I thank all noble Lords for another interesting discussion on this Bill. As the noble Baroness, Lady Jones of Whitchurch, has just observed, the Government are endeavouring to perform a careful balancing act by delivering on their manifesto commitments to improve the environment through addressing the consequences of unsustainable abstraction and modernising the licence system while minimising the impact on farmers.
To put things into context—I was grateful for the balanced comments of the noble Baroness, Lady Young of Old Scone—I say that we expect that, out of the 13,000 permanent abstraction licences, there may be up to 1,200 that are unsustainable and to which these measures may apply. However, the Environment Agency expects that the number of licences will reduce in any case before the need for the measures to be applied following local site investigations and discussions with licence holders.
I also thank the noble Lord, Lord Carrington, for his Amendments 176 and 177 to 179, and understand his concerns about the effect of the proposals on licence holders. My noble friend the Minister and I were grateful to be able to meet the noble Lord alongside my noble friend Lord Colgrain the week before last to discuss this issue further.
As we have heard from other noble Lords, unsustainable abstraction can have very negative impacts on the aquatic environment, including causing low flows. Low flows can lead to reduced levels of dissolved oxygen, harming fish and insects. It can also lead to increased temperatures and impede the migration of fish species, which may not be able to reach spawning grounds. I say in response to the concern expressed by the noble Baroness, Lady Young of Old Scone, about salmon stocks—an interest of mine, of course—that Defra, the Environment Agency and partner organisations have committed to the salmon five point approach to restore the abundance, diversity and resilience of salmon stocks, ensure that river flows are adequate for the habitats they support and increase spawning success by improving water quality.
Of course, low flows have a knock-on effect on other parts of riverine ecosystems, including specialist species which rely on the aquatic environment. Low flows can also lead to dire consequences for internationally important chalk streams, 75% to 80% of which are found in the UK.
However, we also know that abstraction is vital for food production, as farmers provide drinking water for livestock or abstract water to irrigate their crops. I hope that my noble friend Lady McIntosh of Pickering is reassured that I put that firmly on the record.
As we heard from the noble Lord, Lord Cameron of Dillington, with respect to his potatoes, skin finish is vital, and the Government recognise the importance of maintaining the high quality of British produce. We must therefore balance the needs of agricultural and other abstraction licence holders with public water supply demands and the need to protect the environment. That is why the Environment Agency is using a catchment-based approach and trialling innovative approaches in priority catchments with a range of local stakeholders, including water companies, the National Farmers’ Union, local abstractor groups, environmental groups and navigation interests to solve issues of access to water and unsustainable abstraction.
As we have discussed in our conversations to date, the Government want the Environment Agency to continue to work closely with abstractors to explore all voluntary solutions to unsustainable abstraction. I do not agree that this is a blunt regulatory process; rather, it is the last resort in a collaborative process.
On removing compensation rights, which a number of noble Lords mentioned, we want to protect licence holders’ ability to abstract where it is fair and right to do so. Unless a licence risks damaging the environment or is underused, we believe that licence holders should be eligible for fair compensation for any loss if licences are revoked or varied.
Farmers hold more abstraction licences than any other sector and so a higher number of farmers may be affected than other sectors. However, the Government expect the Environment Agency to work closely with affected licence holders to find alternative solutions which balance the needs of the environment and the needs of farmers. We expect these powers to be used by the Environment Agency only after all other options have been exhausted.
The Environment Agency, as the statutory environmental regulator, has the relevant expertise to determine which licences may be affected by the changing of the threshold from “serious damage” to “damage”. The Environment Agency grants licences and proposes their revocation or variation based on monitoring of abstraction and the water environment from which the water is being taken.
To reassure my noble friend Lord Cormack and the noble Lord, Lord Cameron, who appealed for an appeals process, as currently, an abstraction licence holder will be able to appeal to the Secretary of State in respect of a proposed revocation or variation of their licence, as well as to put forward any additional evidence from other experts, if they wish to do so. Therefore, the Secretary of State is already required to consider relevant expert evidence when using this power as it is an intrinsic part of the existing process. Furthermore, I reassure noble Lords that the Environment Agency has already started conversations with a number of farmers, which I hope will reassure the noble Lord, Lord Cameron, and the noble Baroness, Lady Jones, who asked about the ability of the Environment Agency to undertake all these powers.
We should expect that these measures will be used only after other solutions have been exhausted. Partly for this reason, they will not be available until 2028. In the meantime, we expect the Environment Agency to
work closely with affected licence holders on a case-by-case basis, to provide data and evidence for why a licence needs to be varied or revoked, to consider the type of abstraction when making decisions, and to take a risk-based approach and consider what the abstraction is being used for.
On the noble Lord’s Amendments 180 to 187, I hope he can see that the Government have designed these provisions to make more water available to other abstractors and to reduce the risk to the environment. These measures will be focused on permanent licence holders who consistently abstract much less water than they are licensed to take, but the Government are well aware that not all licence headroom indicates a lack of need. It is appropriate to safeguard licence headroom in some cases—for example, to manage higher demands during dry weather as well as the planned future growth of a business. The 12-year period specified in the Bill allows for weather variations and crop rotations and fits with the current abstraction licensing strategy timeframe.
On Amendments 176A, 180A and 187ZA from the noble Lord, Lord Cameron of Dillington, I hope that the arguments I have given have convinced him that introducing these measures from 2028 strikes the right balance between protecting the environment and recognising their impact on abstractors.
As I think the contrast between the amendments in this group illustrates, the Government have worked hard to reach a fair compromise on this issue. As well as allowing time to find voluntary solutions, the 2028 date will give time for licence holders to adjust. We understand that this is particularly important for business certainty and continuity. Furthermore, it will allow time for the catchment-based approach to water resources to produce solutions. In the abstraction plan, published in 2017, the Government committed to update abstraction licensing strategies for all catchments by 2027, and a 2028 date aligns with this.
Regarding Amendment 179A, also tabled by the noble Lord, Lord Cameron, the Government simplified Clause 82 following feedback received during our consultation in 2019 that our original proposals were far too complex. Licences can be varied or revoked without the Environment Agency being liable to pay compensation where the Secretary of State considers the licence change necessary, having regard to the relevant environmental objectives under the water framework directive or to protect the water environment from damage. As such, I am pleased to confirm for the noble Lord that the clause can already apply to licences that may affect all sites designated under existing legislation, including sites of special scientific interest and Ramsar sites.
The Environment Agency also already considers the impact on flow when assessing the environmental impact of an abstraction licence, including when it is considering whether to revoke or vary a licence. The Environment Agency will continue to do so when these new powers are available on or after 1 January 2028.
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Restoring England’s internationally important chalk streams is a government priority, and the powers in this clause will apply to chalk streams. It will give the Government powers to address unsustainable abstraction in chalk catchments without liability to pay compensation if the abstraction is causing damage to the chalk stream environment.
My noble friend Lord Colgrain asked me about gravity-fed licences. The clause as drafted covers all permanent abstraction licences which are abstractions of over 20 cubic metres per day. Most gravity-fed abstractions are for less than 20 cubic metres per day and, as such, do not require a licence. However, if a gravity-fed licence takes over 20 cubic metres per day it will require an abstraction licence, which falls within the scope of this clause. Because of that, gravity-fed abstractions were not covered separately in the consultation or in the Government’s response as different types of permanent abstraction licence were not differentiated. The relevant factor here is the impact that the abstraction has on the environment.
I reassure the noble Earl, Lord Devon, that water companies are already subject to the removal of abstraction rights without compensation, so there is no need for them to be covered by this clause.
Finally, on Amendment 187B in the name of the noble Lord, Lord Chidgey, the Environment Agency already has the power to grant abstraction licences containing such provisions as it considers appropriate under Section 38(2)(a) of the Water Resources Act 1991. This could include water quality monitoring upstream and downstream of an abstraction point if there was any uncertainty about the effect the abstraction might have on water quality.
As regards the cost of such monitoring, the abstractor would pay for water quality monitoring if it were to be, or were to become, a condition of their licence. In practice, there is rarely any need to place water quality conditions on abstraction licences, as licences normally include conditions to protect river flows and, in turn, water quality. I hope that this provides reassurance to both the noble Lord, Lord Chidgey, and the noble Duke, the Duke of Wellington, who expressed similar concerns.
The Environment Agency can impose similar conditions to protect water quality on discharge permits issued under the Environmental Permitting (England and Wales) Regulations 2016 for returning water to the environment.
In summary, this debate and the range of opinions it has showcased have shown that abstraction reform is a complex issue. There are good points on all sides. However, I hope noble Lords can see how hard the Government have worked to strike a reasonable and sensible balance to protect our precious water environment while ensuring that we manage the impact on abstractors and farmers. I sincerely hope I have managed to reassure noble Lords and ask them not to press their amendments.