House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

ENVIRONMENT, FOOD AND RURAL AFFAIRS COMMITTEE

(ENVIRONMENT, FOOD AND RURAL AFFAIRS SUB-COMMITTEE)

DRAFT FLOOD AND WATER MANAGEMENT BILL

Wednesday 17 June 2009

HUW IRRANCA-DAVIES MP, MR MARTIN HURST and MR SIMON HEWITT

Evidence heard in Public Questions 281 - 325

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

(Environment, Food and Rural Affairs Sub-Committee)

on Wednesday 17 June 2009

Members present

Mr Michael Jack, in the Chair

Mr David Drew

Lynne Jones

David Lepper

David Taylor

Paddy Tipping

Mr Roger Williams

________________

Memoranda submitted by Department for Environment, Food and Rural Affairs

Examination of Witnesses

Witnesses: Huw Irranca-Davies MP, Minister for the Natural and Marine Environment, Wildlife and Rural Affairs, Mr Martin Hurst, Director of Water, and Mr Simon Hewitt, Divisional Manager, Flood Management Division, Department for Environment Food and Rural Affairs, gave evidence.

Q281 Chairman: Now we move on to our next session on the Draft Flood and Water Management Bill. In figure one of the Pitt final report on page 136 there is a very useful diagram which provides an attempt to show what the summary of legislative links dealing with water looks like at the present time. Minister, I am not asking that you even look at it now but I wonder if by any chance, for the benefit of the Committee, you might redesign this remarkable diagram so that we could have a look at the before and after effects in terms of the Bill that you are proposing because the new architecture is something that I would like to see in legislative form. This Bill is potentially a very big one, and I say "potentially" because there are some bits, as we have just been discussing, about Cave and Walker which are catered for in your consultation document but which are not, in fact, expressly in the Bill for obvious reasons. Michael Pitt, in his report, gave a very clear view that he would like to have seen a comprehensive piece of legislation bringing together water legislation as it is and then augmented by the types of measures in your current Bill which have a particular focus on implementing the Pitt Inquiry. My first question is, why did you not go for what I might call the encyclopaedic approach? Why did you choose the one that is before us?

Huw Irranca-Davies: Some of the aspects of what Sir Michael Pitt recommended we are already getting on with. There are quite a number that we can get on with regardless of any legislation, or the need for legislation, so we are getting on with them straight away. By the way, this does not preclude the necessity at some future date for a consolidation bill in effect. In the legislative time available in front of us, and recognising that there are some areas that definitely need legislation, what we have tried to do is reduce it to those elements that definitely need primary legislation now. At some point in the future we might need to return with some sort of consolidation bill, but what we have got in front of us now, I think, will take us a long, long way.

Q282 Chairman: Just before we get into the real detail of it, help us through the timetable. As I understand it, you are working towards having some form of finished Bill by October. Is that still the plan of campaign?

Huw Irranca-Davies: Yes.

Q283 Chairman: Is that the beginning of October, the end of October or the ministerial middle of October?

Huw Irranca-Davies: I do not think we have a precise date. It is a ministerial October at the moment.

Q284 Chairman: So sometime between the 1^st and 31^st you hope to produce some kind of Bill. In terms of your working hypothesis, let us take the worst case scenario that the Bill comes out towards the end of October. If we were scenario playing through, if Parliament continues into October and we have the normal what I call cleaning-up/sweeping-up session you might imagine that might be over by October, and let us assume we might have a Queen's Speech at the beginning of November and the House would have its normal one week to debate it, say up to the beginning of March, when minds might be turning to other matters, you have got 11 legislative weeks and if you were very generous and added three more weeks out of March onto that you might get to 14 or heroically 15. That is pushing it a bit, is it not, Minister, to get a Bill of this size right the way through both Houses of Parliament and on to the statute book. Would that be a fair assessment?

Huw Irranca-Davies: Yes. Let me try and sketch it out and then I will bring Simon in. The Pitt Report through in June 2008, Government response in December, the Bill published in draft April 2009, sometime in October we bring it forward, and it has been well discussed now because a lot of the things within Pitt have a large degree of agreement. Some things we have already done, such as reservoirs and consultations going on on that; others need a little bit more development. Simon, where do we take it on from there?

Mr Hewitt: You are right that we retain the ambition, as was said in the Government response to the Pitt Report, to try and bring all this legislation together and modernise it, if you like, because some of it is rather old now. In the area of legislation on reservoirs that is exactly what has been achieved in the draft Bill in that that repeals and replaces the existing legislation on reservoirs. In other areas, partly due to the speed with which we have moved and partly because there were areas where we genuinely wanted to consult more openly on some of the propositions that we might want to legislate on, there is a more open approach and in some cases, therefore, not even yet the draft legislation in this document which we are now considering. In terms of where the timetable goes from here on in, clearly it is going to be partly dependent on how quickly those issues on which we are consulting now can be resolved and also exactly which session and how legislation gets brought forward in future is going to depend on the other demands on parliamentary time and so on. Yes, we will continue to be developing the legislation here that we have already got and developing that which we have not yet started drafting in this consultation package over the summer.

Q285 Chairman: The reason I am asking is not to place the Minister in a difficult position in speculating about the date of the next General Election but to reflect a genuine view that is coming through from those we have had as witnesses that they want to see a well thought-out quality piece of legislation which tries to bring together in a coherent fashion as much of the future legislation on the water industry as is possible. That may well be bringing on board elements of Cave and Walker, and that will take a little time to digest, and not effectively to be bounced into doing it for the sake of doing it in terms of having a sort of stripped-down bare minimum Bill, for example to deal with the Environment Agency responsibilities as defined by Pitt and the EU Flood Directive and say, "That's the basic minimum". There is a view, I think, that would like to see somewhere near a comprehensive finished product. I am trying to gauge in an ideal world where Defra would like to be on this. Does Defra aim to have a Bill that is coherent, but recognising it might not have enough time to get through before the end of this Parliament, or are you hell-bent on stripping out every bit using every parliamentary bit of the kit to try and get bits through, like the European Communities Act, simply because, "I've got to get it done", the mad rush towards the end?

Huw Irranca-Davies: Our approach is we want the legislation we are bringing forward to deal with all of those aspects of Pitt that we can and also, where possible, and where we have that sort of agreement based on the consultation going on, elements of Martin Cave and Anna Walker as well. We would like to see this as a good encompassing Bill if we have the opportunity.

Q286 Chairman: Would I not be right in saying that you still have until 2011 to deal with the Flood Directive because I think up until now I thought the imperative was sooner rather than later, but you do have a bit of leeway. Am I not right in saying that?

Huw Irranca-Davies: We are actually running out of time on this.

Mr Hewitt: My understanding is that we are required to transpose by a date this autumn. Clearly it takes a while before you get into infraction proceedings of any rigour, if you like, but my understanding is that we are required to transpose by autumn on the Flood Directive. That is one imperative, if you like. There are several others where, for example, during the debates around the Queen's Speech for this session most parties said they would like to see certain provisions coming forward in the floods area, for example to address some of the things that Sir Michael Pitt proposed in his report. There is clearly a balance to be struck between those things which one wants to get ahead with and those things which are going to take longer to cook. It may be that you do end up doing legislation in stages. That is not at odds with the ambition to try to produce some sort of good quality unified corpus of legislation at the end of that process because, of course, the later stages can pick up and unify those things which have gone before, where necessary.

Q287 Chairman: I hear what you say but, in terms of the Commission, as long as they can see intent by a Member State and that we are not dragging our heels, and much of what the Flood Directive requires us to do we are doing anyway but just have not put it into law, the message goes out that we are on our way. All I am saying is in terms of the legislative window, if there was a Bill ready at the beginning of November you have got about 14 parliamentary working weeks in which to jam something through or if you wait for another four weeks you have potentially got a whole year to deal with it.

Huw Irranca-Davies: I may be able to help with this. Our preference would be to implement via primary legislation to put it there in a cohesive manner if possible just to avoid that fragmentation of legislation that you are describing. However, as the Minister, because of the scenario that you are painting, if the actual transposition via primary legislation looked like being delayed in any way then we have that option in the specific one you are talking about to introduce regulations under section 2(2) of the European Communities Act. Our preference is towards a cohesive legislative framework but we do not rule anything out because if push came to shove we might then have to be inventive. It is not that we do have to deliver everything legislatively under this Bill either. As we have described, we are taking some elements forward already outside of this. As a legislator I often find it quite odd that some of the things that I argue for are not, "Let's do it all through the legislation".

Chairman: I concur. I had a very useful discussion with members of the Environment Agency in the North-West who seemed to be doing much of what the Bill requires in terms of cooperation and it is going happily along without the Bill. We will come to that later.

Q288 Lynne Jones: You published Future Water with ambitions to reduce water use and although, if I can just add, the targets for new homes under the Code for Sustainable Homes are commendable, the target in Future Water is only 130 litres per day which has already been achieved in Germany and other countries. For example, in Copenhagen they have got down to 120 litres a day. You have a vision there, and some would say it is not exactly an ambitious vision, but is this Bill going to deliver on that vision? Referring back to the discussion we had a little earlier about water efficiency, and obviously we are waiting for the Walker review and so on and consulting on efficiency, how do we get the water companies not to regard capital investment as the means of delivering on water efficiency, but looking at their operational spending?

Huw Irranca-Davies: The answer to this is there is not one single way. This Bill will certainly help with it. Since 1994-95 we have driven down leakages by something like 34/35 per cent. That is one aspect. That is the equivalent of supplying 12 million households. It is also what we do with manufacturers in the designing of products as well, that is an important part. It was great to see the work that has been done recently by the Bathroom Manufacturers Association in having that voluntary-led labelling scheme to show where there are certain products that will help individual households improve their own water efficiency. It is also what we do in terms of incentivising industry through things such as the Enhanced Capital Allowance Scheme which promotes water efficiency technology so that it drives innovation. It is also what we bring forward in the Bill. There are a lot of ways we do this. Whether or not driving it down to 130 litres by 2030 is ambitious enough I do not know, but we need to have a target that we can not only go for but that we can achieve as well. I think it is important that we probably keep that target under review and if we find that we are hitting it early on then let us see how ambitious we can be beyond that. It is certainly what we would regard as a pragmatic target because we know we have still got areas where we need to come up to it. Martin, I think you wanted to add on that.

Mr Hurst: I think it is pretty ambitious because we are not the same kind of country as Berlin. We have got much, much older housing stock, for example, and probably more things like a lower density of housing, so more gardens and such like. Just by way of information, I do not think any of the water companies in the Water Resource Management Plans, even with the measures they are taking, are expecting to get below 130. We do have an aspirational target in Future Water of 120 litres per day. We are doing a number of things that do not need primary legislation. We already have primary legislation that allows us to change the water fitting regulations, for example, CLG will do the same with the building regulations, the Water Resource Management Plans have a quasi-statutory basis and Ofwat now have a water efficiency target for companies. If you wanted to do metering on a more compulsory basis more quickly that probably would require primary legislation. Tariffs for water once you have metering are another way of getting water efficiency. There is a lot of good work from Waterwise and such like on household information. There is a whole panoply of measures out there, some of which may require primary legislation and many of which will not. Getting to 130, if you talk to the bodies who are working there, including Waterwise who have a strong water efficiency commitment, they would say that it is not unambitious, let us put it that way.

Q289 Lynne Jones: The question is how the water companies are doing to deliver and the issue of whether there should be a water efficiency commitment enshrined in the legislation. I know you are looking at that, but where do you think we are at?

Huw Irranca-Davies: We are still taking views on that and considering it. I do not necessarily want to make a policy decision today. Whether we need that absolutely statutorily binding element to drive it, it is out there for live debate at the moment.

Q290 Lynne Jones: I am always very worried when people say there is a panoply of measures because that makes it very confusing and I think it needs to be much more understandable and in your face, in a sense, in terms of how we go about improving our efficiency, not in terms of just water use but also companies in terms of dealing with sewerage, drainage and so on, which is also very heavily energy dependent.

Huw Irranca-Davies: You are right and it can be as well that because of all of those various measures we are talking about a lot of businesses will not be interested in all of them, domestic residences and households will not be interested in all of them, but the ones that potentially impact most on them need to be the ones that are driven home. In terms of individual households it is what they can do themselves, whether it is through metering or the choice of appliances or new build homes and so on. That is the most relevant for them. Getting that message out there through fitters, suppliers, new builds, et cetera, that is most important for them. For companies it will be a different approach. Everybody needs to play their part and that is one of the critical messages at the moment, to come back to this issue of valuing water. It is getting everybody to play their part - water companies, individual customers, businesses - and getting the right message and right tools out there for them to do it. Whilst what we are describing might seem quite complex, for an end user it is targeting the right measures at them and getting the awareness that they can do something themselves.

Q291 Mr Drew: I have got Wales again! One of the problems with the way things have panned out is that Wales is starkly different in the way you talked about the water company. Out of all the comments, the most fearful are those from Welsh Water who have some views on the way in which the costs are going to be offloaded onto them. As a Welsh MP, besides the Minister responsible, and you have already talked about the benefits of diversity and the social enterprise model, what have you said to Welsh Water? What ways have you won them round to have us believe that they will not be disadvantaged by some of the changes that are being made?

Huw Irranca-Davies: Their concerns are also concerns that are shared by Jane Davidson, my colleague in the Welsh Assembly, the Environment Minister. Individually they have had quite extensive dialogue with Martin Cave, Anna Walker and others, and our own officials, and I have these discussions with them as well. What Jane and I are convinced of, and the head of Dwr Cymru, is that we do not have something here in place which disadvantages the Dwr Cymru model. Certainly my discussions with Martin Cave, for example, have been very much along those lines and he genuinely sees that nothing being proposed there, and there are slightly different consultations going on in Wales in parallel to what we have with our draft Bill so that they can feed into it, negatively impacts either upon Wales as the Welsh Assembly Government or on Dwr Cymru. As a Welsh MP, as you put it to me, as opposed to the Minister who also happens to a Welsh MP, I am particularly seized of the importance that this is not disadvantageous either to Welsh consumers, Welsh ministers or to Dwr Cymru.

Q292 David Taylor: Trying to calculate a Net Present Value over a period of 40-odd years is not dissimilar to the chancellor trying to predict national debt over a rather shorter period because you are dealing with the difference between very large numbers which are inherently difficult to predict and variable to a very considerable extent as well. The figure that has been seized on is £5.12 billion, but realistically, Minister, is it not the case that quite often the most favourable figure has been used in terms of the savings in terms of flood damage or whatever that might accrue from the work that is done and in relation to the work that is done sometimes it has been the base figure of a range of figures that has been utilised. You can imagine, can you not, that it would not take an awful lot of inaccuracy to turn that 5.12 billion into 1.5 billion Net Present Value or, indeed, to have a negative Net Present Value. How useful is that measure? Do you expect and plan to have a rather more sensible range of possible outcomes at the time when the final Bill reaches Parliament because this is just a working figure that I feel, I suppose as an accountant but also as a politician, is not especially useful, to put it mildly?

Huw Irranca-Davies: The straight answer is yes, we do recognise that the evidence base that we currently have for some of the policies needs further development and we do plan to do this as well, including some of the questions we have asked within the Consultation Document. The proposals that we bring forward for the final draft Bill and its impact assessment will benefit from further information that we are gaining from the responses to the consultation first and foremost and in some cases through work that is being carried out in parallel recognising that we need to build on this. The action plan that we have set out within the draft Bill document sets out some of the work that we are undertaking on this so that we do have more robust, more well-informed figures that we can be more confident with.

Q293 David Taylor: It is stretching forward the horizon and beyond. It is two generations, 40-odd years. You will be the Father of the House by the time the end of this period is reached! Does it make sense to try and predict the unpredictable when it is in pitch darkness beyond the horizon with all sorts of uncertainties besetting that figure?

Huw Irranca-Davies: There is a good tradition of Welsh MPs being Father of the House, I have to say.

David Taylor: Exactly.

Q294 Chairman: We will take this as an early bid. I will put my money on now!

Huw Irranca-Davies: Simon, can you expand a bit further?

Mr Hewitt: One of the key things we are trying to do in an impact assessment is to see whether a policy stacks up or not. In one sense, if you have got a Net Present Value of one billion versus five billion you still have a Net Present Value against ---

Q295 David Taylor: Of minus one billion or minus five billion.

Mr Hewitt: One of the key things is how confident one can be about the sorts of assumptions one is using to drive those figures. That is precisely some of the work that we are trying to do, for example, around the larger figures on surface water that are in these impact assessments. Over the summer one of the things we are trying to do is to get greater certainty or some better testing of the assumptions we are using which delivers those rather larger figures to be more certain about the fact that they do stack up. That is one thing to say. The other is that we have not just plucked this analysis out of the air in the first place, largely those particular assumptions come from the Foresight work which, granted, is long-term and is subject to quite a lot of ---

Q296 Chairman: It is going to change tomorrow, is it not?

Mr Hewitt: It is said in many quarters that some of the Foresight work now is looking somewhat conservative.

Q297 Chairman: Hang on. You are going to be making an announcement tomorrow in which you are going to reveal to the world what your new assumptions are for the impact of climate change, are you not, as a Department? That is right, is it not? The answer is yes.

Huw Irranca-Davies: Our knowledge and understanding of the evidence base in this field is constantly improving.

Q298 Chairman: Do not duck and dive. I heard that this morning from a Mr Roger Street who is the Director of the UK Climate Impacts Programme. He said that tomorrow this is what is going to happen, so you will have updated data. You have just admitted that what we are seeing before us here is predicated on Sir David King's Foresight work and not the latest information that is going to be available with the UK climate change assumptions tomorrow.

Mr Hurst: Obviously that is right, but ---

Q299 Chairman: Hang on, I want to know what is right. We are getting some new data tomorrow, are we not?

Mr Hurst: Yes.

Q300 Chairman: At we least we got that bit clear.

Mr Hurst: To answer David Taylor's two points, firstly we are dealing with both flood and water assets that if we are changing or putting new ones in place we are designing them to be here for the next generation or the next generation but one. One of the lessons of climate change is the first thing is you have to adapt and build adaptation into other things that will be here when climate change is hitting us at its most severe over the next century, so we cannot put our heads in the sand and merely design or appraise for this generation.

Q301 David Taylor: I was not suggesting that we put our heads in the sand.

Mr Hurst: I appreciate that. Forty years plus, and I think Nick Stern's report will bear this out, is the responsible way to take this forward.

Q302 Chairman: Why did you choose 43 as the number?

Mr Hewitt: On that particular impact assessment it was a question of consistency with the timeframe for the Water Framework Directive and that was the case for that particular impact assessment. It is not 43 for each impact assessments, it varies.

Q303 Chairman: What did you do, add 25 years onto the end of the implementation of the Water Framework Directive and it came out at 43?

Mr Hewitt: No. There are targets in the Water Framework Directive which extend that far ahead, if I remember correctly, so the same timeframe was adopted. Each of the individual assessments, and as you will know there are several, getting on for 20, assess the impact of the policy over a relevant timeframe for that policy and what is being put in place. For some of the big ticket items where the effects and the investment are over a very long period then the sort of approach that Martin was describing and the timeframe you have just mentioned was adopted; but for others it was three or five years, or whatever, depending on what the issue was in hand.

Mr Hurst: What I would reject, Chairman, is any suggestion that we have not done the best job we can and we have tried to bias the figures. The process we go through with our impact assessments is they are drawn up by policy staff with economic colleagues. They are then peer reviewed by an economist who has not been doing the work. They are then signed off formally by the chief economist to the Department or another economist who would be nominated by the chief economist. They also have to pass scrutiny by the Better Regulation Executive. The idea that we could pad the figures upwards to make a case for regulation would not wash. They are obviously very imprecise. I like the idea of moving towards more ranges and giving a better idea of uncertainty. There is a hell of a lot of work that has gone into these trying to make them the best assessments we can do.

Q304 David Taylor: I am not trying to be cynical or snide about it, I assure you.

Mr Hurst: I appreciate that completely.

Q305 David Taylor: I am just asking for appropriate qualifications to be entered in the presentation of the data, particularly when the Bill reaches Parliament.

Mr Hurst: I think that is entirely legitimate.

Q306 David Taylor: We were awash with the sort of experts you are talking about in the banking system and NHS connecting for IT and a lot of the PFI projects. We are not short of experts in the environment here and, sometimes, God save us from experts. All I ask is let us have an appropriate level of qualification, a caveat, a context.

Mr Hurst: That is entirely legitimate.

Q307 Chairman: I think the message I get out of this is this is an area where it is still work in progress.

Huw Irranca-Davies: Yes, absolutely.

Q308 Chairman: Particularly in the light of tomorrow's announcement you will have to reappraise the situation. Going back to this question of valuing water, up until now one has talked about valuing water, if you like, on the way into the supply system but there is an interesting debate coming along about valuing water on the way out. In your Future Water document there is a very interesting suggestion that says future needs could be dealt with, if I remember rightly, up to 2030 if we were able to capture everything that falls down. It has often occurred to me that, if you like, the waste is a resource but we have not yet learnt how to capture it, clean it, process it and put it back into the system.

Huw Irranca-Davies: Yes.

Q309 Chairman: If there are going to be constraints on investment in the water infrastructure then that is a challenge which the industry may well wish to take up which could profoundly change the cost benefit analysis that you conduct in the context of this Bill. I suppose what I am groping towards is how much futurology is informing this or extensions of existing technology?

Huw Irranca-Davies: You touch on a real issue. I sort of made a half-flippant remark about the dynamic nature of this particular environment, but it is something where there is innovation by water companies and individual householders in terms of using this asset that we have better and recycling it, reusing it, rather than flushing good quality water down the drains and so on, or catching the rainwater and using it. I say this with a vested interest as somebody who has a huge rainwater harvester tank buried in my garden and I use it for doing my washing, the flushing of toilets and everything else. Also, if you have people like British Waterways with some very innovative ideas on what they can do in terms of using the water that they have within their canal system in terms of heat recovery, et cetera, and reducing the carbon footprint. There is a lot more to be done but it comes back to this point that we are building here in a very dynamic environment where, thanks to good efforts of a lot of players, not least Defra players as well but also the regulator and everybody else, we are building our knowledge base and our evidence in real dynamic live time, so not only in terms of the impact assessment but as we go forward we will have to factor this in in live time as well.

Q310 Chairman: Let me probe a little bit more about this because in your remarks you have touched on the question of adaptation and in terms of climate change it is the Climate Change Bill that has the legal requirement for adaptation locked into it. In terms of this Bill, there is not any kind of signposting or cross-referencing in it to remind us that is where the repository is, and yet both in adaptation and resilience if the objectives of this Bill are to be fulfilled there will be a requirement on all of the players to plan for those two areas of thought, let us put it that way, because it is still an area for development. As far as I can see there is not almost a sub-plot that says, "Let's take adaptation and make it an express requirement in this Bill that all of the people in carrying out their responsibilities", which we will come on to in a moment, "will have an adaptation requirement in there to say how they are going to achieve what is in the Climate Change Bill".

Mr Hewitt: You are right that there is not that explicit linkage. If I recall the Act correctly, and I may not, many of the bodies that feature in this legislation under injunctions to take account of the national standards and so on to be met under the Climate Change Act in any event, so in terms of their local actions, would be operating within that sort of framework. It does seem to be an interesting idea to think about whether some sort of explicit linkage might be made. Subject to the Minister's view it is something we would look at.

Q311 Chairman: I think it is quite interesting from the point of view that one of the key residual climate change responsibilities that still remain with Defra is the question of adaptation. We are going to talk about sustainable urban drainage systems in a bit more detail later on, but it seems to me that is part of the adaptation process just as, Minister, your excellent in-garden grey water solution is also part of that. In terms of getting highway authorities, for example, to give consideration to adaptation, the question of permeable surfaces and all of the technologies that we know, and sometimes the ones we do not, it does seem to me to be something that should be part and parcel of this Bill.

Huw Irranca-Davies: We will take that thought away. It is an interesting thought in terms of whether something within the Bill can reflect that. There is also a way forward on this as well already in place which is the adaptation sub-committee within the climate change remit. That will examine adaptation risk assessments for water by, for example, Ofwat, water companies and others. There is a mechanism there already within the executive to actually drive forward this genuine adaptation but it is an interesting thought, and we will have a look at it, as to whether it could be appropriately done within this legislation as well to reference it.

Q312 Chairman: We are going to move on to talk about local authorities and I know Paddy wanted to raise a point but he has not managed to come back for various reasons, so I will open the batting and David Drew will take over. One of the things that is very interesting in the Bill is there are lots and lots of definitions of terms at the beginning of the legislation, and I could turn it up and thumb through and find the relevant section, but the one bit that is not defined is what we mean by "strategy". In other words, what is it and what ought to be in it. I am intrigued to know. So much weight is put on people developing strategies that I thought you might have put a few basic minimum requirements into the Bill as to what ought to be in it, but it is the one bit that when we look at the list of definitions, for example, that is not defined. Why?

Huw Irranca-Davies: If you look at what the Environment Agency is currently doing, Chairman, developing, in effect, a hierarchy of strategies ---

Q313 Chairman: I am going to be rude and stop you. If we look in clauses 3, 4 and 5 of the draft Bill, for example, "risk" is defined in clause 5, it says what it is and there is a little section on risk management and so on. We have got "main river" defined. Everything here in the long list of things one to 15, list of definitions, has got a little description of what it is, but the absolute key to dealing with all of these is what is the strategy and what ought to be in it and that is the bit that does not seem to be defined or mentioned specifically in the Bill. I am intrigued to know why.

Huw Irranca-Davies: I may be able to be of some help here. Within clause 16 it sets out the requirement on the EA to produce a summary of the strategy and what this must include in particular. For example, the EA's objectives, have they been achieved and a list of plans, guidance or maps relevant to that strategy. It sets out in some context what the strategy will be about. The drafting of clauses 15 and 16 here do reflect the fact that the EA's strategy is unlikely to be a single document, it is not going to be an all-encompassing document. It could well be, and is highly likely to be, a series of documents, policy statements, guidance notes, maps, plans, et cetera, but the summary where this is pulled together and the importance of making this accessible to people, to pick up on an earlier point, would list all of this to help the public understand.

Q314 Chairman: The reason I ask that is quite a lot of people have been seeking after certainty in this. David is going to take that on, so I do not want to trespass onto his area of work, but I would have thought it was classic schedule territory in the Bill or possibly to define in secondary legislation so it could be amended over time to provide a bit more of the guts. As you have outlined in your evidence, this is an area of evolving technology, there are new ideas coming along and people are discovering new things about the climate. There may be all kinds of things that you want to tell the Environment Agency they ought to be building in, but at the moment it is the missing part and all we get is, "Summarise what you think is the strategy in the terms of draft clause 16".

Mr Hewitt: Given your point that things may change over time and you may want the Environment Agency to be dealing with certain things differently, for example, this draft of the legislation, which is reviewable anyway as it is a consultation draft, does say that there is an ability to issue guidance as to what the strategy ought to contain. The very strategy itself can be adaptable to those changed circumstances and that seems a sensible approach rather than ossifying a particular view of the strategy at one point and then needing legislation later on to change it.

Q315 Chairman: As they say, you have your point of view and I have mine. I think it does stand out where you have got so much detail in these first 20 or so clauses and the one bit which is utterly central does not have a minimum statutory definition or requirement of what ought to be in this strategy. That is something we will come back to in our report. Can I go back to a point which the Minister smiled at earlier in our evidence session when I was, if you like, reflecting on the fact that a lot of good cooperative work is already starting which parallels the route that the Bill wishes to go down. We took evidence from Suffolk Coastal amongst the local authorities that came before us and over time under the existing legislation they have developed some innovative approaches to coastal management and managing their flood risk. Those innovative approaches have caused them to be working creatively with other local authorities, with the Environment Agency, even with developers. They cited a case where a development right had been given and, if you like, there was a section 106 benefit coming along which enabled them to do things on their flood protection which they could not otherwise do. I thought that was wholly beneficial. Having heard their evidence, what slightly concerned me was the way the Bill describes the hierarchy of responsibility, starting with the Environment Agency going down to the lead local authority and the lead local authority working with subordinate local authorities to achieve certain things is a very vertical organisation. Suffolk have done what they have done horizontally. I wonder if you felt that the rigidity of the vertical organisation would inhibit the kind of excellent work that Suffolk have been doing in a future as guided by the Bill

Huw Irranca-Davies: I do not think so. One of the things that we have been bearing in mind in the team, Hilary Benn and myself, is whilst clarifying the issue over leadership both locally and at the Environment Agency level we should allow flexibility so that innovative solutions can be delivered on the ground. I think we have got the balance right there. People will want to know that there is clear leadership and one point at which the responsibility stops and within that framework the ability of either the forum and local groups you are talking about or alternatively, even though they are not universal across the country, internal drainage boards to deliver as part of this partnership approach as well. I guess it is the difference between leadership and identifying leadership and bringing in those various partners to contribute to some quite innovative solutions, and also where they can add value beyond what central Government or the Environment Agency can do. We are quite interested in exploring that sort of avenue where there is some ability to have not only local innovation but some local flexibility as well.

Mr Hewitt: We were just aiming to avoid being dirigiste. It is not a vertical rigid system. We wanted to make sure there was clear responsibility locally on somebody to make sure something happened and to define to a degree that there should be some local analysis and management of the risk of local floods across the piece. How that is actually delivered is down to the locality in the light of their own circumstances, the capabilities of the various bodies and the bodies themselves that exist in that area. Rather than saying, "You must delegate such and such to the district" or "You must do certain things at the upper tier or do things through an IDB", all we are saying is somebody has to have the responsibility to pull this stuff together. How they go about doing it locally is very much to be determined by the local parties so that the best solution is achieved. That is the thought behind the structure that is in legislation.

Huw Irranca-Davies: There is the ability, even with that local autohrity leadership, not only to bind people but to delegate areas to them, whether it is IDBs or others, to say, "You have the expertise, you have the capability, will you do this part?" and so on.

Mr Hurst: The way we have set it up is very much coming out of Sir Michael Pitt's diagnosis. There are two things I would add in addition to what the Minister and Simon have said. The first is it is fantastic where there are good local authorities and there are some really good districts who know what they are doing, but there are also some areas where they do not have the same degree of local leadership. You want to balance giving the capacity for good local leadership to take the initiative with the right of local communities, whether they have good local leadership or not, to have the basic service. That is the first point. The second point is flooding is one of the characteristic issues that does not stop at a local authority boundary. In fact, coastal flooding is particularly a case in point. A very well-intentioned local authority can, if they are not careful, by what they do in their area have big effects down the coast along shore drifts. That is why with coastal flooding in particular you need to have the Shoreline Management Plan, which is the Agency approach for the whole stretch of coastline, because if you do not couch it underneath that strategy then even the most well-intentioned work in one particular area may have some very big unintended consequences down the coast. The idea of having a clear hierarchy but with every incentive on people to be sensible and to use the expertise that is there, and particularly to use the people on the coast who know the communities, is the right way forward. It is a balance because the more you are not dirigiste the more some people will not get the service, but the more you are tight the more you are going to get in the way of innovation. You have to find a way that fulfils both remits.

Q316 Chairman: Pitt talked about 35 million to implement his proposals. Is that figure now fixed because obviously a lot of the costs of implementing this Bill reflect Pitt, as you have just said?

Huw Irranca-Davies: One of the things we have consistently made clear, and continue to make clear, is we have done our assessment of the impacts and where the burdens will lie with this and where some of the savings will come from this as well. We do need to keep that open and under review as time goes by because we have made a commitment that any additional net burdens will be met, will be resourced, because to deliver on Pitt's recommendations will require not only central Government but everybody to step up to the mark and play their part. We will keep it under review but at the moment that is the figure we have and we are quite firm on that. We will monitor it over time. We have got some good pilots going on at the moment with local authorities, so let us see what the evidence is that comes in from them on the costs and savings from implementing this.

Q317 Mr Drew: It is always a good approach to issues to say "follow the money" or "follow the possibility of the money". I think it is fair to say that local authorities from all I have seen are very much in favour of this Bill, but they are rather sceptical about whether there are real resources coming their way, particularly if they are the prime autohrity. That takes two forms: firstly, as the Chairman quite rightly says, what money there is in the pot overall but, secondly, there is the grant mechanism by which they have to be assured that the Environment Agency are going to play fair. The danger there is they may play fair to one authority but that means that somebody else has got to take less. What is the rubric for this whole process on who gets the money and how it is fairly distributed and what they would do if they do not believe it is fairly distributed?

Mr Hurst: Bear in mind that this is not one of those issues where central Government is taking the initiative and local government are following unwillingly. The things that we are putting into law for local government to do are things that many councils have already realised they want to do on behalf of their local population. Many local authorities are spending their own money on this already. If you look at Gloucestershire, for example, this was sufficiently important to the people of Gloucestershire when after 2007, and that seems an entirely legitimate decision, they raised a council tax precept to fund more work on flooding. I can give you examples also of Leeds, North Lincolnshire, many other councils which are putting their money where their mouth is. There are two main funding routes from central Government. There is the 15 million that we have put forward between now and 2010-11 from the Michael Pitt 34.5 million which is mainly for work related to surface water and it is mainly being targeted at the local authorities where there is the greatest risk of surface water flooding, so it is very deliberately targeted. Then the Revenue Support Grant contains money that is notionally earmarked for floods, and I use the word "earmarked" because the system is not a ring-fenced system. In 2006-07 that was 87 million but actually even by 2007-08 local authorities were already up to 100 million, so this is another illustration of where they are putting their own money forward. There is a balance of central Government putting money in to meet the gap in the net new burdens and local authorities putting some of their own money in, both because they see it is important but also because it will save them money in the long-term in terms of their responses, damage to their property, insurance, etc.

Q318 Mr Drew: There are two areas where they have clearly voiced concern to us. Firstly, the adoption of private sewers and, secondly, the assumption of money saved because of floods averted. Can I have some clarity of what money will be coming forward, and you are very interested in the sewers issue, but also this one about, "Well, we don't need to use as much money as we thought we needed to because you have not had to spend nearly as much money as you would have done if you had not had this money to protect against floods".

Mr Hurst: The private sewers money first. This is money that comes in from 2011 onwards to local authorities or, more to the point, money that does not go out. The net new burdens assessment and the 34.5 million is only until 2010-11 and we obviously cannot prejudice what the next Spending Review will decide. The 54 million of savings that on the basis of discussions with the local authorities by independent consultants who have come up with a figure ---

The Committee suspended from 5.00 pm to 5.17 pm for a division in the House

Chairman: Minister, we are going to move on to sustainable urban drainage systems. We will write to you about one or two other things that we were going to ask you about but we do want to have a word or two about SUDS. Paddy Tipping?

Q319 Paddy Tipping: SUDS are a good thing but have been neglected in the past and it is good that provision has been made. I am not entirely sure why local authorities have been given the power to take on SUDS rather than the water and sewerage companies?

Huw Irranca‑Davies: If my recollection is right, in the consultation that we had on this there was discussion over where the responsibility should lie, but there was a significant response in suggesting that it was logical that this should also lie with local authorities, albeit making sure that the resources were there and that the expertise was there as well to deliver it.

Q320 Paddy Tipping: Maybe you or Martin would take me through the logic of the argument because I am not convinced about this.

Mr Hurst: You need to recognise that the term SUDS covers a multitude of things, by no means all of which and possibly not even half of which are the kind of underground assets that you might think about as being water company expertise. For example, there may be connecting elements which will be permeable roads, permeable paving through planning permission, swales, attenuation ponds, et cetera, many of which would be completely outside water company expertise, quite frankly, so the idea that local government should be the lead party for adopting and maintaining the SUDS does seem logical and the idea of a water company, for example, trying to maintain a local authority road which happens to have a permeable surface is not immediately obvious, let us put it that way.

Huw Irranca‑Davies: We certainly expect that many of these SUDS will be above ground rather than underground container systems, so they will be swales or attenuation ponds, et cetera, where amenity is also a real issue, so there is a logic to saying that local authorities are the best ones equipped to actually deal with that that because it straddles not only SUDS but also the amenity value of that particular part of the environment.

Q321 Paddy Tipping: Tell us about skills and resources. First of all, have local authorities got the skills and, secondly, my impression is that, as always, local authorities are saying you are asking us to pick up a new commitment without the resources.

Huw Irranca‑Davies: You are absolutely right and I am glad to say that one of the facets of this was that it was well‑aired in our discussions with local authorities and others. What we will be doing is setting national standards for the approval and adoption of SUDS and these will set out standards for the maintenance of SUDS which local authorities will use then in carrying out their adoption role. We will also provide guidance to local authorities on this. It is our intention that local authorities in their role as the approval bodies for SUDS can also if they wish to ‑ and this does come back to partnership as well ‑ delegate the responsibility for the maintenance of SUDS if they so choose. They could delegate for example to water and sewerage companies if they had the necessary skills to do it or they could use consultants if those were not in-house. There are a couple of other facets as well. We are currently undertaking the skills review analysis with local authorities - not of local authorities but with local authorities ‑ to meet both the SUDS and also the surface water management plan proposals and where there are gaps to identify how the skill levels can actually be increased. There are many aspects of this Bill that we have already begun. We have begun to increase skills in flood risk management within local authorities. We funded 27 places on the Environment Agency's foundation degree in flood management which starts this autumn. We are also working with operating authorities on apprenticeships which we expect to start in 2010, so we are not waiting, we are actually getting on with this because we recognise that there will be some capability issues.

Q322 Paddy Tipping: Let me give you an example in my own area. There is a private company that has built a housing development which has got a very attractive SUDS scheme associated with it and it has amenity value. They are responsible for its maintenance but the company has gone bust and nobody is maintaining it, so what is going to happen in the future?

Mr Hurst: One of the big advantages of local authorities adopting the SUDS is that it will get round that particular problem. Typically when a developer has developed a site and sold the housing on, the developer's interest in the site is reduced and if it is a big liability it is very sharply reduced. The advantage of adoption is that for new developments at least and new SUDS they will be taken forward in a properly maintained fashion because otherwise they will deteriorate and can end up doing more damage than good.

Q323 Paddy Tipping: So the developer will pay a capitalised sum to the local authority for them to take it on in the future?

Mr Hurst: The local authority can enter into a section 106 deal with a developer. That is up to the local authority; it is not something we would want to prescribe.

Q324 David Lepper: About the skills training that you mentioned, they are quite good numbers there but are they spread across England and Wales? Has there been a concentration? Maybe you do not have that information, but I was just concerned that every authority who needs to perhaps is taking the right steps to get the trained people or the extra training for people that they need?

Huw Irranca‑Davies: This is very much the beginning. I am saying that we are not waiting for this to get on with it; we know we have to do it. This is the start and we will see more of the gap analysis ‑ because some local authorities, I have to say, will have a capability or they will have local partners who can deliver but for others there will be a deficit - and this is the start of it straightaway and then we see this rolling out and identifying, as we are currently doing, with local authorities where the gaps lie so we can help them fill those.

Q325 Chairman: Just one final point on SUDS. Water eventually finds its way somewhere so whilst SUDS may slow things down in terms of the dissipation of water, ultimately it might still end up as a water company responsibility because the water ends in a water course and it ends up being somebody else's responsibility. Have you received any representations from any of the major players in this area expressing that kind of concern particularly about the cost implications regarding SUDS?

Huw Irranca‑Davies: No, I do not think so. Simon, I do not know if you want to add anything to that, but you are right in what you are saying, Chairman, what SUDS do in effect is they deal with the water in a far more natural way in terms of slowing down its process, of dissipating its effect. Ultimately, it will make its way down into the water courses and so on but it is the fact that it has been managed better in a very natural way rather than all of it impacting immediately on the system to carry it.

Mr Hewitt: As to your narrow question as to what represents Rule C we will come back to you on that, but the general point is that if it is eventually getting into a water course it is actually in the long term saving water companies money because it is not then going through the sewage works and all the rest of it. The point is that you are using natural forms of drainage to avoid that system and therefore the burdens upon it. Actually the water companies are gaining out of this proposal rather than ending up with a burden, is the typical position.