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Lord Whitty: My Lords, this is a substantial amendment which aims to translate the terms of the Water Framework Directive into the Bill. We have had this discussion on several occasions during debates on the Bill, in which we have indicated that we intend to transpose the Water Framework Directive in due course following the consultations we are engaged in.

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For those purposes the definitions in the directive will be appropriate. But by incorporating those definitions in the Bill they alter the existing definitions in the Bill and earlier legislation in a way that can be confusing.

For example, the definition of groundwater in the directive is different and narrower than that in the Water Resources Act 1991. Incorporating it into that Act would therefore limit the ability of the agency to control current and known pollution. In order to control pollution of a saturated zone—for example, as a result of indirect, diffuse discharges—it is necessary for controlled waters to include water in transit as it percolates from the surface through the unsaturated zone; that is, to include all groundwater in underground strata, whereas this definition does not. It is therefore important that for the purposes of the Water Industry Act 1991 the existing definition stands.

Another example is "river", which we have also debated in passing. If we substitute the Water Framework Directive definition of "river", the current distinction between main and non-main rivers could be compromised. That would give rise to considerable confusion in domestic legislation; in particular, in relation to flood defence. The Water Resources Act defines "main river", and that Act generally sets out the permissive powers available to the Environment Agency to undertake work on such rivers. As noble Lords will know, all other watercourses are the responsibility of local authorities and internal drainage boards under the Land Drainage Act 1991, in which they are referred to as "non-main rivers".

If we no longer had that distinction then we would need an alternative legal mechanism to show which watercourses were the responsibility of the agency, and which were for local authority internal drainage boards. The effect of transposing the directive prematurely into the Bill would be to introduce confusion in the previous definitions.

Similar problems arise more directly in relation to water services. Throughout the Water Industry Act, the drafting and structure of the legislation is based on the distinction between sewerage services and the supply of water. The word "water" is used only in the context of the provision of fresh water. The framework directive definition of water services is different in that it covers both functions.

In those three respects and, I believe, some others, it would obviously cause considerable confusion to introduce the water framework definitions into this Bill to apply retrospectively to earlier legislation. Of course, we will need to transpose the directive and, as we have explained, we intend to do so. Where the powers are not already in place, the directive powers will be transposed, reflecting the framework directive definitions. To do so in this Bill would confuse the issue.

Baroness Miller of Chilthorne Domer: My Lords, what time scale are the Government considering to transpose those parts that will need to be redefined, given that the framework is to take effect by the end of the year? Will the transposition start then? I can

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understand some of the technical reasons that the noble Lord has given me, but he has just illuminated my point that there will be a good deal of confusion between those who are working to the water framework directive definitions and those who are working to historic English definitions.

Lord Whitty: My Lords, as we have explained at earlier stages, we are involved already in the consultation on the transposition of the directive. It is intended that the directive will be transposed before the end of the year. Obviously, some parts of it will come into play later down the line, and the full effect does not come until 2015.

The noble Baroness is right in the sense that there will be new definitions relating to new duties and responsibilities, which would not have existed before we transposed the directive. However, the old definitions will continue to apply in relation to the powers and duties that have existed through various stages of water legislation. To alter them in this context would distort the current understanding of those definitions shared by the water industry and everyone else.

The noble Baroness will no doubt argue for the consolidation of everything into one big Bill. In this Bill, as with other legislation, the definitions involved relate to the powers in this Bill and not to some future piece of legislation, however we enact it. In the case of the Water Framework Directive, we will be enacting it in a very specific piece of transposition under the European Communities Act 1972.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. However, it is a great shame that the Government have not got their act together sufficiently to enable this sort of issue to be cleared up at this stage. I look forward to debating the consolidation issue, under the amendment to be moved by the noble Baroness, Lady Byford.

I have listened carefully to the Minister. I propose to take further soundings from the water industry and environmental bodies. I may well return to the issue at Third Reading. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford moved Amendment No. 39:

    Page 37, line 35, at beginning insert "regional"

The noble Baroness said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 40 and 41.

Having studied the Hansard report covering this area of debate in Committee, I have concluded that the main reason for our concern is that the Bill limits the official committees of the Consumer Council to regional committees. Our amendment would free the logjam and allow flexibility where it is necessary, so that the council may operate more effectively. We feel that sound mechanisms are needed to control the

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licensed water suppliers. As it stands, the Bill seems to place all the burden on water undertakers and all the privileges with water suppliers.

This is as good a point as any at which to seek further clarification of the Government's intentions. What really lies behind the creation of licensed water suppliers? In our debate on 10th April, the noble Baroness, Lady Farrington, stated:

    "At present, undertakers have a duty to supply customers outside their area for domestic purposes but not for non-domestic purposes. We have sought to simplify the situation and provide clarity by removing this distinction".

She went on to explain that,

    "undertakers will compete only outside their areas through their associated companies and not directly".—[Official Report, 10/4/03; col. GC82.]

Will the Minister confirm that associated companies may not be water undertakers? If so, why is that so? Why have the Government not opened the water market to competition between water undertakers? If licensed water suppliers can demand access to an undertaker's pipework, why should not another undertaker? What do the Government imagine a licensed water supplier will look like? With a potential market of some 2,000 customers throughout the country, will he have an office in a tower block with a telephone line? How will the supplier operate? Will he operate regionally?

I should be grateful for further clarification on some further questions. Will it be possible for there to be 2,000 licensed water suppliers—each of the largest companies—which form a water supplier subsidiary to supply itself, for example? That is a possibility. Will it be allowable for such a subsidiary in a loss to claim tax relief?

Those are very specific questions, so if the Minister needs a longer period in which to consider them, I am happy that he does so. However, we do need greater clarification. I beg to move.

Lord Whitty: My Lords, the noble Baroness raised some wider questions, but the amendments have two effects. First, they would allow the Consumer Council for Water to establish non-regional committees. We accept that it is necessary for the council to decide its own organisational structure and, in Schedule 2(15), that power can be used to consider licensee issues generally. There is no limit on how the council can use the power.

The second aim of the amendment is to allow the council to allocate licensed water suppliers to any regional or non-regional committee. We discussed the matter in Committee, and I agreed to investigate the role of the council in relation to licensed water suppliers. We have tabled government Amendment No. 42, which makes it clear that the council will have the same powers for licensed water suppliers as it has for undertakers. The amendment aims to confirm that the customers of licensed water suppliers can also be looked after by regional committees. The second point is therefore taken care of by government Amendment No. 42, although some water suppliers will not necessarily be easily allocatable region by region.

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We shall discuss the issue of associated companies at a later stage. It is a little complicated. Perhaps I may reserve that until later unless the noble Baroness wishes to press me now.

Baroness Byford: My Lords, I am grateful for that response, and I shall be telling the noble Lord shortly that I am grateful for government Amendment No. 42. This can be a difficulty when one tables amendments between Committee and Report stages—clearly the Government have already responded to them in this case. I accept the Minister's comments on paragraph (b) of Amendment No. 41. I am happy for him to give me further detail between now and Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 40 and 41 not moved.]

5 p.m.

Lord Whitty moved Amendment No. 42:

    Page 38, line 10, leave out "(unless the context otherwise requires)"

The noble Lord said: My Lords, in moving Amendment No. 42, I wish to speak also to the amendments with which it is grouped.

In Committee we said that we would consider extending the council's remit to monitoring licensed water suppliers, as I have just said. The government amendments in the group I am discussing take forward that commitment. We have come to the conclusion that there will be a need for the council to monitor licensed water suppliers and to look after the interests of their customers. These amendments will enable the council to investigate complaints concerning licensed water suppliers, obtain information on them and investigate the interests of their customers.

Given that we all have the same objective, I hope that noble Lords will give a favourable wind to this group of amendments. I beg to move.

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