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Baroness Miller of Chilthorne Domer: The noble Baroness, Lady Young, made a good point. Amendment No. 60 might be strengthened if we added a couple of the clauses to it that she mentioned. There should be a presumption of renewal, not only when it could be shown that there was no serious damage but also subject to efficiency. To that extent, I agree with the noble Baroness.
There is a difficult balance to strike, given that those who invest in a businesses need certainty, or as much as they can be given in an uncertain world, of how much it will rain. Given the fact that there will be a constant ratcheting-up of efficiency, should the Government choose to accept that that aspect of the Bill should be strengthened and the amendments to that effect are accepted, Amendment No. 60 would be on a much stronger footing. I would be interested in discussing with noble Baronesses, Lady O'Cathain and Lady Byford, how we could amend the amendment further, so that it included the issues of need and efficiency.
Baroness Byford: My name is linked with the amendment, and I accept the comments of my noble friend Lady O'Cathain. I believe that I must go through the Minister, as I am not allowed to address the noble Baroness, Lady Young, herself on this matter. She said that the present system works well, so the question must be, "Why change it?" That is a clear question, to which we need an answer from the Minister. Are we changing the system because there is something in the Water Framework Directive that means that we have to change it?
As for the presumption on renewal of licences, we had a long discussion on a previous Committee day, in which we all showed an awareness of the need or desirability that for businesses of whatever size, large or small, there should be a presumption of renewal. The noble Baroness, Lady Young, said that there would obviously be six-yearly reviews of licences. However, I understand that when regular reviews have happened in the past, it has not necessarily meant that the licence would be withdrawn. There might be a slight fault or something that needed adjusting, and the company may be told of the reasons or the concerns expressed by the operation within which they work. Reviews of consent do not consider removing consent, but usually involve additional constraints on quality, requiring more treatment processes and investment, especially as regards sewerage works. The Environment Agency does not take consent away but considers the way in which the process is working.
If the Minister will bear with us, we should perhaps spread the debate a little wider, because two things are becoming intertwined. It is no use business being unable to invest or to know where it is going in the long term. If through leakage, pollution or for whatever reasons, the Environment Agency has concerns, surely those concerns are best addressed in the review that is done on a regular basis. It will, I understand, be done
My noble friend Lord Dixon-Smith rightly said that a licence granted to one person might have an effect on another person. I accept that, but would it not be possible to adjust to the terms of individual licences, rather than going for complete renewal? Again, I ask through the Minister, because I must. That may have to be done if climatic change happens radically, because renewal would not be possibleit would be an emergency. Perhaps we might consider the matter in that way.
Since our last sitting, I have been concerned about the question of renewals. I refer especially to infrastructure renewals, especially with regard to those with long-term investments, such as water companies. Conventional accounting methods for water companies,
If we are to move from a system whereby the presumption of renewal has been in being to one where it is not, that has huge implications not only for the viability of water companies and others that are concerned in quarries, but also to the way in which accounting is done. How can value be assessed? We are referring not to the freehold value of land but to construction work underneath the soil.
Lord Livsey of Talgarth: The amendment was also tabled under my name. I am interested in what has been said about accounting and write-offs. When I spoke about accounting last week, I said that there was a strong case for a schedule to be produced of write-offs and accounting for different types of investment. Clearly, when there is a water company with major investments of a very expensive type over a long period, the write-off must be over a much longer period. In the case of a bottling plant, one might adopt something different, as the technology would be likely to change more rapidly and the write-off period should be that much greater. Some guidance should be incorporated, and some formula should be drawn up.
Lord Whitty: In a sense, the two amendments move in opposite directions, which makes it interesting that the Liberal Democrats support them both. The first measure would impose a tighter schedule on time limiting, and the second would make any time limiting, whatever the time, subject to automatic renewal except in very limited circumstances. Given the recent exchange between the noble Baronesses, Lady Miller and Lady O'Cathain, about amending the amendment, we may consider a more substantial amendment at a later stage. However, as it stands, renewal would be refused in a limited set of circumstances.
On Amendment No. 57, the Government want all abstraction licences to be subject to a time limit, over time. However, that is best done on a voluntary basis, and we look to the Environment Agency to encourage existing holders of abstraction licences to move to a time-limited basis voluntarily. If we asked them all to do so at 2012, it would create a huge concentrated burden of work on the Environment Agency, which would have to consider all existing licences all at once. But the kind of compensation issues which relate to renewal are also relevant. Converting an existing abstraction licence to time-limited status could, of itself, raise compensation issues. Therefore, it would not only be an extremely time-consuming exercise; it could also be an extremely expensive one if we were to require a mandatory switch to time limits. The aim of the whole policy is to make time-limited licensing and the new system far more attractive.
Most of the discussion has been based on Amendment No. 60. In effect, the amendment would limit to a very narrow set of circumstances the area in which the Environment Agency could refuse a licence. As has already been said, the amendment would affect the agency's ability to manage water supplies sustainably. It would not allow it to take into account issues of efficiency. My noble friend Lady Youngactually she is not my noble friend any more; she will know what I meanpointed out that there is concern
The Environment Agency needs to be able to refuse renewal under a wider range of circumstances. But there is not, as the noble Baroness, Lady O'Cathain, suggested in her first intervention, a presumption of non-renewal. That is not the case. The policy and the framework of the operation provide us with a clear presumption of renewal provided that the three main tests are met.
Baroness O'Cathain: I thank the Minister for giving way. The reality is that if someone had to apply for an extension as if it were a new licence, that would mean that there was no presumption of renewal. That is simple.
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