Deregulation Bill
Lord Cameron of Dillington Excerpts(9 years, 3 months ago)
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Lord Cameron of Dillington (CB)
My Lords, I have added my name to Amendment 17. I declare an interest as a farmer in Somerset with rights of way on my land. Like the Minister, I am a great enjoyer of our rights of way across the country.
I will not repeat all I said in Committee about this being a deregulatory amendment, but it does have the potential dramatically to reduce the administrative work of the local highway authority while greatly simplifying the law and the lives of others. It also has the potential to reduce the onerous duty to repair the surfaces of all highways on the part of local highways authorities, which we know are extremely strapped for cash at the moment. The fact that most local highway authorities pay virtually no attention at all to their duty of repair on anything less than an adopted highway is no excuse for us not to try to minimise their responsibilities.
Anyone who has seen pictures of green lanes from all around the country, particularly the pictures of green lanes in the Lake District National Park that have been circulated recently, will be in no doubt that regular motorised traffic on those green lanes is not compatible with fair enjoyment of the countryside by walkers, bicyclists and riders. Something has to be done and the wrongful assumption that motorised vehicles automatically have rights on all those green lanes needs to be rejected. If they have rights, I and others believe that it is their responsibility to prove them.
I recognise that the Minister proposes the setting up of a motor vehicle working group in response to the amendment. I am sure that is not a way of pushing the whole issue into the long grass. I have every expectation that he will respond favourably to the amendment or at least its intent. I also realise that we have to tread softly, softly on this matter. All I would say is that this long-lasting sore on the face of responsible access to the countryside has to be firmly gripped, and soon; or, as the noble Lord, Lord Bradshaw, said, come 2026, which is just 11 years away, we will still find ourselves floundering around in the mud, both literally and metaphorically—literally on the ground and metaphorically, administratively in county halls—with no greater clarity than today. Defra has already acknowledged that the 2026 cut-off date cannot be met under the current circumstances—it is 11 years off and it cannot be met—due to the number of green lanes and the lengthy processes involved. We have to find a better way forward and this amendment, or something like it, is a very reasonable way of achieving that.
Lord Skelmersdale
My Lords, I understand the rationale behind what the two noble Lords have said on the amendment but I would add a slightly cautionary note. Although we all enjoy walking on footpaths and we get irritated by bicycles, quad bikes, Land Rovers, et cetera, on paths that are not BOATs, there are those, such as disabled people, who are able to enjoy such footpaths only through the use of some sort of propelled vehicle. Although I readily understand that there is a need for control, I do not believe that it should be absolute and I look forward very much to listening to what my noble friend the Minister has to say on the working group that is proposed.
EU: Counting the Cost of Food Waste (EUC Report)
Lord Cameron of Dillington Excerpts(9 years, 6 months ago)
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Lord Cameron of Dillington (CB)
My Lords, I declare an interest as a farmer. I must admit to being on the committee, and I thank the noble Baroness, Lady Scott, for her good work in this area, both in the run-up to our report and subsequent to it. I want to examine this subject from the point of view of one of the world’s biggest problems: how are we going to feed the 9.5 billion people who will inhabit the planet by 2050? How are we going to feed that number when more and more people are eating meat, which consumes up to seven times more of our planet’s resources than if we were eating bread or rice? How are we going to feed that number when our climate is changing and our water supplies are reducing?
Of course, although this is off the subject, the first thing to do is to have freely available family planning in every village on the planet so that women can be free to manage their own fertility. Turning to the problem of food, though, it is a pity that the focus of most scientists, politicians and of course farmers is just about producing more and more of it. I am glad to say that in the scientific world has been a slight change recently, in that scientists are now looking more seriously at the question of yields in terms of nutrition per hectare rather than simply yields per hectare, because there is a big difference. We will never solve the problem of sustainably feeding the world unless we also start tackling it from the demand side, and undoubtedly the most glaring aspect of the demand side is that black hole known as food waste.
We have seen some pretty frightening statistics in our study of this matter, and we have already heard some in today’s debate. I shall highlight two. The Institute of Mechanical Engineers stated that as much as half the food produced in the world never reaches the human stomach, which is as much as 2 billion tonnes of food per annum going to waste. That could be the equivalent of £5 billion per annum being consigned to the tip—bad news indeed for the world economy.
Food waste is also disastrous for climate change. This is my second statistic: in the USA, 300 million barrels of oil per annum are used to produce food that is then thrown away. A barrel of oil is roughly 159 litres, which means that 47.6 billion litres per annum are burnt away into our atmosphere to produce food that is then thrown away. That is just in the United States and, as we know, consumer waste is undoubtedly a problem for the whole western world.
It should be noted, though, that in relation to the western world we in the UK are very much ahead of the curve, and we can be proud of that. WRAP reckons that the 15% reduction in food waste between 2007 and 2012 saved every UK household approximately £130 per annum. My message to Defra is that if you envisage a further drop in WRAP’s budget, you are cutting off your nose to spite your face. Do not go there. WRAP says that over the last five years every £1 spent by the Government through WRAP has saved £500 in household waste. Think of the savings from that to local authority refuse disposal services alone.
This agenda is the very model of a public-private partnership that could save UK millions, if not billions, of pounds, and it is vital that it does not lose momentum. We were told during our report that the anti-smoking campaign was a 50-year journey, and although we must try to make this one a little faster, there is no doubt that public perceptions and awareness take time to change. But keeping up momentum is absolutely the key, and WRAP needs all the support and the money that it can get.
I know that this is an EU committee and this is an EU debate, but as I said at the beginning, this is a worldwide problem so I will direct my final thoughts to the developing world. Here, consumer waste is one-tenth of that of the developed world. They cannot afford to waste any food at all once it is in the home but post-harvest losses, both on the farm and during transport to market, can amount to 30% to 50%, depending on the crop involved. These extensive losses are mostly the result of lack of money for investment in proper storage facilities—rodents, bugs and bacteria abound. There is also no cold chain to market, although the Institution of Mechanical Engineers is looking at cheap ways of addressing that. The roads are rough, resulting in damaged and wasted fruit and veg on the way to market, and while trekking your animals to market may seem the cheapest way to get them there, it appears that weight losses of up to 30% frequently occur, which makes it a more expensive option.
A lot of the problem is knowledge, but the lack of any financial infrastructure also makes it impossible to invest to save. Equally, if you cannot read, it would be too dangerous to use chemicals to prevent the bugs attacking your stored maize. The alternative to having a large enough store which is sealed to keep out air is costly and beyond a smallholder’s reach. However, with investment and research—a lot of which comes from the UK and Europe—breakthroughs are being made. Mobile phones now enable farmers in remote areas to sell their crops directly to markets hundreds of miles away, before they rot from multiple handlings. Large plastic bags which can take a tonne or more and which can be airtight sealed are a new way of preventing decay at a reasonable price. Even reverting from maize to old fashioned crops like finger millet, whose natural husks protect the grain, has proved beneficial for local nutrition. For further details I would recommend our all-party parliamentary group’s recent booklet called Missing Food which I can provide for any interested Peer.
Aid and investment are enabling sub-Saharan African farmers, who often represent 85% of their country’s population, to stand on their own feet. The World Bank says that in terms of alleviation of poverty, a 1% increase in agricultural GDP is worth five or six times more than a 1% rise in non-agricultural GDP. This is an important agenda and post-harvest losses are a crucial part of that agenda, so DfID must continue to do all it can to help.
Deregulation Bill
Lord Cameron of Dillington Excerpts(9 years, 6 months ago)
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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.
Earl Cathcart (Con)
My Lords, I support these amendments, particularly the ones in the name of my noble friend Lady Byford. I do so because they go a little further than those of my noble friend Lord Skelmersdale, which would include only gardens and driveways. My noble friend Lady Byford’s amendments also reflect the recommendations of the stakeholder working party on this subject, as mentioned by the noble Lord, Lord Cameron.
Although the Government have issued guidance they have put nothing in the Bill, which I find odd. My honourable friend Tom Brake, speaking for the Government at Third Reading in the other place on 23 June, said:
“It is clear, however, that there has to be a change in the way in which both legislation and policy operate if people are to get a satisfactory hearing, and that is what the Government are doing in the Bill”.
He goes on to say that it,
“will be supplemented by guidance that will effectively act as a presumption to divert or extinguish public rights of way that pass through the gardens of family homes, working farmyards or commercial premises where privacy, safety or security are a problem”.—[Official Report, Commons, 23/6/14; cols. 77-78.]
Unfortunately, that is not what the Government are doing in the Bill because they have not put anything in it on this subject.
We have the guidance but we do not have the legislation, which is what my honourable friend said was needed. Guidance is only guidance; it is not obligatory. We need legislation in this Bill. I am sure that this omission by the Government may be an oversight so I hope that the Minister will accept my noble friend Lady Byford’s amendments, which reflect the working party’s recommendations. If the Minister cannot accept them today, I hope that he will agree to take them away and consider them further.
Lord Cameron of Dillington
My Lords, I support Amendment 19 concerning the time limit. We live in a very crowded island and I believe that England is the fifth most densely populated country in the world. There is huge competition for land use across a wide spectrum of activities, and the planning system is a very obvious example of where the use of land is democratically decided upon. It seems to me that the simplest way to avoid disputes is to have certainty and a clear decision-making process that adjudicates clearly and fairly with clear time limits so that everyone knows where they stand as soon as possible.
The whole point about a Section 31 deposit of a map and statement by a farmer is to create certainty so that the householder, the farmer or the landowner and the public know what is permissible and what is not. With a Section 31 deposit there is usually a conversation between the farmer and the highway authority. The local highway authority agrees the deposit of the maps, so the farmer and the highway authority are in agreement in saying, “This is the situation regarding rights of way on this land”. That clarity is really important to all concerned, including the general public.
A Section 31 deposit is also really important to landowners, among whom I include myself and the son of the noble Lord, Lord Plumb. I welcome most people on to my land. There are people who walk all over it, and kids cycle across the fields and go into the woods. In fact, I get into trouble because they tend to cycle around badger setts, which brings somebody in authority down on my head for allowing that to happen. I am very happy to allow local people to use the land. Sometimes I have to interfere and say, “Thou shall not do this or that”, but on the whole I am very relaxed about it. I am happy to do that provided they are not creating a statutory right—that is, getting rights that are going to infringe any future use of that land because they are establishing rights of way. That is a really important factor. If people can come along and contest a Section 31 deposit of a map and statement several years afterwards, that is completely wrong, and I think that the general public and the walking public will suffer as a result. It may be that a one-year time limit before anyone can object is too short. I would probably have gone for two or maybe even three years. However, it is important that we have some time limit in this whole area.
The other amendment in this group to which I want to refer is Amendment 22. I had slight sympathy for Amendment 20, concerning costs being made against spurious claims, but it is almost impossible for an applicant to know in advance whether their claim is spurious. Therefore, the way to deal with it is to ensure that the proposed statements are true. That is a very good idea. I do not believe that the minor cost involved is a good reason to bypass this reasonable check on a process. The statement needs to be treated as though it has been made in a court of law, even if in reality it has been garnered around a kitchen table in a very relaxed atmosphere with, quite likely, the witness being led in a very unbarrister-like manner by whichever side happens to be taking the statement. It could be being taken on behalf of the Ramblers or on behalf of the landowner, but having to sign a statement of truth is sufficient to ensure that it is the whole truth and nothing but the truth. That would be a very good thing.
Lord Grantchester
My Lords, the proposals in the Bill will make great progress on many aspects and procedures covering rights of way legislation. We welcome this further debate on many aspects that the stakeholder working group raised. While we have addressed and debated some of them, there is as yet no agreement and it may be a long way off. However, we have welcomed the debate and look forward to further progress after these provisions have been enacted.
Lord Cameron of Dillington
My Lords, I actually put my name down to support this amendment but, unfortunately, too late to get onto the Marshalled List. My main point directly contradicts what the noble Lord, Lord Jopling, said. I think this is a deregulatory amendment and, as such, fits in very well with this Bill. If passed it would involve much less work for local highway authorities, organisations and individuals; it would also simplify the law for others. It makes it unnecessary for the local highway authority to classify or define the status of each and every one of these UUCRs—unsealed, unclassified county roads.
We have heard this evening about the lack of resources available to highway authorities and they would inevitably not have the duty mentioned by the noble Lord, Lord Bradshaw, to repair some of these roads. There is less work also for planning authorities and, possibly, the courts. It obviates unnecessary work, research and legal proceedings by the public sector, private individuals and bodies on the vast majority of the 3,000 miles of green lanes. Incidentally, it would prevent most of them being churned up into wet, muddy brown lanes, as has been said, by motorised traffic where drivers have wrongly assumed that they have automatic rights to use them. They do not. Just because the roads have not yet been classified by the highway authority, which has not the time or the resources to do it, it does not mean that drivers have the right to use them. It puts the onus on those wishing to use these UUCRs for motorised traffic to prove their case and it gives them a full three years to do so, which seems a reasonable window. The local highway authority will not have to investigate all the green lanes and by the end of the three-year window, clarification and certainty for all will prevail. That is the key—uncomplicated clarity and certainty.
Under the current circumstances, it is extremely likely that these UUCRs will be left until after 2026 because the local highway authorities are not getting round to dealing with them. They will be left and remain uncertain. Drivers will continue to use them because they will not be properly classified by 2026. Not surprisingly, no progress has been made on that front at all. This amendment is deregulatory for both public bodies and private individuals and I recommend that the Government look very favourably on accepting it. I believe that it would be very popular with walkers, bicyclists and riders, who are a very large constituency.
Viscount Bridgeman (Con)
My Lords, I will be very brief. I support my noble friend Lord Bradshaw’s very comprehensive outline of the purpose of this amendment and I, too, express my regrets to the Committee that I was not able to be present at Second Reading. There is, of course, an element of farce, were this not a really serious matter, in that the precedent is claimed by the off-roaders that these green lanes in the past were open to horse-drawn vehicles. I find it very regrettable that some of the national park authorities, which of all bodies should be the basic guardians of this beautiful and threatened environment for which they are responsible, have not been universally helpful. There has been a wide disparity of co-operation across the local authorities. My noble friend indicated the difficulties that they face. There has certainly been a multiplicity of police and local authorities. It is interesting that one of the success stories is the Ridgeway where there is only one police authority, Thames Valley. In the past, there has been a knight in shining armour on that police authority—my noble friend himself.
The Minister has gone as far as he can in flashing exhibits to this Committee, but I know that he has received pictures of the appalling damage that is done on these green lanes. He made the point about traffic regulation orders, and a lot of authorities are very wary of instituting those for the reasons that he gave: the huge potential cost of defending against challenges.
I am very glad that the noble Lord, Lord Judd, raised the question of disabled access. There have been unfortunate cases where confrontations between groups of learning disabled people and motorcycles or 4x4s have turned violent. We have to remember that the 4x4 and motorcycle groups are very powerful and persuasive, and they do not always have the restraining and responsible influence of the Auto-Cycle Union, to which my noble friend Lord Jopling has referred. I support the working group. The Government’s apparent policy of reconvening these stakeholder groups, which have hitherto failed to reach agreement, is not helpful.
This is an opportunity that will not occur again. I have a feeling that this has been kicked into the long grass—possibly an unfortunate reference in this context, as the green lanes could probably do with a little more of that. However, this opportunity will not occur again for many years to come. It is a simple amendment to rectify unintended gaps in past legislation and I strongly hope that the Minister will give it some consideration.
Rural Economy
Lord Cameron of Dillington Excerpts(9 years, 10 months ago)
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Lord Cameron of Dillington (CB)
My Lords, I must first declare an interest as a farmer and a landowner. I must also congratulate the noble Earl on introducing this debate to the House.
Why is the rural economy important for the UK? Well, it is worth £348 billion. As was said by the noble Earl, Lord Caithness, there are various figures, but that is the highest I have seen. It is a huge amount. The countryside also hosts more than half a million businesses. There are actually more manufacturing businesses in the countryside than there are in the towns, so perhaps we should have combined the two debates we had in the Chamber this afternoon. Rural tourism adds £29 billion to the economy, and food and farming contribute approximately £84.7 billion. Our rural economy is vital for UK Inc, and it also provides the wherewithal to maintain and manage our most cherished national asset, our countryside, as mentioned a moment ago by the noble Lord, Lord Trees. England—not Britain—is, I believe, the fifth most densely populated country in the world, yet it still has some amazing countryside, which continues to be a vital factor in the health and well-being of our nation.
What are the Government doing about cherishing this incredibly important asset, our rural economy? Actually, they are doing quite a lot, to give credit where credit is due. For instance, the RDPE provides £60 million-worth of grants for micro and SME rural businesses. There is £20 million there for farmers and foresters, and another £20 million for skills and knowledge transfer. Skills and training used to be the major problem for rural businesses, which had difficulty accessing courses and facilities, but with the internet this is now getting better, or should be.
Talking of which, and to continue to praise the Government, the Government are putting £530 million into the rollout of high-speed broadband, which is another huge amount of money. Another £20 million is being put into rural community broadband. At this point I have to say that all the messages I have heard say that this rollout is going much more slowly than originally intended. As we have heard already this afternoon, it is causing a lot of problems. There definitely needs to be a big push to drive the actual implementation, but—bearing in mind that online shopping in the UK is greater per head of population than in any other country in the world—I believe that the rewards for doing so will be huge, if we can deliver.
Meanwhile, just to complete the picture, VisitEngland is investing £12 million in promoting rural tourism and Defra has allocated £10 million for local tourist initiatives. There are six pilot rural growth networks with funding of £15 million and a £2 million fund especially for women-led enterprises. Anyone in this House who, like me, has addressed the WIRE conference—where WIRE stands for women in the rural economy—will know that it is a pretty formidable force in our rural economy.
It would appear that the dead hand of the Treasury has been resuscitated as far as the rural economy is concerned. Even the planning system—often accused of being the real dead hand—is being loosened by a series of reforms, started under the Labour Government and continued under this Government, which should, in theory, make life easier for rural entrepreneurs, even if these reforms all too often run into the barrier of local resistance to change.
What is missing? On planning, one of the gaps is a lack of long-term vision of what makes a sustainable village, and how a good mix of young families, ample workspace and housing that is affordable for ordinary employees, or suitable for their retired parents, can be accommodated. The process for drawing up village and neighbourhood plans needs to be simplified and encouraged. However, central government must also share some of the blame for not rural-proofing all of its policies. For instance, the bedroom tax is disastrous for rural workers because there is virtually no small accommodation available in rural areas. The proposal to do away with the need for affordable homes on sites with fewer than 10 houses could be devastating for the rural workforce and the rural economy if it is implemented. Virtually all village sites have fewer than 10 houses and such an exemption could wreck the balance and likely future of a sustainable community.
Apart from good positive planning and ample affordable housing, my next ask would be for better transport, as has already been mentioned by several noble Lords. Transport is the life-blood of rural living. For the economy, we need better trunk roads to get our goods out to market and pull tourists in. I hope that the Infrastructure Bill, which I should probably be debating right this very minute in the Moses Room, will help in this respect, especially in the south-west. However, we also need better local public transport links for access to work. Big buses are hopeless, but more help for combined business and community transport would be beneficial.
There is also Wheels 2 Work. How does a young person, looking for their first job, find a job in the countryside? Unfortunately, they need their own transport to get to it. They cannot get their own transport because they have not got a job that pays the money to buy the transport. It is a Catch-22 situation. The only answer is to lend them a moped for six months. This is a brilliant scheme that costs less than jobseeker’s allowance and probably means that these kids will never be a burden on the state again. However, there is still reluctance by BIS and the DWP to save the state money by investing in these schemes.
Lastly, I make a plea for more interdepartmental rural-proofing. For instance, the Wheels 2 Work scheme, which I have just mentioned, is relevant to the Department for Transport, BIS and the DWP. They should all be thinking about it and gathering the evidence. Affordable housing is relevant to the DCLG, BIS and the DWP. Again, they need to work together to realise what needs to be done. Rural-proofing and rural understanding need to be embedded in the early stages of every department’s work.
Let us take, for instance, BIS, which is probably the most relevant department to today’s debate. The first thing to understand is that good evidence is vital to good rural-proofing. “Rural” should be a constant feature in government employment or manufacturing surveys and so on, so that rural economic needs can be assessed. Then, of course, they should respond to those needs. BIS’s agencies, UKTI, the TSB, LEPs and so on should all be asked annually to show how they have designed or will deliver new programmes and measures so that they are accessible to rural firms in all sectors. To have effective rural-proofing, you need constant vigilance.
As I think has been made very clear this afternoon, our rural economies are a crucial part of UK Inc. However, their specific problems need focus, care and attention. Only by giving that detailed attention will they be able to play their part in enriching our lives.
Water Bill
Lord Cameron of Dillington Excerpts(10 years, 1 month ago)
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Lord Cameron of Dillington (CB)
My Lords, I strongly support this amendment. Indeed, I strongly support the fracking industry. We need to pursue all possible energy options at a time of high-energy costs and uncertain energy sources. The crisis in Ukraine is perhaps a sharp reminder of Europe’s unwise overreliance on Russian gas. Furthermore, when visiting Brussels to investigate EU energy policy it was made clear to us on Sub-Committee D last year—or perhaps the year before; I forget—that the EU was looking very closely to us, the admired and well respected Brits, to show the proper way for fracking to be done so that others within the EU could copy us. By the proper way I mean taking into account all the necessary environmental safeguards as are inherent in this amendment. So my first point is that Europe is watching us and that what we do could set a precedent for other EU countries, such as Poland.
My second point is that we have to bring the public with us on fracking. In this context it is important to remember that a fracking borehole or well produces 85% of its deliverable gas within the first 12 months after it has been drilled. If we are going to have a sustainable and long-term gas industry from fracking, we will need to have a large number of holes or wells drilled over the coming decades. I made the point at Second Reading that in order to do this the public have to have absolute faith that the companies involved will clear up any mess that they make as opposed to the taxpayer clearing it up or, worse still, the mess being left to the locals to sort out. I am sure that the chances of any mess being made are very limited, so any insurance or bond necessary will not be particularly costly, but for the sake of the fracking industry across Europe it really must be done.
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?
Lord Cameron of Dillington
My Lords, I support the amendment. I do not have quite as many questions as the noble Earl, Lord Lytton, but I have a similar sense of the injustice and unfairness that are implicit within the Flood Re scheme.
I am not quite sure what the opposite of taking a sledgehammer to crack a nut is, but perhaps it is taking a bucket to stop a flood or maybe it is using the current Flood Re scheme to deal with the domestic flood insurance problems and then excluding more than half of all UK households. I know that there is then the added problem of SMEs, but I totally accept that for the present the scheme is designed to tackle the domestic marketplace.
In my view, the proposed scheme is so hedged about with exemptions that it fails to get to the heart of the domestic flood insurance problem. Even without SMEs, most buildings will not be covered by the scheme. Exclusions include: nearly all leasehold properties; the entire private rented sector; housing association schemes, whether shared equity or let—and are these not the very people whom we are trying to protect?—council houses; homes built after 2009; and properties in council tax band H. Some 60% of all domestic properties are specifically excluded. Flood Re, in this case, is not fit for purpose. It would have been so much more simple, fair, just and equitable to have included all of the above and dealt with the problem of excess demand on funds by either capping individual payouts or adjusting the level of premium at which Flood Re cuts in. It seems unimaginative to me to exclude 60% of all properties as a way of mitigating the risk.
Incidentally, the average household premium is just under £200, so the 2.2% levy amounts to an average of £4.40, not the £10.50 being bandied about. When I met with the ABI, it seemed to have no satisfactory explanation for the difference in these figures, so I have no idea where the £10.50 came from. The reason I mention this is that, if a £10.50 premium is considered acceptable, and the real figure is actually much less, then maybe adjusting the amount of supplementary levy on the premium could also be a way of mitigating risk in the early years of Flood Re. Just to exclude 60% of the properties surely undermines the whole purpose of the scheme.
Turning to the various unjustifiable domestic exclusions, I will deal with them one by one, starting with properties in council tax band H. First, as confirmed by ABI, the inclusion of such properties would not in any way raise the cost of the scheme. If, as suggested by Hiscox, a cap of, say, £160,000 were put on any one payout from the scheme, their inclusion would not increase by one jot the risk of failure of the Flood Re scheme. Noble Lords should bear in mind that those who are being excluded are not paying the £4.40 supplementary levy or even the £10.50 towards the scheme: they will be paying nearer to £50, £60 or £70, because of the value of their house, towards a scheme that specifically excludes them. They will not all be rich; many of them will be elderly, cash poor and vulnerable.
I of course understand the politics at work here; as I said, this exclusion is an entirely political decision. If they cannot be included in the scheme, however—which, I agree, seems unlikely at this stage—I would strongly support the National Flood Forum’s proposal that they should be helped with any mitigation measures possible, either through locally targeted schemes or from the Flood Re pot once it has been built up, as in Amendment 90ZA, put forward by my noble friend Lord Krebs and the noble Baroness, Lady Parminter. They should not be totally abandoned when they are contributing so much towards the scheme itself.
Turning to post-2009 properties, apart from people in this House and some people involved in the insurance industry, I have yet to find a single person in real life who knows anything about this 2009 cut-off and the effect it may have on their insurance in 2015. Included within that group of innocents are two people who actually work in the insurance industry. I know that some of your Lordships are saying, “Look, we have to make an example here. We must stop developers building on the flood-plains and the only way to do it is to make these properties uninsurable against flood risk”. To me, that misses the point. For a start, society—that is you, me and the local planning authority—gave permission for these houses to be built. Currently, the Government are actually helping these people to buy these houses through their Help to Buy scheme. The Environment Agency only comments on 6.6% of all applications; perhaps it should have some responsibility. My point is that, if we do not want houses built, we have to stop them at source and not just take it out on the poor, unfortunate souls who—probably totally unknowingly—end up living in these properties either as owners or, worse still, as tenants, who of course are going to be doubly excluded.
Furthermore, to have a blanket exclusion on all post-2009 properties also misses the point. We are not just talking here about houses on the designated flood-plain; we are talking about all houses that represent an insurance risk. We are talking about houses that probably started flooding since 2009 for a variety of reasons. There are more and more examples now of houses flooding because of rising ground-water, even on hillsides. There are many examples of houses flooding from surface water, sometimes because of activities upstream—possibly subsequent to 2009—over which the householder had no control; for example, another development that increases the speed of run-off. There are also houses where the weather pattern has changed and, after two floods, the cost of insurance becomes unbearable. Therefore, just to have a blanket exclusion of all properties built after 2009 seems completely unnecessary and grossly unfair. It is well known that there are several examples, most notably in Hull, where there are properties side by side, one of which will be included and the other, because of this rule, will not be—you can almost guarantee that neither of the owners knew their future fate when they chose which one to buy.
Of course, the biggest exclusion is the leasehold and rented sector. I will leave my sense of injustice about those properties until we get to Amendment 89B from the noble Lord, Lord Whitty.
All in all, I realise that it is probably too late to upset the apple cart of this version of Flood Re at this stage. However, many in the insurance industry are pretty unhappy about it, largely because they know that, when the blatant injustices become obvious, they and not the politicians will get the blame. I hope that the scheme works for those lucky 40% who find themselves included, but it would have been much more imaginative to have made the scheme much more inclusive, if not all-inclusive, and to have mitigated the risk in other ways. I hope that when it comes to the various regulations bringing this scheme into effect, some thought will be given to those who have inadvertently found themselves on the wrong side of the legislator’s pen.
Lord Crickhowell (Con)
My Lords, we all owe a great debt of gratitude to the noble Earl for moving this amendment and to the noble Lord who just spoke for spelling out in great detail some of the shortcomings that can be identified. I think it is 37 years since I was a director of a firm of Lloyd’s insurance brokers, on the board of a large Lloyd’s underwriting agency and losing money at Lloyd’s. I do not think I must declare an interest for that, though, like others, I must declare one as living in a band H property.
I have been very uncomfortable about this scheme, based not so much on the residue of knowledge long forgotten as on the political outlay that I see arising when the whole scheme does not produce the results that most people expect. I told my noble friend Lord de Mauley on Thursday morning, when we happened to meet, that I had just received an e-mail from the chief executive of Hiscox. My noble friend asked me to send a copy of that to him—although he was copied into it, apparently he had not seen it. I said I would come back to this issue because the Hiscox e-mail raised a number of very significant issues that must be addressed. I do not have to go through them all in detail because we had very good summaries from both the noble Earl and the noble Lord, Lord Cameron.
Hiscox points out that the scheme, though clearly desirable in principle, will not solve the problem of unaffordable flood insurance that it was created to address. Nor does it take into account the changing nature of flood. Hiscox points out that of the 885,000 homes in high-risk areas more than 350,000—3.8% of the total housing stock—will be excluded. While some of those will be commercially owned properties able to buy commercial insurance, a proportion will be private buy-to-let properties. What is more, Hiscox says it is likely that this underestimates the scale of the problem. The noble Earl pointed out the uncertainties about the numbers. Hiscox indicates that 80% of its claims came from homes that it did not consider to be at flood risk. It is not just homes sitting in obvious flood plains, of the sort with which I had to deal when chairman of the National Rivers Authority. No one is more indignant about some of the planning decisions that have been taken there than I am.
The whole thing has been arrived at by negotiation between the Government and the Association of British Insurers. No doubt we will be told that this is the best deal that can be done at present. I am not sure we should be satisfied with that. Clearly quite a number of active insurers do not believe it is the best possible scheme and, for the reasons well elaborated by the noble Lord, Lord Cameron, it does not appear fair.
Lord Whitty
My Lords, I will try not to repeat too much of what was covered in the earlier amendment of the noble Earl, Lord Lytton, but there is obviously some overlap.
Of all the exclusions from Flood Re, that of leasehold and tenanted residential properties was, certainly out there, the most unexpected and, on the face of it, the least logical and most inequitable. As the argument about it has gone on, it has also become the most complex and confusing. Leasehold and tenanted buildings in a flood-prone area are faced with exactly the same risks as the freehold properties next door. That is where we start from. The families and individuals who live in these properties face exactly the same problems. These are residential properties; generally, no business is conducted from them. They are people’s homes. Yet the Flood Re project, which was the product of bilateral negotiations between the Government and ABI without any direct engagement with landlords, leaseholders or tenants, now appears to regard these properties and that risk as being different in kind to that of the freehold buildings in the same street. The rationale for that is that letting a property—whether long or short-term—is regarded as a business. The risk must be the same and the families will not be very different, yet they are treated entirely differently.
Since the original proposition for Flood Re, its terms have been, shall we say, “elaborated”—that is, amended in some respects or, to put it more bluntly, confused. For example, the ABI made it clear—this is a clarification, in a sense, but it confuses the issue—that contents insurance paid for by tenants and leaseholders would be part of the scheme and included in Flood Re, but obviously not the landlord’s buildings insurance paid for by the landlord. That makes the arithmetic a bit more complicated. Clearly, the £10.50 levy on other households—they presumably pay the full buildings and contents insurance—does not apply to that group. That leaves a lot of grey areas. For example, one of the most serious problems for leaseholders and tenants will often be that the flood damage has caused depredation to the fittings and furniture, some of which—in the case of fittings, most of which—will be covered by the buildings insurance of the landlord. Of course, landlords have contents insurance so it is not necessarily the same position as that apparent distinction creates. The effect is that the whole situation is more blurred and complicated.
The Government have also complicated the system. Just recently, they apparently conceded that properties of three or fewer leases are in the scheme, provided that the freeholder lives on the premises. Anything more than three, or where the freeholder happens to live down the road, is outside the scheme. There is also a rumour, though it does not seem to be substantiated, that the ABI and Government were also looking at the possibility of distinguishing between small landowners or single-property landlords and large, commercial operations. Where does that all leave us?
Let us take a typical street in a low-lying riverside area of a market town. For the purposes of making us all at home and in deference to the Minister’s patience in dealing with all the complications of the Bill, let us call it De Mauley Street. In De Mauley Street, No. 2 is a family house with three generations living there from two to 80. No. 4 looks and is very similar but is divided into four flats, one of which is occupied by the landlord at least occasionally. No. 6 is a house divided into four leasehold flats that have jointly bought the freehold and administer it as a leaseholder-owned company. No. 8 is, let us say, owned by a school teacher resident in London who bought the premises for her retirement and is letting it out as four student flats. No. 10 is a four-flat block owned by a commercial leasing company with four leaseholders. I am tempted to add a No. 12 that is a mixed property, but that would complicate it too far.
Under the original proposition, No. 2—the family home—is covered but nobody else. Under the ABI concession on contents insurance, No. 2 is covered and all the rest are, but for leaseholder-paid contents insurance only; everything else is not covered. Under the Government three-leases concession, Nos. 2 and 4 are clearly covered, provided you can prove that the landlord actually lives at No. 4, but only the tenant-owned contents in No. 8 is covered. As I understand it, No. 6 would also be covered because the leaseholders jointly own the freehold and therefore one of them lives on the premises. In Nos. 8 and 10, only the tenants’ contents insurance will be covered. We are already in a very confused position.
If there were a cut-off defined by size of landlord, nos. 2, 4, 6 and 8 would be covered but not No. 10. If there happened to be a social landlord in the same street—there would probably not be in De Mauley Street—nobody would be covered because social landlords are not. Incidentally, I am not sure because we have not touched on it what the position is on mixed blocks. With the right to buy, some of the social landlord’s property may well be owned by private leaseholders, who presumably ought to be covered and may well assume that they are—but are not. We have a bit of a pig’s ear of a situation here. None of it is very logical. The properties are pretty much identical, the risk is the same and they thought they were all included under the pre-existing arrangement of the statement of principles.
The long-term implications of this are particularly severe. Particularly with small landlords and their tenants, if they cannot get insurance then they cannot get a mortgage or raise money for improvements. Hence the buildings deteriorate. The only way they could raise money would be to raise rents or the service charge, so tenants and leaseholders suffer directly. The area starts going downhill because the buildings appear more dilapidated and more obviously at risk. The tenant and leaseholder experience suffers, the landlords suffer and the number of new landlords prepared to invest and buy property diminishes in those areas. This is not a situation that the Government find easy to defend, but I think even the insurance industry is beginning to find some difficulty in defending it.
Having said that, as I said earlier in the previous debate, we recognise that the actuarial calculations for Flood Re are delicate and depend on various assumptions. I do not intend to unravel those calculations at this point by this amendment, but it is important that Parliament understands the position so this is a relatively modest amendment. It does not require Flood Re, the Government or the ABI to do anything directly. However, because the scheme has to have statutory backing and because to give that statutory backing Parliament needs to be convinced that it is logical, equitable and proportionate, Parliament needs to understand the consequences of including or excluding different combinations of property.
The amendment therefore seeks to find that out. It does not seek to delay the process—well, not by much. However, it proposes that before we finalise the statutory instrument on this—and it will need a final statutory instrument—the Government report back to Parliament on: the number of leasehold and tenanted properties included; the number excluded; the number where the landlord is in business in a large way; the number where a landlord is in business only in a very small way—probably with a single property; and the cost that would arise from including each of those categories in the Flood Re proposition. I am leaving the dividing line between large and small largely up to the Government, but we need to have a clear one.
The information that that report would show to Parliament would mean that we, and interested parties, could have a meaningful discussion before the consultation started—or within the consultation—on the statutory instrument, which I am assuming, because this is supposed to start in 2015, would have to be within a very few months. Without that information, we in Parliament are in danger of giving the go-ahead to what appears to every rational observer to be a seriously inequitable, complicated and illogical scheme, which we are about to back by legislation. I do not need to tell Ministers that that situation is probably judicially reviewable.
This amendment therefore asks the Government to give us the facts before we finally go down the road. In a way, it is not delaying this legislation going through, but it would allow us to face up to the facts before the final statutory instrument is carried. At the moment, frankly, we do not have those facts. The Minister referred to fanciful figures. A number of very reputable insurance companies and others have bandied about a number of different figures. I do not know the total number that fall into each of these categories nor, I suspect, does the Minister or the ABI. However, we need to know—at least approximately—and we need to know the cost consequences for them, for the scheme and for those in the rest of society who are subsidising this scheme what the effect would be. Therefore, we do need that information. This amendment would allow the Government, without holding everything up, to get that information and to report back to Parliament. In my view it is pretty obvious that Parliament needs to know. I beg to move.
Lord Cameron of Dillington
My Lords, this is a very mild amendment to which I certainly would have added my name if I had become aware of it in time. There is no doubt that the exclusion of the leasehold and rental sector is the worst lacuna of the current Flood Re scheme. I understand the original political thought process—that professional landlords should not be helped to overcome their flood insurance problems by those who live in band A properties, for example. Of course, that political thought process is a fairly simplistic and stereotypical understanding of the average landlord. This is an important fact: 78% of all landlords own a single dwelling for rent.
As noble Lords know, there are many professions where a dwelling goes with the job. In my part of the world, farm work is the most common example. Many farm workers and tenant farmers buy a house to retire to, and, of course, they let it while they are still working, largely to help with the mortgage. It is perfectly sensible retirement planning and the Government should encourage it. Furthermore, perhaps it is a typical English aspiration, but many people currently living and working in cities have a dream of buying a house in the country and retiring there—similar to the farm workers who I have just mentioned—and they will let it in order to help pay the mortgage on it.
This Bill does not recognise these dreams of ordinary—well, the noble Lord, Lord Whitty, mentioned schoolteachers, but it could have been anyone really: secretaries, nurses, anybody. It does not, to borrow a phrase from Yeats, tread softly on their dreams. They are excluded from this scheme. Surely these are the people for whom this scheme should be designed—people whose mortgage companies will insist on full insurance, including flood insurance. But what about those who cannot afford a house, in the country or elsewhere, and buy a flat? I cannot think of a more appropriate person to benefit from this scheme. However, along with 60% of the other households, they will almost certainly be excluded from this scheme while at the same time contributing to it.
I will not give the rest of the speech on leaseholders and flat owners because that has already been very well covered by the noble Lord, Lord Whitty. However, it seems strange to exclude householders whose only error has been to choose to live in a flat rather than a full-blown house. It seems unjust to me. A much more sensible cut-off point for the application of Flood Re would have been owners of, say, two, three or four let properties. However, all that apart, this amendment will at least ensure that we have a full understanding of the sort of owners, leaseholders and tenants whose property is being excluded and what they could have contributed to the scheme if they had been included. As I say, I think that this is a very mild amendment, merely touching on a problem that is a major shortcoming in the Bill. I hope that the Minister will look kindly on it.
Earl Cathcart
My Lords, I congratulate the noble Lord, Lord Whitty, on his use of De Mauley Street. I think it was clear what he was saying. It seems to me that if you have a property to let, as landlord you should buy the insurance. It might not just be the bog standard property and contents insurance that you buy: you will probably also buy owners’ liability insurance, public liability insurance and any other commercial insurance that you might buy as a landlord. That is one reason why they are excluded from Flood Re, because we are not talking like for like. The owner occupier in No. 2 De Mauley Street, for instance, will buy their own bog standard property and contents insurance. As a landlord you buy other things as well, which makes it a commercial risk.
I too read somewhere that to qualify for Flood Re, you had to live in the property. Therefore, I come to the amendment spoken to by the noble Lord, Lord Cameron, regarding which he said that 78% have one property, which they let. If the occupier has to buy the insurance, why does not the landlord get the occupier to buy the property and contents insurance, which would qualify it for Flood Re? If the landlord then wanted to buy his public liability or owners’ liability insurance, he could buy it as a separate policy. That might be one way in which a number of these cases can get into Flood Re.
Lord Cameron of Dillington
I understand what the noble Lord is saying but the problem is that the tenant does not have an insurable interest. He cannot insure the property. No insurance company would accept his insurance of a property in which he is only a tenant.
The Earl of Lytton
My Lords, I too would have put my name to the amendment had I known about it in time. I apologise to the House and to the noble Lord, Lord Whitty, for not being in my place when he introduced it, but I understand a great deal about the background to it from previous discussions with him. Whatever we do with the cut-off point between what is in Flood Re and what is outside it, it is important that it is reliable, consistent, transparent and fair. The outcome must not be capricious or so asymmetric that people lose trust in it, because I am a believer that credibility is at the centre of Flood Re’s success.
One thing in particular stands in stark contrast with that. The commonhold units’ owners do not themselves own the fabric of the building: it is owned by the commonhold association. I asked myself, if there is a difference in personality, in legal entity, why is it that long leaseholders of the conventional sort in a similar building—with the freehold being the common parts and the fabric of the building owned by someone else—should not benefit? Why is there a blanket inclusion of commonhold but a blanket exclusion of leasehold? I find that difficult to understand, particularly because, under the Leasehold Reform, Housing and Urban Development Act, the intention was to try to get leasehold nearer to freehold, to remove the segregation between the freehold interest and the leasehold interest which for years has dogged the sector and allowed all sorts of abuses to occur and produced all sorts of disadvantage in funding, growth and reward for that investment.
It seems to me that the convenience of insurers is being put ahead of the public interest. There probably has to be a cut-off point somewhere in the system. It is not for me to speculate on what the actuarial approach would be to that, but it seems that where it is being placed at the moment defies objective analysis on the points of consistency and transparency that I mentioned. I am very inclined to support the amendment.
Lord Grantchester
My Lords, during our debates in Committee, the amendment of the noble Lord, Lord Howard of Rising, and the noble Earl, Lord Cathcart, seemed purely a matter of practicality. The noble Earl should be congratulated on finding this shortfall in the relevant documents. The Minister wished to reserve the Government’s position pending further evidence. I merely rise to ask the Minister whether the position could be addressed by secondary legislation. That would allow Parliament to keep a watch on the situation and assess when and if it develops.
Lord Cameron of Dillington
My Lords, I apologise that I did not manage to get in before the Labour Front Bench. Before the excellent exposition by the noble Earl, Lord Cathcart, I had no detailed knowledge of the technical benefits brought about by this amendment. However, I do know about the vital importance of the role of IDBs in the land drainage sector, both as a former chairman of the CLA water committee, who was once the keynote speaker at an Association of Drainage Authorities lunch—a memorable occasion—and as a farming resident in Somerset.
The 2010 Act, not entirely wisely in my view, gave new land drainage responsibilities to county councils and district councils, taking away from the previously comprehensive responsibility of the Environment Agency and IDBs. This has caused a degree of chaos, certainly in Somerset, with no one really taking full responsibility for their duties or even, to begin with, knowing what those duties entailed. That is by the by. My key point is that the one solid rock in all this has been the IDBs. Their local and comprehensive technical and engineering expertise is absolutely vital and we would be lost without them. Anything that helps them to perform their duties better must be in all our best interests. I strongly support this amendment, which would seem to further that end.
Water Bill
Lord Cameron of Dillington Excerpts(10 years, 1 month ago)
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The Lord Speaker (Baroness D'Souza)
Page 141, line 32, at the end insert the words as printed on the Marshalled List, with the proviso that the last word in that amendment is “reduced” rather than “recorded”.
Lord Cameron of Dillington (CB)
My Lords, I declare an interest for the purposes of Report, in that I am a farmer with abstraction licences on my farm. I support Amendments 59 and 60, which ensure that de-averaging on the basis of geographic location is outlawed in the Bill.
The delivery of water in a civilised, developed country should be a universal right. That is not to say that it comes free for anyone, but that all the costs of the necessary infrastructure, such as large pipes running across farms and small pipes running to farms, should be shared between all the parties. In the same way as Royal Mail has a universal service obligation, so should water.
The Minister said in Committee that Ofwat has the powers to prevent this sort of de-averaging, and he repeated that in response to the previous group of amendments. However, he also said that the Government’s charging guidance will say that any de-averaging must occur only where it is in the best interests of customers; but which customers—urban or rural? It is important to set out firm rules here against de-averaging on the grounds of location in the Bill. That is because there is no doubt in my mind that the Bill is merely the first step in a more comprehensive reform of the water industry, which will happen in due course. Like John the Baptist, the Bill is not the light but the precursor of the light to come.
The next Bill will undoubtedly bring in a comprehensive and sustainable abstraction reform—we know that that has been virtually admitted by Defra—while at the same time it will herald a sustainable consumption reform in the form of introduction of universal metering. I know we are coming to that; everybody knows that that is essential and only political games seem to be preventing it happening this time around. Moreover, as a result of these reforms at either end of the supply chain, I envisage a gradual move to the introduction of competition in the water industry in both the commercial and domestic water supply marketplace. At this stage the important principle of preventing de-averaging for different locations, which these amendments achieve, is absolutely paramount.
I am slightly suspicious of the Government’s reluctance to endorse these amendments in Committee, but I get a hint that they might move a bit further at this stage. If they do not, frankly, the writing will be on the wall for remote rural customers. To use the Minister’s words, it will undoubtedly be in the interests of customers —that is, urban customers, who are in the majority—if the minority of remote customers can be charged more. If that were to happen, it would be a major betrayal of the rural consumer. I say that as the person who has been asked by Defra itself to rural-proof government policies.
Lord De Mauley
My Lords, my noble friend Lord Selborne has tabled Amendments 30 and 37, which would amend provisions in Schedules 2 and 4 allowing Ofwat to produce the charging rules that enable licensees to apply for discounts, where the licensee, its customer or anyone else, takes action to reduce pressure on water or sewerage networks. These amendments would restrict such discounts to situations where the incumbent water company’s costs are also reduced.
I agree with the sentiment behind the two amendments, but let me explain why they are not necessary. Ofwat’s powers to make rules on discounts are wide-ranging and can take into account impacts on an incumbent’s costs. They must also be consistent with ministerial guidance. It goes without saying that a discount should not result in an increase in costs for the incumbent or its customers. The sorts of things that we are looking for are agreements where customers commit to take positive actions, such as investing in water recycling facilities or agreeing not to take water during peak periods or during a drought. It might also involve a discount in wholesale charges, where a customer or licensee agrees to invest in an upgrade of a network where the incumbent is also making an investment. But my strong concern is that making a reduction in an incumbent’s costs a condition of such discounts protects the competitive position of the incumbent and risks stifling innovation in the sector if a proposal results in a one-off increase in an incumbent’s costs or if a small investment is needed by the incumbent to help the licensee.
I note that the amendment is similar to a provision in Scottish legislation, which also allows licensees to apply for discounts against charges made by Scottish Water. As far as I can determine, no details have been published of any discounts being applied in Scotland, and I do not wish to place such constraints on the system in England. I am confident that ministerial charging guidance and Ofwat’s charging rules can address issues relating to an increase in incumbent’s costs and what may or may not be passed on to other customers not benefiting from a discount.
Amendments 59 and 60 would prevent an incumbent making any charges within its area based on a location of premises. I know that my noble friend seeks to address issues relating to de-averaging, which we have just debated, but these two amendments could result in a significant impact on charges for all customers across England and Wales. It is sometimes necessary for an incumbent to set different charges within its area of appointment, particularly when it is merged with another incumbent. It may be necessary to maintain separate charges for different parts of a merged incumbent’s areas, even after the merger is complete. For example, Affinity Water provides services in three different parts of the country. The charges are different in each of those three areas to reflect the local costs of supplying water.
We are hoping to stimulate more merger activity through Clause 14—for example, to take advantage of economies of scale for the benefit of customers, who could lose out if the merged incumbent had to average its charges across a merged area. There will be winners and losers, but it will mean that the true costs of providing water and sewerage services may no longer be reflected in customers’ charges. Ofwat and the Secretary of State share a statutory duty to protect the interests of customers. The Water Industry Act 1991 provides that this duty should be discharged when appropriate by promoting effective competition. The Government are clear that the purpose of introducing competition into this sector must be to benefit consumers.
I know that noble Lords will be concerned about the potential for impact on rural and vulnerable customers. The noble Lord, Lord Cameron, referred to that. I share those concerns, and I know that noble Lords will be concerned about household customers who cannot switch suppliers. The Secretary of State, Ofwat and the Consumer Council for Water all have specific duties to have regard to the interests of rural customers and those who are unable to switch their suppliers, such as household customers. These duties are already clearly reflected in the charging principles which we have produced to inform these debates and will flow through directly into our charging guidance and Ofwat’s charging rules.
My noble friend referred to discounts for direct debits. To be clear, the discounts covered by the Bill are not discounts offered by incumbents, such as direct debit discounts for charging payment methods, but discounts for novel or innovative proposals which help all customers.
My noble friend was also concerned that charging rules could be different for different localities. This will allow Ofwat to provide extra protection—for example, for rural customers—as supported by its duty to have particular regard to certain classes of customers, such as, indeed, rural customers. Given these comments, I hope that my noble friend will be prepared to withdraw the amendment.
Lord Oxburgh
My Lords, I begin by declaring an interest in a company that designs and manufactures smart meters for gas, electricity and water; the amendment is about water.
I shall not rehearse the arguments about water metering, which were well aired in Committee. The present situation is clear: a householder who wants a water meter is entitled to have one. However, no one is charged for their water by metered volume unless they want to pay in that way or they live in an area designated by the Secretary of State as one of water stress. As has been pointed out by the noble Baroness, Lady Parminter, that situation obtains despite the fact that in 2009 the independent Walker review of water charging set up by Defra concluded that charging by water volume was the only fair and sustainable basis for charging.
In Committee, I pointed out that regardless of the considerable fairness, efficiency and environmental benefits of metering, there were two other important considerations. First, because meters are relatively expensive to install on a one-off basis, it is much more cost-effective if a whole street or neighbourhood is done together. Secondly, because we live in times of changing climate and weather, an area that previously enjoyed an abundant supply of water may become water-stressed quickly and unexpectedly. If meters are already in place, it would be possible to respond to the changed conditions much more quickly. This means that there are good reasons to allow water suppliers to install meters at their discretion and convenience, while leaving the decision on whether to use those meters for water charging with the Secretary of State or the householder. This would allow meter installation at minimum cost and permit a timely response to water stress, if needed, and it was the essence of the amendment that I introduced in Committee.
In subsequent discussions with the Minister, his officials and the supporting Front Bench team, for which I am very grateful, the view was that water companies already had the authority to carry out general meter installation and that this amendment was unnecessary. Numerous communications which I have had since that time—I continue to receive them—suggest that this fact is not well known. I have tabled the present amendment at least in part to allow the Minister to make an authoritative statement on the present situation.
I will make a couple of comments on today’s amendment, the wording for which was offered by WWF and several collaborating organisations. First, I have to apologise to them and to the House that the wording in the amendment is in fact not the most recent wording—but never mind, it gives us an opportunity to discuss the general problem. The amendment would allow water companies to introduce universal metering if, after consultation with customers through the existing water resources management plan and business plan processes, it is found to be the most affordable option for customers overall as well as being the best option for water resources management. This will be consistent with the new resilience duty of Ofwat, and I strongly endorse that proposal. The present procedures for metering approval need widening and are glacially slow even when all those directly affected are in agreement.
Secondly, the text of the amendment provides an excellent illustration of the need for the Secretary of State to supply a clear and authoritative statement on metering to clarify the tortuous complexity of the present legislation. It is hardly surprising if water companies are confused about the law, if indeed they are. The subject matter is not intrinsically complicated, but successive layers of amending legislation, laid one upon the other, make the present state of the law difficult to discover without a great deal of work. At an earlier stage the noble Baroness, Lady Northover, assured me and the House that codification of water legislation would receive the attention of the department. I wonder whether the Minister could simply comment on any progress that has been made.
In conclusion, I believe that metering is important both to give consumers a fair deal and to help the environment. We ought to make it less expensive and easier to accomplish. I beg to move.
Lord Cameron of Dillington
My Lords, in supporting my noble friend Lord Oxburgh I realise that we are swimming against an overwhelming political current here. However, it is sometimes the duty of Cross-Benchers to point out the political follies of some of the main parties in this House. It is clear to me from having spoken to many Members of this House—including some very important Members, many of whom are here today—that on a personal vote this amendment, or something like it, would sail through the House. To put it bluntly, a lack of imagination at the other end of the Palace is preventing this happening. One might even say it was a lack of leadership. I say “lack of imagination” because it is quite easy to devise a tariff system or to further enhance or better promote WaterSure or some of the other systems so that large households on low budgets, for example, can continue to pay as little as they do for their water at the moment, or even less.
It has been my ambition throughout the passage of the Bill to ensure that water is valued more by all parties: government; businesses, including energy, which are great water users; farmers; and, above all, domestic consumers. Having read the Committee stage—I apologise that I was not in Committee when this was discussed—I know that it has already been said that no one will value it unless we measure it. That includes those who might be getting assistance. Everyone would value water more if they measured it. What seems strange is that that is the overwhelming view not only of Members of this House but of environmentalists and of most customers, when they are asked—you have only to read the Walker report to see that.
It is also the view of water companies that we should work towards 100% metering. Your Lordships might think that slightly counterintuitive because, if customers value their water more, surely they will buy less. However, water companies know that the costs and delays in providing ever-expanding infrastructure and water supplies to cater for an ever-expanding demand would cripple their balance sheets. In January, some of us heard that a mere extension of a reservoir in Essex took 20 years to achieve: 10 years to prove the case and 10 years to go through planning. How much longer would it take for the many new reservoirs required to cater for this system of unlimited demand? There is no doubt that a reduction in demand by around 15%, which is often cited as what can be achieved by universal metering, would be the equivalent of several new reservoirs. Metering is therefore so much quicker and cheaper, and infinitely better for the environment.
I want to tell your Lordships a small parable from India. In India, water was considered to be a commodity that was given by God and therefore should be free to all people. Because no one was paying for it or valuing it, the investment in infrastructure by the state and the private sector was therefore negligible. It was even worse than our water industry was before privatisation. So as a result of this paucity of investment, communities in both cities and rural villages often got water only for an hour per day, or sometimes two at the most. Anyone who has listened to any debates on overseas development in this House will know that poor sanitation caused by lack of water is the biggest killer of children in the world. Anyway, the Indian Government realised that everyone had to value water more and so changed the law about not charging for water. Almost immediately, a giant leap forward was taken in water supplies and sanitation across India, although it is not perfect and they have a long way to go yet.
Your Lordships may be thinking, “What on earth does this have to do with universal metering?”. However, as I said, it is a parable rather than a parallel because the Indian Government had learnt that you do not want to use water as a political or social tool to iron out the inequalities of life. Apart from anything else, water is one of the heaviest commodities on the planet. It is difficult and expensive to move around. It is best to put the proper value on water and then ensure through other measures that people have the wherewithal to pay for it; that is what I mean by a lack of imagination. Nearly all Western countries have universal metering and most of them, from what I can gather, have some sort of WaterSure scheme or an equivalent which relieve those who might get into financial difficulties. Universal metering is going to happen here eventually, as in the rest of the world, However, I am reminded of the German philosopher—I think it was Otto Mencke, although I cannot be dead certain—who said: “When the end of the world comes, I want to be in England because everything always happens 50 years later there”.
Water Bill
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Lord Whitty
My Lords, some of the issues covered by Amendment 9 have been discussed in the previous group. I do not entirely disagree with the Minister’s response on common carriage, in terms of how water gets delivered and having as broad a range of potential new retailers as possible. However, the outcome seems to be that if you have de-averaged prices, you have discrimination between users. Whether all the structural amendments—some in this group and some in the previous group with the amendment of the noble Earl, Lord Selborne—would be necessary to prevent that, the Bill ought to enunciate that principle. At the end of the day, we do not want a market where the easiest route leads to suppliers cherry picking and to a two- or three-tier market for the final delivery of water to businesses, public authorities and so forth—the non-domestic retail market.
In one sense, Scotland shows us what the benefit to business, and the knock-on effect to the domestic side, has been. It has been not in differentiated prices but in better service, in driving water efficiency both in the delivery and use of water, in better means of dealing with waste water, in better water treatment in specialist cases and in disposal of water and waste. If you put competition wholly on the price side, you will not get those advantages. It will be easy for a supplier, on the supply side, to have a more accessible or more cheaply accessible source of water at the upstream level to bring to its business consumers or, on the demand side, to have a group of businesses and other institutions taking advantage of its terms because they are all fairly close together and all have similar requirements, and therefore there are economies of scale in actually supplying that institution.
I do not think that the Government envisaged—and nor did we on this side—the increasing competition in the retail sector as being primarily about wholesale price. Reassuring noises have been made about Ofwat having the ability to ensure that de-averaging does not take place. The natural drive of the market, however, is likely to make it quite attractive. Unless Ofwat has a clear line, which this amendment would give them, that the wholesale price and therefore the retail price of wholesale water would not be differentiated by location, we will get some differentiation of outcome. We will get cherry picking and we will get distortion. It will hit particularly the more remote rural areas and rural businesses in those areas; it will hit particularly businesses in rundown parts of the inner city, where not many of them are inclined to negotiate deals with the company; and it will hit businesses where it is difficult to see how a new arrangement would work.
Unless there is an overall presumption that there should be no de-averaging then it is quite easy to see how the market would end up with that. It may be that Ofwat’s powers would be exerted to prevent that, but this Bill does not require Ofwat to do so. The terminology that de-averaging would exist only if there was an “overall benefit” to consumers makes it quite difficult to assess. You have an example of de-averaging which clearly might benefit the immediate consumers who are benefiting from that de-averaged price, but how do you then assess its effect in the short and medium term on consumers as a whole? It is quite a difficult judgment for Ofwat. If the outcome the Government want is that which has been delivered in other quasi-utility markets—largely it has been—why not actually tell Ofwat to deliver that? Surely it would be easier.
I hope that the Government take this slightly more seriously. It will not necessarily unravel their whole approach to competition in this Bill. It is simply giving Ofwat an explicit duty that will deliver an outcome the Government say they want. The Government should not fundamentally object to this amendment. It may require a bit of back-up along the lines the noble Earl, Lord Selborne, has suggested already, but it requires at least the principle to be reflected in the Bill. Otherwise, we will get cherry picking and we will get discrimination, which is unlikely to drive the kind of efficiencies that we have been praising the Scottish system for delivering. I beg to move.
Lord Cameron of Dillington (CB)
My Lords, as this is the first time I have intervened in Committee, I declare an interest as a farmer with abstraction licences. Even though I come from Somerset, my farmland is not yet flooded. However, if the current rains continue, it is unlikely that I will be able to say that on Report.
I want to back up the noble Baroness, Lady Parminter, who said that she could not understand why we had only a week between Second Reading and Committee. This is a very complicated Bill and I am not certain why that particular protocol has been broken on this occasion. I have never had an explanation of it. Maybe I have missed some explanation somewhere, but I think it is wrong. I hope it is not a precursor to a Commons-style approach to Bills, where arguments and the length of discussion are ridden over roughshod.
I strongly support Amendment 9 and the whole question it addresses. It is very important that de-averaging does not take place. I would have supported the noble Earl, Lord Selborne, in his amendments to ensure there are no detriments or de-averaging if I had understood that that was their intention. The noble Lord, Lord Whitty, said that he was not entirely clear what the amendments intended; personally, I could not understand them at all. Anyway, I would have supported the noble Earl had I known.
Water, like Royal Mail, should be covered by a universal service obligation that is amendable only with the permission of Parliament. Water should be a universal right—although clearly there can be exceptions, as with Royal Mail. For instance, I believe that a postman does not have to deliver to a household where he is permanently attacked by a savage dog. The water equivalent of that might be a blatant leak in a householder’s garden where the water was going to waste; there could be exceptions.
It is very important, particularly in rural areas, that de-averaging does not happen. I have heard the view expressed that de-averaging is bound to happen with the introduction of competition, especially if that competition eventually moves on to cover domestic premises. I personally hope that it will but obviously we should go softly, softly. I do not see competition as incompatible with de-averaging. It is possible to invest efficiently in the overall infrastructure and still charge your customers competitively, based on an average cost per litre, once the overall infrastructure is in place and the supply of water adequate for the demand. That obviously means we must manage the supply, the overall abstraction and the demand—preferably through universal metering but we have yet to come to those debates.
For the time being, I strongly support the thinking behind Amendment 9. Neither remote nor very remote properties should have to pay more per litre than their urban counterparts. I sincerely hope that the Minister was right, when replying to the previous debate, to say that Ofwat has the power to prevent de-averaging. I sincerely hope that it will use those powers.
Lord Moynihan
My Lords, I have a number of amendments in this group. Briefly, I am very supportive of the way the noble Lord, Lord Whitty, set out the principles and concerns on this. He echoed many of the points made by my noble friend on the previous group of amendments. My amendments focus less on the principles and more on the mechanisms of charging. To limit the amount of your Lordships’ time taken in Committee, I intend to pick that up in the context of Amendment 43, on restricted access, and of Amendments 99, 100 and 102, which fit more neatly into Clause 16 and the charges scheme—which I know my noble friend will address when he reaches his group of amendments, led by Amendment 44. I could discuss them here but I think it would assist the Committee to refer to the charges scheme at that point.
In closing, I urge the Minister to take very seriously the concerns on this issue raised across the Committee. As has been pointed out, he mentioned at the conclusion of the debate on the previous group of amendments that Ofwat has powers it can take to protect customers in this context. The Bill also gives Defra the option to issue charging guidance. Given the importance of this, as Members from all sides of the Committee have highlighted, I hope that due account will be taken of those views and that Defra will give serious consideration to the issuing of charging guidance in this context.
Lord Cameron of Dillington
My Lords, it seems strange to be talking about possible water shortages and abstraction reform in one of the wettest Januarys since records began. I remind noble Lords that January is named after the Roman double-headed god, Janus. If one head is pointing to the climate change extreme of floods, the other is undoubtedly pointing to drought.
I am not certain that either this group of amendments or the previous group totally grip the issue of likely water shortages and the much needed reform of the abstraction regime, which should be put in place as soon as possible. One of the lessons of the disaster of the Somerset Levels is that we should not wait until disaster strikes before taking action and rushing through reforms. At one of the side meetings last week, which many noble Lords attended, we heard that improvements in water supply and demand take a long time. We heard, for instance, how the mere extension of a reservoir in Essex took 20 years to arrange—10 years to prove the case and 10 years to get the planning through. Equally, universal metering, on the demand side—which of course is worth several reservoirs and is not dependent on rain—would also take a very long time to achieve, particularly if we are to bring consumers along with us, which is very important.
To avoid the likely dire situation that we will have in the future, we should use the Water Bill to ensure that disaster does not strike some time in the future. The dire situations relate to population increases, more demand for energy—energy is a huge user of water, as I am sure many noble Lords know—and more droughts, which are very likely. All these factors require greater flexibility in the management of our abstraction regime.
There are parallels with the energy industry. Some of us were dealing with the Energy Bill at the end of last year and tried to ensure that in the next 10 or 20 years’ time there would be a sufficient balance of supply to demand within the energy industry. All the time, we were aware that 10 years ago no one had looked carefully at this balance of supply and demand. We are quite likely to face power cuts in the next couple of years—as many noble Lords are aware—because of this lack of forethought in the past decade.
During the passage of the Energy Bill, my noble friend Lord Oxburgh, who I am sorry to see has left his place, tabled an amendment to establish a council of wise men who would look at the energy industry in the long term, see what was needed and ensure that the right precautions were in place. If the water industry had a group of wise men now, they would be telling us to put a road map in the Bill to take us as speedily as possible towards overall abstraction reform in universal metering and not to wait until the next decade, which seems to be the form, to put this in place.
I agree that abstraction reform is a serious issue. There will undoubtedly be winners and losers in the process whose interests must be given voice in the democratic process. However, I am fearful that Amendment 104, which I am sure the noble Lord, Lord Whitty, will come to in a minute, might put an even greater brake on the introduction of reforms than the long drawn-out process seemingly currently envisaged by Defra. If I have misunderstood Amendment 104, I look forward to being corrected. In the mean time, I strongly support Amendment 96 in the name of the noble Baroness, Lady Parminter.
Lord Crickhowell
My Lords, the noble Lord, Lord Cameron, asked if it was right to discuss the possibility of drought in the middle of floods. I can assure him that it is absolutely right. My experience in the NRA was that, whenever we had a flood it was almost immediately followed by a drought, and whenever we had a drought it was almost immediately followed by a flood. It was an almost invariable rule, so I am sure that he is right that we should be addressing these issues.
When speaking to my noble friend’s previous amendment, I said that the one area to which I might want to return was reform of the abstraction licensing regime. I spoke about it in some detail at Second Reading and I do not want to repeat what I said then. It was one of the central problems that we had to deal with in my time in the NRA.
I disagree with the noble Lord who has just spoken when he says that the Government should get this issue into the Bill and that it is very urgent. My understanding is that the Government are getting on with the kind of review and detailed discussions with just the sort of people that he suggested they should be meeting. However, they have pointed out that the issue is extremely complicated and cannot be rushed. While I, perhaps on the basis of experience, have always been one of the first to criticise the timescale on which some government departments operate, I have a good deal of sympathy with the need to take adequate time on this. This view was reinforced by the fact that at one of the briefing meetings, the representative of—I think—Anglia Water told us that it was undertaking fairly basic research into the resources available in the region. It was suddenly brought home to me that we do not know a great deal about the availability of ground water resources in many of our regions. We know how much water is going down the rivers, but we still need quite a lot of information before we have the kind of policy that we all want to see.
While we must get on with it, I am not sure it is right to think that we can put into this Bill the requirements that will follow the result of this important inquiry and examination. However, my noble friend Lady Parminter is right in thinking that there should be safeguards in the Bill so that when the results of the review come through, we can be certain that the necessary steps and measures are taken. I am not sure how that should be drafted or whether the noble Baroness has got the drafting quite right, but I sympathise with her desire to write safeguards into the Bill so that we are not left with a great gaping hole when we get the results of the very important review that is under way. I will therefore listen with great care and interest to what the Minister says in reply to this debate.
Water Bill
Lord Cameron of Dillington Excerpts(10 years, 3 months ago)
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Lord Cameron of Dillington (CB)
My Lords, I declare an interest as a farmer in possession of two abstraction licences. Also, not to be totally outdone by the Minister, I must own to having several fields that frequently lie under water, particularly this month.
On the whole, I think that this is a good Bill which is much needed to ensure that our watercourses, our water supplies, our water environment and our water management safeguards are all in good condition to face the future. Water, although not very highly valued by most people in this country—particularly in one of the wettest Januarys for years—is in fact the most valuable commodity on the planet. Ask any scientist looking for signs of life in the universe or any African farmer struggling with climate change, and you will find that water is indeed the key to life.
There is much good in the Bill, but to my mind it is lacking in ambition—a point on which I shall expand. My main point is that, even if the Government are right to proceed on a softly-softly basis, I for one should like to see more enabling clauses that permit the water industry to make more competitive and environmental progress without having to wait for another water Bill, which, after all, is unlikely to come along for a decade or so.
Let me run through various aspects of the Bill to show what I mean. First, retail competition for commercial customers is a good idea. As many noble Lords have said, it has been beneficial to more than half the businesses in Scotland, even if most of them ended up staying with their existing supplier. The reforms in Scotland have also resulted in household customers benefiting from the thought processes that such non-domestic retail competition has provoked in the water companies, but surely the end game must be to have retail competition across all water customers, commercial and domestic. I am therefore surprised that it appears we have to wait for another water Bill before such household competition can be introduced. There ought to be some enabling clause in this Bill to allow progress on this front, as and when it becomes appropriate.
Having said that, I for one would want to ensure that any future competitive structure was to the benefit of all customers and did not lead to de-averaging, and thus the unfair exploitation of rural and remote rural customers. I am told that competition can happen without de-averaging. Equally, it is important that water-saving activities by retailers do not result in anti-competitive activities by wholesalers. In other words, the Bill before us lacks the “no detriment” provisions of the Scottish legislation which protect both customers and the environment.
Moving on to the next lack of ambition, I think that there is a total absence of foresight over the question of metering. Southern Water, which covers the most metered area in England, believes that 100% metering would result in a 12% saving in water. That is a gigantic amount of water to remove from the system day in, day out. This could be the most environmental part of the Bill—if only it were there. Furthermore, the current voluntary-only metering actually puts the price up for those not metered and thus has proven negative social implications. I realise that if there was a universal tariff for every litre of water used, some poor households with large families, and others, would find themselves worse off under 100% metering. However, with transitional tariffs, social tariffs and even block tariffs and the like, and with the meter in the house and not at the end of the garden, it is perfectly possible for everyone to benefit from 100% metering. There is absolutely no doubt that the environment would win hands down—I repeat that there would be a 12% saving.
Furthermore, 100% metering results in retail water companies having a better and more direct relationship with individual customers. So metering is good for the environment and should also be good for customers. However, there appears to be nothing about metering in the Bill. At the very least, as I have said, there should be an enabling clause for greater incentives for water suppliers to work towards 100% metering—if that makes sense for their customers. The Government need to show some leadership in this field. For instance, the current barrier of having to prove the existence of a water-stressed area before promoting metering is totally unnecessary.
Moving on, I will touch on abstraction. Again, so far so good: upstream transfers—good, in my book; the flexibility of buying water from farmers’ winter storage reservoirs—good; and the free surrender of unused water company abstraction licences—very good. The latter unused licences have been hanging over the proper economic and environmental management of our river basins for far too long, and I am glad we are finally gripping that particular problem.
However, looking deeper at future plans for abstraction, I read the Defra consultation document Making the Most of Every Drop with interest. It is rightly ambitious in its proposals and I would go with either of the two main proposals that are in it. This is an important subject as water becomes more and more valuable to a growing British population, who are subject to ever more extreme climate events and yet possesses an admirable desire to protect their environment. However, I worry about the timetable. Why, as the consultation suggests, do we have to wait until the 2020s before implementing any changes? This would seem to be unnecessarily cautious. What guarantees do we have now that anything is going to happen at all? Again, why can we not have an enabling clause in the Bill or, at the very least, a time limit by which any new scheme has to be introduced? I urge the Government to be brave and to grip this issue firmly to bring about reforms as soon as they can.
So far, my comments have been largely about saving water and benefiting the environment, but I want to cover two other areas. The first is Flood Re, which I think is a good scheme and will work well. While I suspect that many of us would prefer it to cover band H properties and even SMEs, I recognise that the more it covers the greater will be the cost to ordinary householders, so I support the boundaries as currently proposed.
However, I am not sure that the cut-off date of 2009 can be quite so easily defended. We have to bear in mind that a large number of people outside the Westminster bubble, who bought houses in good faith which were built after 2009, would have been unaware that an Act would be introduced in 2014 which would make it impossible for them to benefit from a government flood insurance scheme. After all, those houses were built with the approval of local government through its planning system, and it is quite possible that central government even encouraged those people to buy them through its Help to Buy scheme. It therefore seems grossly unfair to impose on largely unknowing householders a retrospective date of 2009 for a scheme introduced in 2014. I think that people will be amazed to find that they are ineligible, so it would be better to set a date in the future, or at the passing of the Act, rather than holding the line on 2009.
My last point has not been mentioned so far in the debate but it came up in Committee and on Report in the Commons. It is to do with the protection of water supplies and the environment from fracking. I am very much in favour of fracking. I wish to see the multitude of boreholes necessary for a successful industry to be able to come into being in this country with the minimum of fuss from the public. One of the great concerns of the public is that their water supplies will be contaminated by stray gas concentrations from the fracking process. The industry assures us, and I believe it, that this is virtually impossible. All I can say is that, in that case, the public liability insurance bond will not cost them very much.
Meanwhile, the Minister in the other place assured us that such a compulsory insurance bond was unnecessary because the Environment Agency already has powers to make the polluter pay in the case of any required pollution clean-up and that, anyway, rigorous financial tests would be carried out on the fracking companies which would ensure they were as safe as the Bank of Scotland, so no government bailouts would ever be necessary. Quite apart from the fact that not all the companies currently involved in fracking exploration have totally pristine balance sheets—in fact, in some instances, it is very much the opposite—I do not believe that the public have confidence that the Government will not have to step in to protect water supplies and the environment. So why not insert a clause into this Bill which reassures the public that the companies will take on their own liabilities through an insurance bond—as they say, it should not cost them very much? I believe that that would go a long way to reassuring some potential objectors and thus help get the fracking industry off the ground, which I am keen to see.
Finally, by way of summary, I believe that this is a good Bill, but it is slightly lacking in ambition to really to get to grips now with all the problems that the water industry will have to face in the future.
EUC Report: EU Freshwater Policy
Lord Cameron of Dillington Excerpts(11 years, 5 months ago)
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Lord Cameron of Dillington
My Lords, there is no doubt that water is a valuable commodity. Sadly, we cannot yet control the amount that falls from the sky. Speaking as a farmer in the south-west of England in 2012, I can only say, “I wish!”. But, even after so much rain, we still do not value our water enough in this country.
I believe that we have now reached the stage where the UK needs to introduce compulsory metering. I realise that in some old blocks of flats it is difficult to achieve, but it is not impossible, even if special support funding might be required to disentangle the pipes in all the nooks and crannies, in some instances. But until everyone is on a meter, not everyone will value the water they use. In the UK, we currently use 160 litres per head per day, whereas in Germany, where they have universal metering, they use only 110 litres per head per day.
To go to the other extreme, in India, where until recently the belief was that water should always be provided free by the state, the result was that in some villages you could only get water from a tap for eight minutes per day. However, now they are charging for water, and the service has begun to improve. The Indian Government have at last understood that it is the poor who suffer most from cheap water. The rich can afford private bore-holes or other independent schemes. But the Government have now realised that it is best to put the right price on water and introduce other social measures where help is needed. The lesson learnt was that using water, one of the heaviest commodities around, to transfer wealth, did not make sense.
Back in the UK, although the circumstances are obviously very different, there are parallels with India. If, as at present in the UK, you have voluntary metering, only those who reckon to pay less will apply for a meter. Thus the rest end up sharing a greater overall cost to be averaged out between them. Often this means, as in India, that the poor end up paying more for the water they use than they should do. If we were to introduce metering we could perhaps even go one step further and apply the increasing block tariff method. This is a scheme that is counter to normal economic practice, whereby the more you buy, the more you pay per unit. China, Singapore and several countries in the Middle East and even in the EU now use this method. It is particularly effective for industry, especially for the electricity-generating industry, which can be a huge user of water unless the right capital investment is made. This scheme encourages the right capital investment. The trick is to get the charges and the percentage increase at the right level to encourage good practice without being overly punitive.
Going back to India for a moment, one of the major ongoing problems there is the established right of farmers to take water from the aquifers largely for free, without much control over the quantity. As a result, India removes nearly 100 cubic kilometres of water more from its aquifers than the recharge rate every year. I realise that in the UK, agricultural abstractions amount to only about 2% of all usage, but nevertheless, if we could develop a more flexible system of abstraction licences that looks to future needs, it could be beneficial to industrialists, generators, farmers, environmentalists and domestic consumers alike.
That brings us to Australia, where they are solving the considerable problems in the Murray-Darling river basin by changing or transferring from riparian or historical abstraction rights to tradable rights. It is a sort of water quota system that gives both long- and short-term flexibility to all parties: you can sell or buy, as well as lease, the right you have or need. This, incidentally, includes the Government, who buy entitlements to give to the environment. It means, for example, that in a drought, when water suddenly becomes expensive, rice growers reduce their irrigation or even their total production that year, but survive by selling or leasing their entitlements which, of course, are very expensive that year. Often it is agriculture that sells to mining or electricity-generating interests. Some farmers have actually sold their total allocation but survive on annual licences as and when needed. Municipalities buy excess entitlements and when they have enough for safety, they can rent some back to farmers on a flexible basis. Of course, it is important that the market is properly controlled and regulated, and above all, what is needed is a water trading system for the future, not the past. That means it must allow for the possibility of reducing rains and therefore the ability to reduce the total licensed abstractions.
Of course, the key to success of any system of sharing out this precious commodity called water is overall catchment management, as several noble Lords have already mentioned. Catchment management is about ecosystem services: not only the supply of clean water and the treatment of sewage but landscapes, habitats, irrigation, food, sport, central heating, cooling systems and protection from flooding, among many others. People probably value these services—being the results of water management—more than the water itself. That applies particularly when our population has to face its three biggest worries: drought, flooding and pollution.
Wherever problems exist, the most important thing is to manage our rivers as whole catchments. We are beginning to understand that if problems are caused by the many different activities of too many humans, then the solutions can only be found in the way these activities occur: the way we farm, the way we live, the way we manufacture and consume and the way we plan our urban and rural communities. They can all provide solutions to our water-based problems. We need to understand better how a catchment-based approach can be adopted and how to build the respective capabilities to operate it. Integrated catchment management is in contrast to a piecemeal approach that artificially separates land management from water management. They are inseparable; we rely on the health of both for many of the things we value. Experience shows that considering this locally will help engage communities to take ownership and act.
Catchment management requires leadership to ensure that we get the essential co-ordination covering the many different aspects of land and water management: agriculture, water supply, wastewater, waste management, highway and urban storm runoff, stream corridor restoration and development and, particularly, planning. Working practices are needed that work top-down with standards and guidelines and yet facilitate local partnership arrangements and appropriate delegation, creating local ownership within local catchments. That is the basis of Elinor Ostrom’s famous polycentric system of water governance. It is to be hoped that the revised EU water framework directive will greatly encourage such governance both here and on the continent. When I say “continent” in the context of this debate, of course I mean Europe, but my aspiration is that we might eventually stimulate similar practices and improve water management where it really matters: on the continent of Africa.
Public Bodies (Abolition of the Commission for Rural Communities) Order 2012
Lord Cameron of Dillington Excerpts(11 years, 9 months ago)
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Lord Knight of Weymouth
My Lords, this afternoon we are discussing another public bodies order from Defra. To date these discussions have been friendly affairs, much in keeping with the amicable way in which the Minister dealt with the dodgy primary legislation as it went through your Lordships’ House. I fear that our deliberations today might be slightly less consensual. As we heard, the Commission for Rural Communities was established by the Natural Environment and Rural Communities Act 2006, following the review led by the noble Lord, Lord Haskins. I was the Bill Minister for the NERC Act and therefore would describe myself as something of a midwife for the CRC.
That does not mean that I oppose the order outright, but it does mean that there are important questions for the Minister to answer. They happen to be the same questions that I asked when the Public Bodies Bill was going through the parliamentary process. As ever, I am grateful to the Secondary Legislation Scrutiny Committee, on this occasion for its third report of this Session. Its conclusion is the one that I came to last year and that I know is shared by many in the House. The committee correctly applied the three tests of effectiveness, economy and efficiency, and accountability. As is the way with these orders, it is right that I should do the same.
The Government argue that it is more effective to bring officials in-house, rather than have them at arm’s length, so they will have earlier and greater involvement in the development of policies and programmes across Whitehall. I am afraid that in my experience Defra is not central to the Government’s thinking until there is a crisis, and that rural policy in turn is on the margins of Defra’s thinking. The clue is in the name. It thinks about the environment, then food and farming, and finally rural affairs. There is no sign that this has changed. We witnessed the inability of the department to secure a legislative slot in this Session for the much-needed water Bill. That is the reality of the marginalisation of Defra. To argue otherwise is naive in the extreme.
As the Minister said, the Government are looking to save £17 million over the CSR period by this change to their rural policy function. That is the real reason for this change: economy. I do not argue that savings are there to be made, although it is worth noting that the CRC cost around £600,000 in the past financial year. It is worth diverting some of the remaining cost of the rural policy function to support the continuation of a rural policy adviser who is independent of government.
My main objection to the move is on the ground of accountability. The Government argue that these changes will enable Defra’s Ministers to be held accountable by Parliament for the exercise of rural policy functions. However, we should look at how Parliament is currently being treated. Over the weekend, dairy farmers blockaded milk processing plants to draw attention to the exploitative pricing that is making milk production uneconomic. Two supermarkets have already responded by raising the prices they pay to farmers. The farmers clearly believed that parliamentary methods were not being listened to—and was it any wonder?
Today it was reported that Jim Paice, the Agriculture Minister who does not know the price of milk, had raised the possibility that an adjudicator would be created to oversee a voluntary code for the dairy supply chain. This is exactly what my noble friend Lord Grantchester suggested last week when he moved an amendment to the Groceries Code Adjudicator Bill. Coalition Peers were whipped to oppose it—and duly defeated the very proposal that is now coming from the Agriculture Minister. Just one week later, threatened by angry farmers, Defra’s policy is churning, thanks to direct action rather than parliamentary pressure.
This follows a succession of protests that bounced Defra. Its proposals to sell off the nation’s forests were met with huge protests and it backed down. The same happened with national nature reserves and changes to reduce environmental protection in planning law. There was the case of wild animals in circuses. Over Easter Defra suggested allowing the shooting of buzzards—a native species—to protect pheasants, which are a non-native species bred to be shot. Unsurprisingly, that was laughed out of the court of public opinion within days. In these cases, we made what noise we could in your Lordships’ House or in the other place, but it was clear that Ministers were more accountable to 38 Degrees, the National Trust and Farmers for Action than to this Parliament—so much for accountability.
The lack of long-term strategic thinking that bedevils Defra is at the heart of the issue. At the same time, rural England feels the effects of policies and cuts from other government departments. For example, it emerged this month that the rate of young people not in education, employment or training is rising faster in rural areas than in urban ones—and that rural councils, which tend to have older and less deprived populations, receive lower grant allocations, spend less on social care, charge more for home care and allocate lower personal budgets than local authorities serving younger, more urban and more deprived populations. New research finds that social tenants in rural areas will be more likely than those in urban areas to have to move house as a consequence of reductions in housing benefit, yet there are fewer smaller dwellings for them to move into. I know these things thanks to the July newsletter from the Commission for Rural Communities. Its reports often make uncomfortable reading across Whitehall. The independence from government of these reports increases accountability. That is why a letter to today’s Daily Telegraph is signed by the right reverend Prelates the Bishops of Wakefield, Norwich and Exeter, the Duchess of Rutland, the High Sheriff of Cornwall, me and other parliamentarians, including my noble friend Lord Grantchester.
As the letter says, there has been an independent voice to government since 1909. It goes on:
“In the current economic circumstances it is more important than ever that the voices of rural communities are not lost and that an independent adviser—distinct from the range of rural pressure groups—exists to speak up for rural interests”.
That is all we ask—not for the expensive retention of the CRC, but for the retention of what has served us well for more than a century, an independent rural champion. What do the Government propose instead? The independent voice will be provided by Defra’s very own Rural Affairs Minister, Richard Benyon, he of the buzzards U-turn. Rural England’s new champion will be inside the tent but, unusually, on this occasion pointing inwards.
The lack of commitment is demonstrated by the facts that Mr Benyon has not delivered the new rural-proofing guidance promised even today on the Defra website for this spring, and that he has failed to deliver a rural statement, referred to by the Minister, by spring 2012, which was also promised today on the Defra website. That is serious for this Committee. Can the Minister tell us in his wind-up what happened to it? Are we going to get it in September, along with rural-proofing toolkit, six months late?
As he says, the Secondary Legislation Scrutiny Committee specifically recommends that the rural statement sets out robust structures for incorporating stakeholder input into policy development and implementation. The Minister responded to that by referring to the explanatory document which has already been scrutinised by the Secondary Legislation Scrutiny Committee. It then wanted more information, which we do not have, to scrutinise this order.
I ask again what I asked the noble Lord, Lord Henley, in column 765 in March last year. Why not give us an independent rural voice that tells us by appointment, with the authority of the Prime Minister, what is really happening and tells us the truth regardless of fear of or favour from the Government? It worked for Lloyd George, for Churchill and for Thatcher. Is it really too much to ask?
Lord Cameron of Dillington
My Lords, I thank the Minister for his introduction to this, and his team for providing the explanatory document about the different ways in which consultation will take place with rural groups such as the Rural and Farming Network, ECO and its sub-groups, the Rural Coalition, local economic partnerships, the Rural Service Network and the LEADER exchange group. I know that LEADER is an initiative to do with the delivery of the Rural Development Programme for England, but the word made me think. These groups, or leaders of groups, such as farmers, businessmen and local councils, are all stakeholders—to use the Minister’s word—in the countryside.
Who is going to represent the deprived of rural England—those who sometimes go with only one meal a day because they know that they have to spend their money on a car to get to their valuable work, or to have any of form of life there? Who is going to speak up for the countryside’s young, who cannot get a job because they have not got the transport to get to one and cannot get the transport to get to a job because they have not got a job to pay for the transport? Who is going to speak up for the unemployed, the unhoused and others?
The Minister will know that I am in a slightly difficult position. I have been asked by Richard Benyon, the Defra Minister in the Commons, to pool together a group of Peers to help rural-proof the government department’s policies in each individual case, but I still have not quite grasped who is going to do or commission the critical and independent research that will penetrate the normal attitude of most departments to the countryside, which is ambivalent at best. Actually, their attitude ranges from ambivalence to total ignorance and they need spurring on.
Most of us in this Room have argued our best on several occasions for some representation at arm’s length from Government, as stated by the noble Lord, Lord Knight, of those rural voices that are not normally heard. I hope that the Minister can reassure me on the question of the independent, fearless research that is often critical of the Government, and which departments are, frankly, unable, to carry out. I hope that he can also reassure me on my point about who will represent the voice of the rural deprived.
Lord Curry of Kirkharle
My Lords, I thank the Minister for his statement and his desire to ensure that the commission’s functions are properly fulfilled within Defra. I say from the outset that I am not opposing the decision to abolish the CRC. However, it is now clear—indeed, it was clear to many of us at the time—that in the desire to have a large bonfire of the quangos, decisions were taken without a clear plan for properly addressing the consequences. I am pleased that Defra has a plan, but I would like to be reassured that the functions of the CRC will be properly resourced and carried out by Defra. As the noble Lord, Lord Cameron, said, the CRC did some very helpful and useful research into issues like rural poverty and changes in demographics in the countryside that will be essential in helping design policies that impact on the countryside.
It is essential, as has been said, that government policies have a degree of rural-proofing. Without an independent commission, I suggest that it will be difficult for the department to fulfil this function without trying in the process to defend government policies in doing so. It is difficult for a department to be, if I might use the phrase, both gamekeeper and poacher. The role of the rural advocate, as the noble Lords, Lord Knight and Lord Cameron, said, has been extremely useful in highlighting many vital rural issues. Dr Burgess has been a very effective and active advocate, as was his predecessor, the noble Lord, Lord Cameron, before him. It has already been stressed that the element of independence that has been so valuable is being lost. The role of the rural advocate should be reconsidered.
However, I welcome the Minister’s assertion that ensuring growth within rural areas is critical to the Government and is being recognised. I have always believed that it is impossible to draw a line between rural and urban in any case; one is dependent on the other, and government policies need to reflect that. Without the vital independence of a rural advocate, though, it really is difficult to know where any challenge is going to come from.