage Authorities, ADA. Defra officials meet with ADA on a regular basis, including through a technical advisory group, which meets quarterly, to discuss a wide range of issues relating to IDBs. It is helpful that my noble friends have raised this issue with us, as ADA had not highlighted this previously as a potentially significant or widespread problem.
We have since sought information on this issue from ADA, as my noble friend indicated, and are in continuing discussion with them. ADA has written to all 120 IDB clerks to gather their views on this issue. Responses have been received within the past month and I can update the numbers. From a small number of IDBs, five say that they have access to rating lists, while six have said that they foresee a possible need for an amendment such as this. We do not therefore yet have the evidence to demonstrate that the unavailability of rating lists poses a widespread practical problem for IDBs.
Water Bill
Baroness Northover Excerpts(10 years, 1 month ago)
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Baroness Northover
“ In section 158 (powers to lay pipes in streets), in subsection (7)(a), the following words are repealed—
(a) “or (b)(i)”;(b) “or laid in pursuance of section 66B(4)(b)(ii)”.”
Baroness Northover (LD)
My Lords, I beg to move government Amendment 38 and will speak also to Amendments 39, 73, 75 to 77, 79 to 86, 88, 92, 94 and 95 to 97. This group of amendments consists of changes to Clauses 37 and 39, following the recommendations of the Delegated Powers and Regulatory Reform Committee, as well as various minor and technical amendments to correct drafting errors in Clauses 49 and 80 and Schedule 12, and consequential amendments to Schedules 5 and 7.
We welcome the scrutiny of the Bill by the Delegated Powers and Regulatory Reform Committee. Following its recommendations, the Government have decided to amend Clause 37 on appeals relating to revision of codes so that the power to make regulations under this clause will be subject to the affirmative resolution procedure. This will apply to the first exercise of these powers only. On reflection, we agree with the committee that it is important for Parliament to have a further opportunity to scrutinise these regulations, and we have therefore tabled Amendment 73.
We have also followed the recommendations of the committee for amending Clause 39 on the exercise of adjudication functions in routine cases. The Government have left the choice of adjudicator open as we have not yet decided whether the relevant functions should be taken on by an existing body. However, we are grateful for the committee’s suggestion that this relatively wide power should be subject to the affirmative resolution procedure, and we have tabled Amendments 75 to 77 accordingly.
I would be happy to explain any of the minor and technical amendments to the House if there is anything that needs clarification. I beg to move.
Baroness Northover
“ In section 213 (powers to make regulations), subsection (1ZA) (inserted by Schedule 7) is repealed (if not previously repealed by an order under section 3).”
Lord Oxburgh (CB)
My Lords, I have to confess that this is a part of the Bill that I have not followed particularly closely, but I have listened to the government and opposition arguments with great interest today and, indeed, have sympathy with both. I would just like to ask the Minister—
Baroness Northover (LD)
I think the noble Lord is out of order. We are on Report, the Minister has spoken, and we are waiting for the noble Lord, Lord Whitty, to respond. The noble Lord can ask a quick question for clarification.
Lord Oxburgh
Thank you. The clarification that I seek is whether the Minister would be willing, when he brings back these amendments at Third Reading, to strengthen some of the words relating to consultation to something rather stronger and relating to an obligation.
Baroness Northover
(i) ”
Baroness Northover (LD)
My Lords, in moving government Amendment 61 I shall also speak to the other amendments in this group. I shall address Amendments 61 to 63 first. I am grateful for the support of my noble friends Lord Redesdale and Lady Parminter, who have added their names to these amendments. During scrutiny of the Water Bill we have debated the important question of how to ensure sustainable outcomes in the context of regulation of the sector. As part of that debate, we have returned repeatedly to the need to promote the efficient use of water so that all parties—Ofwat, the water companies and their customers—are encouraged to use water as efficiently as possible.
There is already a duty on undertakers to promote the efficient use of water by their customers, and Ofwat has a role in enforcing this duty. As noble Lords will know, we consider water efficiency to be an important priority. A compelling case for additional clarity on this issue has been put forward by noble Lords in Committee and in subsequent discussions. We therefore propose to make a further alteration to the resilience duty to make it absolutely clear that Ofwat is expected to promote the efficient use of water by water companies. We want to avoid any doubt on that score. This ensures that the resilience duty embraces all relevant action, such as the capture and retention of water by investing in new water storage or by tackling leakage. It will ensure that Ofwat promotes action to ensure that water is managed by the companies as efficiently as possible and encourages them to take action to encourage customers to use water efficiently. All such activity will support the overall objective of reducing pressure on water resources.
I also wish to speak to Amendments 65 to 70. I hope that it will be clear how seriously we take the crucial matter of getting the right balance between social, environmental and economic considerations in the regulation of this sector. We know that noble Lords across the House share this concern. It is with the intention of further strengthening that balance that we are bringing forward these amendments today. They require that when setting strategic priorities and objectives for Ofwat, the Secretary of State and Welsh Ministers must have regard to Ofwat’s duties and must have regard to social and environmental matters as well.
My noble friend Lady Parminter tabled a similar amendment in Committee and, supported by the noble Lord, Lord Whitty, made her case forcefully. I thank both noble Lords for rightly flagging this issue. Briefly, Clause 24 clarifies and strengthens existing guidance- giving powers. It enables the Secretary of State to issue a single consolidated statement setting out social, environmental and economic policy priorities in the round. The purpose of this is to help Ofwat weigh all of the relevant considerations appropriately when making regulatory decisions, and Welsh Ministers will have an equivalent power. We agree that the consolidated guidance must include social and environmental considerations. That is why we made it clear in the drafting of the Bill that social and environmental matters should stay. However, we share the concerns of noble Lords on the issue of the status of that guidance, and for that reason we are bringing forward an amendment to resolve the issue.
I thank noble Lords for their constructive and well informed engagement, and I hope that they will welcome these amendments. I beg to move.
Lord Redesdale (LD)
My Lords, I thank the Government, after some considerable debate about the issue, for the alacrity with which they have taken steps to introduce water efficiency. At the previous stage I raised the issue of sustainability, and I see that the noble Lord, Lord Whitty, has tabled an amendment covering it as part of this group. However, what I am most concerned about is the issue of water efficiency.
The resilience amendment talks about demand management. In the parlance of the water industry, demand management is very much about the reduction of leaks, whereas I believe that water efficiency is much more about the use of water and how it is a partnership between the water companies and water users on how water is to be used. We still have to bring about a massive behaviour change in customer use to make sure that the biggest leak we have in any system is the tap that is not turned off or used inefficiently. That is a movement which we have to take forward.
I hope that these provisions will bring about a degree of behaviour change within Ofwat itself, as happened as a result of the changes made to its core duties in the 2003 Act. I believe that Ofwat is seeking to change the way that it looks at such a scarce resource. With climate change, we are going to have to look at a very different system of determining how much water is available and how we use it. Indeed, in a few minutes Ofwat will be holding a reception just down the road to discuss these issues with stakeholders. I am glad that the Government have brought forward these amendments, which I am sure will help the regulator in its duties.
Lord Whitty
I am not sure whether the leave of the House is divisible business. With the leave of the House, I will explain to the noble Baroness, Lady Byford, that the sustainable development duty under the current Ofwat remit is a secondary duty. For several other regulators, including Ofgem, it is now a primary duty. That is what my amendment seeks, and it would cover social, environmental and economic matters, not simply resilience and water efficiency.
Baroness Northover
My Lords, I thank my noble friends Lord Redesdale, Lady Parminter and Lord Shipley and the noble Lord, Lord Whitty, for their thanks for the government amendments. I hope that noble Lords around the House are pleased that there has been so much positive engagement between Committee and Report. The noble Lords who have spoken are right to emphasise the importance of the environmental context of everything we are doing here. I am very glad that my noble friend Lord Redesdale can go from here to a meeting to celebrate what has been achieved.
Turning to Amendment 64, tabled by the noble Lord, Lord Whitty, I make it absolutely clear that we agree that sustainable development must be at the heart of all that the regulator does. I hope that that reassures him and is also of interest to my noble friend Lady Byford. That belief is at the heart of the Government’s statutory guidance to Ofwat, the strategic policy statement. That guidance requires the regulator to report on an annual basis on its contribution to the Government’s sustainability objectives. I am pleased to be able to say that Ofwat is making such a contribution.
Much of the broader debate about Ofwat’s sustainable development duty dates from the 2009 price review. Much has changed over the past five years. Ofwat has made good progress; for example, it has taken active steps to correct the perceived bias towards capital investment. The current price review is very different from previous price reviews. For the first time, there is a balance between capital and operational solutions as a result of Ofwat’s new approach, which now looks at total expenditure rather than at capital expenditure and operational expenditure in silos.
Ofwat has been working with water companies and Infrastructure UK to halt the up-and-down cyclical investment that has affected the sector for many years. This change in approach has had tangible outcomes; for example, Ofwat has recently given permission to water companies to bring forward £100 million of investment into 2014 to smooth the investment profile and benefit the water-supply chain.
All of this is reinforced by what we have been doing to move the horizon from the short-term view of the next five years to a sustainable long-term focus. That is why the Bill will introduce a new duty of resilience that deals directly with the long-term pressures facing the water industry. The new resilience duty encourages investment in additional water storage. It pushes the sector to tackle unsustainable abstraction. It places the focus squarely on the responsible management of water resources. Importantly, it promotes the reduction of pressure on water resources, and reducing demand for water.
Noble Lords will also be aware that the new duty was amended in another place to be absolutely clear and unambiguous about what that means. It is about managing water resources sustainably. We have now made further amendments to be absolutely clear that the resilience duty means that Ofwat is expected to promote efficient water use by companies. I thank my noble friends again for their welcome of this.
We recognise the importance of preparing the water sector for the future. We recognise the need for a strategic response to climate change. We recognise the demand on resources that future population growth will cause. It is because we agree with the aims of the noble Lord, Lord Whitty, that we have addressed this at all these levels. The changes that the Bill introduces, and the changes we are already seeing in the regulation of the sector, show how much this debate has moved forward. I hope, therefore, that noble Lords will accept the Government’s further amendments—it sounds as if everybody welcomes those—and that the noble Lord opposite will be willing not to move his amendment.
Baroness Northover
Baroness Northover
Baroness Northover
My Lords, we all agree that bad debt in this sector must be tackled effectively. However, we believe that the best ways to do this are through the sector-led voluntary approach to information-sharing and by Ofwat getting the regulatory penalties and incentives right.
While we strongly support the aim of the amendment, we cannot agree that it is necessary because, as noble Lords will be aware—the noble Lord, Lord Grantchester, made reference to this—very similar provision already exists in primary legislation. Without anything changing in the Bill before us, the power exists for the Government to bring forward regulations to require landlords to provide water companies with details of their tenants. This could happen if it seemed appropriate.
However, after consulting widely with all those who would be affected by this measure, we decided that a voluntary approach would be more suitable than imposing those regulations. Landlords felt that it would not be fair to penalise them financially for the debts of others. Having looked carefully at all the evidence, we took the view that there was much more that the water sector could do to address the issue, and there is evidence that some companies are already doing it. It is important that we make decisions based on the evidence; and the evidence showed us that good practice in tackling bad debt is not applied consistently across the water sector.
On earlier amendments on affordability, the noble Earl, Lord Selborne, and others suggested that water companies’ hands were perhaps tied on bad debt. Several companies have excellent performance in the recovery of bad debt—there are many things that they can do—but many others do not. Water companies can, and many already do, use the courts to pursue debtors. However, too many companies still fail to use all the debt collection tools at their disposal and we want improvements in performance in this area.
By way of illustration, perhaps I might give noble Lords some examples of what we identify as good practice. Yorkshire Water is an outstanding example of good work on bad debt. It partners with Experian’s credit account information-sharing service. Yorkshire Water assesses all new customers’ credit histories, which enables it to tailor services to each individual, supporting those in financial difficulty and providing sanctions for those who avoid payment. Another effective scheme is the arrears allowance scheme run by United Utilities, which supports 8,300 customers. For the first six months, the company matches customers’ repayments pound for pound; then the company matches every £1 paid with a £2 allowance until arrears are cleared.
However, at the moment, by no means all companies use these approaches. We wish to see such approaches become much more widespread, and the regulator wants to promote this, too. The methodology for the current price review places a much stronger focus on the responsibility of the company to collect its debts.
The sector as a whole is now starting to respond to this challenge. It is working with landlords’ organisations to establish a new voluntary scheme. Soon, it will launch a database that enables landlords to provide tenant information voluntarily. Crucially, this scheme is supported by the industry through Water UK and the main landlords’ organisations. We wish to give this new system a chance to work and we hope that noble Lords opposite will do so, too.
Ofwat decides which costs may be recovered through the price review; it is absolutely central to what it does. It is clear that Ofwat is using the current price review process to bear down on the costs of bad debt, which is clearly very important. The regulator has been very clear to companies about how bad debt is viewed. Companies must demonstrate high performance in debt collection. They are obliged to show that any increase in bad debt is genuinely beyond their control.
I shall refer to a point made by the noble Lord, Lord Whitty, again in relation to the earlier group of amendments on affordability—the noble Lord, Lord Grantchester, may have referred to it just now as well. The noble Lord suggested that bad debt was mostly in the private rented sector. There is no evidence that bad debt is disproportionately in the private sector; nor does provision in the Flood and Water Management Act, which the noble Lord wishes to see implemented, focus on private rented properties. It would make all landlords, both private sector and social landlords, financially liable for their tenants’ debts. We may have misheard or misunderstood the noble Lord, but we wanted to put that clarification on the record in case that that was how the noble Lords opposite viewed the situation.
Intervention in the setting and recovery of charges is a job for the independent economic regulator. Ofwat has all the tools necessary to enable it to do this job, and it is absolutely right that it is allowed to do so independently. Although we share the view of the noble Lord opposite that those who seek to avoid paying for the water provided when they can pay should not push those costs on to others, I hope that he will accept that progress is being made in the way that I have described and will therefore be content to withdraw his amendment.
Lord Grantchester
I thank the Minister for her comments. We were perhaps talking at cross purposes on the amount of bad debt in the private rented sector. The point here is that local authorities and housing associations are much keener on water companies chasing up tenants and therefore reveal to them the details of those tenants far more readily than do landlords in the private rented sector. That could explain the preponderance of bad debt in the private rented sector.
Nevertheless, I contend that the voluntary approach is simply not working fast enough. It is evident that things are going on in this respect—I pay tribute to what is being done—but I am concerned that not all companies are working as assiduously as they could to reduce this problem.
Given that provision already exists in primary legislation, I urge the Government to press forward a little more keenly than they appear to be doing. I beg leave to withdraw the amendment.
The Earl of Selborne
My Lords, I think those on the Conservative Benches should support the noble Lord, Lord Oxburgh, as well—as indeed I am sure many of us do. I agree very much with the noble Lord, Lord Cameron, who says that we simply have to value our natural resources. We in this country are totally out of step with the whole movement towards valuing natural capital and understanding the extent to which our natural resources underpin our economy and our quality of life. It makes obvious sense, therefore, that we should all be aware of our footprint, and if we think that we have the right to buy water at a rate that reflects some old rateable value as opposed to our actual consumption, we are simply denying our responsibility to understand our long-term impact.
As I understand it, this amendment is tabled more in order to demonstrate that the water companies can already do what the amendment seeks that they do, so I expect that the Minister will say that it is unnecessary, but it is certainly not unnecessary if it demonstrates what is obvious. I cannot understand why anyone should say that it is against the tide of the day; it is my understanding that every party supports the idea that we should value our natural resources properly, and who could say, therefore, that water should be exempt from that process?
Baroness Northover
My Lords, I thank the noble Lord, Lord Oxburgh, for laying this amendment, and I think I thank the noble Lord, Lord Cameron, for his contribution, with all his liquid metaphors. I was pleased to speak at the WaterAid reception last night, which he attended, so I assure him—I think he knows it—that we recognise the importance of water, whether it is in developing countries or in the United Kingdom.
We have thought carefully about metering in bringing this Bill through Parliament. Our position on metering seeks to strike a balance between the benefits that metering brings and the consequences that it can have for customers and their bills. We agree that metering is a fair basis for charging, but we are also concerned about the potential impacts on struggling customers. As the noble Lord, Lord Oxburgh, has observed, any customer can request a meter. The company must then fit a meter for free. That customer has a year to decide whether to revert to paying according to the rateable value if it turns out that they are worse off.
We are already seeing increasing levels of metering across the country. Next year will see the number of metered households reach 50%, with a trajectory towards 80% by 2040. Where there is a credible economic case, any company may install meters across all or part of their area. The only restriction is on imposing metered charges on customers without their consent. Companies could, as the noble Lord, Lord Oxburgh, suggests, install a complete street or neighbourhood at the same time; and to answer my noble friend Lady Parminter, companies can put in meters throughout.
The evidence shows that the case for imposing metered charges on all customers in an area can be made in water-stressed areas where there is an insufficient supply of water to meet projected demand. The amount of available water varies around the country. When it makes social, environmental and economic sense to do so, charging all customers according to a meter is already a possibility, but in areas where water resources are not under pressure, imposing meter charges is restricted because of our concerns about affordability.
There are two sets of costs that must be considered here. First, the investment cost of installing meters across an area can put up bills for all the customers in that area. Secondly, imposing metered charges across an area can increase the bills of some of the worst off in society. This is not something that anyone wishes to do in areas that have sufficient water to meet demand.
The balance will doubtless change over time. With climate change and population growth, the case for universal metering in particular areas will no doubt shift. That is why we revised the water stress designation last year: to take better account of long-term climate projections and information about environmental pressures. We wanted to ensure that the designation of serious water stress is forward looking. It is also updated on a regular basis, and we will continue to keep the situation across the country under review. I hope that that does something to reassure noble Lords.
The noble Lord, Lord Oxburgh, asked me to clarify the circumstances in which companies can install meters, and he made the point that a number of organisations were not clear about the situation. I hope I have answered his question, but for the avoidance of doubt let me do so again for the record. Water companies are able to install meters wherever there is a good case for doing so. There is a variety of reasons why they may choose to do this, including to improve leakage detection and enhance their understanding of consumer behaviour. A number of companies already do this. What the companies are not allowed to do is to impose charges by reference to that meter without the householder’s agreement. The exception to this rule is in areas of serious water stress, for the reasons that I have mentioned. It is not the installation of meters, therefore, that is restricted; it is making people pay a metered charge without their consent in other areas. I hope that answers the noble Lord’s question.
The noble Lord also mentioned the complexity of the legislation in this area. We agree that the prescribed conditions regulations, which govern the restrictions around metering, are complex and hard to follow. I am glad to be able to confirm that under the Government’s Red Tape Challenge, we have a commitment to consolidate these regulations by April 2015.
Water companies can install meters wherever it makes sense to do so, but it is the householder who decides whether they wish to be charged by reference to it in the areas where that is permitted. There is flexibility to allow universal metering in the wider interest of water efficiency in areas of serious water stress. This is a careful balance. I hope that the noble Lord will be willing to withdraw his amendment, although I am sure he will do so with great reluctance.
Lord Oxburgh
My Lords, I thank the Government for their constructive response, and indeed for the clarification, which I think will be welcomed by many of the water undertakings that have expressed their concern about the present legislation and its lack of clarity. I would just comment that there is some concern, in so far as the noble Baroness referred to it, about the recent reclassification of areas of water stress. There is some disagreement that it is sufficiently forward looking. I am delighted to hear that the legislation is being looked at under the Red Tape Challenge. May we encourage the department in its efforts in that direction?
One disappointment is that, given the progress that has been made, the Government do not feel able to take the last step and say that there does not have be water stress if there is general agreement in an area that this would be the most cost-effective and generally acceptable way of charging. However, under the circumstances, I beg leave to withdraw the amendment.
Water Bill
Baroness Northover Excerpts(10 years, 3 months ago)
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Baroness Northover (LD)
My Lords, I thank my noble friend for her amendment. We agree with her that it is important for the necessary information to go to the relevant people and for the relevant groups to be consulted in the way that she says. I emphasise that we are here retaining all the powers that are already in place; this is just about not having to publish in local newspapers. I will just go through that: I think she has picked up on the key points anyway.
We consider that the requirement for the internal drainage boards and the Environment Agency to advertise a range of notices, procedures and orders in newspapers is inflexible, out of date—given the range of media now available—and often wasteful of public funds. We are therefore introducing more flexibility to the advertising arrangements. This is in line with recent legislation, such as the Marine and Coastal Access Act 2009 and the Flood and Water Management Act 2010, which allows relevant authorities to publish documents without being prescriptive in how they do so.
Internal drainage boards have complained that advertising in local newspapers can be costly and that, in some areas, it does not represent best value for money in reaching out to the relevant communities. We also understand that some local newspapers may not be widely distributed in rural communities, or in some cases may no longer be published. Our changes will allow for both a wider and a more targeted distribution of notices. This could mean, for example, distribution through the use of electronic means, parish notice boards or, in the way that she indicated, school notice boards and so on, while retaining a fair, open and inclusive process.
The Environment Agency and IDBs will still have a requirement to publish notices and bring these notices to the attention of the people who will be affected by the changes; I hope that is the reassurance that the noble Baroness needs. We are, however, keen to take full advantage of the extensive local knowledge and experience of internal drainage boards and the Environment Agency by enabling them to reach out to the communities affected by any changes in the most cost-effective way.
Therefore, I can assure my noble friend that we are not telling internal drainage boards and the Environment Agency not to use local newspapers. If they consider this to be a cost-effective way of getting their information out, they may still do so, as well as making use of other media. We agree that local people should be consulted in the way that my noble friend suggests. I hope that I have reassured my noble friend and that she will be content to withdraw her amendment.
Baroness Bakewell of Hardington Mandeville
I thank the Minister for her comments. I welcome the increased flexibility on advertising that she detailed and accept completely that, if the internal drainage boards are the bodies that decide how to advertise the alterations, then I should be happy with that. It seems that a wider and targeted approach is going to come forward, so I beg leave to withdraw my amendment.
Lord Grantchester (Lab)
As my noble friend Lord Whitty said in relation to an earlier amendment, it is vital that there is clarity on aspects of the scheme, especially on defining the scheme concerning the inclusions and exclusions of property and responsibilities or liabilities around flood risk.
There appears to be a lack of clarity as regards the situation concerning owners of river banks and whether they are responsible upon the withdrawal of the Environment Agency from funding many aspects of flood prevention and the consequential third-party losses. The amendment seems to assume that the responsibilities of the Environment Agency will be reduced, as well as the funding. While there may be recognition that owners should be responsible for their own situations, it is nevertheless recognised that covering third-party losses could be severely onerous to riparian owners. This amendment seeks to limit their liability. Nevertheless, a limit to their liability begs the question of who would then take it on.
Even at this late hour, perhaps I may tempt the Minister. As regards limiting the liability of riparian owners, could they claim that a flood was an act of God? Is the Minister able to pass judgment on such things? However, this serious situation needs clarity, as landowners, farmers and even boating sports clubs could find themselves in severe difficulty alongside more affluent band H properties.
Baroness Northover
My Lords, far be it from me to judge upon acts of God or even the implications of the Equality Act.
I thank the noble Earl for his amendment, which I will address at a little length, as I think he would probably like to hear my comments. He speaks of instances where the Environment Agency might decide to withdraw from maintaining some flood management assets and suggests that this could create a challenging situation for landowners, residents and others affected. He will probably know that we are discussing those concerns with the Country Land and Business Association, to which he referred, and that my honourable friend the Parliamentary Under-Secretary of State met it on 23 January.
We share the noble Earl’s wish to reduce the possibility of litigation, which is an aspect that is implied by some of the concerns expressed by the noble Earl. That is why we are promoting the asset maintenance protocol published by the Environment Agency. We strongly believe that developing partnerships and working arrangements between local parties to guarantee future maintenance is the best way to prevent problems arising that could lead to claims of liability.
The Environment Agency and other authorities maintain many thousands of flood defence assets. The situation to which the noble Earl refers is not one which is affected by this Bill. He is picking up instances where the Environment Agency may decide that it is no longer going to support certain flood defences and the responsibility for that would fall to others. So I would separate this issue from the Bill, as the noble Lord, Lord Grantchester, sort of did.
The Environment Agency is looking to withdraw maintenance of some of these assets where maintenance is no longer economically justifiable or where the work may not have a high enough priority for central government funding over the longer term. Examples of such assets are embankments in rural areas that protect grazing land or small flow control structures such as gates or penstocks.
Understanding these concerns, the Environment Agency has published, and recently updated, a protocol explaining the processes it will follow. The agency is committed to bringing together landowners and other affected parties to make sure that they are clear on their respective roles and responsibilities and that they understand the range of options that may be available to them for future management of the assets and their likely costs, benefits and impacts. This may include options for continued maintenance of assets by local groups and options involving less or no maintenance. The agency will then work with all the interested parties to help them reach agreement on how the parties involved will take forward maintenance of the asset in the future. It is possible, for example, for the landowner on whose land a defence is situated to enter into an agreement to secure contributions from his neighbours towards the costs of maintenance and repairs.
We understand the noble Earl’s concerns about whether these agreements will be possible. However, it is important to remember that third parties are also expected to play their part. If third parties refuse to make reasonable contributions for the maintenance of a flood defence asset that is protecting their property, they could diminish the success of any future claims against the landowner.
The noble Earl has suggested regulations should be drawn up to set out what actions a landowner should take in order to meet any claims of liability. This would not be the simple clarification that the noble Earl might have been expecting. Such regulations would need to cover many types of assets, the type of location, as well as a list of all possible activities that might be appropriate for their maintenance. The regulations would need to address the range of impacts of flooding, ranging from a garden becoming waterlogged to flooding of many buildings and possible loss of life. Most importantly, the regulations would need to address such complications as a flood asset being owned by one or more landowners or a number of different beneficiaries of different means. Such regulations would be complex and, to be proportionate, would need to have an element of subjectivity to what a landowner would be required to do to avoid liability.
For that reason, we do not believe that such regulations could give significantly more certainty than the current case law. We firmly believe that use of the Environment Agency’s protocol gives all the parties involved a chance to ensure an outcome that reflects the particular situation and circumstances of each individual case, while avoiding the need for litigation between landowners. For these reasons I encourage the noble Earl to withdraw his amendment.
The Earl of Lytton
My Lords, at this hour of the night it is not my intention to press the amendment; as I said at the outset, it is a probing one. I am grateful to the Minister for her explanation. I am aware of the ongoing discussions and I appreciate that this matter sort of sits outside the Bill. I suppose that if I have a hook to hang it on, it is the situation where somebody might be protected by such works and finds they are no longer protected and unable to get full cover insurance. They then go looking for the next deep pocket in order to press a claim, so the geometry of the circumstances might change.
However, it is right that the matter should be discussed by the industries concerned. I would hope that the protocol would at least give some protection in the sense that, if one had done something in accordance with the protocol that was agreed between the parties, that would be a reasonable defence in law. However, I do not think that I can ask the noble Baroness to go into that sort of detail. I would like to reserve my position in case it is necessary for me to come back to this at a later stage of the Bill but, in the mean time, I beg leave to withdraw the amendment.
Baroness Northover
My Lords, I am grateful to my noble friend for raising an issue which is clearly of no small importance to any community affected. Section 101A relates to a “Further duty to provide sewers” to relieve environmental and amenity issues caused by inadequate sewerage. This section applies to “premises” and “buildings” and the amendment seeks to change that to make the duty apply to structures which may not currently be considered buildings for the purposes of this duty.
In the case of Traveller sites, such as the one she referred to at Chesterton Fen near Cambridge, when considering an appeal in respect of a decision not to provide a sewer under Section 101A, the Environment Agency will look at the case for each individual caravan on the basis of its size, permanence and degree of physical attachment to the land. To vary the definition in this section would potentially have far-ranging and unintended consequences. We feel that the best route is to meet my noble friends to discuss their concerns further. On that basis, I hope that she will be prepared to withdraw her amendment.
Baroness Humphreys
I thank my noble friend for her reply. Given the degree of reassurance she has given me, I beg leave to withdraw the amendment.
Water Bill
Baroness Northover Excerpts(10 years, 3 months ago)
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Lord Grantchester (Lab)
My Lords, the amendment would set up a review of recent outcomes of planning policy in terms of flood risk for new developments. It has received widespread support around the Committee.
The noble Lord, Lord Moynihan, has already highlighted how the market will change following recent events. In view of the terrible situation that has resulted from recent weather events in Somerset and the Thames Valley, which may well trigger a wide-ranging review of flood risk policy, it makes sense to ask why there has been more building on low-lying and flood risk areas in the past four years, even allowing for the guidance to which the Minister has already referred today. There has been plenty of notice since 2007 that not all property in areas that might be developed would be eligible for flood insurance. Recent floods have highlighted that there may be errors in the guidance. Nor have successful protection measures been achieved.
Why has planning allowed development to take place against a background of increased perception of flooding potential following the floods in 2007 and in 2012? As the Government, the Environment Agency and planning authorities—indeed, the whole country—will be reassessing flood defences and expenditure, a review of where we are now would make eminent sense.
I was struck by the comments of the noble Lord, Lord Shipley, on the cumulative development effect, which would be worth of the attention of the Environment Agency. The amendment has also prompted some interesting suggestions from my noble friend Lord Campbell-Savours, so it is worthy of further assessment by the Government.
Baroness Northover (LD)
My Lords, we strongly support the intention behind this amendment. The importance of managing the impact of flooding has been brought into very sharp focus recently, and my noble friend has made a cogent case for ensuring that all those involved, whether builders, local councils, inspectors or national organisations, are fulfilling what is required of them in terms of capacity and performance in reducing flood risk.
My noble friends Lord Shipley and Lady Parminter made the case for a review of planning policy delivery. Planning policy for flooding is set out in the National Planning Policy Framework. The framework was published by the Department for Communities and Local Government in March 2012 following extensive public consultation and is supported by practice guidance. It sets strict tests to protect people and property from flooding, which all local councils must follow. We have been very clear that where these tests are not met, new development should not be allowed.
The framework states that councils should plan the location of new development to avoid areas of flood risk where possible. Only if no sites are available in areas of lower risk of flooding can local councils even begin to consider whether to allow development in areas where there is a higher risk. For logical reasons, this is known in planning terminology as the sequential test. Where the sequential test has shown that it is not possible, consistent with wider sustainability objectives, to locate in an area with a lower risk of flooding, then—depending on the flood risk—a second stringent test must be met before a development can go ahead. This is called the exception test, which provides a very strong safeguard. To pass the exception test, you must show that the development provides wider benefits to the community that outweigh the flood risk and that it will be safe for its lifetime without increasing flood risk elsewhere—which was another point that noble Lords flagged up. Where possible, the development will reduce flood risk overall, such as through new flood defences. If there is a risk of flooding, a planning application has to be supported by a site-specific flood risk assessment. This is important because, where there is a risk of flooding, councils should give the go-ahead to new development only where, following the sequential and, if required, the exception tests, it can be demonstrated that what is to be built is flood resilient and resistant, and, as necessary, includes safe access and escape routes. Quite simply, in terms of flood risk, if there are better sites for developments, or developments demonstrated to be necessary are not made safe, they should not be permitted.
Lord Krebs
In the case of the Environment Agency lodging an objection, in what proportion of cases was it informed of the outcome? In the review that the adaptation sub-committee carried out in 2012, we found that in nearly a third of instances where the Environment Agency had been consulted, it did not know the outcome because it had not been informed. Has that figure changed?
Baroness Northover
I hope to get an inspired answer any second in order to be able to tell the noble Lord. If I do not get inspired, I will write to him.
I remind noble Lords that the Environment Agency is already required, under Section 18 of the Flood and Water Management Act, to report on the delivery of the national flood and coastal erosion risk management strategy for England. These reports must include information on all sources of flood risk and coastal erosion, and cover the work of all of the relevant accountable authorities. To reassure the noble Earl, Lord Lytton, the Environment Agency helps to provide the national overview that he seeks.
My noble friend Lord Shipley suggested that we need to know better whether properties built since 2009 are flooding or making others flood. One of the benefits of the memorandum of understanding between the Government and insurers last year, which I will come on to in the next group, is that for the first time we will have access to claims from flooding. This information will be used by the Environment Agency and its equivalents to target flood risk investment and could be used to inform policy development. In this context, I also note what the noble Lord, Lord Krebs, said about his data sets. Clearly, the more information we have, the better. I am sure that those data sets will be of interest both to Defra and to the Environment Agency.
Let me see whether I am inspired by the note I have been handed.
Where the outcome is not known, which is what the noble Lord, Lord Krebs, is talking about, the agency is satisfied that there is no significant difference in the outcomes between those cases reported and those not reported by authorities. I hope that that reassures the noble Lord. It is, of course, important that all these areas continue to be probed, because everybody needs to be reassured that that is, indeed, the case.
Coming back to the assessments that are taking place, high-level reports are produced annually, with more detailed reports provided to coincide with the six-year cycle of the flood risk regulations. Further interim reports may be produced as directed by the Government to support policy decisions such as future government spending reviews. The Government also conduct regular reviews of the effectiveness of policy delivery. For example, a review of the impact of the new partnership approach to flood risk management funding has just concluded. There are also two reviews of flood risk management in progress at the moment and one at a scoping stage. I listened to the comparison by the noble Lord, Lord Campbell-Savours, of the situations in Abingdon and Keswick. My noble friend Lord Younger, who was in his place a moment ago, noted this with interest and passed me a very interesting comment, but I hear what the noble Lord said and I will make sure that his suggestion is fed through to the relevant authorities.
Coming back to the general reviews, in addition to those I mentioned, my right honourable friend Oliver Letwin MP is leading a review of the lessons learned from the recent flooding, particularly the tidal surge, and the other review is looking at the resilience of key infrastructure to major coastal flooding. Both of these are expected to complete in the spring. Defra is also scoping an evaluation of the effectiveness of the Flood and Water Management Act 2010, which I hope will reassure my noble friend and which will initially focus on local flood risk management. Under the Act, lead local flood authorities and other risk management authorities have a duty to co-operate with each other, as he noted, to ensure that constructive and active engagement takes place and helps to build local relationships between relevant authorities within and across operational boundaries. We noted what he said about Northumberland and Somerset. Work on this evaluation is anticipated to start later this year. We therefore feel that proposed new paragraphs (b) and (c) of this amendment would duplicate existing planned work.
I hope that my noble friend is reassured by what I have said and that he will be content to withdraw his amendment.
Lord Shipley
My Lords, I am grateful to all those who have taken part in this debate. I shall just take up one question posed by the noble Earl, Lord Lytton, about whether this concerns only new properties. The amendment refers to new developments but, for the avoidance of any doubt, that includes any building post-2009, not any building purely in the future. I am very grateful for the Minister’s reassurances. We have to think further about what she said, in particular about the role of the Environment Agency as a statutory consultee and the extent to which that might be extended, but I think we could look at that again on Report, when we have had time to consider the points raised in greater detail. I beg leave to withdraw the amendment.
Lord Ashton of Hyde
My Lords, perhaps I may ask the noble Lord whether the requirements should be imposed before the regulations that bring the Flood Re scheme into effect, or whether he is talking only about subsequent regulations. If that task has to be undertaken at the beginning, it might imperil the start of Flood Re.
Baroness Northover
My Lords, I am grateful to the noble Lord, Lord Whitty, for drawing attention to his wish to ensure that that the policies set out in the legislation respond to the demands that climate change may bring in future—in particular, by including a formal role for the Committee on Climate Change. I was not entirely sure whether the noble Lord, Lord Krebs, accepted that formal role.
We fully agree that climate change and adaptation to it are vital. The noble Lord, Lord Whitty, added the additional factor of population growth. He rightly challenges us on the uncertainty of the future and we are very much aware of the need to plan for the future in this regard.
The Committee on Climate Change and, in this respect, its Adaptation Sub-Committee play a very important role in providing independent advice to the Government. The information and analysis provided since the committee’s inception have helped to shape the debate on climate change. Although the evidence of climate change is becoming increasingly compelling, it is clear that we need to do more to understand and plan for its impacts. This is a challenging task, given how interrelated and unpredictable those effects are. We have seen how variable the jet stream has been over the past few years, for example, and how it has brought us drought and flood.
Although, clearly, dealing with the current devastating flooding is the immediate absolute priority, we also need to reflect on our management of flood risk and assess our preparedness for climate change. The Government published the UK’s first national adaptation programme report in July 2013, which sets out the action that we propose to take. There is great expertise in this country, not least in your Lordships’ Chamber, which we can access and are accessing, as well as learning lessons from elsewhere.
Specifically in relation to Flood Re, I assure noble Lords that climate change projections were considered alongside other risk factors during the design of the policy and that the effects of climate change will continue to be considered during future levy-setting discussions. I remind your Lordships that in the memorandum of understanding with the industry that has been used to craft the Bill—I mentioned it in relation to a previous group—we have recognised the importance of the programme of flood defence and have committed to a specified amount of expenditure for 2015-16. However, we believe that advising on the scope and financial parameters for the transitional Flood Re scheme is a role for the insurance industry and would be outside the current remit of the Committee on Climate Change.
To clarify, the number of policies that would be eligible for Flood Re is based solely on the cost of the flood risk component of any policy, which is set by the insurers. This assessment of flood risk will indeed change over time, as the noble Lord, Lord Whitty, acknowledged, and it would not be possible for the Committee on Climate Change to provide any estimates without detailed knowledge of industry pricing models. Similarly, the value of the levy required and the likelihood of the need of any additional contribution by insurers is based on a number of financial parameters that could change year on year. Those include the level of premiums received, the cost of reinsurance and the amount of levy collected.
The Government and the Association of British Insurers have worked hard to determine the value of the levy required and the likelihood of the need for additional contributions, based on industry data and assumptions that were subject to independent review by Professor Stephen Diacon. In addition, extensive modelling, using a model that was quality-assured by the Government Actuary’s Department, has been carried out by the Government using there data, as part of both the pre-consultation and post-consultation impact assessments.
Looking forward, the Environment Agency will continue to collect and analyse data on flood risk, which will feed into the Government’s ongoing assessment of the scheme. In addition, as Flood Re is directly accountable to Parliament, detailed audited information about Flood Re’s ongoing operation will be reported to Parliament regularly.
I turn now to the proposed role of the Committee on Climate Change in advising the Secretary of State on setting the target number in relation to the flood insurance obligation. Clause 58 gives the Secretary of State the power periodically to set a target for the proportion of properties on a register of properties at greater flood risk that relevant insurers are collectively required to issue with insurance policies. The register, to be created by the Environment Agency and its counterparts in the devolved Administrations, will be based on the flood risk maps published by those bodies.
The number of properties indicated as subject to flood risk may change with time, as a consequence of climate change or through better information and mapping. The Secretary of State would set an overall target for the number of registered properties that the industry as a whole needs to cover. In setting this target, the Secretary of State would consider evidence on existing take-up rates of insurance and other relevant data. This could include advice from the Committee on Climate Change, should the Secretary of State wish.
The setting of the target number is a decision regarding the appropriate breadth of support that should be given by this financial support mechanism. Again, we believe that advising on the target number would be outside the committee’s current remit and, for reasons discussed in relation to Flood Re, would not be the most appropriate use of its resources or expertise.
Although, for the reasons that I have set out, we do not feel able to accept these specific amendments, I would like to return for a moment to the wider spirit behind them. We absolutely recognise that climate change is a most important consideration for the management of future flood risk and we value the expertise of the Committee on Climate Change. We are pleased that the independent Adaptation Sub-Committee will be publishing a revised climate change risk assessment report in summer 2016. We will consider that evidence and any implications for flood risk management carefully once the report is received.
Noble Lords know about various measures that we are putting in place to reduce the risks of flooding and coastal erosion, so I will not expand on that right now. I hope that the noble Lord will have been reassured by what I have had to say, setting what we are doing here in the context of our deep understanding of the potential implications of climate change and the unpredictability of measuring it into the future. I hope that he will withdraw the amendment.
Lord Whitty
My Lords, I thank the Minister, who clearly recognises the issue. I also thank the noble Lord, Lord Krebs, who, I thought, accepted the additional responsibility—although slightly conditionally. The conditionality was that the financial information, at least in broad terms, would be available to the committee.
I am a bit disappointed by the Minister’s reply. She recognises clearly the importance of climate change in defining the nature and scope of the problem. The Government have an authoritative independent committee available to them to feed into their deliberations, along with the administrator of Flood Re, but she is saying, “Actually, the Minister might or might not take notice of what the Climate Change Committee says, but, in any case, it is not the role of the Climate Change Committee and the Adaptation Sub-Committee to talk about financial risk assessment”. That is not what we are saying, though. To feed in to the risk assessment, you need the most authoritative input that you can get, in order that the financial structure can be changed to reflect those increased risks, changed probabilities or changed distribution of risk. I would have thought that it would be useful to the Government to have it written into the Bill that they have an authoritative input on this from the Committee on Climate Change.
In response to the noble Lord, Lord Ashton, I am not looking for this input before we get Flood Re off the ground. I will be looking for an ongoing input. The administrator of Flood Re, as well as the Government, is going to look increasingly for this kind of authoritative input. At the end of the day Flood Re is—despite its statutory base and its reporting to Parliament—a private body informed by the expertise of the insurance industry, but that expertise is itself informed by the best information that can be got on risk. In my view, the best information that can be got is probably from the noble Lord, Lord Krebs, and the noble Lord, Lord Deben, who is no longer in his place. I would have thought they would be the best and most authoritative sources to be relied on. I am surprised that they are not prepared to get that reflected in the Bill. For the moment, I withdraw my amendment.
Lord Oxburgh
Amendment 161A scarcely needs any detailed discussion: we have spoken this afternoon on a number of occasions of the importance of getting information to people. Certainly, this was a plea that came to us through many of the verbal representations that we had when we saw various interested groups in the lead-up to the discussion of this Bill. I simply offer this proposal to use council tax demands as a simple and almost cost-free way of disseminating information very widely, reminding people on an annual basis of their vulnerability to flood. It could serve as a portal to the various schemes and proposals that we discussed this afternoon.
Baroness Northover
My Lords, I am grateful to the noble Lords for their amendments. We are certainly supportive of their intentions in tabling them. The provision of information to households at risk of flooding is vital for managing the costs and impacts of flooding. We believe that it is essential that households benefiting from Flood Re should know about Flood Re and actions that they could take, for example, to reduce flood risk, allowing them to plan for the future. This was a key issue in the public consultation on flood insurance; some of the issues in these amendments echo some of the issues raised in earlier groups, which my noble friend Lord De Mauley has addressed.
The noble Lord, Lord Grantchester, rightly emphasised transparency; we certainly agree with that. As my noble friend Lord De Mauley has just pointed out, the Government have agreed with the Association of British Insurers the principle that insurers will be required to provide information to customers, both when a property is ceded to Flood Re and at the point of a claim, highlighting their flood risk. We are also keen to ensure that Flood Re plays its part in managing the transition to risk-reflective pricing, which we discussed earlier. We are continuing to develop with the ABI proposals in this area. We strongly believe that it is equally important that households outside Flood Re are aware of their flood risk, and the Government are committed to making this information available to the public. That is why we already have systems in place, through the Environment Agency and its devolved equivalents, to provide this information.
In England, the Environment Agency already makes comprehensive and searchable flood risk data available on its website. This has enabled people to check their flood risk from rivers and the sea and take action to prepare for flooding. The agency provides the same information for insurers to use. In addition, last December, the Environment Agency published surface water maps for all areas of England on its website and will produce a combined map, showing all sources of flooding, by December 2015. This work further helps improve public understanding of their flood risk and I hope noble Lords will be further reassured by that. While this places the onus on home owners to seek the information themselves, it provides clear information to households, is well established and is actively promoted by the agency.
The noble Lord, Lord Grantchester, raised the point about people buying properties. Clearly, anybody purchasing a property should check their flood risk by commissioning property surveys and searches or, alternatively, information on surface water risk that has been available in recent years on request from lead local flood authorities. If they conduct those kinds of searches and surveys, then this kind of information should emerge. Clearly, if, having discovered the flood risk, they discuss it with whomever they are buying their property from, the issue of Flood Re would no doubt enter their discussion.
Since June, we have been working with the insurance industry to go even further to improve the data available on flood risk. We have now agreed that the Environment Agency, and its devolved counterparts, will be able to access Flood Re’s data on where the highest-risk households are. This will help the Environment Agency to improve its own mapping of flood risk and will mean that our record levels of flood investment can be targeted at those areas most at risk.
To add to what I have said to the noble Lord, Lord Grantchester, I also point out that the seller is required to fill in a property information form—he will be aware of that—as part of the conveyancing process. This form asks questions about the flood risk history of the property, and if the seller provided misleading information there would be potential for the buyer to seek damages.
Lord Campbell-Savours
Is it not true that under the process to which the Minister refers, a purchaser would not know until lawyers had been involved and were beginning the exchange of documents? My noble friend’s amendment would mean that the buyer would have access to that information in advance. Is that not the distinction or do I have that wrong?
Baroness Northover
The noble Lord will know that a buyer can access the Environment Agency’s maps and see for themselves. When buyers are seeking to buy in a particular area, they usually check out all sorts of aspects: for example, where the schools are and public transport is. It will increasingly become a concern of people seeking to buy a property, given what has happened in recent weeks, to have a look at what the potential flood risk might be. They have access to those maps before they even start down the road of any potential purchase.
Lord Campbell-Savours
Is it possible that some property might be excluded? It might not necessarily show whether a property was actually subject to Flood Re.
Baroness Northover
Does the noble Lord mean a band H property? I would have thought that it would be fairly obvious if it were a band H property. I am happy to write with any further clarification if that would assist him.
Baroness Northover
Advice on obtaining flood insurance is also readily available. The National Flood Forum offers independent advice and guidance on how to go about getting insurance and how to reduce premiums and excesses. Separately, the Government have published a guide that provides advice on how to obtain affordable cover. We recommend that anyone finding it difficult to obtain insurance should talk to a broker and shop around—this was referred to by the noble Lord, Lord Krebs—as this is the best way to make sure that they get the best price for their insurance. There are a range of organisations that can provide help and advice, such as the British Insurance Brokers’ Association and the National Flood Forum. We hope that this reassures noble Lords and that they therefore will be content not to press their amendments. I am happy to write with further details about those people who are seeking to purchase properties.
Lord Oxburgh
Before the Minister sits down, would she care to comment on Amendment 161A?
Baroness Northover
As the noble Lord said, this creates a duty on bodies that issue demands for council tax,
“in an area designated as liable to flooding to include prominently on or with such demands the information that the relevant property lies within a flood risk area and information on where relevant advice on flood insurance may be found”.
I hope that even though I did not make explicit reference to the noble Lord’s amendment, I have laid out for him where the information is already provided, which is why we do not believe that his explicit reference is required. If the noble Lord looks at what I have said and is not reassured by what I have laid out in terms of addressing the substance of what he seeks, maybe we can have further discussions after Committee.
Lord Oxburgh
I simply say that there is a big difference between having information available—I readily concede that the Government are doing that with their proposals—and ensuring that people know about it and are reminded of its importance.
Baroness Northover
As I said in my response, we are putting the onus on home owners to seek the information—and I have indicated where that can be acquired—rather than to receive the information, as the noble Lord suggests. I appreciate that this may not be quite as strong as he would wish, but nevertheless there are a number of different sources for this information and a number of ways in which property owners, when they are ceded to Flood Re, will be informed as to their status. If they make a claim they will obviously be informed that that is the case. Therefore there are a number of ways in which they will receive information, even if it is not quite as comprehensive as the noble Lord might wish.
Lord Grantchester
My Lords, I recognise the noble Baroness’s comments in welcoming many of my remarks. She maintains that there is a system in place concerning flood risk data, and I do not for a minute doubt that she is correct about that. While I am reassured, nevertheless I am concerned that people should be able to undertake their own research without the cost of expensive searches. My noble friend Lord Campbell-Savours has further argued that case. I suggest that those expensive searches may well occur further along the process of a purchase. Nevertheless, people these days are very much concerned that they are able to undertake easily, quickly and readily their own research. I will consider further what the noble Baroness said, but meanwhile I beg leave to withdraw the amendment.
Flooding: Somerset
Baroness Northover Excerpts(10 years, 3 months ago)
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Lord Jenkin of Roding (Con)
My Lords, while applauding the work that is being done to try to help people in the stricken areas, particularly the Somerset Levels, can we look for a moment at the longer term? My noble friend told us last Thursday that,
“the Secretary of State has asked for a clear action plan for the sustainable future of the Somerset Levels and moors to resolve the problem for the next 20 years”.—[Official Report, 6/2/14; col. 264.]
Can I draw my noble friend’s attention to a recently published article by Dr Colin Clark, who is an extremely well known hydrologist, in charge of the Charldon Hill research centre in Somerset? The article is entitled, “Floods on the Somerset Levels: a Sad Tale of Ignorance and Neglect”—over the past 20 years. While having to deal with the crisis now is obviously absolutely crucial, I hope that the action plan will take account of the extremely important points made in Dr Clark’s article, where he identifies in some considerable detail—
Lord Jenkin of Roding
He says in considerable detail what actually should be done.
Lord Curry of Kirkharle (CB)
My Lords, I have a very similar question. The speed at which water is now running from hillsides and from urban areas—tarmac and concrete—is part of the problem, coupled with the extreme weather events that we are now seeing. Catchment management is critical to try to reduce and mitigate the risk. I hope that the department is taking that very seriously.
Water Bill
Baroness Northover Excerpts(10 years, 3 months ago)
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Lord Whitty
My Lords, I support these amendments. New Section 2A(3) to be inserted by Clause 24 seems to differentiate between Ofwat’s duties regarding strategic priorities and social and environmental matters. We attach “must” to the former and “may” to the latter, but the Secretary of State ought to have regard to both. This is not the usual theological argument between “may” and “must”. Those of us who have been around the block on this legislation have come across that argument a number of times and have completely failed to understand parliamentary counsel’s advice. The provision clearly differentiates the status of the two duties. It does not differentiate and downgrade the social and environmental objectives for Ofwat, which some noble Lords might think would be sensible, as Ofwat is primarily an economic regulator. This is for the Secretary of State. It is the Secretary of State’s duty to balance all these issues out. He should therefore have regard to both duties and if it is “must” for the former it should be “must” for the latter. The provision does not say, “give priority to”; nor does it say, “If you have regard to these duties, you do not necessarily need to carry out exactly what they prescribe”. However, it is the duty of the Minister to balance all these things out. If the legislation gives less status to one than to the other, the outcome of the balancing seems to be predictive.
I do not think that is right. All parts of the policy need to be looked at. I think “must” is probably the appropriate modal verb but both duties need to be in the same form. They are both important and the Secretary of State, whoever that might be, needs to have regard to both. I therefore support the intention of the amendment.
Baroness Northover (LD)
My Lords, I thank my noble friend Lady Parminter for her amendment. She notes that Clause 24 on setting strategic priorities and objectives for Ofwat requires that the Secretary of State “must” have regard to Ofwat’s duties but “may” have regard to social and environmental matters. She would like to change “may” to “must”. I am also familiar with the debates to which the noble Lord, Lord Whitty refers, having delivered a “must” to the noble Lord, Lord Ramsbotham, yesterday at Third Reading of the Children and Families Bill.
The Government are keen to hear and understand my noble friend’s concerns. However, we think that the new power to set strategic priorities and objectives for Ofwat will ensure that social and environmental matters will continue to be addressed. The purpose of Clause 24 is to strengthen and clarify the existing guidance-giving powers. It enables the Secretary of State to issue a single consolidated statement setting out social, environmental and economic policy priorities in the round to help Ofwat to balance all the relevant considerations appropriately when making regulatory decisions.
The Government’s principles of economic regulation require that Ofwat regulates within a clear framework of policies and duties set by the Government. Under the new power, Ofwat must carry out its relevant functions in accordance with the statement. The new powers stipulate that, in issuing the guidance to Ofwat, the Secretary of State must have regard to all Ofwat’s duties. These are set out in Section 2 of the Water Industry Act 1991 and include protecting the interests of consumers, promoting economy and efficiency by companies in their work and, as we have already discussed, contributing to the achievement of sustainable development. These duties encompass the regulator’s essential purposes and it is right that, in giving a steer on policies and objectives, the Government should be bound by them. We note that the duties clearly embrace both social and environmental matters. In addition, the new powers under Clause 24 stipulate that when formulating a statement the Secretary of State may have regard to social and environmental matters. We hope that this serves to provide additional reassurance that such matters will continue to be addressed through the strategic priorities and objectives. As a further check, Clause 24 also requires that we consult widely on the statement of strategic priorities and objectives. Following this, the statement will be subject to parliamentary scrutiny. When we consulted on the existing strategic policy statement last year, the social and environmental content received a warm welcome from both environmental NGOs and consumer groups. I thank my noble friend Lady Parminter for her own tribute to this.
We have great sympathy with my noble friend’s objectives but we are not persuaded that such a change to the Bill is required. I therefore ask her to withdraw her amendment.
Baroness Parminter
I thank my noble friend for her detailed comments on my amendment and for the fact that she noticed that I commented on the consultation last year. I take this issue very seriously. I also thank the Opposition Front Bench for supporting the amendment. It is not a matter of semantics. It might seem to be that, but it is more fundamental to the direction of travel—what we want for the water industry in the future and how we can assist future Governments to deliver the commitments that we all agree on. I will reflect on what the Minister has said, but we may return to this matter in the future. I beg leave to withdraw the amendment.
Lord Whitty
My Lords, I will speak also to Amendment 124. These amendments deal with the water resource management plans. Water resource management plans, to colleagues who are not familiar with them, are the 25-year plans which each water company is required to produce, which then have to be approved by the Environment Agency. Those plans are fairly strategic. A lot of thought and work goes into them and there is a lot of consultation on them—but it is not always clear what they are used for thereafter. One presumes that the companies follow them for their own strategic decisions. To a limited extent Ofwat follows them in terms of the allowance for capital expenditure that is required in the price review. However, that covers only five years, and Ofwat, try as it might, cannot always see 25 years ahead as regards the changing capital and management requirements that will be needed.
The legislation on this, which is marginally changed by Clause 27, refers only to those plans being authorised,
“for the supply of water to consumers”,
which is of course the key issue. However, it is also important that the plans allow various regulatory, environmental, water quality and resilience requirements to be met. For example, water framework directive timetables and objectives and various ecological requirements have to be met. Following the Government’s inclusion of resilience as a primary duty of Ofwat, companies will undoubtedly have to meet requirements under the resilience criteria by a certain date. The amendment seeks to broaden what the plans deliver in public policy terms and therefore includes a requirement to meet environmental, quality and resilience standards.
Amendment 124 deals with an issue at which I hinted earlier—namely, that once the relevant plans are in place, the environmental regulator and the economic regulator need to pay attention to them. At the moment, following a change of direction or policy on the part of either Ofwat or the Environment Agency, decisions can be taken which do not accord with the plans. Theoretically, the relevant company then has to change the plans but probably does not do so until it has to revise them in five or six years’ time. Amendment 124 suggests that the Bill requires the relevant regulator to have regard to those plans when conducting price reviews, and that the Environment Agency must do so when conducting its regulatory and enforcement activity. If that is not done, the plans will gather dust on the shelf, will be referred to occasionally by the companies themselves but will be used rarely by those who are supposed to be in charge of regulating the sector.
I may exaggerate the position slightly, in that these are important documents and are regarded as such, but they are not quite given the importance that they deserve at either the company or the regulator end. These amendments seek to change that position. I beg to move.
Baroness Northover
My Lords, I thank the noble Lord, Lord Whitty, for tabling these amendments. As noble Lords know, the noble Lord introduced the Water Act 2003 to Parliament, which made the planning processes a statutory requirement. We recognise that he seeks to ensure that the water resources management framework has greater bite and that the relevant plans will have the desired effect. I hope to show him that these plans are supported by other policy measures.
Water resources management plans must show how incumbent water companies intend to maintain a sustainable water supply demand balance over a period of at least 25 years, as the noble Lord, Lord Whitty, said. They must do this within the framework of environmental protection that is set out in legislation. The noble Lord seems to be concerned that they may not have that necessary effect.
Within this context, new Section 37A allows the Secretary of State to issue directions to the incumbent water companies on any relevant matter for which they must plan. In addition to this, water resources management planning guidance sets out the expectations of government and the regulators in relation to the water environment—for example, that the options chosen must not lead to any deterioration in the status of the water environment.
The companies have their own statutory environmental duties. For example, when exercising their functions, companies must have regard to the environmental sites protected by the habitats regulations. They must also have regard to the Environment Agency’s relevant river basin management plans. In addition, both the Environment Agency and Natural England are statutory consultees on the draft plans, and the Environment Agency provides the Secretary of State with technical advice on the plans. Following consultation on the plans, the Secretary of State has power to direct an incumbent water company to change its plan if he is not satisfied—
Lord Spicer
I am most grateful to my noble friend for giving way. Is she not a little concerned that all this is renationalisation by the back door? One is constantly finding additional powers being given to the regulator, and the current big excuse is the environment. Exactly the same thing is happening in electricity—carbon considerations are resulting in more and more powers being given to the regulator, and it is now happening in respect of all the companies’ plans. Is there not a slight worry, particularly if the Government can move in with policy insistence, that we are renationalising the industry by the back door?
Baroness Northover
I am sure that my noble friend shares everyone’s concern that the Government should take responsibility for ensuring that we do our very best to protect the environment. We need only to look at the challenges that we are facing at the moment to realise the importance of that, and it is in our common interest to do so. Here we have a semi-monopoly in an area that is vital to everyone. It is extremely important, therefore, that we balance all the necessary pressures. However, I am sure that my noble friend Lord De Mauley will be happy to talk further with my noble friend to explain the philosophy behind the Bill.
Coming back to my comments on the amendment of the noble Lord, Lord Whitty, I was setting out the other areas that help support his ultimate aims, which were, as I understood them, that these 25-year plans should have positive environmental effects. I was showing how other measures, too, help underpin and strengthen those plans.
As regards Amendment 124, both Ofwat and the Environment Agency already have general duties regarding incumbent water companies’ maintenance of their water supply systems. Ofwat and the Environment Agency consult extensively with incumbent water companies through the water resources management planning processes. For the current water resources management planning round, joint government, Ofwat and Environment Agency guidance was issued to companies to help them prepare their plans. This guidance also set out the role of each regulator in the process.
The Environment Agency, as well as having responsibilities to protect and improve the environment, and promote sustainable development, also has duties such as those set out in Section 15 of the Water Resources Act 1991 to have particular regard to incumbent water companies’ duties. Ofwat has primary duties to ensure that the companies can both finance and properly carry out their functions. The current round of water resources planning and business planning processes have seen much closer joint working between Ofwat and the Environment Agency than may have occurred in the past. I hope that that point is helpful to the noble Lord. To ensure that the outcomes of the water resources management planning process are reflected through the price review process, the Government have made it clear that they expect Ofwat to use its role as a statutory consultee to identify at an early stage any proposals within a water resource management plan that would be inconsistent with its approach to the price determination process.
I have set out a number of these other areas in order to reassure the noble Lord about how the 25-year plan fits into this issue. I heard his concern about whether these provisions had any effect, but all are consistent with what he has been saying about trying to ensure that the water companies operate within a sustainable framework. I hope that my exposition has reassured him and that he will be happy to withdraw his amendment.
Lord Whitty
My Lords, I am happy with those reassurances, in particular on underlining the need for the regulators to work more closely together and on the plans themselves. I think I am probably the only person alive—I am certainly the only person in this House—who has served on the boards of both Ofwat and the Environment Agency, albeit for only a very short time on the board of Ofwat. Although relations had thawed somewhat by that time, they are actually more constructive today, which is very important when looking at these long-term plans. I thank the noble Baroness for her reassurances.
In a sense, my amendments were provoked by new Section 37AA(2) which states that a direction about adjusting the plans or addressing them can be given,
“only where the Secretary of State considers it appropriate”,
in relation to the supply of water. However, there are other outcomes, and the noble Baroness has given me a reassurance that they will be dealt with elsewhere. I beg leave to withdraw the amendment.
Baroness Northover
Baroness Northover
My Lords, Amendments 126, 130 and 148 to 152 are minor and technical amendments to ensure consistency and to correct drafting errors, or provide consequential provisions to the Bill. For example, Amendments 126 and 130 change the wording in new Sections 63AF(3) and 110O(3) of the Water Industry Act 1991 so that they refer to “a code” rather than “the code”, as is currently the case. This corrects a drafting error and provides consistency in Clauses 31 and 32 respectively. Amendment 149 makes a consequential change in Schedule 7 by changing an incorrect reference to “any licensed water supplier” so that it refers to “any water supply licensee” instead. I beg to move.
Baroness Neville-Rolfe
My Lords, perhaps I could seek clarification about the effect of the amendment, which it seems concerns individual complaints as well as collective ones. As I see it, having been in business, complaints are normally dealt with by the business or authority to which they come. You do not want to have special schemes unless there is something pretty serious and bad. I want to understand the purport of this amendment—if it is actually bringing in a whole load of new things that are going to be done by an authority or statute rather than by the company that is meant to be doing the right thing for the consumer, I am concerned.
Baroness Northover
My Lords, I thank the noble Lord, Lord Whitty, for his amendments, which, as he laid out, relate to the vital question of consumer protection. Most noble Lords, bar one, seemed to be supportive of his emphasis. We all wish to see an increasingly consumer-focused water industry and we welcome the opportunity to debate these matters.
The noble Lord thinks that, at the moment, this provision applies only to a single claimant. I will address whether the consumer redress scheme includes complaints made by groups of customers as well as complaints made by individual ones. I can clarify that the ability to address consumer complaints, whether they relate to a single customer or to a group of customers, is already reflected in this clause, which is drafted in such a way as to be inclusive rather than exclusive. To be clear, it covers complaints by both individual customers and groups of customers collectively—I want to put that very clearly on the record. The noble Lord might like to know that CCWater has already successfully taken up complaints on behalf of groups of customers, for example in a conurbation where a number of neighbours wished to challenge their surface water drainage charges. I hope, therefore, that he is reassured on the first area that he flagged up here.
On Amendment 136, we agree that consumer protection is an important matter in the context of the Bill. I also put on record and inform noble Lords that this is an area where action is already being taken. The industry, Ofwat and the Consumer Council for Water are working together to improve their collective approach to consumer redress. An independent dispute-resolution scheme is being established to give all customers an independent route for resolving their complaints without having to go to court. The new scheme aims to provide a transparent mechanism for resolving complaints that have reached a deadlock under current arrangements. Work on this scheme is already well advanced, with all the water companies having signalled their support, and I note what my noble friend Lady Neville-Rolfe said about the industry being central to this.
Lord Knight of Weymouth (Lab)
My Lords, briefly, I support my noble friend Lord Whitty in his challenge to the Government and, to some extent, the Environment Agency. At the moment, my home down in Dorset is technically under a flood alert. I can look at maps on the Environment Agency’s website and the detailed data on river levels at the station near to my home which, during this sort of scenario, are updated every few hours. In conjunction with looking at the Met Office website—because I am an experienced watcher of these things—I can predict pretty accurately whether we will flood. I am willing to put on record that I do not think we will flood over the next 24 hours. We put our floodgates up—some of them, but not all of them—but that is mostly because we could not be bothered to take them down from the last time.
This whole business is obviously very worrying for householders. I pay tribute to the Environment Agency for making all the data available so that people like me can, assuming we are online and confident enough to use those tools, make that judgment. However, it is really important that those resources are sustained and, as technology and resource allows, are improved as more and more householders, given climate change, worry more and more about their resilience for flooding.
Baroness Northover
My Lords, when I heard the earlier debate about consolidation and clarifying legislation, I thought that this was a case in point. The noble Lord, Lord Whitty, rightly spotted that, too. This amendment allows me to put something on record. The issue is about duplicate records. Our plan is to repeal Section 195 on the basis that a single record is all that is required. The Environment Agency is not aware of any request having been made for the inspection of the duplicate record required by Section 195. Of course, it will continue to maintain its primary and comprehensive sets of data, including maps. I can assure the noble Lord, Lord Knight, that public access to this information can be obtained under the Environmental Information Regulations 2004, or for that matter under the Freedom of Information Act 2000. This is a small efficiency and cost saving to the Environment Agency, without detriment to necessary data collection, maintenance or public access. I will write to the noble Lord, Lord Whitty, with details of the data held by the Environment Agency. On that basis, I hope he will be happy to withdraw his amendment.
Lord Whitty
I thank the noble Baroness for that and her determination to write to me setting it out. The importance of this is that these maps are there but will change. They will change as a result of development activities, because of climate change and our experience of floods that are supposed to happen once in every 200 years in the Somerset Levels—to return to that topic—but have happened in two years. It is vital that mapping resources are there and accessible to everybody, as they clearly already are to my noble friend Lord Knight. Not everybody has that level of accessibility. We need it, and we need to be assured that the resources can be updated and improved as information changes.
I thank the noble Baroness and the Minister for their patience this afternoon. We will meet again shortly, dealing with floods, in particular. I beg leave to withdraw the amendment.
Water Bill
Baroness Northover Excerpts(10 years, 3 months ago)
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Lord Grantchester (Lab)
My Lords, this amendment would ensure that the Consumer Council for Water would have to be consulted by the water and sewerage undertakers when they drew up their draft charging schemes. The importance of this is that it would allow the CCW to play a role from an early stage and provide the ability for it to flag problems then, before the relevant bills start arriving on customers’ doorsteps and further problems occur.
One example where the Consumer Council for Water had previously challenged a charging plan concerned some companies’ plans to restrict half-yearly payment options for those on direct debit payments. Some customers prefer to pay in that way, as it better enables them to manage their money. The elderly, in particular, may want to retain that option, so it is important that attempts by those companies to stop it were successfully challenged by CCWater. That is just the kind of circumstance that the amendment is designed to pre-empt.
That gives rise to a whole series of problems surrounding direct debits and whether there should be any extra charge for non-direct debit payments, which can be disguised as a discount for direct debits. That may become part of the Consumer Rights Bill, shortly to come before your Lordships’ House. Another example of the benefit that the amendment would create was provided when CCWater negotiated with companies not to backdate charges if a company was at fault for initial error that resulted in substantial backdated charges. That can be as simple as misreading of a water meter by the water company’s employees. It is clear that in such an environment it is always useful, and sometimes essential, for CCWater to have such a say before charging schemes are finalised. It ties in with other steps that we hope to take to protect consumers during the passage of the Bill, such as providing for collective redress where a number of consumers have been subject to detriment.
The amendment is short and simple. I therefore hope that the Minister will find that it makes sense to include it in the Bill. I beg to move.
Baroness Northover (LD)
My Lords, the noble Lord, Lord Grantchester, has already highlighted the important work being done by the Consumer Council for Water, a view with which we very much concur. As he laid out, the purpose of his amendment is to require water and sewerage undertakers to consult the Consumer Council for Water on their draft charges schemes. That is clearly a reasonable objective. I therefore confirm that the Consumer Council for Water is in fact already routinely consulted by water companies on their charging schemes. That is in addition to the important work that CCWater undertakes to ensure that the consumer voice is heard during the price review process.
The noble Lord is right to say that the protection of consumers is essential, and never more so than in a sector with monopoly characteristics, such as water and the sewerage sector. CCWater plays a vital role in working with the water companies to ensure that their charges schemes do not have unintended consequences for hard-pressed customers, and we want that to continue.
I am therefore very happy to be able to reiterate the assurances already given in another place that the charging guidance produced by the Government will ensure that consumer groups such as CCWater continue to be properly consulted on company charges schemes in future. CCWater has identified its three top priorities in relation to the Bill. The third of those is that the charging guidance,
“should reflect that CCWater should be consulted by each company on its charges scheme and any changes to it before they are implemented”.
Once more, I confirm that the charging guidance produced by the Government will ensure that CCWater continues to be consulted on charges schemes. With that reassurance, I hope that the noble Lord will be content to withdraw his amendment.
Lord Grantchester
My Lords, I am very grateful to the Minister for that assurance. The provision should indeed, as a minimum, be included as statutory guidance. That is very well accepted by the Consumer Council for Water. However, we have received briefing from it that it is particularly keen that that should be written into the Bill. We will consult further and reflect on the Minister’s words but, in the mean time, I beg leave to withdraw the amendment.
Water Bill
Baroness Northover Excerpts(10 years, 3 months ago)
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Baroness Northover (LD)
My Lords, I have no interests to declare except as a frequent user of water and sanitary facilities and, therefore, I am extremely grateful that we do, indeed, have both.
Amendment 2, moved by the noble Viscount, Lord Hanworth, seeks further clarification about the market operator. At his request, I will do my best to be clear and not add to the bamboozlement that he referred to. I say to my noble friend Lady Parminter that we are very grateful to the Delegated Powers and Regulatory Reform Committee for its careful consideration of the Bill. We will respond in due course and make sure that noble Lords receive a copy of the Government’s response.
I am most grateful to the noble Viscount, Lord Hanworth, and to my noble friend for tabling their respective amendments and thus for giving me the opportunity to discuss the market operator, clarify its role and purpose and, I hope, set their minds at rest about any concerns they may have. The market operator will be a company limited by guarantee that will initially be set up by Ofwat. Incumbent water companies and licensees that will operate in the competitive market will own and manage the market operator. As noble Lords will know, Ofwat is accountable to Parliament and has a primary statutory duty to protect customers as well as powers to take action against anti-competitive behaviour under the Competition Act. Ofwat will oversee the overall operation of the market and ensure that it is working in the interests of customers, with powers to intervene if the market operator were acting in any way that was anti-competitive. For example, Ofwat could take action against the market operator under the Competition Act 1998 if its activities were disadvantaging customers.
I should make it very clear that the market operator is solely a facilitator with an entirely administrative role. Despite what the noble Viscount, Lord Hanworth, said, it is not a regulator. The market operator will hold a register of premises eligible to switch. It will also facilitate switching and financial settlement between incumbent water companies and licensees. Ofwat will be involved in developing the licence conditions that will set out how licensees and incumbent water companies must interact with the market operator. Market codes may also be used to set out some aspects of these arrangements. The market operator does not in itself have any formal statutory roles.
Looking somewhat wider than the Bill—I see that the noble Viscount, Lord Hanworth, looks perplexed—I hope that the following remarks may be helpful. There are other examples of such companies set up in retail markets—for example, in the gas and electricity retail markets. Perhaps the noble Viscount needs to look at some other 60-page documents in relation to other utilities. The Metering Point Administration Service company administers switching in the UK electricity market and Xoserve does the same for gas. These are not exactly household names because they do not come into contact with the public. They are private companies set up for and by participants in regulated markets to operate silently in the background. None of these companies was established under statute and none has had its respective remit set out in legislation or by the Government.
The water industry and regulators have already set up a company limited by guarantee called Open Water Market Ltd. The noble Viscount has clearly done a lot of research on this matter. The company will initially be a vehicle to take forward the delivery of the Open Water programme, which is establishing the retail market on behalf of the Government, Ofwat and the industry. A decision will be made in the coming months on whether this company or another one will be established as the market operator for the retail market that goes live in April 2017.
The market operator will be governed by its articles of association and will be accountable to its members, which will be the incumbents and licensees that it serves. As a limited company, it will be subject to the provisions of the Companies Act 2006 and will have to prepare accounts and reports in accordance with that Act. Decisions will have to be made in the future on whether the retail market operator or another body should operate in the upstream market. If there were to be an upstream market operator it would not have roles around the inputting of water or withdrawals of sewage that would properly fall to the Drinking Water Inspectorate or the Environment Agency. The market operator’s role is likely to be limited to registering arrangements and verifying quantities of water input and consumed to facilitate financial settlement arrangements. An example of such a market operator in energy is Elexon, which facilitates settlements for the electricity generation market.
I shall comment on a point made by my noble friend Lady Parminter about market codes being subject to the affirmative procedure and explain that market codes will not be subject to any parliamentary procedure. The regulations under Clause 12 are subject to the affirmative procedure and these codes will be subject to consultation. If my noble friend needs further clarification we can provide that.
Coming back to the issue of what the market operator is, I conclude by saying that the market operator will not have any statutory roles, duties or responsibilities within the retail market of the sort that would need to be set out in regulations. I hope that I have clarified that. It will handle routine transactions and communications between incumbents and licensees to help them to meet their statutory and regulatory obligations, as prescribed by legislation, codes and their licences. The market operator will not take over any responsibilities that properly belong with the incumbents, licensees or regulators. I hope that I have provided some elucidation to noble Lords. Obviously we would be happy to provide any further elucidation that is required. In the mean time, I hope that the noble Viscount will be content to withdraw his amendment.
Viscount Hanworth
I thank the Minister for that explanation. She has told us that the market operator is intended to operate silently in the background but I am not sure that that justifies the complete silence of the documentation we have received about the market operator. This is a fundamental part of the architecture of the water industry as it is intended to evolve so the lack of any mention of it in the principal documents is extraordinary. I have made that point rather forcefully but I shall withdraw the amendment as it is a probing amendment. I hope that others will also voice an opinion about the extraordinary lacuna that we have in the documentation if not in the legislation. I beg leave to withdraw the amendment.
Baroness Northover
My Lords, I thank the noble Lord, Lord Whitty, for tabling these amendments. The Government recognise the significant role that CCWater plays in the industry by representing water and sewerage customers in England and Wales. The noble Lord made that case cogently.
However, these amendments concern the licence authorisations that relate to inputting water to the network, and the noble Lord is clearly well aware of that point. This means that they relate solely to the relationship between water supply licensees and the incumbent water companies, rather than that between licensees and customers. Before issuing a wholesale or supplementary authorisation, Ofwat must consult the Environment Agency, Natural Resources Wales and the Drinking Water Inspectorate. This is not least because they can provide intelligence on any prospective licensees that are trying to operate in this area. The purpose of this is to ensure that these parties are fit and proper persons for the purpose of operating in the new markets.
We would like CCWater to continue carrying out its valuable work of protecting customers and handling customer complaints. It is worth noting that Ofwat already publishes a notice on its website asking for comments from interested parties before it issues a licence with either a retail or restricted retail authorisation. CCWater therefore has the opportunity to respond on any issues that might affect customers at this point. I hope that any concerns, as identified by the noble Lord, Lord Whitty, can be addressed in that way. I hope that he is reassured by this and is willing to withdraw the amendment.
Lord Whitty
I thank the noble Baroness for those comments. She is right that these clauses deal with the relationship between new bulk suppliers and the incumbents, but that has a significant effect on the nature of the market beyond that. If the purpose of this consultation is to establish whether the newcomers negotiating a relationship with the incumbent are fit and proper persons, one issue is the effect on consumers down the line. I accept that Ofwat is open to people writing in, but why is the statutory consumer organisation not one of those listed to give a view in the first place? We are changing the market, and there should be a consumer view on how that market is changing and who is entering that market. I am looking not for a veto, but for an input. I hope that the Government will think slightly more. It would not cost them that much to add a new paragraph (e) to this subsection, and it would be consistent with what is done later in the Bill—admittedly on parts closer to the consumer—and with the established legislation and regulations. I withdraw the amendment for now, but I would hope that the Government could consider this further.
Baroness Northover
My Lords, I thank my noble friend Lady Parminter for tabling these amendments. Clause 8 plays an important role in achieving a more resilient water industry by encouraging the bulk transfers of water, or bulk supply agreements, between incumbent water companies and between incumbent water companies and inset appointees. We recognise my noble friend’s concern that an increase in bulk supply agreements might lead to unsustainable abstraction, particularly in advance of broader reform of the abstraction regime. We are therefore grateful for the opportunity to explore these issues in further detail today.
We would like to assure the Committee that we are serious about reforming the current abstraction system so that it is fit to face future challenges, and noble Lords are quite right to focus on this point. We are committed to putting in place an effective system that better reflects available water resources and we published our proposals for consultation in December. My noble friend Lord De Mauley will talk about our approach to abstraction reform in more detail shortly, as my noble friend Lady Parminter noted; as my noble friend Lord Crickhowell noted, Clause 12 may also appear to be relevant here.
I shall focus on Clause 8, which introduces new provisions to regulate more effectively bulk water supply agreements by introducing codes and charging rules that will govern these agreements. By enabling incumbent water companies to use water resources more flexibly and efficiently, increased water trading can both build resilience and increase the sustainable use of water resources. It can be particularly useful for water stressed areas and in times of drought. My noble friend Lady Parminter is right that we need to avoid any damage from unsustainable abstraction happening in the first place. Tackling damage after it has occurred can be a slow, difficult and expensive process. We therefore want to ensure that adequate safeguards are in place in introducing this reform to the bulk supply regime. We believe that these safeguards are already in place.
The Environment Agency and Natural Resources Wales are the regulators responsible for protecting and improving the environment and they will continue to control the impacts of abstraction through abstraction licensing. As my noble friend Lady Parminter noted, it has been agreed that Ofwat must consult the appropriate environmental body before ordering, varying or terminating a bulk supply agreement. However, I note her current disquiet at this. My noble friend Lord Crickhowell was more encouraged by the arrangement and is, as he put it, almost entirely satisfied by the correspondence from my noble friend Lord De Mauley, and I trust that my noble friend Lady Parminter has also seen this correspondence. If she has not, we will make sure that she receives it. I note also that the noble Lord, Lord Whitty, is less reassured, and I am sure that this issue will be considered further in the later group, as I have indicated. We all share the concern to ensure that we have a resilient system which does not cause damage.
I remind noble Lords that water companies have statutory environmental duties as well, including a duty under Regulation 17 of the Water Environment (Water Framework Directive) (England and Wales) Regulations 2003 to have regard to river basin management plans when deciding whether to enter into bulk supply arrangements. River basin management plans set out the environmental objectives for the water bodies within a river basin district and how they will be achieved. Each water company also has a duty under Section 37A of the Water Industry Act 1991 to produce a water resource management plan every five years that sets out how it aims to balance demand and supply over the next 25 years.
As I say, my noble friend Lord De Mauley will be addressing abstraction in greater detail in the next group, and in the mean time, I hope that my noble friend will be content to withdraw her amendment.
Baroness Parminter
I thank the Minister for her comments and I thank my noble friend Lord Crickhowell and the noble Lord, Lord Whitty, for their contributions in exploring this debate. It has become clear that the focus is not the new licences, which are covered by effective safeguards, but the issue of bulk trading where the licences have already been issued. It is about whether the new safeguards that have been put in, which give statutory consultee status to the environmental bodies, are sufficient. Ofwat has to consult those bodies, but it is not obliged to act in accordance with what they say. In the absence of the aligned timetables for the abstraction reform proposals and the proposals for the upstream composition, I remain concerned that we need the strongest safeguards. If we are not given satisfactory responses to the issue that we will be discussing imminently, I reserve my right to come back to it. On that basis, I beg leave to withdraw the amendment.
Trees: British Ash Tree
Baroness Northover Excerpts(11 years, 6 months ago)
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The Earl of Selborne
My Lords, I thank all noble Lords who put their names down to speak in this debate, which comes at a slightly later hour than perhaps we expected. I declare an interest as chairman of a farming company that has woodlands and a fruit nursery.
The word “crisis” is often overused in the context of environmental concerns, but the sudden realisation that the British ash could go the way of the elm in the 1970s is without doubt the recognition of a crisis. I will start by setting out the facts as I understand them. I am sure that if I get them wrong, the many experts who are due to speak will be able to put me right. Ash dieback disease is caused by a fungus called Chalara fraxinea. The disease was probably introduced to northern Europe on nursery stocks from Asia. Over the past decade it has had a devastating effect on the ash trees of northern Europe. It was first confirmed in Britain in March 2012, on young ash trees in a nursery in Buckinghamshire. Subsequently, other sites of infection were discovered, linked to imported nursery stock from Europe.
Last month, ash dieback was identified in older, native trees in woodlands in East Anglia. I will bring noble Lords right up to date by saying that today the Forestry Commission and Defra reported that after a weekend of intense activity by volunteers and experts, Chalara had been identified in 82 locations, including 14 nurseries, 36 planting sites and 32 forests and woodlands, including some in Kent and Essex. Last Friday, the count was 52 rather than 82, so the expectation must be that as surveillance and monitoring extend, many more sites will be identified.
While cases of infection in nurseries are clearly caused by importing infected stock, cases in mature trees in woodlands in the east and south-east of England are thought to have been caused by spores that were blown from the continent, or which possibly were brought in by migrating birds. In August, the United Kingdom plant health authorities undertook a pest risk analysis on ash dieback, which concluded that once trees are infected, they cannot be cured. However, the analysis also stated that not all trees die of the infection; a number are likely to have genetic resistance. Swedish research suggests that this number might be significant.
The pest risk analysis formed the basis of a fast-track consultation that ended on 26 October. On 29 October the Government introduced a ban on ash imports and the movement of trees. At the same time, Defra’s Chief Scientific Adviser, Professor Ian Boyd, was asked to convene a tree health and plant biosecurity expert taskforce. A number of companies have proposed treatment solutions for Chalara, which Defra has promised its scientists will rapidly evaluate. So much for history; I recognise that this is almost a running commentary on a fast-moving epidemic.
The public reaction has been one of disbelief that once again we have been caught by surprise by yet another threat to a native tree species from invasive pests and diseases. After the disastrous outbreak of Dutch elm disease in the 1970s, when we lost more than 30 million elms to a new and more virulent fungus spread by beetles, we were challenged by a plethora of tree pests and diseases, including acute oak decline, which is of great concern, particularly in the east of England; plane wilt; chestnut blight; and bleeding canker of horse chestnut, to name just four from a much longer list. Time and again we seem to act too late. For all those diseases, as for ash dieback, we put in place policies once we had found that the diseases were already with us. What we need are measures aimed at keeping out these serious pests and pathogens and such measures need putting in place years ahead of the anticipated arrival of the disease.
We knew years ago that ash dieback was a threat. We discussed four years ago with the European Commission's standing committee for plant health whether an import ban might be appropriate, but it seems that we were not able to produce the scientific evidence to justify a ban then. Instead of a ban on imports, which we now have, we carried out a small-scale survey. By the time Defra launched its Tree Health and Plant Biosecurity Action Plan in October 2011, ash dieback seems to have been relegated to a low priority. Indeed, there were plenty of problems in this country on the tree health front to deal with. This allocation plan allocated £7 million over three years to tackle tree diseases. That is not just on research, but on all other measures that might together address these issues.
Ahead of that biosecurity action plan, the Forestry Commission produced in May 2011 a revised table of top pests and pathogens that threaten tree health in Great Britain—a list of about 16 species. This listed the prioritisation criteria for potential impact for each disease: its risk or probability of entry and its expected economic, social or environmental damage. Those were the right questions to ask. The problem is that having asked the right questions no one seems to have answered the questions correctly or alerted the Secretary of State that ash dieback, although not yet thought to be in this country, like many of these other diseases, was an imminent threat, that its economic, social and environmental damage could be enormous and that we should act immediately to ban imports of ash plants. Defra got permission for the ban in October. Why on earth could the scientific evidence for justifying the ban not have been produced three or four years ago when the Horticultural Trades Association and others were asking for a ban on ash imports?
We do have a taskforce convened by Professor Ian Boyd charged with reviewing our approach to plant health. Rather than dwell on our failures in protecting plant health let me list what this taskforce now needs to recommend. Landowners and the public need to be assured that whenever a suspected incidence of an infection of whatever disease is reported, a rapid identification service will be provided. Detection and identification methods using molecular approaches such as the portable DNA tests have undergone rapid development and tight targets for response rates must be set. We need greatly to increase the surveillance, monitoring and inspection of nurseries and plantations.
The Forestry Commission has lost a significant proportion of its staff in the field. Its regional staff used to be able to spend much more time in the woodlands and forests, and they knew their forests. Likewise, its research capacity has declined. Research on pests and pathogens of trees is woefully underfunded, whether in universities or research institutes, and bears no correlation with the cost to the economy of woodland pests and diseases or to their impact on society. An assessment must be made of eradication and containment methods for ash dieback and indeed for other diseases, reviewing the role of a quarantine system for plants and plant passports for species for which the import ban does not apply. We need to develop biological control approaches such as looking for natural enemies to these new pathogens.
Trees are a long-term crop and amenity. Our approach to this sudden threat must be long term. We need to recognise that within our ash population there will possibly be some strains of ash with resistance to dieback. We need to protect this diversity. I hope that the Minister will assure the House that tree health will in future be given the priority it deserves and that if the taskforce comes up both with short-term and long-term recommendations that command the confidence of experts, the forestry sector and the public, the Government will without reservation commit to implementing those measures.
Baroness Northover
My Lords, I remind noble Lords that, unlike previous debates this evening, this is a strictly time-limited debate and that, therefore, when the clock reaches six minutes, noble Lords have had their full time.
Bovine Tuberculosis
Baroness Northover Excerpts(11 years, 6 months ago)
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Baroness Northover
I remind noble Lords that ministerial Statements are made for the information of the House. Although brief comments and questions from all quarters are allowed, Statements should not be the occasion for an immediate debate. I am acutely aware that many noble Lords wish to get in. It would therefore be courteous if noble Lords could be as brief as possible, to enable their noble colleagues to get in as well.
Lord Krebs
My Lords, as has been said, bovine TB is a serious problem, and it deserves serious science to underpin policy. I do not want to take up too much time, but I hope that your Lordships will forgive me as an individual who has been involved in this over the past 15 years and, as has been said, instigated the randomised badger culling trial and took part in the review of the evidence with Sir Bob Watson last year. It is worth briefly repeating the facts: the long-term, large-scale culling of badgers is estimated to reduce the incidence of TB in cattle by 16% after nine years. In other words, 84% of the problem is still there. To reflect on what that means, this is not a reduction in absolute terms but actually a 16% reduction from the trend increase. So after nine years there is still more TB around than there was at the beginning; it is just that there is 16% less than there would have been without a cull. The number is not the 30% that the NFU quoted; that is misleading—a dishonest filleting of the data. The other thing that the experts conclude is that culling makes the situation worse at the beginning so it will take a long time to emerge into this Nirvana of a 16% reduction, and 84% of the problem is still there.
That is just the background. I turn to questions that I hope the Minister will answer. Last Friday we were told by the Minister of State for Food and Farming that between 500 and 800 badgers would be culled in each of the two areas. The number, thanks to rapid badger reproduction over the weekend, is now 5,530 over the two areas—a fourfold increase. I am impressed. What this underlines is that if the policy is to cull at least 70% of the badgers, we have to know what the starting number is. This variation from just over 1,000 to more than 5,000 in the space of a few days underlines how difficult it is for us to have confidence that the Government will be able to instruct the farmers to cull 70% if they do not know the starting numbers. So my first question to the Minister is: how will he assure us that these numbers are accurate?
If we ask why the NFU has backed out, it is because it was due to pay those who were going to shoot the badgers on a per-badger basis. The NFU calculated it on the basis of shooting 1,300 badgers. Suddenly it is told, “It’s 5,500 badgers”. The farmers thought it was worth doing—but not that much. They have done their own cost-benefit calculation and say that it is not worth the candle. So my second question to the Minister is: in next year’s cull, who is going to pay? Are the farmers going to stump up on a per-badger basis to shoot 5,500 badgers or are we, the taxpayer, going to pay?
Finally and briefly, we have a pause and time to rethink. I urge the Minister to gather together scientific experts and rethink the Government’s strategy altogether, starting from square one.