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Baroness Miller of Chilthorne Domer: My Lords, I can see the sense in addressing the issue of metering, particularly in water-scarce areas. Perhaps in reply the Minister can address the fact that the water framework directive will encourage a change in water charging by moving from fixed charges to charges by volume. I believe that it points in that direction.

I believe that metering on a wider basis would be a more efficient way forward than just in water-scarce areas. However, those areas need to be addressed first, particularly in that regard. The noble Baroness referred to innovative powers. On moving from one system of charging to another, I regret that she did not support my amendment on water affordability because with such large shifts, which I believe will be necessary and which will come about, we need a safety net to protect the more vulnerable. That said, I see the need to consider this amendment.

Lord Livsey of Talgarth: My Lords, the noble Baroness, Lady O'Cathain, is right to draw attention to areas of water scarcity. A point I made in Committee is that in some parts of the country the infrastructure is very lengthy and difficult to maintain but there is plenty of water. In such areas it may not be appropriate to impose a metering regime. As I understand it, the noble Baroness, Lady O'Cathain, is specifically addressing the problem of areas of water shortage.

Baroness Byford: My Lords, I support the ideas behind this sensible amendment. The noble Lord, Lord Livsey, is right to say that there are areas in the country that have a water surplus. We have to ask whether metering is really necessary is such areas. But there are other parts of the country—East Anglia, Kent and the south—where there will also be increased building and increased demand. While the amendment does not require it all to be metered, it directs that metering should be considered seriously in those areas. I am sympathetic to that.

Whether we live in an area with plenty of water or an area that is short of water, it is still a precious commodity. We have talked about that throughout the Bill. While I accept that it is sensible to look in the first instance at areas where there are shortages of water, it may be that in the longer term we must think again.

In addition, we are going through some extraordinary cycles of climate change. We do not know where they will end. While it is suggested that new buildings should be metered, my noble friend will confirm that it is not compulsory. It is strongly

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encouraged. As it is not compulsory, it seems sensible to highlight the difficulty in areas where there is a water shortage. I shall be interested to hear what the Minister says in response to the amendment.

Lord Whitty: My Lords, I correct the noble Baroness, Lady Miller. The water framework directive does not require metering; it requires policies to have regard to recovering costs, which our system can do. Water framework or not, there are already powers relating to compulsory metering in areas of water scarcity. We do not need new, prescribed powers in those areas.

The present powers allow a water company to apply for water scarcity area status. The Secretary of State decides on the basis of that application, after consulting the Environment Agency, Ofwat, and so on, including the people who would be affected. We already have those powers. Despite the concerns about water scarcity, no water company has applied for those powers to be exerted.

The amendment adds the Environment Agency and the water companies together but then prescribes the Secretary of State to act only on their representations. Clearly, the Environment Agency can make representations to the Secretary of State and the water companies have a formal ability so to do. However, it is for the Secretary of State to judge whether the designation of an area of water scarcity—and therefore an area of compulsory metering—should be imposed. The amendment, while in a sense giving a stronger status to the Environment Agency, precludes the Secretary of State making the decision herself that there is an area of water scarcity.

I said earlier that no water company has yet applied for water scarcity area status, presumably on the basis that it might alienate its customers. One could conceive of a situation where it would be necessary for the Government to take the initiative, which the amendment would not allow the Secretary of State to do. While I understand some of the arguments behind the amendment—although I do not completely go along with the line that the noble Baroness takes on metering in general—I understand that in such situations we need to be able to act. In such situations the amendment constrains the ability to act in certain circumstances. It is not therefore appropriate.

Baroness O'Cathain: My Lords, before the noble Lord sits down, how does it constrain the ability of the Secretary of State to act? The Secretary of State currently has the power to act. The problem is that we are trying to get the Environment Agency on side. After all, the responsibility of the Environment Agency is to look after the environment and to ensure that the water resources situation is good for sustainability. One of the reasons for metering is to limit the consumption of water in areas of great water shortage.

Lord Whitty: My Lords, the Environment Agency is perfectly able to approach the Secretary of State to suggest that she uses her powers. She must react to an

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approach from the water company, but she can make a judgment on it, and she would also be able to act independently of that.

The amendment would prescribe that the Secretary of State may designate those conditions only after an application from either a water company or the Environment Agency. A crisis situation could be identified which neither wished to suggest. Therefore, it is a constraining amendment, whether or not it was intended to be. I accept the importance of the Environment Agency being given the right. But the amendment as drafted is restrictive.

9.45 p.m.

Baroness O'Cathain: My Lords, I am very grateful to the Minister, as that is one aspect that I had not thought about. I shall go through the amendment with a fine-tooth comb to see whether we can improve the wording.

The Minister also made the point about customer reactions to compulsory metering, which I am sure is absolutely right. Nobody wants to be the first person to do the nasty thing; in other words, to make metering compulsory. However, if there is a serious shortage of water resources in an area, there is no alternative to longer-term metering; for example, in certain places in the South East the huge water resource problems will be compounded by an increase in house-building in the area. I shall take the matter away and return at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain moved Amendment No. 157:

    After Clause 61, insert the following new clause—

After section 39A of the WIA there is inserted—
In carrying out their respective functions, the Environment Agency and the Authority shall—
(a) take into account the requirements of—
(i) all water resource management plans prepared in accordance with sections 37A and 37D above, and
(ii) all drought plans prepared in accordance with sections 39B and 39C above; and
(b) in that regard co-ordinate the exercise of their respective functions.""

The noble Baroness said: My Lords, the amendment would require the Environment Agency and the water regulator to take into account the requirements of all water resource management plans and all drought plans prepared pursuant to the Bill. That can be seen as advancing the cause of joined-up regulation, particularly in respect of water resources management.

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The Government see water resource management plans and drought management plans as major elements of their strategy to manage water supplies and therefore ensure,

    "the prudent management of water resources".

Again, I quote from Directing the Flow.

The plans fit into the regulatory regime in two important ways. First, water companies will prepare the plans. Ofwat expects them to take into account the long-running marginal costs. That information will be incorporated into the Environment Agency's updated water resource planning guidelines. Secondly, the Secretary of State will approve the plans.

The amendment ensures that the plans are carried forward into all aspects of the regulator's work. More generally, the Government are already working to achieve a closer integration between economic and environmental regulation; for example, they want the principles of sustainability to inform the work of the economic regulator. The Water Bill includes a specific duty on the regulator to take into account sustainable development. Also, the Government expect the regulators to work together on specific matters; for example, the implementation of the Water Framework Directive and tackling diffuse pollution.

The amendment is a practical step to ensure that environmental considerations, including the prudent management of water resources, inform the work of the new water services regulation authority and are of appropriate importance in that of the Environment Agency.

The amendment was not moved in Grand Committee. On 8th April, in reply to an amendment after Clause 39, the Minister said that he supported more co-ordination but would not favour doing it in such a way as to increase the Secretary of State's powers to override the regulator or undermine its independence.

This amendment enables more joined-up regulation without giving greater powers to the Secretary of State to intervene in the regulator's decisions. I beg to move.

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