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Lord Livsey of Talgarth: I shall speak to Amendment No. 54, tabled in the name of my noble friend Lady Miller and myself. We have set out to strike a balance between environmental needs and the obvious needs of the operators, whether water companies or others involved in the use of water, who have to invest in equipment.
The amendment is closely related to Amendment No. 55, which tackles the investment question, the write-off of equipment and the depreciation in value of equipment that may be installed. It also relates to Amendment No. 60, which was tabled by the Liberal Democrats and the Conservative Members of the Committee. It is an important amendment, because it presumes that licences can be renewed.
I realise that we are not debating Amendment No. 60, but there is a close relationship between the two amendments. If a licence were granted for 15 years, there is a good chance that the licence would stand for 30 years, if Amendment No. 60 became law. I understand why the CBI and others have lobbied for a longer licence, and I note that Amendment No. 53which was spoken to by the noble Baroness, Lady Byfordasks for not less than 25 years. However, given that we have intractable environmental problems such as global warming, even if there is an almost automatic renewal, we should be able to review a licence after a period of time. Good reasons should be given if a licence is revoked at any point. I press the Minister, as the noble Baroness, Lady Byford, did, whether it is intended within the purview of the Bill that a licence should last for 12 years? We are really debating whether renewal should take place at 12, 15 or 25 years.
Lord Borrie: I intervene from the Back Benches to support the amendment. On Second Reading I declared my interest as chairman of Vivendi Water UK, which is a water supply company. I apologise to the Committee for not having been present when some of these matters were debated last week. I support the points made by the noble Baroness, Lady Byford, particularly on the presumption of renewal. Twenty-five years would be an appropriate period.
There are other amendments on the subject and I do not want to speak for more than a few moments. Having a water company interest, I am particularly impressed by the argument about capital expenditure and the impossibility of imagining that people will be willing to put the sort of money that is needed into the infrastructure without an adequate period within which the money can be recovered. That is a strong argument for a lengthy period of licence.
Baroness Farrington of Ribbleton: It would help me in responding if Members of the Committee could stick to the amendments in the group. I am getting slightly confused, because people are now speaking to
Lord Howie of Troon: One of the worrying aspects of the Bill from my standpoint, which I mentioned earlier, is that a large part of it deals with the abstraction of water to be used as water, although there are other elements in the Bill as well, such as abstracting water as drainage from deep excavation. Westminster Tube Station might be an example of that.
Many years ago I was engaged at the entrance loch to Grangemouth harbour on the River Forth. It was a big project consisting of two parallel lines of caissons with a coffer dam at each end. This left inside a quadrangle a very big hole, after excavating the soil, which filled with water. That is no use if you are trying to build something at the bottom of it. We de-watered the hole, and in so doing we reduced the water table on the outside of the hole, which disturbed some of the buildings around the harbouror at any rate caused them some alarm. We then put the water back into the outside at the same time as we were taking it out from the inside. Engineers do that kind of thing because they think it is useful, but it does not fit this Bill terribly well.
Something similar applies in draining a quarry. You take the water out of the quarry because you have to do the workings and you put it somewhere elseprobably back into the aquifer nearby or into some other nearby water coursewithout having used it. You have just shifted it over a bit.
When you deal with a quarry, you have a problem. You have planning permissions for the abstraction of the rock, gravel, sand or whatever it happens to be, and, under the new proposal, you will need a licence for the removal of the water. That is fine as far as it goes, except that the lifetime of a quarry might be very long. I am acquainted with quarries which have been thereand are still workingall my life, which is now a considerable time.
A problem arises if the licence to de-water does not coincide with the planning permission. Twelve years has been suggested. Twelve years is hopeless for a quarry that might last for 50 years, 60 years or even longer. Fifteen years has been suggested. It is an improvement, but only a trivial one. Twenty-five years is beginning to look right, but only like half the thing. What really is required is for the extent of the licence to be as long as or nearly as long as the extent of the planning permission. Therefore, for the kind of reasons put forward by the noble Baroness, Lady Byford, the quarrying companies can invest, plan ahead and run their businesses in a proper capitalistic manner.
I hope that the Minister will pay some attention to Amendment No. 54A, which stands in my name. We hope that whatever happens there will be a substantial opportunity for appeal against the length of a licence.
Baroness O'Cathain: I apologise for not being here at the beginning of the Committee, but, like other Members of the Committee, I have to cut myself into two and attend the Select Committee on Economic Affairs, which is dealing with minor matters such as Finance Bills. However, I came into the Committee and thought, "Goodness gracious, there is some repetition", because we dealt with quarrying last Thursday, which was highly educational and very interesting.
I return to the point. I support absolutely the noble Lord, Lord Borrie, who spoke on this point as chairman of Vivendi. I also must declare an interest as a directornot a chairmanof a water-only company. The position must be stated that since the privatisation of the water industry there is a regulatory procedure whereby Ofwat will allow a certain amount against investment. However, if Ofwat allows investment and takes it on board that the infrastructure produced by water companies will last, say, 30 years, not in its wildest days would it allow water companies to write it off against five, 10 or even 15 years. The Government must try and get their head around this. The investment requirement in terms of length of investment and return on investment is huge in this industry, and in particular in the water supply industry.
As I mentioned in my Second Reading speech on the issue, thankfully we still have Victorian pipes, which are 150 years old. Indeed, some of the wonderful investments made in the 1960s in PVC pipes now have to be replaced because they are not as good as the Victorian ones. Such problems have arisen with the infrastructure, and no one is really aware of them. I hope that DEFRA will keep close to the people who actually know the ins and outs and the problems of the infrastructure. That is not special pleading, it is pleading on behalf of all of us as water consumers. The last thing we want is to have no water running out of our taps.
Earl Peel: I support my noble friend Lady Byford's amendment, Amendment No. 48. I am glad that my noble friend has confirmed that she appears to have got herself into some muddle over the amendment. I have read it more times than I care to recall and I still cannot make any sense of it. I thoroughly support and understand the principles that my noble friend is getting at; that is, a presumption of renewal.
We had an extensive debate on Amendment No. 30. We addressed the need for consultation. If there was a presumption in favour of renewal, to a large extent Amendment No. 30 would be negated. One other key issue is that if an amendment to the effect that my noble friend seeks could be accepted, it would require the Environment Agency to explain carefully and in a robust fashion why a licence was not going to be given. That would be quite an advantage. It would add transparency to the way that the operation was going to be conducted. In essence, I am very much behind what my noble friend is trying to extract with Amendment No. 48.
I briefly speak to Amendment No. 53. We have had clear examples from a number of noble Lords as to how the 12-year lifetime for licences simply will not be enough for businesses to invest with confidence. My noble friend suggested 25 years. I suspect that at the end of the day there will have to be some degree of flexibility. Clearly, 12 years is not enough, and 25 years is probably more than enough in most cases. To hold it firmly at 12 years will quite frankly not be acceptable.
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