Select Committee on Delegated Powers and Regulatory Reform Twelfth Report


40 Standards of performance in relation to water supply

Clauses 40(1) and 40(2)

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulation

Parliamentary procedure:    Negative Resolution

See comments under 41, (Standards of performance in relation to sewerage services) below.

41 Standards of performance in relation to sewerage services

Clauses 41(2) and 41(3)

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulation

Parliamentary procedure:    Negative Resolution

At present, service standards (the minimum standards of performance that water and sewerage undertakers must attain in the delivery of their services) can only be set by the Secretary of State or National Assembly in response to a specific proposition from the economic regulator. These clauses (clause 41 in relation to water supply; clause 42 in relation to sewerage service) will extend the existing delegated powers to allow the Secretary of State and the National Assembly to initiate proposals for new service standards where:

  • the Secretary of State considers that the regulations are being made so as to further the attainment of policies relating to public health and the environment; or if
  • there are exceptional reasons why it is otherwise in the public interest that the regulations be made.

In either case, the Secretary of State or Assembly will need to fully consult the economic regulator and other interested parties before the standards could be set, and an RIA will have to be prepared in line with standard practice. Additionally, the regulations themselves are established by Statutory Instrument (by negative resolution) and so will be subject to Parliamentary scrutiny.

The power to set standards in the wider public interest is intended to be used as a reserve power. Standards of performance can currently only be implemented by the Secretary of State in response to a proposal from the economic regulator. If this position were left unchanged, the new Consumer Council for Water would have no direct access to the body responsible for setting standards of performance. As the CCW will be fully independent from the economic regulator, it is not appropriate that it should have no alternative but to route proposals for new customer service standards to the Secretary of State via the economic regulator. Therefore, the reserve power included in the Bill would allow the Secretary of State to act on proposals submitted direct to him from the new Consumer Council for Water.

These clauses will also allow other regulators (for example the Environment Agency and the Drinking Water Inspectorate) to propose standards of performance to the Secretary of State.

FUNCTIONS OF THE COUNCIL

43 Provision of information to the Council

New Sections 27H (1) AND 27J (1) WIA

Power conferred on:    Secretary of State, NAW or Authority

Power exercisable by:    Directions

Parliamentary procedure:    None

New Section 27J allows the Authority, the Secretary of State or the Assembly to direct the Council to provide information, that is required in order for any of the aforementioned to carry out its functions. This is not strictly a delegated power; however, it imposes a duty on the Council to comply with the direction or supply notice of why it will not do so.

The purpose of these directions is to ensure that the Secretary of State, Authority and Assembly will have access to any information from the Council that it reasonably requests. This is reciprocated by the Council's own power to direct the Authority or an undertaker to provide it with information (New Section 27H). It would be inappropriate for such a request to require legislation.

New Section 27K (1) and (3) WIA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulation

Parliamentary procedure:    Negative Resolution

New section 27K will permit the Secretary of State to make negative procedure regulations:

  • defining categories of information which the Authority, or any undertaker may refuse to provide when the Council requests it;
  • defining circumstances in which the above bodies may refuse to provide information requested by the Council;
  • defining categories of information and circumstances in which the Council may refuse requests for information made by the Authority, Secretary of State or the Assembly; and
  • enabling disputes relating to requests for information to be heard by a person other than the Authority.

Delegated powers are appropriate in these cases because it is thought that the level of detail that may be necessary to identify precisely the categories of information that may be withheld and the circumstances in which it may be withheld would be inappropriate in primary legislation. The Government also expects that experience may reveal that there are categories of information that might need to be added to, or subtracted from, those which may properly be withheld by the relevant parties. This delegated power will give the Secretary of State the ability to remove this protection in respect of circumstances or categories where protection proves to be unnecessary, or to extend the protection to circumstances or categories of information not yet identified.

It may on occasions be necessary for the Secretary of State to enable a third party to hear disputes where the Authority fails to provide information to the Council (the Authority would be asked to resolve disputes between the other bodies subject to these provisions). A delegated power is sought because it is not possible to say now whether the Secretary of State will need to take any action under this part of the clause, as such action will be dependent on the Authority refusing to respond to a request made by the Council. There is no appropriate body or tribunal currently within Defra that is qualified to hear such cases, and it would be inappropriate to delegate responsibility to a non-Defra body or individual unless we could quantify the likely level of commitment or workload that it might generate.

Precedents for all the measures proposed in Clause 36 are contained in similar delegated powers in s27 of the Utilities Act 2000 that permit the Secretary of State for Trade and Industry to make regulations relating to information requests made by such bodies and people as the Gas and Electric Consumer Council to the Gas and Electricity Markets Authority or gas or electricity licence holders.

ENFORCEMENT OF OBLIGATIONS

47 Financial penalties

New section 22A (1) WIA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - order

Parliamentary procedure:    Negative Resolution

This clause allows the Secretary of State to make an order that sets out the provisions for determining a company's turnover, which is the means of limiting the penalty which may be imposed on a water company for contravening any condition of its appointment or failing to meet a required standard of performance. This would follow a negative resolution procedure.

It is proposed that this power should be delegated because this will provide the flexibility for the Secretary of State to amend the order if this proves necessary. The details of this order would not be appropriate for primary legislation as if orders of this level were not delegated, the Parliamentary timetable would become overloaded. A relevant precedent can be found at section 59 of the Utilities Act 2000.

THE COMPETITION COMMISSION

52 Determination references under section 12 of the WIA

Amending section 12 WIA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulation

Parliamentary procedure:    Negative Resolution

This clause modifies existing delegated powers in the Water Industry Act 1991. Section 12 of that Act gave the Secretary of State regulation making powers to prescribe the procedure to be followed in relation to issues relating to the Competition Commission and determination under conditions of appointment. This clause modifies the administration procedure under which such regulations must be made.

53 Conditions of appointments under the WIA

New section 16A (1) and (2) WIA

Power conferred on:    Competition Commission

Power exercisable by:    Direction

Parliamentary procedure:    Nil

This clause allows the Competition Commission to give a direction to the Authority, with which the Authority must comply, vetoing some or all of the licence modifications the Authority proposes to make following a report on a modification reference by the Competition Commission. The Competition Commission may do so where it considers that the proposed licence modifications are not requisite for the purpose of remedying or preventing the adverse effects specified in its report. It is then required to substitute its own licence modifications which it considers are requisite for that purpose. The intention is to improve regulatory certainty about the outcome of cases involving a licence modification reference to the Competition Commission. A delegated power is sought because it is not possible to say now whether the Competition Commission will need to take any action under this clause, as such action will be dependent on a licence modification reference being made to the Competition Commission and action taken by the Authority following the report. A power of direction is thought appropriate in this case because it will be addressed to the Authority alone.

This Clause would also permit the Secretary of State a power of direction to extend by 14 days the period that the Competition Commission will have to consider licence modification referrals. A delegated power is sought because it would be difficult to define now in primary legislation the circumstances in which the Competition Commission may require additional time to consider individual licence modifications. A power of direction is appropriate because it will be addressed to the Competition Commission alone.

Precedents for these arrangements are contained in s39 of the Utilities Act 2000, which establishes similar arrangements for licence modifications proposed by the Gas and Electricity Markets Authority.

LICENSING OF WATER SUPPLIERS

54 Licensing of other water suppliers

This clause provides for Schedule 4 [j3005sch], which includes a number of delegated powers, to have effect. These powers are described below.

Part 3 - Miscellaneous

OUTLINE OF THE PROVISIONS IN PART 3

This Part of the Bill introduces a number of measures designed to strengthen the Environment Agency's ability to manage water resources and to increase the scope and public availability of information on water resources. It also introduces a range of miscellaneous provisions that contribute to a number of Government priorities.

WATER RESOURCES MANAGEMENT PLANS

59 Water resources management plans

New Section 37A(3), (6) and (7) WIA

Power conferred on:    Secretary of State

Power exercisable by:    Direction

Parliamentary procedure:    Nil

Under this clause every water undertaker will be required to produce a water resources management plan. The Secretary of State may give directions to water undertakers specifying the form which a water resources management plan should take and the relevant planning period, in addition to the matters that such a plan is required to address as listed under 37A(3). Such a direction will apply to one, a number or all undertakers, as the Secretary of State may consider appropriate. The Secretary of State will have the power to vary or revoke any such direction after the event by further subsequent direction. The Secretary of State may direct the water undertaker to prepare a revised plan under 37A(6)(b).

These provisions are also relevant to Drought plans under clause 60, through the provisions of the new 39C(5) which apply these provisions in relation to drought plans as well as to the production of water resources management plans. The Secretary of State may, through regulations, prescribe how any representations made on the publication of an undertaker's draft water resources plan (including any comments from the undertaker on those representations) be dealt with in the plan. That includes the more general power for the Secretary of State to direct a water undertaker to change its plan from the draft submitted as the Secretary of State sees appropriate.

It is submitted that a delegated power to specify the procedural details of the treatment of representations is appropriate and that this should be subject to negative resolution procedure.

New Section 37B(5)

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - Regulations

Parliamentary procedure:    Negative resolution

The secretary of State may make regulations to prescribe how representations from any water undertaker under the water resource management plan provisions are to be dealt with. It is submitted that this is an appropriate level of safeguard and control.

DROUGHT

60 Drought plans

The above delegated power provisions under clause 59 are also applied to drought plans by the new WIA 39B(5). Here too, the procedural details, diversity of areas and situations involved make the matters concerning the regulation of drought plans appropriate for secondary legislation.

LAND DRAINAGE AND FLOOD DEFENCE

63 Revocation of local flood defence schemes

New section 18A(2) Environment Act 1995

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - order

Parliamentary procedure:    Negative Resolution

Clauses 63 [j810] and 64 [j811] should be read together. Clause 63 inserts a new section 18A into the Environment Act 1995 to empower the Secretary of State, by order made by statutory instrument, to revoke any local flood defence scheme and for supplementary purposes. These include altering the number of members of the regional flood defence committee in whose area the local flood defence scheme was situated and adjusting the members appointed by constituent councils to the regional committee.


64 Regional flood defence committees

Power conferred on:    Relevant minister

Power exercisable by:    Statutory Instrument - order

Parliamentary procedure  :  Negative Resolution

Clause 64 amends paragraph 1 of Schedule 4 to the 1995 Act to empower the relevant Minister to make orders which establish a new regional flood defence committee for such area as specified in the order, or to abolish a regional flood defence committee.

Taken together with the powers under clause 63 these powers will enable Ministers to abolish some or all of the present local flood defence committees so that there will be a single, regional tier of flood defence committees. Orders abolishing the local committees may adjust the membership of the "parent" regional flood defence committee. There are also powers to create new and additional regional committees and abolish existing regional committees. These powers are likely to be used if it is considered that existing regions are too large and should be split into two or more areas. The 1995 Act effectively limits the total number of regional committees to the number in being at the time of enactment - i.e. 10 - and that limit will be removed by these amendments.

It is considered desirable that these powers are contained in delegated legislation as they will be exercised in relation to existing orders (the local flood defence schemes) and applied flexibly across the country, taking account of consultation and other considerations.

Paragraphs 2 to 6 of Schedule 4 to the 1995 Act set out the procedures for making orders under that Schedule, including those under the extended paragraph 1. These procedures are also being applied to orders under the new Section 18A. They embrace public consultation and advertising; consideration of objections; orders being subject either to special parliamentary procedure (if notice is served by an objector) or annulment in pursuance of a resolution of either House of Parliament (if no such notice is served). There are also requirements for orders to be advertised after making and for them to be questioned by the courts.

INFORMATION

66 Information

New section 201(2) WRA

Power conferred on:    Secretary of State

Power exercisable by:    Statutory Instrument - regulations

Parliamentary procedure:    Negative Resolution

This clause strengthens the Environment Agency's power to require information in respect of abstraction and impounding in section 201 of the Water Resources Act 1991 and aligns it with the existing power to require information in respect of the control of pollution in section 202 of the 1991 Act. The Secretary of State is empowered to make regulations restricting the information which the Agency may require and for determining the form in which information is to be required. The power would be used to set reasonable parameters on the types of information the Agency could seek. It is submitted that a delegated power is appropriate and that it should be subject to negative resolution procedure.

RESERVOIRS

72 Flood plans

New section 12A(1) Reservoirs Act 1975

Power conferred on:    Secretary of State

Power exercisable by:    Direction

Parliamentary procedure:    None

The Secretary of State and the National Assembly for Wales are given the power to direct reservoir undertakers to prepare flood plans describing the action they would take in order to control or mitigate the effect of an escape of water from their reservoir. A direction would specify technical requirements for determining the downstream effect of a dam failure, require the plan or information about matters in it to be given to the Environment Agency, specify others to whom the plan must be sent, and the manner in which the plan is to be published. The direction-making power is conditional on extensive prior consultation with interested parties, though this may be constrained in the interests of national security by the provisions of Clause 73. It is submitted that a direction making power is appropriate as each reservoir undertaker can then be addressed on a case-by-case basis.

73 National security

Power conferred on:    Secretary of State

Power exercisable by:    Direction

Parliamentary procedure:    None

The body with enforcement duties under the Reservoirs Act 1975 is required to maintain a publicly available register of the large raised reservoirs in its area. Reservoirs owned by the Crown are presently excluded from the 1975 Act but clause 75 ends that exclusion. The Secretary of State may direct the enforcement authority not to include details of a reservoir on its register if he considers inclusion to be prejudicial to national security interests. It is submitted that a direction making power is appropriate to deal with matters on a case-by-case basis.

DISCHARGE CONSENTS


 
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