Examination of witnesses (Questions 160-179)|
TUESDAY 6 FEBRUARY 2001
160. So you want to get somewhere comfortable
which you know you can achieve, and you can set that as a target?
(Ms Golay) When you set leakage targets, that is within
the control of the companies and, since the summit you mentioned,
achievement has been pretty phenomenal whichever way you look
161. But if the targets have been pretty phenomenal,
why were they unattainable when we were asking you to do something
before the summit?
(Ms Golay) We probably would agree with you on that,
as we said. When you set demand targets, you are looking at ways
of persuading other people to change their behaviour and there
are two aspects to this. One of them is how far can you go into
persuading customers, because supply is demand-led, to do that;
the other is that there are costs of achieving certain targets.
When you hear some pressure groups say, "Well, all the cisterns
in all the households in this country should be replaced",
there is a cost to that. It is possible that this cost will be
considered well worth paying for the sake of protecting the water
environment but how do we know which cost is well worth paying
until we have had this open debate?
162. But the debate has been going on a pretty
(Ms Golay) This debate goes on in the papers and informally
in various groups, but it needs to be put on a statutory basis.
163. So if we said in this legislation that
there should only be a 5 per cent leakage rate and that water
companies should be penalised if they had a higher rate, that
would be all right?
(Ms Taylor) Water companies already have leakage rates
set for them by Ofwat.
164. Yes, but it could be put in the legislation.
You have just been saying that we have had the debate; we need
the legislation. What I am saying is what do you want in the legislation?
(Ms Golay) What we should have in the legislation
is the mechanism whereby those targets are fixed because whatever
is the right target today might change next year or the year after,
so we need to have a mechanism whereby those targets can be fixed
according to the values that this House represents between the
environment, on the one hand, to simplify it, and the cost of
protecting the environment on the other.
165. On the question of abstraction licences,
you seem a bit unhappy about the proposals in the legislation.
(Ms Taylor) Restricting access to water resources
and creating a short-term licensing regime, instead of the current
long-term one, will increase costs.
(Ms Golay) In our response to DETR we have produced
a table with figures that we will gladly send you demonstrating
one case on how costs will increase.
167. That is one case. What about across the
board? A large number of abstraction licences are not being pursued
by even the water companies who have rights to withdraw, so why
should they not surrender those rather than keep them and run
the risk at particular times of using them to other people's disadvantage?
(Ms Taylor) Can I say that we are not opposed to change
or to proposals as regards change. What we want to see, though,
is an understanding of the impact of that change so there will
be an increase in costs. Now if it is decided that that is acceptable
then that is fine. We understand that there will need to be changeswe
are not objecting to that at all.
168. I am not convinced that there needs to
be any increase in costs. If your members were more efficient,
they would need less water therefore there would not be a problem
if they had to surrender some of their abstraction licences?
(Ms Taylor) It is not our members using the water
but their customers so, as far as supply is concerned, it is led
by the demand.
169. It is led by your leakage to a certain
extent. Very few companies actually abstract more than is excessive
(Ms Taylor) No, that is not true. We are obsessional
and fanatical about leakage and have continued to be so, and we
are meeting the targets set for us. For example, during the winter
that we have had with the severe floods and then the freezing
and the thawing, we have not said a word other than getting on
with our job. We have just got on with it. It is perfectly true
to say that the results we have had as regards leakage have been
phenomenal and, yes, we are fanatical about that. In terms of
water resources, it is part of an equation. Part of that is how
much water is used and, as I said earlier, we have a statutory
responsibility as regards safeguarding the use of water and, of
course, it is in everybody's interest to do that. The other part
is developing new resources as you need them. When it comes to
abstraction licensing, we are saying that it could mean an increase
in costs. Because this is a long-term industry, if a company is
to develop a resource which then it no longer has the right, if
you like, to use, then you have stranded that resource and you
have spent money. If that is considered desirable and is part
of an open debate, we do not have a problem with it. What we are
saying is please, can we have that open debate.
(Mr Pocock) That is certainly a point and perhaps
I can mention two other aspects. If you are moving an investment
in an asset from a long-term to a short-term basis, inevitably
the way you invest in that asset will change. For example, the
balance between initial capital investment compared to an operating
cost solution may well change, therefore the total cost will be
very much shorter than long term, and we believe that may well
increase costs long-term. The second point I would like to make
would be that, when you are restricted in terms of access to water
in one particular area yet whilst you are still working on demand
management there is still a need to maintain supplies in the short
term, then you have to look to replace that water and, where there
is an area, for example, of high utilisation of resources, inevitably
the replacement of that water tends to be from further afield,
more costly, with greater pollution. These will all attract greater
170. You think, therefore, it is perfectly reasonable
to remove some licences where they are now creating environmental
(Ms Taylor) We think it is perfectly reasonable for
any changes to be made as regards licensing. What we are saying
is that the impact of those changes should be readily understood.
That is all.
171. What about this question of sleeper licences?
Surely they should go? If someone has not used them for four years,
is it not reasonable for the Agency to take them away?
(Ms Golay) Droughts do not happen in regular four-year
cycles, and those sleeper licences may be used for cases of drought
happening only every ten or fifty years but they are still needed
for those emergency situations, and if they are not there when
they are needed then we will have a reduction in supply or problems
with supply and people will wonder why we did not build up reserves
and contingency plans.
172. But if you find that someone has not used
them for four or five years, then surely it is perfectly reasonable
to look for alternative supplies if they lose the right to draw
(Ms Taylor) It is perfectly reasonable to ask the
question, and the answer may vary. As Jeanne says, there may not
have been a drought in that particular area for four years but
there may be after that, so the company concerned will have had
to have built up resources elsewhere. Now, if there are restrictions
on how else it can build resources, it is just a question of balance,
that is all.
173. Does this mean you do not trust the Agency?
Is it not sensible to put these powers in and leave it to the
goodwill of the Agency?
(Ms Taylor) It is not that we do not trust the Agency
but the Agency has a main duty to protect the environment; not
a duty to supply water. We do. The Agency merely has to have a
regard that we have a duty to supply water so it is not a question
of not trusting, but what we were coming back to earlier, which
is the Agency should be looking at these issuesabsolutely
rightand it is then going to be a question of balance and
discussion as to what is the right way forward. We are certainly
not saying the Agency should not have the powers
Chairman: But it does not seem sensible, if
there is going to be discussion, to give the Agency the powers,
because then you have to persuade them that, in a particular case,
they are exercising them unreasonably?
174. What are you so terrified of?
(Ms Taylor) I do not think we are terrified of anything.
175. Well, you are giving a very strong impression
that you are?
(Ms Taylor) Then I must apologise.
176. Not you personally; I am talking about
the evidence. If it was just you, I think you and I could deal
with that quite easily, but you give the impression that you are
saying, on the one hand, "Oh, yes, they should have these
powers but that really we do not think they are ever likely to
need to do anything with them because they do not have the same
responsibilities as we do". That is nonsense.
(Ms Taylor) If we are saying that the Environment
Agency's overriding responsibility is to protect the environment,
we then have our responsibility as regards supplying our customers,
and Ofwat with their responsibilities, and what we are saying
is we would then like the DETR to hold the ring as regards
177. Fine. Nobody disagrees with that but why
does that automatically negate powers in the Bill?
(Ms Taylor) It does not necessarily.
Chairman: So it is perfectly all right to give
the Environment Agency this power?
178. So we are back where we started. It is
perfectly all right to give them the power in the Bill?
(Ms Taylor) The Bill is incomplete in the way in which
it explores this. We are willing to continue to explore it, but
with the Bill as it is at the moment it is very difficult to see
how that balancing decision is going to be made
179. But in the Bill it gives the power to the
Environment Agency, so surely that is clarity?
(Ms Golay) What we have in the Bill is the power to
remove the sleeper licences. There is also the requirement on
the companies in the Bill to have drought emergency plans. We
asked, therefore, when we discussed the Bill with DETR whether
there could be a connection between the existence of a drought
emergency plan and sleeper licences that would guarantee that
the sleeper licences that had been removed because they are not
used except in drought would be reinstated or protected or somehow
treated differently because they are required for the furthering
of the drought emergency plans. The answer is there were no provisions
or intentions to make that link. If the Bill had this link that
said that sleeper licences are removed except that they can be
re-used in drought circumstancesand there are, for instance,
in the 1999 Act, circumstances where the Secretary of State can
proclaim an area to be under water stressthen we would
be satisfied that the balancing duties and responsibilities are
there in the Bill, not only of removing but also of bringing back
into use when required.