EU: Counting the Cost of Food Waste (EUC Report)

Baroness Parminter Excerpts

Thursday 6th November 2014 Lords Chamber

[Baroness Parminter (LD)]

My Lords, like the noble Lord, Lord Whitty, I am a member of the sub-committee and benefited from the very able chairmanship of my noble friend Lady Scott on this, her first inquiry for the sub-committee. I am sure that the House will benefit from many more, particularly if she carries on choosing subjects for our inquiries which are so pressing and can reach out to the wider public as well. It is important that we speak not only on issues among ourselves but, on occasions, manage to reach a wider audience.

This is indeed an incredibly pressing problem, with 90 million tonnes of food in Europe being wasted every year and environmental resources being wasted as a result of that. Greenhouse gas emissions result, while resources—water, pesticides and other resources—are being wasted by being used for producing those food products.

The report, as other noble Lords have mentioned, identifies where action is necessary. It has identified that good practice is to be found principally in the UK, for which the Government can take a fair degree of credit. It has brought the issue to the public’s attention.

I will focus on one issue that has not been mentioned so far by noble Lords: our recommendation that there was considerable room for improvement in the data reporting by the food and drink manufacturers, the retailers and the wider food service industry. Both the UK Government and the retailers are united in favouring a voluntary approach to reporting. We as a committee accept that the voluntary approach is the right one at this stage. Undoubtedly, however, it requires strong leadership, both from the Government and the umbrella groups in the industry—notably the British Retail Consortium.

The evidence from elsewhere in Europe shows the value of open data reporting at company level. In Norway we saw very clear evidence that the ForMat project—which is a collaborative effort between the retailers, the environmental organisations, the producers and indeed the Government—was a means to chart and minimise food waste. Part of the project is knowledge transfer and communication of the results, ideas and experiences, which has allowed this open data reporting to help drive down food waste by open data sharing: that is, sharing of individual company reports.

In October 2013, we had the first company in the UK to participate in open data reporting. That was Tesco. It may be thought surprising that Tesco was prepared to disclose its food waste when it had some slightly more tricky issues with auditing other accounts in more recent times. Nevertheless, it was an important and welcome initiative. It revealed that it was generating in half a year 30,000 tonnes of food waste. It used its own data and industry-wide figures produced, I think, through WRAP. It was frankly a revolutionary step change in market reporting. It was interesting to see in the Financial Times and other respected newspapers that the Tesco share price was monitored very carefully the next day to see if this had had an impact. It had not. Therefore, there was an assumption that other companies would follow suit and would publicly report their own individual food waste figures. Currently it is done privately as part of the very welcome Courtauld agreement with the support of WRAP.

Those initial hopes were dashed in January this year when the British Retail Consortium announced that the UK major supermarkets had signed up to report their total food wastage statistics, not their separate figures. I accept that all reporting of company food waste is important. It can help individual companies to identify hotspots and they can learn from that and drive down food waste. Indeed, when Tesco did that exercise, it found that 68% of the salad sold in bags was wasted. It then produced smaller bags of salad—so it can have value. But if we are seriously going to help companies save the £5 billion which they are wasting on food waste, we need to share data. We need to learn from best practice and use that peer pressure to address the problems in the industry.

Do the Government have plans to meet the British Retail Consortium and the major supermarkets after the publishing of that sectoral report in late January—in two months’ time? If those plans are not in place, I suggest a round table including government Ministers, perhaps the chairman of our committee, and the major supermarkets in the BRC. They should be brought together in order to look at those collective figures and seek to move towards the publishing of separate food waste figures by major UK supermarkets.

Of course, it is not just supermarkets we need to worry about. It is all companies which are involved with either producing food, selling food, or indeed with employees consuming food. It is here that the Government’s environmental reporting guidelines for companies should be a key plank in moving towards every company reporting its figures. From October, all major UK listed companies were obliged to report their greenhouse gas emissions in the directors’ report. Other forms of social and environmental reporting are voluntary, but in a welcome move the Government encouraged companies to do so and produced those guidelines to help. They are very much in line with the EU’s provisions on non-financial reporting for large companies, which were produced earlier this year and set out the provisions for environmental data reporting.

However, looking in some detail at the government guidelines, as I tend to do, I noticed that in the section on food waste—on page 49, for those noble Lords who want to have a quick look—food is not even mentioned as a separate category for which companies should report waste weight. Paper, glass, aluminium, plastics, aggregates and even hazardous waste are mentioned, but not food waste. Now I accept that the list is not exhaustive, but I thought that if the Government were serious, as they say they are, that companies should be looking to report their food waste figures voluntarily, their own environmental reporting guidelines would explicitly include food waste. Will the Minister confirm that the Government are seeking to encourage companies to report their food waste figures voluntarily? If so, perhaps they might revise their guidelines.

The report accepts that voluntary reporting is the right way forward for now but, given the scale of the challenge, urgent action is needed. It requires leadership from the Government and the British Retail Consortium to achieve a step change in open data reporting. The time is undoubtedly now—or perhaps future Governments in the not too distant future, or indeed the European Commission, will be likely to see the merit, as they have done for greenhouse gas reporting, of making open data reporting an obligation for all large companies.

Deregulation Bill

Baroness Parminter Excerpts

Tuesday 28th October 2014 Grand Committee

[Lord Rooker]

My Lords, we did not spend a lot of time in the Joint Committee on this because we were not adding things to the Bill. We made recommendations relating to further clauses, which I will not go into. I have been a regular walker in the Lake District for the past 30 years. One of my greatest regrets is that I did not discover the Lake District until I was 45. However, I would never claim that enjoyment of the countryside and the open air, and walking in the Fells, entitles me to go through someone’s garden alongside their private home. There can be no justification for a walker, a person enjoying the country, making that claim. Because of the route that a path may take—sometimes they go through a private garden—you sometimes see a sign that asks walkers not to use a child’s swing and says that if they do, they do so at their own peril. There cannot be an argument to do that.

I was involved in a case about a path being moved. The cost of moving a path a small number of yards—or metres if we are in Europe—is enormous. I cannot see that that cost can justifiably be put on the owner. It is a public good to move a path. In some ways, I am sympathetic to the principle behind the amendment, although putting it in the Bill is asking for trouble. Perhaps we need another stakeholder working group. The one relating to this Bill was admirably chaired by Ray Anderson, who seems to have done an incredibly good job getting a consensus.

By and large, there is a case for change. The Government’s view should not be, “Oh well, this is on the landowner”. It is not quite like that, particularly when you are in the Fells, which is the only area I know in some detail but it may be different elsewhere. However, it does not alter the fact that things change as regards rights of way. A path can be diverted, and the joy of the countryside and the open air can be maintained. My view is that you cannot make a claim about the right to go through a person’s garden. I am not making that claim as a walker. My claim is to access to the countryside. Therefore, there should be movement on this issue but it would be best for it not to be in this Bill.

[Baroness Parminter (LD)]

My Lords, I apologise for not being able to attend Second Reading. I had to go to a school event with my children. This package of measures has been agreed, as referred to by the noble Lord, Lord Grantchester, and others. However, we need to reflect on the fact that it has been carefully agreed by a wide group of people over two years. If we start to unpick various elements, other issues might fall out as well. We need to bear that in mind very carefully. This has been a carefully agreed package and what might seem a small change, if introduced in one area, might undo the broad compromise and consensus secured on the wider agenda.

My second point is that, looking carefully at the amendment tabled by my noble friend Lord Skelmersdale, it seems that in this new legislation there will be a significant improvement—he alluded to this—in the process for owners and occupiers with their ability to apply to make orders to divert or extinguish public paths. I think that the authorities will have to consider such applications within four months. Combined with the draft guidance which I think has been agreed to by the stakeholder working group, and which spells out how order-making authorities must consider this issue as it moves forward, those two changes together—the draft guidance and the new rights that private landowners are being given in this legislation—should be tried and tested before we start making further amendments. For those two reasons, that it is a carefully considered package with broad consensus among a hugely divergent group of people and that there are already some new proposals in the legislation to address some of the issues that my noble friend Lord Skelmersdale has rightly raised, I do not feel able to support his amendment.

[Lord Cameron of Dillington (CB)]

My Lords, I support these amendments but first I must declare an interest as a farmer and landowner, as an ex-chairman of the Countryside Agency and as an ex-president of the CLA. I really rose to support Amendments 17 and 18, in the name of the noble Baroness, Lady Byford. Both amendments seem to bring forward consistency and clarity; certainly, Amendment 17 does that while Amendment 18 creates greater flexibility and less red tape. I endorse the question that the noble Baroness put to the Minister as both these amendments were agreed by the stakeholder working group. The reason, as enunciated by the noble Baroness, Lady Parminter, is that we have fairly limited reform of the rights of way legislation in Clauses 21 to 27 because those were the only agreed reforms put forward by the stakeholder working group. However, these two amendments were also agreed. Why has Amendment 17 been rejected altogether, when it seems to be very consistent with a deregulatory Bill to bring consistency across the country?

Frankly, Amendment 18 has been gralloched—a good expression meaning to remove the guts of something, in this case the amendment put forward by the stakeholder working group. It has been limited to applying only to byways open to all traffic. The other reasons for erecting gates, which are well enunciated in proposed new subsection (2) of the amendment, seem perfectly reasonable and appropriate. As I say, they have been agreed by the stakeholder working group.

On the amendments put forward by the noble Lord, Lord Skelmersdale, I am on the side here of the noble Lord, Lord Rooker: I agree with their principles but they are a step too far. They ought to be thrown back to the new, reformed stakeholder working group for it to look at carefully and see where it can agree amendments about diversions or closures—preferably not closures but certainly diversions—so that they would be easier to make around domestic premises. That would be a very good idea.

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[Lord Skelmersdale]

My Lords, I am extremely grateful to all noble Lords who have taken part in this debate and of course to my noble friend the Minister for his very full explanation of the Government’s—I believe—slightly misguided interpretation of what has been put in the Bill. Were we in the Chamber, I would withdraw my amendment in favour of my noble friend Lady Byford’s Amendment 17, which gives me exactly what I and those who have briefed me would like.

I am not sure whether my noble friend Lady Parminter wrote the government line or is following it. She said that the group package should be tried and tested. They both said the same thing, so they are clearly in concert.

[Baroness Parminter]

I am sure that my noble friend the Minister can speak for himself, but it is not often that he and I are said to say exactly the same things.

[Lord Skelmersdale]

Does my noble friend want to comment? No? Anyway, they have spoken with one voice, whether accidentally or intentionally. My noble friend Lady Parminter says that it is nice to know.

Both the noble Lord, Lord Cameron, and my noble friend Lord Cathcart said that Amendments 17 and 18 were agreed by the specialist working group and asked why they were therefore not in the Bill. We have heard a lot on that from my noble friend the Minister. My noble friend Lord Plumb agreed that there are occasions when walkers—was his word “misbehave” or have I interpreted what he said?

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[Lord Judd]

My Lords, I thank most warmly the noble Lord, Lord Bradshaw, for having introduced this amendment. If one looks at the photographs to which he referred and others—the evidence of our own eyes—one sees that this could be described in other circumstances as wilful and irresponsible vandalism. It is the destruction of one of our greatest assets and the people doing it should be treated firmly. Of course, it is going to be a complex area and it will be difficult, but the point is that the noble Lord, Lord Bradshaw, is having a go. If his proposals are not right, let us get proposals that are effective but let us stop dilly-dallying on this issue.

Some of the points made by the noble Lord, Lord Jopling, are very valid, not surprisingly, and I am sure that as we take this matter forward they can be considered. If the amendment is brought back on Report, as I hope it will be, perhaps they can be considered by then, which would be very sensible.

Sometimes in this context, there is emotional talk about the right of the handicapped to access the countryside. To those of us who work in the sphere of national parks and the rest, all the evidence suggests that the responsible representative bodies of the handicapped and the others are saying that what is happening is a menace, because it makes walking—for the blind, which is a very obvious example—much more hazardous and difficult. For the deaf—and I understand that problem, being deaf myself—it can be a terrifying experience when this noise suddenly occurs, with no sort of warning.

The point that we need to remember, and it is about social responsibility, is that what a few are doing is placing significant financial penalties on people who are trying to care for these rich and special national assets. This means that the cost of that care very often gets passed on to the taxpayer, to the subscriber and the donor. Is the indulgence of those few in irresponsible behaviour to be subsidised by society as a whole? That is just ridiculous. The financial and Treasury disciplines that apply to most of our lives should mean that we make it a priority to get this situation put right. I therefore again thank the noble Lord, Lord Bradshaw, most warmly and say that the sooner that we can do something about it, the better.

[Baroness Parminter]

Can the Minister, in his closing remarks, answer a question that I think will be of interest to all noble Lords? This amendment deals with a very important issue and I think we are very grateful for it having been raised today. The question is how we deal with it. I agree with my noble friend Lord Jopling that a stakeholder group is the best way forward. However, there have been questions raised about how much confidence we can have in that as a route to deliver. Can the Minister say what progress has been achieved in setting up a working group on this issue? Has a timetable been set for that working group and if it does not complete by that point, what actions do the Government intend to take? Perhaps the Minister can say in words of one syllable whether he, like his colleague down the other end, has confidence that a stakeholder working group can address this very real problem. The strength of feeling in this Grand Committee today shows it is something that this House wishes to be addressed quickly.

Thames Tideway Project: Contingent Guarantees

Baroness Parminter Excerpts

Tuesday 14th October 2014 Lords Chamber

[Baroness Parminter (LD)]

My Lords, given the Government’s work with Infrastructure UK, Thames Water and Ofwat to identify the exceptional risks for which the contingent financial support has been offered, what measures have the Government asked to be put in place to minimise the likelihood of those risks and the resulting cost to the taxpayer?

[Lord De Mauley]

My Lords, the latter half of my noble friend’s question is quite difficult to answer at this stage. The Written Ministerial Statement referred to the contingencies covered by the support package. There are, for example, measures to deal with situations where claims exceed insurance cover, where economic or political events affect access to debt finance, where there are exceptional cost overruns and where the IP goes into special administration. It allows for discontinuation in certain circumstances and deals with how value for money for taxpayers is to be achieved. I can assure noble Lords that we have kept this to an absolute minimum to ensure a competitive process.

Thames Tideway Tunnel

Baroness Parminter Excerpts

Wednesday 14th May 2014 Lords Chamber

[Lord De Mauley]

My Lords, yes. I am grateful to the noble Lord, not only for his question but for the very valuable work that he does, which we all know about. We are required to have a collecting and treatment system for London. Exceptions on grounds of cost have to be truly exceptional, and this project does not qualify as exceptional. The environmental standards that have been set are equivalent to those in other tidal estuaries. I am therefore confident that the tunnel is the right solution for London, and the only solution compliant with the urban wastewater treatment directive. However, I assure noble Lords that we remain completely focused on keeping costs to a minimum.

[Baroness Parminter (LD)]

My Lords, the Government have offered contingent financial support for exceptional risks on this project. Following discussions with Infrastructure UK, Thames Water and Ofwat, is the Minister in a position to say what those exceptional risks and the potential cost to the taxpayer are?

[Lord De Mauley]

My Lords, we are still working on that, but I thank my noble friend for the opportunity to say that independent financial advisers have confirmed that no water company—whatever its financial structure—would have been able to access sufficient finance at an acceptable cost for such an exceptionally large and complex project without some contingent support from government. It is important that, when offering contingent support, taxpayers’ interests remain a top priority and that the taxpayer is appropriately protected by measures that minimise the likelihood of these exceptional risks.

Water Bill

Baroness Parminter Excerpts

Tuesday 8th April 2014 Lords Chamber

[Baroness Parminter (LD)]

I rise to speak to Amendment 13, which is in this group. It is tabled in my name and that of my noble friends Lady Bakewell of Hardington Mandeville and Lord Marks of Henley-on-Thames.

I think my views on retail exit are well known in this House. I am not in principle against it, but I have concerns that it is a complex issue and therefore one should not legislate in haste. The amendments the Government have introduced today, at this late stage, give broad-ranging powers to the Secretary of State to implement changes to allow voluntary retail exit from the non-household market. Given the nature of these powers and the need to get the details of retail exit right, I believe the fullest consultation and parliamentary scrutiny are required. Only this will ensure that retail exit is introduced in a way which delivers improvements in services to all customers.

The Delegated Powers and Regulatory Reform Committee argued yesterday that,

“the opportunity for discussion in Parliament of the extent of the powers and the manner in which they are likely to be exercised has been seriously curtailed”.

It went on to argue that,

“the powers to make exit regulations should require a strengthened affirmative procedure on their first exercise”,

and outlined what procedure it had in mind for that. I agree with the committee. My amendment does what it called for yesterday, which the Government sadly chose not to table.

Why is this important? It is because we need wide stakeholder engagement and strong parliamentary scrutiny to ensure that the real concerns about retail exit can be addressed and taken into account. It is because we need to make sure that retail exit proposals protect the rights of customers, both affected non-household customers and household customers who remain with incumbent providers who cannot divest them. Given that the retail exit is for business customers only, householders could be left with a water company that has signalled a lack of interest in providing customer services. We must ensure a good level of service for effectively stranded customers. As it stands, water companies take ownership of the provision of clean drinking water from source to tap and plan with their customers to deliver that efficiently and safely. Aggregating water retail apart from water provision means we will not necessarily have water providers working with retailers to help customers manage water efficiently. Major water-saving initiatives have been driven by robust planning by water companies which know the supply constraints and want to work with customers through their retail operation to manage that supply for the long term. We need to ensure retail exit is not done in such a way as to hinder that incredibly valuable objective.

Let us also not forget that there is no consensus in the water industry that retail exit is the best way forward, as Water UK makes clear. Indeed, the only vocal advocate among water companies is Thames Water, or more precisely Macquarie, which is one of Thames Water’s major investors. The paper it produced is about selling off customers to extract maximum value for its investors. That blatant self-interest is in stark contrast to the needs of those investing in the industry for the long term. They want stability in the sense of predictability, no surprises and carefully thought-through, outcome-based, long-term logic. We need to ensure that retail exit is done in such a way as not to unsettle the wider investment community whose investment we need to deliver long-term water resilience.

The Government’s amendments show that they are alive to these concerns. For example, they propose a requirement to consult customers prior to an application to exit, and an application can be refused on the grounds that it is not in the interest of household or non-household customers. Equally, the Government are proposing further dialogue with the industry, regulators, customers and others in advance of laying a proposed regulatory framework before Parliament, and a consultation is proposed later this year. This is all welcome, but it does not go far enough. We need a process with full consultation and then the opportunity for Parliament to scrutinise any draft proposals before regulations are put to the House, at which point they cannot be amended.

My amendment would deliver what the Delegated Powers Committee asked for and ensure that any proposed framework for non-household retail exit receives the widest consultation and full parliamentary scrutiny. That way we can be sure that retail exit improves customer service, gives investors confidence and delivers the long-term water resilience we need.

[Lord Marks of Henley-on-Thames (LD)]

My Lords, I support Amendment 13, which was spoken to by my noble friend Lady Parminter and to which I have added my name. I do so as a member of the Delegated Powers and Regulatory Reform Committee of which the noble Lord, Lord Haskel, who has already spoken, is also a member—other members are in their places today—to explain why that committee takes the strong view that a strengthened procedure, often called the super-affirmative resolution procedure, is important, at least on first exercise in the case of these regulations.

The context in which these amendments fall to be considered is that they are a wide-ranging set of amendments which represent a radical change of direction in the Bill. The Bill itself introduces considerable change in the way that the water industry operates, that industry being of great importance to the UK economy as a whole and to individuals. Although these amendments on retail exit are concerned with non-household supplies, as my noble friend has already stated, they are nevertheless of wide public importance.

The noble Lords, Lord De Mauley and Lord Moynihan, and my noble friend Lady Parminter have all explained the political context and impact of these amendments. I will confine what I say to the three reasons why a strengthened procedure is so important. First, there has been very limited time for the consideration of this scheme as a whole, as the noble Lord, Lord De Mauley, frankly recognised. The amendments are introduced in this House at Third Reading in response to amendments introduced earlier, notably by the noble Lords, Lord Moynihan, Lord Whitty and Lord Grantchester. However, in legislative terms, the amendments come, in this House at least, not even at the 11th hour: it is a minute to midnight. It is not, I suggest, satisfactory, and it is certainly not desirable, for nearly 11 pages of amendments to be introduced at such a late stage in the passage of the Bill without the time for lengthy and informed scrutiny of the detail of the proposed scheme. The amendments are complex and demand detailed scrutiny after all interested parties have had ample opportunity to consider them and to comment on them. The timing of their introduction has simply not permitted this to happen and the use of a simple affirmative procedure, as is proposed, would be likely to lead to a draft set of exit regulations being laid before Parliament for approval in unamendable form.

Secondly, quite regardless of the issue of timing, this is, I suggest, a case for a super-affirmative procedure in any event. The amendments would introduce into the Bill the power to make regulations which would effectively amount to an entire new legal framework to enable relevant undertakers to withdraw from the new market arrangements. If those provisions become part of the Bill without a super-affirmative procedure, then Parliament will have, as your Lordships well know, no opportunity to consider and report on the individual details of the proposed regulations and, in practical terms, no opportunity to invite detailed revision of their provisions. With the super-affirmative procedure set out in our amendment, there will be an opportunity for a committee of either House to consider the draft regulations in detail and to recommend changes to the draft for the Secretary of State to consider. The procedure proposed is similar to that in Section 102 of the Local Transport Act 2008, which the Delegated Powers and Regulatory Reform Committee recommended as a model. There is no rush to introduce these exit regulations, particularly not when they are potentially of such importance. They should not be the subject of delegated legislation without a full opportunity for Parliament to consider their detail.

Thirdly—this was touched on by the noble Lord, Lord Haskel—our committee was extremely concerned by the degree to which the amendments establish, not a list of requirements to which the Secretary of State must adhere in presenting the regulations, but a menu from which he can largely pick and choose at will. I have no objection to the fact that the power to make regulations in the first place, in subsection (1)(a) of the new clause proposed in Amendment 1, is permissive and not mandatory. It may be that the Secretary of State decides against exercising the power to make such regulations at all, although that is of course unlikely. However, if he makes such regulations, it is surely right that he should be required to incorporate all the safeguards of which the noble Lord, Lord De Mauley, spoke, which are essential to protect customers, to ensure proper consultation with interested parties, to safeguard the public interest and to secure appropriate parliamentary scrutiny. Yet the amendments as drafted are almost entirely permissive in respect of such matters.

I will trespass on your Lordships’ time for a moment or two to look at a couple of examples. Amendment 1 provides that exit regulations,

“may include provision for protecting customers”,

affected by a relevant undertaker’s withdrawal. Amendment 2 provides that:

“Provision under subsection (1)(a) may require a relevant undertaker … to consult”.

Amendment 4 states that:

“Exit regulations about the transfer of a part of a relevant undertaker’s undertaking may include provision for the making of a scheme to transfer property”.

These are all matters on which this House would wish to be given the opportunity for detailed consideration.

General directions are of general application. I will address two points on Amendment 9. Subsection (1) states:

“Exit regulations may make provision for the Secretary of State to publish … a statement setting out general directions for the”,

regulators. Subsection (4) states:

“Exit regulations may make provision for the Secretary of State, before publishing a statement under the regulations, to consult”.

These are all matters which I would expect, and I suggest your Lordships would expect, to be requirements. They are matters which concerned the Delegated Powers and Regulatory Reform Committee. The list goes on. The central point is that it is vital for Parliament to have the opportunity to consider the proposed exit regulations individually and to recommend changes to particular regulations before they become law without being restricted by the limitation inherent in a simple affirmative resolution procedure.

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Moved by

[Baroness Parminter]

14: Clause 54, page 109, line 40, at end insert “and this is to include guidance about the application of surplus funds during the period of operation of the scheme to support uptake of resilience measures by householders”

[Baroness Parminter]

My Lords, the noble Lord, Lord Krebs, and I return again to the issue of the use of any surplus reserves for Flood Re. I will not repeat the arguments we advanced in Committee and on Report. I feel that the House is clear that our aim is to ensure that any significant surplus funds can be used by Flood Re to encourage householders to adapt to the impacts of climate change and flooding, and so manage down risk.

I am grateful to the Minister for meeting the noble Lord, Lords Krebs, and me last week to discuss the matter again. We accept that decisions cannot be made now—pinning down in legislation what level of reserves should be built up and what should happen to them. However, we need clarity about the decision-making process that will condition what happens to surplus funds. Will the Minister confirm that Flood Re will have to draw up a strategy to manage surplus funds and that it will be published? Equally, we seek confirmation that the approach of “invest to save” is not ruled out if significant surpluses are built up. By this I mean spending on property-level protection where the economics of that approach show that it delivers the best value for money in managing down risk. Given that it has been shown that such an approach delivers a benefit of at least £5 for each £1 invested, it is too important an approach to discount. It could make a decisive difference to individual householders and their protection. It will also benefit the insurance industry by reducing the level of overall claims. It is, therefore, in the interests of a smooth transition at the end of the process of Flood Re. To that end, I beg to move.

[Lord Krebs (CB)]

My Lords, I, too, thank the Minister for meeting the noble Baroness, Lady Parminter, and me to discuss this amendment. I do not wish to say anything at length but I shall make a couple of simple points. If we accept that Flood Re, according to the Government’s own figures, will build up a reserve, we can ask what this surplus might be used for. It could be used for future discounting of policy charges; it could be saved up for—excuse the pun—a rainy day when the call on insurance may be greater than anticipated; or, as our amendment suggests, it could be used to manage down future risk. As the noble Baroness, Lady Parminter, said, this is in effect a proposal that Flood Re should invest to save, to reduce both its own future costs by encouraging household-level protection measures and to help those householders to exit at the end of the period of operation of Flood Re.

According to the work of the Adaptation Sub-Committee of the Committee on Climate Change, which I chair, about 190,000 properties could benefit from property-level protection. It would seem reasonable that some of the money that accrues as a surplus in Flood Re should, given the returns on investment to which the noble Baroness has already alluded, be used to help some or, I hope, eventually, all of these 190,000 properties to become more resilient.

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I ask my noble friend whether she is prepared, on the basis of my answer, to withdraw her amendment.

[Baroness Parminter]

I thank all noble Lords who have joined in this short but important debate as we seek to ensure that Flood Re achieves what we all want it to achieve, which is to help individual households move towards risk-reflective pricing and make them more able to cope with the challenges of climate change, as most clearly reflected in the flooding situations that we have seen. I listened carefully to what the Minister had to say and was pleased to see that he again articulated that “spend to save” is not ruled out in the administration of Flood Re and, secondly, that any secondary legislation will set out that it is open to Flood Re to spend any surplus helping households invest in more resilience measures. Those are both important steps which needed putting on the record. I think both I and the noble Lord, Lord Krebs, will be very grateful and thankful for that comment.

On that basis, we have probably pushed this issue as far as we can. We have sought throughout the process to be helpful to the Government in their ongoing discussions with the ABI, and I hope they feel that we have achieved that. We look forward, once the Bill has completed its parliamentary stages and secured state aid clearance, to looking at the secondary legislation, where I am sure this matter will be touched on again. Finally, as this will probably be the last time I speak on this matter in the House, I would very much like to put on record my thanks to the Minister and the Bill team for all the constructive discussions and dialogues they have had with me and my colleagues on these Benches. It has been an extremely technical and complex Bill and we are grateful to them for the time that they have given to help us in our job of making sure that the Bill leaves this House in better shape than that in which it came to us.

Amendment 14 withdrawn.

Water Bill

Baroness Parminter Excerpts

Monday 31st March 2014 Lords Chamber

[Lord Shipley (LD)]

My Lords, on the face of it this seems a reasonable amendment and I agree with much of what has been said in the two contributions so far. The issue is actually a very specific one around the financial resilience of companies engaged in fracking. Some of these companies may be small and as a consequence of that it is very important that their financial resilience is clearly demonstrated. We already have onshore drilling in the United Kingdom so the question is whether existing regulations impacting on those operations suffice in the case of the introduction of horizontal fracturing or shale gas.

I seek the Minister’s confirmation that the Department of Energy and Climate Change already requires operators to have the financial resources to meet any liabilities, including prevention of contamination. I think that in Committee we were informed that a fund was to be created to guarantee financial sufficiency and long-term cover in the event that a company ceases trading. We have to be clear what problem this amendment seeks to solve, partly because the UK regulatory system seems to be much stronger than the regulatory system in the United States, although the US environment has been made much more robust in recent years.

I understand that our regulations are already very tough and the use of hazardous chemicals is not permitted. Can the Minister confirm this and that the statement made in Committee that the regulatory framework would be further enhanced would meet any concern that this amendment addresses?

There are three issues around water. First, there is the composition of the fracturing liquid. I understand that it already requires the approval of the Environment Agency. Can the Minister confirm that? Secondly, there are ways in which water can be contaminated. There is ground-water contamination by hydraulic fracturing, not least from poor-quality well casing. Anything that leaks out might contaminate ground-water if it can rise to the point where the ground-water is. Methane might rise into ground-water from lower down as a consequence of hydraulic fracturing. Thirdly, there is wastewater. I understand that even at the high end of shale gas extraction, it would amount to only 3% of the annual wastewater rate because extraction industries and others produce wastewater. Are the existing regulatory requirements around the handling of wastewater sufficient?

The critical element this amendment relates to is the financial resilience of the companies. Almost certainly, a number of companies that undertake shale gas fracking in the foreseeable future might not be in existence in, say, 30 years. What will be done to create a fund through pooling to enable that financial resilience to be demonstrated?

[Baroness Parminter (LD)]

My Lords, ensuring we have the right regulatory framework and the financial means to deal with the potential environmental impacts of fracking are important issues and therefore I most sincerely thank the noble Lord, Lord Whitty, for raising this matter again.

In Committee, the Minister outlined the steps being taken to address the low-probability, but high-risk, scenario of a pollution incident. My noble friend Lord Shipley referred to the Minister’s response, which was that the Government and the industry are looking to put a scheme in place, and I am sure that we all look forward to hearing further news about that in the Minister’s remarks this afternoon.

We need tight regulation of fracking by the Environment Agency, the HSE and local planning authorities, but of all the impacts of fracking, not just the impacts resulting from increased pressure on water supplies or their potential contamination. In Committee, the Minister confirmed that the regulatory framework will be,

“reviewed and refined as appropriate as we move towards the production phase”.—[Official Report, 11/2/14; col. 543.]

We need a holistic view of the environmental impacts of fracking, not just of its impacts on water supplies, important though they are, and I therefore cannot support this amendment. I certainly hope the Minister will give assurances that there will be full parliamentary scrutiny of any proposed changes to the existing regulatory framework for fracking.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, Amendment 88ZA, which was moved by the noble Lord, Lord Whitty, would require onshore oil and gas operators to provide financial security when applying for an environmental permit so that funds would be available to deal with any water pollution incidents caused by the operator. The amendment relates to both the conventional and so-called unconventional, or alternative, oil and gas sectors. It would address any pollution that an operator might cause to the water environment but not, I stress, any other damage that might be caused by their activities. The same amendment was raised in Committee by the noble Lord, Lord Whitty, and was withdrawn in the light of information that I provided on our plans to address any wider environmental risks by developing a scheme to ensure that the polluter will be liable in the event of a pollution incident and that there will be sufficient funds available to cover the costs.

I reiterate that the proposed amendment would also apply to, and have implications for, our well established UK conventional onshore oil and gas industry, an industry which, over many years, has maintained a good record of environmental responsibility and competence that has enabled it to co-exist with, and provide employment for, many. Our existing regulatory framework and the application of good operational practice have served us well to prevent pollution from onshore oil and gas activities and to tackle any problems that emerge in an appropriate way. These same controls will provide the basis for the regulatory framework for any new developments in the oil and gas sector to ensure that the environment continues to be appropriately protected. I shall come back to that in a moment.

As part of the licensing process, and prior to awarding a licence, the Department of Energy and Climate Change assesses whether a company has sufficient funding for its planned operations. DECC also checks at the drilling and, where relevant, production stage that the company has appropriate insurance. Similar financial competence checks are carried out by the Environment Agency as part of the permitting process. In this way, we ensure that the companies have the necessary resources needed to back their operations.

Our regulatory framework is underpinned by a robust range of enforcement powers, which are available to the Environment Agency. This includes powers under the Environmental Damage (Prevention and Remediation) Regulations 2009, which in the event of serious damage to surface waters or ground-water will enable it to require the polluter to pay to clear up the pollution. Ultimately, if a significant environmental risk becomes apparent, the Environment Agency has the authority to stop the activity. These powers apply to a wide range of activities undertaken by different industries, so I do not think that it would be justified to create any specific provisions for the onshore oil and gas industry.

However, the Government are very aware of the public’s concerns about the capacity of companies exploring for shale gas to address any liabilities that may arise. As I mentioned in Committee, this issue is being looked at as part of a wider review. DECC and the shale gas industry are working together to put in place a robust scheme that would cover environmental liabilities, even if the relevant operator is no longer in business. They are discussing with leading insurers to build expertise and capacity in the insurance market. The aim is to facilitate the development of products appropriate for shale gas and similar operations, which, in turn, could facilitate the development of an industry-wide scheme. As I explained, these discussions will take time, as we need to ensure that we get this right first time.

The amendment proposed by the noble Lord, Lord Whitty, is quite specific, but perhaps I could just talk more broadly for a moment. As I have just mentioned, and noble Lords have mentioned in their speeches, there are understandable concerns about this whole area of exploration and production. The noble Lord, Lord Cameron, referred to the need to bring the public with us—and he is absolutely right. The Government are clear that we must take all appropriate measures to ensure human safety and protection of the environment. The United Kingdom has more than 50 years’ experience of regulating the onshore oil and gas industry, and we have a robust regulatory system in place to ensure that operations are carried out to high standards of safety and environmental protection.

I can assure noble Lords that the Government will allow production of shale gas to proceed only where it can be done without compromising human health or the environment. We are therefore undertaking a very careful assessment of our existing policy and regulatory framework to ensure that it is fit for purpose, as we move towards the production phase. It is not just about fracking—a process used to extract oil and gas from rock—which has been safely employed in the United Kingdom and elsewhere for many years.

Any changes to regulations that we believe are necessary following this consideration would of course be subject to parliamentary scrutiny. Parliament is also using its other mechanisms of scrutiny, including the significant inquiry into the potential impacts of shale gas being conducted by your Lordships’ Committee on Economic Affairs, which I understand is due to report soon and whose conclusions we will of course consider carefully. A couple of weeks ago, on 17 March, my noble friend Lady Verma spoke for the Government in a short debate on shale gas initiated by my noble friend Lord Borwick. Noble Lords may wish to note also that this debate is occurring simultaneously at EU level, as the noble Lord, Lord Cameron, said, and that debate will reach its own conclusions in due course.

--- Later in debate ---

[Lord Campbell-Savours (Lab)]

My Lords, as in Committee, I need to declare an interest in that I have a leasehold interest, with my wife, in a band G home on the Thames built on the flood plain. My flat is not threatened by flooding, has never been flooded and can never flood because it is on the second floor, and the whole of the south of England would have to be flooded before we were. Nevertheless, I have to report that a car park area that serves our block of flats was recently subjected to some flooding, and it is with that in mind that I feel that I should restrict my comments today and limit what I have to say, and I will not be voting on the issue.

All I want to do today, without commenting on the issue in the light of what has happened, is to read a letter which has been sent to my noble friend Lord Whitty, the noble Earl, Lord Lytton, the noble Baroness, Lady Bakewell of Hardington Mandeville, Mr Owen Paterson MP and Ms Anne McIntosh MP, who I understand is the chairman of the Select Committee in the House of Commons. I simply want to read the letter, which the Minister has seen, because I think that it should be on the record so that all those in the industry outside can read what it says.

The letter is from a Mrs Beverley Morris of Topcliffe Mill, Topcliffe, Thirsk in North Yorkshire, and she has given me permission to read it. Part of it states:

“If I may give a brief summary of our current situation to further expand upon our current predicament.

This building, known as Topcliffe Mill (Mews), and built as a water powered corn mill circa 1800, was subject to a ‘once in 100 hundred year’ flood on 26th September 2012. Apartments 1, 2 and 3 on the ground floor were flooded along with 2 communal areas. Three houses in the same location behind the Mill were also flooded”.

Here we are talking about a leasehold property.

“Much of the North East was flooded during this period and Topcliffe Mill was ‘sandwiched’ between the swollen River Swale to the front of the building and the saturation of the fields to the rear.

Topcliffe Mill building insurance policy is purchased by a small management company, Town & County Properties (Wharfedale) Ltd and the premium (pre flood) was just shy of £5,000 for the year 2012, divided between the 12 homes. Post flood and following the claim, the renewal premium was and continues this year at £23,750 divided between the 12 homes, an increase of almost 500% per home. My husband and I are now paying £2,000 per year for a Band C, 4th floor”—

fourth-floor—

“domestic flat that we have made our home for the past 10 years. As we are not in a position to pay this amount up front and on demand, arrangements have been made to pay by instalment, which in itself incurs extra charges.

The ABI are offering assurances that ‘there is no systematic problem with freeholders being able to obtain insurance for their leasehold properties’. Our management company, have indeed secured building insurance, as I understand they are legally required to do, but at what price? The insurance companies, who know this, have our management company and us over a barrel it seems.

T & C Properties Ltd had their agent, J M Glendinning of Guisley in Leeds thoroughly search the insurance market for a better deal and it was to no avail. As owners, we took on the challenge of checking out the markets ourselves and if required we can supply documentary evidence of refusals, although many refused point bank on the telephone to even consider it. Our management company and their agents are also prepared to lend their testament to the situation we find ourselves in. I am at a loss to see how this scenario fits with the ABI’s explanation either now or in the future if leaseholders are excluded.

Referring again to the Food and Rural Affairs Committee meeting 11th March 2014, Ms McIntosh discussed with Aiden Kerr the issue of SME exclusion from Flood Re. He gave his explanation stating that Flood Re ‘is limited to households’. As we are not an SME but a collection of households, it begs the question, does being a leasehold define us as not a household?

During the session 11 February 2014 you drew attention to the services of the Financial Ombudsman Service. We, however, have no recourse to them to make any complaint into the risk assessment that led to our mighty high renewal premium and nor will we in the future, because the policy is not in the name of the domestic leaseholder. Would the management company complain on our behalf? Doubtful, since they are not financially affected, transferring all the associated charges directly on to the leaseholder …

The notion that one might sell up and move on, being unable to meet the management fees is something of a forlorn hope. Everyone is aware of how property values have fallen and the North East of England is not experiencing the same improvement to values as the south. Add to this a history of flood— albeit the first in 100 years. The financial security of our household stands to be jeopardised, in terms of our ability to meet mortgage payments due to over stretched resources and/or the ability to secure reasonable flood insurance.

The opportunity to afford us the same level of assistance being offered to freeholders is likely to slip by if we are not included in the Flood Re scheme. Given that the decision to have a cap in place in the medium term has been taken, I feel it only fair and just that leaseholder homes are included”.

As I said, my position has changed since the last time I debated these matters, but that testimony is from someone who is directly affected, and a five-times premium increase in the north of England on a band C flat on the fourth floor of a block of flats is something that Ministers should seriously think about. Indeed, I would have thought that Parliament would have addressed that problem.

[Baroness Parminter]

My Lords, the aim of Flood Re is to support people at the highest risk of flooding who would struggle to find affordable insurance on the open market. The way in which it is funded, as the noble Earl, Lord Lytton, has reminded us, is via a levy to provide a funding pool to use for the purposes of the scheme. Many contributors are likely to be at a low or no risk of flooding, but this approach spreads the risks across a large population to make it more affordable.

The question that we are trying to address here is whether it is fair to include specifically band H council-tax and post-2009-built homes—I am not going to address leaseholders because, as other noble Lords have mentioned, we are going to come back to this with an amendment from the noble Lords, Lord Whitty and Lord Grantchester. There will be a small number of asset-rich but income-poor in band H houses. In Committee in this House, the Minister confirmed that 0.5% of such households are in the five lowest-income deciles, or 45 properties in flood risk areas.

A letter to the Committee in the other place from the Parliamentary Under-Secretary Dan Rogerson on 10 December 2013 confirmed that the cost to add band H houses to the scheme would be between about £1.4 million to £5.4 million, funded by an increase of up to 3% in the levy paid by all householders. Given that small number of asset-rich but income-poor, and the high cost to add these to the scheme, I do not support their inclusion in Flood Re—indeed, it would be a regressive measure—but I would certainly hope that lead local flood authorities will target some of their funding to address the impacts on vulnerable elderly people in their areas. Targeted mitigation of the impacts of this exclusion would be a far better approach and, as the noble Lord, Lord Campbell-Savours, said, is supported by the National Flood Forum.

Houses built post-2009 were excluded by the previous Administration from the statement of principles, which preceded Flood Re—the reason being that, with strong planning policies in place, such homes should have been properly assessed for flood risk. Equally, the date as set was important to avoid incentivising development in areas of flood risk. I accept that that is not perfect, but the exclusion of post-2009 from the band H properties was widely consulted on by the Government last year in advance of drawing up these proposals and was broadly supported. Hundreds of thousands of homes will benefit from Flood Re and, frankly, we need to get on with it. I am satisfied that this approach is fair and targeted at those most in need, and with regret I therefore will not be supporting the amendment.

--- Later in debate ---

Moved by

[Baroness Parminter]

90ZA: Clause 53, page 108, line 43, at end insert “and this is to include guidance about the application of surplus funds during the period of operation of the scheme to support uptake of resilience measures by householders”

[Baroness Parminter (LD)]

My Lords, the aim of Flood Re is to provide affordable insurance for flooding and to transition to risk-reflective pricing. If a surplus of funds were built up, that could help to manage flood risk down by encouraging householders to adapt to the impacts of climate change and flooding.

Funding for Flood Re will be via a levy, set as part of the five-yearly review by government. The Bill makes clear what would happen if there was a deficit—namely, a further levy on the insurance companies—but it does not make clear what would happen if a significant surplus built up. In Committee I outlined the potential, on the basis of the Government’s own figures, that at the end of year 1 it could have at least £100 million in reserves. In the early years, the aim would be to build this figure up to meet potential claims. The maximum reserves that Flood Re should need in any one year, after paying for reinsurance and administration, is an amount equal to the reinsurance policy threshold. This is due to be £250 million. If there is a sizeable flood during the lifetime of Flood Re it will need to pay the first £250 million, with the rest paid for by a claim on the reinsurance policy. It will then need to build up the reserve again the following year.

Ministers and insurers may well want to build up a slightly higher reserve in order to protect against a possible deficit if there are two bad years in a row, so there may be no surplus, as my noble friend Lord Cathcart rightly pointed out in Committee. Over the lifetime of the scheme, though, there may be a build-up of reserves if there are fewer claims than anticipated. Given that the ABI is now saying that the number of households it expects to be underwritten by Flood Re is 350,000 rather than the original figure of 500,000, which was the basis of the Government’s impact assessment, that is certainly possible. The ABI made it quite clear to me that its intention was for any surplus to be returned to ABI members. We need to ensure that Flood Re does not inadvertently lead to insurers profiteering from excess levy income being returned to them. It may not be passed back to customers automatically but could lead to a reduction in the future levy on bills. It would be better for the levy to be reduced in advance if a reasonable reserve has already been built up or, better still, for the excess to be spent on managing down the flood risk. I am envisaging paying not for flood defences but for things like grants to low-income households for home flood protection measures. I would not want to pin down in detail in this legislation what levels of surplus of reserves Flood Re should be able to build up or what will happen in those circumstances but a marker needs to be put down that, if significant reserves are secured, such reserves may be used to incentivise Flood Re policyholders to fund household resilience measures.

This amendment, which I am glad to say has the support of the noble Lord, Lord Krebs, allows this issue to be explored by the Government and Flood Re administrators during their five-yearly review of the scheme. It gives flexibility but encourages managing down flood risk if, and only if, significant surpluses are built up. I beg to move.

[Lord Krebs]

My Lords, as the noble Baroness, Lady Parminter, has said, this amendment is concerned with the possible surplus or cash reserves that Flood Re might build up. We have to recognise that although Flood Re is being designed as an integral part of the insurance industry it will be a public body spending public money and will operate on a not-for-profit basis. The noble Baroness, Lady Parminter, has indicated and the Government’s own figures suggest that there might be reserves of more than £100 million after one year. If that surplus exceeds the amount that is required to cover claims in any one year—again, the noble Baroness indicated a figure of £250 million—it would seem perfectly reasonable for that money to be used to manage down Flood Re’s own exposure to future claims and it could do so in a highly cost-effective way. This is about value for money. One estimate is that £4,000 spent on a property could prevent a number of claims on Flood Re averaging £45,000 a time, so the return on investment is going to be enormous.

The adaptation sub-committee which I chair has estimated that there are 190,000 properties in England where fitting flood-protection measures would be cost-effective, but progress in fitting them at household level has been very slow. In fact, the rate of uptake would need to increase by a factor of 20 to fit all such measures within the lifetime of Flood Re. This amendment recognises the potential to do more to protect high-risk households and the opportunity that the surplus reserves might represent. Investing in resilience now would leave high-risk households better able to afford flood insurance once Flood Re has withdrawn and, rather than adding to the cost of the levy, investing in this way promises to help minimise the costs of Flood Re over the lifetime of the policy.

--- Later in debate ---

[Lord De Mauley]

My Lords, I thank my noble friend Lady Parminter for her amendment, which deals with a very important subject. I thank all other noble Lords who spoke to it.

Actions taken by government, communities, individuals and businesses to reduce levels of flood risk are indeed the best and most cost-effective way to secure affordable insurance and value for money from Flood Re in the long term. In addition to the substantial levels of investment in flood defences that I referred to in an earlier debate today, we are also taking action to ensure that households are supported to improve their property-level resilience. For example, grants of up to £5,000 are available for households and businesses that have flooded this winter, and applications open tomorrow. In addition, there are community projects in which we are investing more than £4 million over two years in order to learn about the most effective strategies to drive community resilience to flooding. Nevertheless, I recognise my noble friend’s intention to see Flood Re’s role reflected in the Bill.

Reserves that build up during the lifetime of Flood Re will primarily be used to pay flood claims in the bad years. Flood events are by their nature unpredictable, so while it may be possible that Flood Re would have a number of good years in which it built up reserves, it is equally possible that a run of bad years with heavy flooding could wipe out any reserves built up within Flood Re. As such, it is not easy to identify surplus funds, and any decision about Flood Re’s reserves will need to involve judgment about the level of cover needed for the unpredictable risks it bears.

Added to this, as an authorised re-insurer, Flood Re will be required by the Prudential Regulation Authority to hold certain minimum levels of capital. Any commitment by Flood Re to spend a certain portion of reserves in a certain way—for example, on betterment or resilience—would necessarily increase the amount of capital it is required to hold on an ongoing basis, having an impact on the cost of the scheme and ultimately the levy.

It may well be that, in due course, the Flood Re administrator decides that investments of the sort my noble friend would like to see present the best way of Flood Re fulfilling its obligations to manage the transition and act in the public interest. However, these are choices that are difficult to make before the scheme is established or has any sort of track record. Nothing in the Bill precludes this.

Alternatively, in due course, Flood Re may decide, in consultation with government, that the best use of any surplus is to reduce the level of the levy, thereby helping to deliver affordability for all policyholders, not just those in Flood Re. We would not, at this stage, wish to see Flood Re’s hands tied in legislation that could have an unpredictable and undesirable effect.

We have always been clear that there should be a gradual transition to more risk-reflective prices. We expect the transition plan to set out how Flood Re intends to support households to adapt to the withdrawal of support from Flood Re over time. We will not designate Flood Re unless we are satisfied with the industry’s proposals for the scheme, including the transition plan.

It is important for Flood Re to retain flexibility in the way it discharges its public interest duty and plans for transition in order to ensure that it is in a position to balance these requirements against its core financial obligations. However, my noble friend’s amendment draws attention to the need to offer more clarity about what might happen in the event that a surplus is accumulated, particularly in relation to managing the transition.

I should say that I have considerable sympathy for the points made by the noble Lord, Lord Campbell-Savours. I have first-hand experience of where exactly the type of sensible resilience measures he has suggested cost no more than putting things back exactly as they were before the flood so the insurance claim could cover them. He also referred to advice, which is clearly an important part of that. A number of sources of independent advice are available today. The National Flood Forum can direct flood victims to appropriate measures. Furthermore, we are continuing to discuss with the industry whether any of the reserves could be used to fund surveys.

As I have said, I am very grateful to my noble friend and the noble Lord, Lord Krebs, for bringing this to my attention. I would like to take the opportunity to discuss their proposals with them further before Third Reading. Although I cannot of course guarantee that I shall be able to bring something back, I may be able to clarify the Government’s position further. I hope that I can persuade my noble friend to withdraw her amendment.

[Baroness Parminter]

I thank the noble Lord, Lord Krebs, the noble Lord, Lord Campbell-Savours, and my noble friend Lord Shipley, for their support for this amendment. My noble friend Lord Cathcart suggested that I may have misunderstood the insurance industry. We all have our dirty secrets, and many noble Lords may think of me as a squeaky-clean campaigner, but I have to say that I have been employed in the City by Lloyd’s of London, so I do know a thing or two about insurance.

I accept the point made by the noble Lord, Lord Whitty, that the wording of the amendment may not be as clear as we would all hope to achieve to ensure that any surplus funds are used to manage down flood risk and help people to transition to a better place at the end of this temporary scheme. I hoped that it would be seen to be not prescriptive and unhelpful and I am very grateful again for the comments of my noble friend the Minister and for his kind offer of discussions with myself and the noble Lord, Lord Krebs, which we are both delighted to accept. We will return to this matter at Third Reading. On that basis, I beg leave to withdraw the amendment.

Amendment 90ZA withdrawn.

Water Bill

Baroness Parminter Excerpts

Tuesday 25th March 2014 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, I declare my interests as a farmer, thereby living in a rural area. Like the noble Earl, Lord Selborne, I am concerned with the effects generally on rural areas. While there are risks, I am not sure that this is the case here. We support the introduction of competition into the non-domestic market and take the issue of de-averaging very seriously. The noble Lord, Lord Deben, has spoken about how we must, indeed, be assiduous in making sure that price averaging is maintained as far as possible. However, we are satisfied that Ofwat has all the necessary regulatory tools to enable it to limit the effects of de-averaging.

Competition can also be about bringing innovation to the market in services and introducing efficiencies. However, we remain concerned that these amendments, which have been tabled by the noble Earl, Lord Selborne, might allow incumbent suppliers to constrain the development of future markets, thereby reducing the benefits that competition could bring.

[Baroness Parminter (LD)]

My Lords, in welcoming the proposals to open up retail competition in the business sector, on Second Reading I, too, raised my concern, like other noble Lords, about the potential for the de-averaging of prices. Ensuring that rural or remote businesses do not pay more than their urban counterparts is vital. We need to share costs for water fairly, regardless of location.

In Committee, the Minister reassured the House that the regulator had the necessary tools to limit the effects of de-averaging on customer charges. Having talked to Ofwat myself, I know that it confirms that this is its belief. Equally, the Consumer Council for Water, which has the interests of water customers at its core, commissioned Martin Cave to review the issue, and he has confirmed that Ofwat can facilitate upstream competition without de-averaging.

The Government will be producing charging guidance to Ofwat, which the Minister confirmed will explicitly say that de-averaging can occur only where it is in the best interests of customers. This Bill provides Parliament with the opportunity to debate and vote on that charging guidance, following a consultation process, so that we have the necessary safeguards to ensure that it does. Not only will Ofwat have to act in accordance with such guidance, but the Consumer Council for Water will be a statutory consultee in the preparation of Ofwat’s charging rules. This seems to me to be a reasonable defence against the potential for de-averaging of water bills, particularly given that as a final resort the Government can veto Ofwat’s charging rules if they do not reflect the guidance given.

On that basis, I am satisfied with the assurances given by my noble friend the Minister, and I will not support the amendments tabled by my noble friend Lord Selborne.

--- Later in debate ---

[Lord Whitty]

My Lords, in moving Amendment 41 I will also comment on the government amendments in this group. I am pleased to see that the Government have at last recognised the importance of this issue and brought forward some amendments of their own. I will listen carefully to what the Minister says, but my first take on them is that, although they are very welcome, they are unclear in certain respects and do not yet go far enough.

This issue is one where economic and environmental regulation overlap. One of the central provisions of the Bill will allow and indeed encourage the eventual development of competitive markets, including in upstream water bulk supplies. That will not happen instantaneously—the Government have indicated that it will probably not happen until after 2020—but the legislation which will govern it happening is already the legal basis for that extension of competition into upstream areas. I am not opposed in principle to that, but there is a very basic problem. All competition, at least in the early stages, requires a surfeit of supply. However, difficult though it has been to believe over the past few weeks, there is a serious shortage of upstream water, in particular at key points in the summer. The level of water abstractions in the majority of our rivers in England—it rains rather more in Wales so I will confine this to England—is such that they have been overabstracted and at times are running dangerously low. This is the result in large part of overabstraction in the upstream areas and a shortage of water in the summer months. The reform of the abstraction regime has been talked about for a long time. Some limitation of abstraction rights is an essential prerequisite to introducing multiple suppliers with competition upstream.

Past legislation has given some powers to the Environment Agency and to the Welsh authorities in this respect, but most of the abstraction rights were embedded in the 1960s—so they are already 50 years old—at a point when there was much less concern about there being a limited supply of water. When the EA is carrying out its functions and rationalising, restricting and, in some cases, possibly taking away abstraction rights, that legislation requires compensation to be paid. That is paid out of the Environment Agency’s grant in aid and, in effect, out of Defra’s budget, so it has been very careful in using its powers. This Bill, rightly, makes one major step forward in removing from the water companies—which are the biggest, although not the only, abstracters—the right to such compensation. Although we note that the companies can, subject to Ofwat approval, recoup any loss from attenuation of abstraction rights by charging the consumer, this is a very welcome change as it means that the Environment Agency can be more aggressive in pursuing the restriction of abstraction rights in general, including those of water companies.

A further distortion and danger is that in many of the catchment areas, current abstraction rights are at a much higher level than the actual level of abstraction. Indeed, on average, 40% of the theoretical abstraction levels are actually drawn in most years. However, even with people taking up under half of their abstraction rights, several of our catchment areas are under severe pressure. If we have new entrants into the upstream area, some of that unused abstraction will undoubtedly, one way or another, be transferred to those new entrants. The logic is that we need a reformed abstraction regime, putting a cap on abstractions and allowing the restriction of or attaching conditions of time or place to the abstractions that are relevant to individual catchment areas. We need to do that before we introduce upstream competition.

It is clear from the amendments the Government have tabled that they recognise that. Indeed, the earlier Defra White Paper recognised that. Yet the Bill does not provide for any future legislation on abstraction reform as it does for upstream competition. The consequence of that is that if the Bill stays as it stands, even if the government amendments are adopted, we will be able to move to competition upstream, which would almost certainly have the consequence of greater use of dormant and underused abstraction rights and therefore more pressure on our catchments. It is true that in the very long run effective competition will lead to greater efficiency upstream, but the immediate effect of introducing competition would be more drawing-down and more abstractions, and there is no adequate limit on the totality of those in the abstraction regime as it stands.

Of course, Defra is currently consulting on changes to the abstraction regime. It is quite a good consultative paper, I have to say, although it was issued well after the Bill entered the parliamentary process. What I am trying to guard against is the possibility that down the line abstraction reform has not happened and yet the number of people using water upstream for commercial purposes has increased. The government amendments give some greater powers to the Environment Agency and the NRBW to check on this, and they institute a five-year delay, but the provisions are fairly weak.

It is not enough to consult with the regulators without giving them effective legislative backing for intervening and for restricting or putting qualifications on abstraction rights. That is why we say that reform should be in place and enforced before we move to introduce upstream competition. The government amendments and the five-year gap do not mean that abstraction legislation will be in place. They call for a report to Parliament. I do not want to be too cynical in your Lordships’ House but we know that plenty of reports to Parliament never actually see their way through to explicit legislation or regulation.

The department clearly recognises the problem and has been prepared to move a bit with the amendments in this group, all of which I can support, but they are necessary but not sufficient. The Government could say to me today that they will strengthen their approach and include a requirement to have legislation in place before the upstream competition provisions are triggered. They could still bring that forward at Third Reading. Indeed, that is probably the best way of proceeding. I hope the Minister will say that but in the mean time this is such a serious issue that I have to ask your Lordships to seriously consider my amendment. I beg to move.

[Baroness Parminter]

My Lords, along with a number of colleagues around the House, I raised serious concerns in Committee about the potential for environmental damage resulting from the upstream competition proposals being agreed in advance of reforming the water abstraction regime. I will not repeat those this afternoon. However, I am very pleased to say that the Government have clearly listened to our concerns and are proposing a number of significant amendments to address them.

First, the Government propose to report in 2019 on progress in reforming the water abstraction regime. The Government’s stated aim, following the publication of their consultation on abstraction reform last December —which the noble Lord, Lord Whitty, welcomed—is to legislate early in the next Parliament and implement abstraction reform in the early 2020s. The report will therefore give Parliament an opportunity to scrutinise the management of the interface between what should be by then the two pieces of legislation and their implementation. We can then seek to ensure that their implementation delivers the desired outcomes for both customers and the environment.

I am also grateful that specific concerns that I raised about sleeper licences and bulk trading were heard. The Government have introduced amendments to require Ofwat to consult the Environment Agency or Natural Resources Wales before they issue the codes on bulk supply agreements and before allowing a water supply agreement between relevant parties and incumbent water companies. Equally, relevant parties will be required to consult before entering into bulk supply agreements, and Ofwat will have to take into account any response from the Environment Agency or Natural Resources Wales. In that regard, I do not agree with the noble Lord on the Front Bench opposite that these government amendments are weak. I know from my conversations with Ofwat, which did not want the amendments to be tabled, that it most assuredly does not see them as weak.

In advance of the abstraction regime being reformed, the Environment Agency is already seeking to vary and remove unsustainable existing licences. It will be helped in that by the Government’s removal in this Bill of a statutory right to compensation for a water company resulting from such modifications or the revoking of a licence. The Government have therefore gone a long way towards addressing concerns that noble friends and colleagues expressed in Committee. These proposals satisfy my concern that legislating now for upstream reform in advance of reform of the water abstraction regime could lead to an unsustainable increase in abstraction. Therefore, I would not support any further amendments being tabled by the Opposition Front Bench.

[Lord Crickhowell]

My Lords, I want to probe a little on the timing. I agree with everything that the noble Baroness has just said. For eight years, as chairman of the National Rivers Authority, I had to try to deal with this problem with rather less adequate weapons than the Environment Agency now has, so I welcome the steps that the Government are taking and have taken. I also want to see rapid progress made on the competitive regime, but there seems to be a very difficult timetable. We will have a report five years out on how abstraction is going, yet there will be legislation in the next Parliament which takes us a year further forward. I do not quite see exactly how the Government envisage progress being made on these two important priorities. I confess that I have been away abroad since Committee—I have been enjoying myself in the Galapagos—so my mind has not been on this matter, but I would be grateful if my noble friend could give us a little greater clarity on the timing of these two interlocking steps, on the way in which they are likely to relate and on how the legislative timetable is likely to fit in.

--- Later in debate ---

[Baroness Parminter]

My Lords, affordability is clearly a key issue and I thank the noble Lord, Lord Whitty, for raising it this afternoon, although I do not share his faith in a national affordability scheme. I use the word “faith” advisedly because, like the noble Baroness, Lady Byford, I think that the amendment is a little light on the details of what a national affordability scheme might comprise.

My understanding is that eight of the water companies already have social tariffs, or will have by the time we get to Third Reading. Perhaps the Minister will be able to comment on that in his concluding remarks. However, there are one or two laggards, including Yorkshire Water, which has undertaken research into a social tariff but says that the results do not justify it proceeding. This is not good enough; it should be working with the Consumer Council for Water, as 11 water companies are, quickly to identify a way forward.

You would expect water companies to try hard to do this as, in addition to being the right thing to do, social tariffs are, as the noble Earl, Lord Selborne, rightly pointed out, one way to help to tackle the bad debts, which put £15 on all our water bills. Where there has been some reluctance to introduce them, it appears that that has had more to do with limited customer support for the company’s initial proposals, because crucially water company customers have to buy in to the social tariffs as they are cross-subsidising them.

Like my noble friend Lady Bakewell, I welcome the new social tariff guidance from this Government and the Welsh Government. It means that more companies can now introduce social tariffs, but of course these schemes must be tailored to local circumstances. The cost of living, average incomes and the cost of supplying water and sewerage systems vary substantially from region to region. In Committee, my noble friend Lord Whitty acknowledged the importance of taking account of regional variations, saying:

“We recognise the desirability of companies taking notice of the configuration of their own consumers and the particularities of their region, and therefore it is better that companies are left to decide their own schemes which will suit their own circumstances”.—[Official Report, 6/2/14; col. 326.]

Like my noble friend Lady Byford, I believe that the Front Bench opposite has not quite spelt out what the national affordability scheme would comprise, saying that it is up to the department to come up with something appropriate which equally allows for regional diversity of delivery.

The issue is not that the majority of companies are not taking this forward; the issue is fundamentally about who pays for the scheme. The Consumer Council for Water has done research which consistently shows that customers are reluctant to pay above £2 as a cross-subsidy. Does the Front Bench opposite think that its national affordability scheme should top up that sum from general taxation? Should schemes be imposed on people unwillingly or from a levy on water companies? That begs the question of whom it would be levied on, given that the overwhelming majority of companies will have agreed to a scheme by next year.

In addition to concerns about a lack of clarity as to what a national affordability scheme would comprise, I am not persuaded by arguments from the Benches opposite about affordability when it will not support further moves to encourage water metering. The independent Walker review, commissioned by the previous Government, recommended a widespread switchover to metered charging, considering it the “fairest way” to address the affordability problems inherent in the current system. Therefore, it is disappointing that the party opposite—I exclude the noble Lord, Lord Whitty, from my condemnation—is opposed to even minor amendments which I raised in Committee and which the noble Lord, Lord Oxburgh, will be raising again later to help to encourage metering. Such a move could help people to take control of their household bills. On that basis, I do not support these amendments.

[Lord De Mauley]

My Lords, I thank the noble Lord, Lord Whitty, for explaining his amendments and I thank all noble Lords who have contributed to this debate. It will not surprise those of your Lordships who sat through Committee on this Bill to learn that I will not be supporting the noble Lord’s amendments.

I shall deal, first, with the Opposition’s national affordability scheme. The Government take the view that companies are best placed to work with their customers to develop local solutions concerning affordability. After all, it is those customers who foot the bill. That is why the Government’s approach is focused on company social tariffs. The companies’ own business plans show us that by 2015-16 most will have put a social tariff in place voluntarily following a process of engagement with their customers. I am struggling to see the advantage of a national affordability scheme in comparison with the guidance and framework for social tariffs which is already in place and which has, as my noble friend Lady Bakewell said, now been in place for a year.

The Government’s social tariff guidance sets minimum standards in a light-touch way. It does so taking into account the reality of diverse regional circumstances. The minimum standards set in the guidance allow water companies to talk to their customers—the ones, as I said, footing the Bill—and to innovate. Imposing more specific minimum standards on water companies would limit their scope to address the unique circumstances of their respective areas. It would disincentivise companies from coming up with something more creative and more targeted. We should not ignore how different the affordability issues facing the water sector are in different parts of the country.

Our social tariff guidance provides a clear steer on the factors that must be taken into account in the development of a social tariff. However, it leaves final decisions for companies to take in the light of local views and local circumstances, rather than seeking to impose schemes from the top down. The most important requirement of our guidance is for effective customer engagement in the development of a social tariff. The Government believe that some customers should not have to subsidise others without being properly consulted.

All the companies have begun that process of consulting with their customers on whether a social tariff is right for their area and, if so, what form it should take to address local needs. The guidance requires that the companies must work closely with the CCW to ensure that their proposals align with customers’ views of what is acceptable. Undertakers will need to be able to demonstrate that they have listened to customers and organisations representing customers. The social tariff guidance applies to both the companies and Ofwat. Where a company brings forward a social tariff that complies with this guidance, there is a clear presumption in favour of approval by Ofwat.

It is crucial that those who are struggling to pay their water bills get assistance, but the difference between what is suggested and what we have in place is our recognition that local people should have a say. Local factors should be, and are being, taken into account.

I turn now to Amendment 56, which concerns billing information. First, I thank noble Lords for raising a very important point about the WaterSure scheme As noble Lords are by now aware—but sadly many customers are not—the scheme is a mandatory safety net for low-income customers. It is available for customers who have a meter and, for reasons of ill health or because they have a large family, use greater than average amounts of water. I have said before that it is unfortunately a feature of all such means-tested benefits that take-up fails to match eligibility. People who are eligible simply do not sign up. Through informing people that WaterSure exists, I am confident that we can increase uptake. That is why it is important that billing information includes details about WaterSure.

However, that is already happening, and it has been happening for years. The Consumer Council for Water has confirmed to me that information on WaterSure and other similar schemes operated by companies is included with bills. CCWater works closely with each water company on the information provided on household bills to ensure that customer interests are met. Its very practical advice is that customers are likely to be put off by too much additional information on the face of the bill. Taking the other suggestions in the amendment, such as requiring all water companies to provide information about tariff structures and the lowest available tariff, I must confess that I find this requirement rather bizarre. What tariffs are we talking about? This is not the energy sector. Water companies simply do not have complex tariffs. In fact, as I pointed out in Committee, the situation is quite the reverse. There are just two tariffs: charging by a meter, or by the rateable value of a customer’s home.

Water companies provide advice to customers on whether or not they might benefit financially from the installation of a meter. They have to fit one free of charge, if asked. The recent publication of water companies’ business plans has demonstrated how this system can work to claw back benefits for customers using the price review process. By taking account of lower financing costs, Ofwat estimates that the next price review could significantly reduce pressure on bills from 2015 by between £120 million and £750 million a year. Most water companies are proposing flat or declining customer bills from 2015 to 2020.

The amendments are well intentioned and raise important questions about the water sector and help for those who are struggling to pay. I thank the noble Lord for bringing the issues again before the House, but I believe the amendments will not help. I have explained my reasons The Government are absolutely committed to helping hard-pressed customers where we can, and I hope that I have demonstrated that adequately today. On that basis I ask that the noble Lord withdraw his amendment.

--- Later in debate ---

[Lord Redesdale (LD)]

My Lords, I thank the Government, after some considerable debate about the issue, for the alacrity with which they have taken steps to introduce water efficiency. At the previous stage I raised the issue of sustainability, and I see that the noble Lord, Lord Whitty, has tabled an amendment covering it as part of this group. However, what I am most concerned about is the issue of water efficiency.

The resilience amendment talks about demand management. In the parlance of the water industry, demand management is very much about the reduction of leaks, whereas I believe that water efficiency is much more about the use of water and how it is a partnership between the water companies and water users on how water is to be used. We still have to bring about a massive behaviour change in customer use to make sure that the biggest leak we have in any system is the tap that is not turned off or used inefficiently. That is a movement which we have to take forward.

I hope that these provisions will bring about a degree of behaviour change within Ofwat itself, as happened as a result of the changes made to its core duties in the 2003 Act. I believe that Ofwat is seeking to change the way that it looks at such a scarce resource. With climate change, we are going to have to look at a very different system of determining how much water is available and how we use it. Indeed, in a few minutes Ofwat will be holding a reception just down the road to discuss these issues with stakeholders. I am glad that the Government have brought forward these amendments, which I am sure will help the regulator in its duties.

[Baroness Parminter]

My Lords, I, too, thank the Government for listening so assiduously to the concerns that I and colleagues around the House raised in Committee. The Government have listened very carefully to those concerns, and I particularly welcome the new amendment which outlines that the resilience duty includes promoting the efficient use of water. This powerful commitment to water efficiency is testament to the tenacity of my noble friend Lord Redesdale. It also delivers the Liberal Democrat party policy agreed five years ago to reform Ofwat’s remit to put water resource efficiency at the heart of water company plans.

I also sincerely thank the Minister and the Bill team for accepting my genuinely strongly felt concerns about the necessity of the Government taking account of social and environmental matters when formulating the strategic guidance with which the regulator has to conform. Their amendment to Clause 24 reflects that and I am extremely grateful.

[Lord Whitty]

My Lords, I, too, welcome all the government amendments in this group. However, I do not understand why they have not gone the full hog towards what the noble Lord, Lord Redesdale, the noble Baroness, Lady Parminter, and I were arguing to begin with, which is that if you give Ofwat a responsibility or a primary duty for sustainable development, these things would naturally flow from that. These are criteria that are applied to other regulators. Everything that has been said in this debate and in the White Paper, including everything said just now by the noble Baroness, shows that you need to have a holistic approach to the management of water. This is not about just one dimension or aspect, but about the cost to consumers and to business, about providing infrastructure for the country, about water quality for consumers, about whole ecosystems and catchment areas, about maintaining water resources against climate change pressures, about resilience and about efficiency.

Resilience and efficiency have now been written into this, but not very much of the rest. I, too, admire the noble Lord, Lord Redesdale, for the pressure that he has brought to bear regarding water efficiency—he has won a notable victory here—but this still baffles me, and my amendment reiterates the need to provide a broader primary duty. The Government have obviously recognised some aspects of upgrading that responsibility because they have, rightly, taken up the earlier amendment tabled by the noble Baroness, Lady Parminter, that changed,

“may have regard to social and environmental matters”,

to “must” in respect of the Minister’s statement. They recognise sustainability in general and that it is an important part of how we manage in the context and framework within which Ofwat works.

As there are multiple regulators in this system, it has traditionally been assumed that Ofwat is primarily an economic regulator, the Environment Agency primarily an environmental regulator and the Drinking Water Inspectorate primarily a quality regulator. However, they actually overlap: the Environment Agency has serious economic responsibilities in its remit, very specifically about water resources, while Ofwat has a secondary sustainability duty and now, as a result of the amendments on resilience, broader aspects of its responsibilities relate to sustainability. I appreciate the references to resilience. When sustainability was being pushed in the Commons, the Government came up with the resilience criteria, and when it was being pushed in the Lords, they pleased the noble Lord, Lord Redesdale, with the water efficiency criteria.

--- Later in debate ---

[Baroness Parminter]

I thank the noble Lord, Lord Oxburgh, for raising this issue, which I, along with other colleagues around the House, moved an amendment on in Committee. I am not going to repeat the argument that I and others made at that time, but there has been new information since then. In preparation for Report, Water UK contacted all water companies, asking for their views on this issue. They all saw the requirement to seek permission from the Secretary of State for metering as an unnecessary constraint. They think that the water stress status should not be a requirement for metering; rather, they should be able to decide what to put in their water resources planning framework on the merits of the case, including what customers want.

Wessex Water and Northumbrian Water have gone on the record separately on this issue, Wessex Water saying:

“In our WRMP we considered the pros and cons of compulsory metering, even though being in a non-water-stressed area we couldn’t introduce it. Our analysis showed that metering on change of occupancy was a better approach as it gave greater long-term water savings whilst retaining customer acceptability. Metering on this basis will be put in our WRMP and business plans, even though we can’t introduce it”.

This seems to me to be a reasonable amendment. All it does is give companies the right to speak to their customers and manage their businesses to their benefit and that of increasingly scarce water resources. I respond to the noble Lord, Lord Cameron, by saying that it is not just Cross-Benchers who are prepared to swim against the tide; the Liberal Democrats are well used to being out of step with the other two main political parties, and on this occasion I am happy to join fellow Cross-Benchers to support them on this important issue.

[The Earl of Selborne]

My Lords, I think those on the Conservative Benches should support the noble Lord, Lord Oxburgh, as well—as indeed I am sure many of us do. I agree very much with the noble Lord, Lord Cameron, who says that we simply have to value our natural resources. We in this country are totally out of step with the whole movement towards valuing natural capital and understanding the extent to which our natural resources underpin our economy and our quality of life. It makes obvious sense, therefore, that we should all be aware of our footprint, and if we think that we have the right to buy water at a rate that reflects some old rateable value as opposed to our actual consumption, we are simply denying our responsibility to understand our long-term impact.

As I understand it, this amendment is tabled more in order to demonstrate that the water companies can already do what the amendment seeks that they do, so I expect that the Minister will say that it is unnecessary, but it is certainly not unnecessary if it demonstrates what is obvious. I cannot understand why anyone should say that it is against the tide of the day; it is my understanding that every party supports the idea that we should value our natural resources properly, and who could say, therefore, that water should be exempt from that process?

Food Banks

Baroness Parminter Excerpts

Thursday 20th March 2014 Lords Chamber

[Lord De Mauley]

I think I have just answered that, my Lords. Britain has a great tradition of charitable giving, and it would be a great mistake to interfere with that.

[Baroness Parminter (LD)]

Can my noble friend say whether the Government have any plans to commission any of the research indentified in the conclusions of his own department’s recent review of food aid in order to inform and support the voluntary groups providing food aid?

[Lord De Mauley]

My Lords, we are not proposing to record the number of food banks or the potential number of people using them or other types of food aid. To do so would place unnecessary burdens on the wonderful volunteers trying to help their communities. The report is a useful summary of evidence from providers and charities. The provision of food aid ranges from small, local provision through to regional and national schemes. The landscape is mostly community-led provision responding to local needs. It is not the Government’s role to tell them how to run the services they provide.

Japan: Dolphins

Baroness Parminter Excerpts

Tuesday 4th March 2014 Lords Chamber

Asked by

[Baroness Parminter]

To ask Her Majesty’s Government what discussions they have had with the government of Japan about the practice of capturing and slaughtering dolphins in Taiji.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, my honourable friend George Eustice, the Minister responsible, wrote to the Japanese Fisheries Minister on 9 February to reiterate our opposition to hunting all cetaceans, except for limited activities by indigenous people for defined subsistence needs. Our ambassador had written to the Japanese Foreign Affairs Minister on 24 January to set out our position. The Japanese Government are in no doubt as to the strength of feeling here, nor about our policy against these hunts.

[Baroness Parminter (LD)]

I thank my noble friend for that Answer. Are the Government seeking to co-operate with other countries and civil society organisations to evaluate what measures can be taken using international conventions to which we are signatories, in order to end the unnecessary suffering of this trade?

[Lord De Mauley]

My Lords, I agree strongly with my noble friend that working within international agreements such as CMS and CITES, and with the IWC, is the way to achieve our conservation goals. We already work closely with other like-minded Governments and civil society organisations, including on whale and dolphin conservation, in these fora and we continue to press for enhanced co-ordination and communication between them to ensure that they co-operate to provide an effective and long-term framework for the protection of cetaceans globally.

Forestry: Independent Panel Report

Baroness Parminter Excerpts

Wednesday 12th February 2014 Lords Chamber

[Baroness Parminter (LD)]

I add my thanks to those of my noble friend to the noble Baroness, Lady Royall, for securing this debate today and for being such a formidable champion on behalf of our precious trees.

The noble Baroness said that there was strong support for the Government’s forestry and woodlands policy statement in January last year, which set out a clear vision for expanding England’s woodland cover while protecting our trees from the ever-increasing range and scale of threats, recognising that woodland assets would deliver benefits for society and the environment as well as contributing to economic growth. A commitment to legislate for a new forestry body was a central plank in the delivery of that vision.

The stakeholder consultation closed on the funding, governance and purposes of our new body. The presentation to the National Forestry Stakeholder Forum on 29 January outlined, as the noble Baroness, Lady Royall, said, the 10 core principles underpinning Defra’s plans. While they were broadly welcomed, they left much unsaid. Big questions remain about the contractual relationship of the body with Defra, and the body’s remit, scope and duties. I add my voice to hers in asking when the Government intend to bring forward a draft Bill to allow for necessary pre-legislative scrutiny.

It is clear that woodland and forests offer good opportunities to deliver manifold environmental and public goods, from carbon capture to providing habitats for wildlife and flora, and places that people want to share. They want to go out and explore our glorious countryside. At a time like this, we should not forget how afforestation can help to reduce the risk of flooding.

I want to pick up on one of those 10 principles outlined to stakeholders on 29 January—that the new public forestry body should be a pioneer in natural capital accounting and payment for ecosystem services. As the Woodland Trust said, this is an opportunity for the forestry sector to,

“demonstrate its value to society”.

One way to ensure that development does not lead to erosion of natural capital assets is a well designed biodiversity offsetting scheme. The Government’s Green Paper consultation on biodiversity offsetting is now concluded. Liberal Democrats are clear that the guiding principle for any offsetting scheme should be that there is a net environmental and biodiversity gain. Equally, and in contrast to the views of the Secretary of State, habitats such as ancient woodlands are irreplaceable, and as such should not be included in any scheme.

Decisions about biodiversity offsetting are important for the future of the public forest estate, given that it has huge potential to provide offset sites for any market-based scheme. It is ideally placed to deliver landscape-scale projects and the wider benefits that they can deliver. The Lawton report in 2010 made clear that nature areas that are linked together have a greater ecological value than similar areas of natural environment that are broken up and separated. This view was endorsed in the Government’s 2011 environment White Paper. Given its importance to the future of the public forest estate, can the Minister say when the Government will make clear their intentions about introducing a biodiversity offsetting scheme?

All three legislatures in England, Scotland and Wales are keen to see substantial levels of new woodland planting over a substantial period. It is important that non-market values are taken into account in decisions about the future locations of Britain’s new woodlands, thereby ensuring that we maximise the value for agriculture and timber outputs, climate change mitigation and recreational opportunities. This would make a reality of the threefold mandate, as outlined in the core principles for the new public forestry estate of enhancing the estate for the benefit of people, nature and the economy.

If we do not do that, we face the danger of locating new forests in areas that do not deliver all the benefits that society and the economy need. We could pick locations, for example, that maximise value of timber production but do not help tackle flooding in key catchments, or maximise greenhouse gas capture but do not help to increase recreational opportunities near our major urban conurbations. Such decisions need to be looked at using the right decision-making framework, and I therefore look forward this spring to the annual update from the Natural Capital Committee, set up by this Government, on its work in ensuring that natural capital accounting is embedded in decision-making. The successful completion of that work could be as important in delivering the future we all want for our British forests and woodland as the legislation necessary to put the public forest estate on a more sustainable footing.