Government to reconsider water competition, but holds fast on abstraction

The committee’s comments on the proposed bill had criticised the lack of mention of both competition and the use of economic instruments in relation to water abstraction. The Government’s response makes it clear that both issues are to be dealt with separately. It draws attention to last year’s publication, Tuning Water Taking, which gave the green light to abstraction licence trading. It also urged the Environment Agency to “make more innovative use of its existing charging powers within the cost recovery framework” when designing its new charging scheme, due out for consultation this June.

The committee had commented on two main areas of the bill, the first being the abstraction licensing proposals. While outlining its strong support for the proposed reforms, particularly the requirement to ensure that water abstractions are not made at the expense of the environment, it warned of its concerns that the provision to revoke abstraction licences without compensation could be challenged under the Human Rights Act.

The Government, however, remains inflexible on this key point. It says in its response: “We remain of the view that, after a reasonable period of notice, it would be unreasonable for those who persist with damaging water abstractions to expect any compensation if those abstractions need to be curtailed.”

“It is the view of the Department that the proposal to withdraw compensation for variation or revocation of abstraction licences set out in clause 17 of the Draft Bill is compatible with the Convention rights as defined in section 1(1) of the Human Rights Act 1998,” says the response.

Government also backed the committee’s call for users of economical trickle irrigation to be treated fairly in the new abstraction licensing system, promising that “trickle irrigators will be treated in an even-handed way”. It noted that transitional guidelines are being drawn up to ensure that trickle irrigation is not disadvantaged. The new Bill will give currently exempt irrigators, such as trickle irrigators, two years to apply for licences once the final Act comes into force.

The Environment sub-committee also commented on a second area of the bill in its report – sustainable development. In particular, it voiced concerns that the role of Ofwat’s director general did not give enough emphasis to the pursuit of sustainable development, and called for him to be given a specific duty to facilitate this. The Government has agreed to make this duty explicit in the bill – it is a role that Director General Philip Fletcher had volunteered for in his evidence to the Environmental Audit Committee last February.

The Government proposes that the duty should be worded similarly to a parallel clause relating to the Strategic Rail Authority, which has a duty to “act in a way best calculated…to contribute to the achievement of sustainable development.”

The Environment Agency has welcomed the Government’s response to the report, saying that it looks forward to working with Government towards implementation.

“It is essential that we now move forward to implement the Water Bill so that we can put in place the arrangements needed to manage our water resources in a sustainable way,” said EA Acting Director of Water Management Andrew Skinner.

“We will need to be sensitive to the impact of the Bill on those such as trickle irrigators, who will be affected by the changes, and ensure that their needs are considered fairly,” said Skinner. “We urge Government to make time for the Water Bill at the earliest opportunity.”