Examination of witnesses (Questions 63-79)|
TUESDAY 30 JANUARY 2001
63. Can I welcome you to the third session this
morning, and can I ask you to identify yourselves for the record,
(Mr Davis) Thank you, Chairman. My name
is Alan Davis. I am Director of Water and Land in the Department
of the Environment, Transport and the Regions. On my left is Rodney
Anderson, who is Head of the Water Supply and Regulation Division
in my Directorate; and on my right is Richard Vincent, who is
the Team Leader of that part of Mr Anderson's Division responsible
for Water Resource Management and Abstraction.
64. Do you want to say anything by way of introduction,
or are you happy for us to go straight to questions?
(Mr Davis) Could I say two short things. The first
is to apologise that both Mr Anderson and I have colds, so we
will endeavour to speak clearly and not cough and spread the germs.
The second is just a brief comment, I think, on the question of
whether we should have published the Bill in its incomplete state,
as the other witnesses have referred to it. I suspect Ministers
would take the view that they would have been damned if they did
and they would have been damned if they did not. This Select Committee
had some criticism last year about our failure to make progress
on the abstraction licensing reforms we had announced; there have
been more general comments about the lack of certainty about what
was going to happen, having removed the water provisions from
the Utility Bill. There is a feeling that there had been little
real discussion of those provisions during the preparation of
that Bill. So I think the view was that, it would be useful to
publish the Water Bill and have a better debate on the utility
provisions specific to water, being clear the extent to which
the consistency argument should win, or the extent to which the
`water is different' argument should win. So the Government decided
it would help to publish clauses as drafted so far, with a very
clear indication in the consultation paper that there was more
work to be done and there were other provisions to be added, particularly
in relation to competition, but also other areas. The Bill has
61 clauses, so it is not insubstantial. We do not expect that
the further work to be done on other parts of the Bill will have
a significant impact on the clauses in the Bill, but clearly that
remains to be judged as that further work is carried forward.
If we had waited until the whole Bill was ready we would then
either have had to delay introduction of the Bill while we could
have a draft Bill discussion of this kind, or we would have had
to do without that; so the Government decided it would publish.
I think we would argue that the many detailed comments we have
received on what is in the draft Bill, as well as the points about
what needs to be added, shows that people think it is useful to
be able to comment on the detail.
65. So, if there was to be a Queen's Speech
in June, would the proposals on competition be ready for that?
(Mr Davis) We are working towards an early announcement
on conclusions on competition. Until Ministers take their decisions,
I do not think I want to speculate on how long it will then take
to draft the clauses that will deal with that.
66. Would you like to define `early' for us,
in departmental terms?
(Mr Davis) I think `early' is all that Ministers have
said so far, and I do not think I want to add to that at the moment.
67. Could you give just a hint to this Committee?
By the time we are actually pursuing the end of our inquiry, is
there any chance that we will know any more about competition?
(Mr Davis) Could you give me an indication of how
long your inquiry will last, Chairman?
68. By the middle of March, we are going to
have to be producing a report, are we not?
(Mr Davis) According to the press, at least, we are
heading for a general election quite soon; no doubt the Labour
Party and other parties will be considering whether water competition
is something they want to feature in manifestos, and Ministers
will want to decide whether it would be helpful before the manifestos
are published to say something on competition or not, but they
have not taken a view on that yet.
69. On the question of abstraction, one of the
problems with getting a logical position about abstraction is
that we do not know what is going to happen about competition.
Now do you really think that the whole abstraction provisions
in the Bill can be sorted out while there is still, as you have
just indicated, a big question-mark about competition?
(Mr Davis) Our judgement is, yes; unless potential
competitors can get access to water, it is hard for them to compete
in its supply, and the provisions are aimed to make it easier
for licences to be moved around. They are also aimed at major
deregulation of small abstractions, particularly by farmers; they
are aimed at bringing all forms of abstraction under control.
So a lot of the elements of abstraction reform do not really relate
to competition, and our judgement was that we are unlikely to
have to change the draft clauses significantly in the light of
what Ministers decide to do on competition.
70. You have heard what Dr Helm said earlier,
and he is Chairman of your Academic Advisory Panel in the Department;
you have had the evidence and advice from Water UK, submitted
to you in the course of the Utilities Bill, last year, they say
they are disappointed that their comments then did not appear
to have been included in the current proposals around abstraction
licensing. Why is it that you do not appear to have taken those
views into account; have you now discarded both the views of Dr
Helm and Water UK, in terms of taking this forward?
(Mr Davis) In relation to abstraction licensing?
71. Let us start with abstraction, yes. Supposedly,
we are having an open consultation process before the publication
of the Bill, you have had time to listen to Dr Helm's advice on
the wider issues and you have had time to take into account Water
UK's advice, none of which appears to have had much impact on
the proposals you are putting forward. Has that advice now been
(Mr Davis) All the comments that were received in
the consultation on abstraction were carefully considered before
the decisions on abstraction were announced, in the document `Taking
Water Responsibly'. A lot of the comments now are about the way
the Agency runs the system, rather than about the primary legislation
which controls what the Agency does; so there may be some further
tinkering to be done, as a result of the publication of the actual
draft clauses in this Bill. But I think we would feel that we
have dealt adequately with the Water UK concern about long-term
supply of water for public water supplies, through the arrangements
that we have described for different time limits for different
uses of water.
72. How do you respond to their concern that
you are putting at risk the long-term security of the public water
(Mr Davis) May I invite Mr Vincent to comment on that
(Mr Vincent) Thank you. I think Water UK are concerned
on two particular fronts. One relates to the fate of the so-called
`sleeper licences', licences which are held but under which no
abstraction is made; and the Bill contains a provision which would
reduce from seven years to four years the period after which such
a licence could be revoked without compensation being payable.
But I think it is very important to emphasise that this would
be an extension of the power available to the Agency, not a duty,
and it has been clearly understood, and documents which the Department
has put out, I trust, have made it fairly plain, that there would
be no question of these sleeper licences being revoked if they
are being held for valid, emergency, standby purposes.
73. Why do you need to reduce this from seven
years to four?
(Mr Vincent) Simply in order to get a better grip
upon sleeper licences which are held for rather less honourable
Chairman: Why not three years, rather than four?
74. Or one?
(Mr Vincent) There has to be a balance, I think. Particularly
where agriculture abstractions are concerned then three years
is probably an agricultural cycle, if you like; not to use an
abstraction licence within that period of time might not be uncommon.
But it is a balance, and the proposals are there for further consultation.
Might I move on to the other aspect, which is
75. Can I just interrupt, on that point, and
ask you, is not that tempting people, like an agricultural abstractor,
perhaps then to make sure that he grows a crop where he needs
to do the abstraction, just to keep his licence running, rather
than necessarily to make the best profit out of whatever he is
(Mr Vincent) If a beneficial use is being made of
the water then there is no question of that licence being regarded
as a sleeperit is abstraction within the terms of the licence.
76. So it might encourage people to abstract
water when it is not absolutely necessary, just to keep the licence
(Mr Vincent) If they have a valid use for it; but
licences, very often, will prescribe the purpose of use of the
water, and some may also have conditions about the way in which
the water is used. So there are various safeguards in place against
wanton, if I may put it that way, use.
77. Have you got a lot of evidence of a problem
with sleeper licences?
(Mr Vincent) The Environment Agency estimates, I believe,
that there may be some 2,000 sleeper licences in existence, that
is out of a total of some 50,000.
78. Yes, that is the number of sleeper licences;
but have you any evidence of problems with them?
(Mr Vincent) No. I believe, and you are seeing the
Environment Agency in two weeks' time, I think, that there is
no great evidence of a difficulty at the present time.
(Mr Davis) If I might make one comment. One of the
issues is providing water for potential competitors, and, clearly,
if there is a sleeper licence the Agency cannot give that licence
to somebody else, and so part of this is to do with opening up
and moving licences around.
79. So it is really clearing competition; this
is the theory behind it, not that there is a problem with sleeper
licences but that it actually is a barrier should you wish to
rejig the licences?
(Mr Davis) I think there is a problem with sleeper
licences, in that, in order to have proper water resource management,
you do not want licences around which might suddenly be used.