1. Introduction

Background to this paper

1.1 Understanding of environmental issues has developed significantly since the current framework for abstraction licensing was put in place in the 1960s, and public attitudes have changed considerably. The Government considers that significant changes to the water abstraction authorisation system are now needed in order to help ensure that we use our water resources sustainably. Therefore, the Government issued in June 1998 a consultation paper¹ proposing a number of administrative and legislative changes to the present system of water abstraction licensing in England and Wales.

1.2 The Government received 205 written responses to the consultation paper. A list of consultees is in the Annex to this paper. There was substantial support for the Government's view that a new approach was necessary. Many environmental and amenity groups welcomed the measures which would strengthen protection for wildlife and important habitats. There was, however, some opposition to some elements of the proposed reforms, principally from abstractors who were concerned that their abstractions might be curtailed.

1.3 This paper sets out the decisions that the Government has made in the light of the consultation. Those decisions reflect the Government's intention that the abstraction authorisation system should contribute to sustainable development by protecting and, where possible, enhancing the aquatic environment whilst facilitating economic growth and higher living standards with minimum impact on water customers' bills. These decisions relate to changes which:

• provide the Environment Agency with additional tools for the conduct of its duty to manage water resources, whilst encouraging a voluntary approach to necessary changes by abstractors;

• increase the scope and public availability of information on water resources, enabling abstractors to review their present operations and plan ahead in an environmentally responsible manner;

• increase the system's flexibility, accountability and administrative efficiency, thereby increasing the ease of access to sustainable water resources for existing and new entrants to the sectors for which water abstraction is vital; and

• incorporate appropriate transitional arrangements, both for existing abstractors and for those who will be subject to controls for the first time.

1.4 The package of changes will also provide improved scope for the application of economic instruments in relation to water abstraction which might emerge from research work currently in progress and the further consultation thereafter to which the Government is already committed.

The changes

1.5 The following paragraphs summarise the main changes which the Government intends to make in the light of its consultation. References are given in brackets to paragraphs in other chapters of this paper where those changes are described in more detail.

1.6 The Government confirms that the Environment Agency should issue abstraction licences on a time-limited basis. The Agency's detailed policy on time limiting licences will be founded on the development and periodic review of an Abstraction Management Strategy (AMS) for each catchment area (paragraph 4.7) . Each strategy will complement the LEAP by describing the water resources position in each catchment and by setting out a strategy to deal with pressures on water resources, but will be physically separate so as to present the more detailed information which will underpin the strategy. Research and development work will continue to be directed at improving this information (paragraph 4.8).

1.7 There will be a general presumption of renewal for time-limited licences provided no significant environmental concerns arise during their currency. Where that is not the case, the Government expects the Environment Agency to provide abstractors, through the development and review of Abstraction Management Strategies, with at least six years' notice of likely non-renewal. Ministers will hold the Agency to account for cases where less notice is given and will give it further guidance if necessary (paragraph 4.42).

1.8 The duration of time-limited abstraction licences will be determined by the Agency to ensure proper protection of the environment while reflecting reasonable needs of abstractors. The Government expects that, in many cases, the duration will be of the order of 15 years, but recognises that some abstractions, particularly those associated with major infrastructure, may need licences with significantly longer time limits (paragraph 4.37).

1.9 In line with the consultation proposals, the Government expects the Environment Agency to simplify its procedures for administering the abstraction licensing system (paragraphs 6.3 and 6.6). Revised regulations in respect of licensing applications and form and content of licences will be made within the framework of the current legislation to assist that process as far as possible and to deliver some new features of the system (paragraphs 4.13, 4.16, 4.21 and 4.37). The Government will also draw up, as necessary, further guidance or rules on the conduct of abstraction authorisation appeals (paragraph 6.16).

1.10 The Environment Agency is continuing to seek voluntary action by abstractors whose abstractions are shown to be the cause of damage to Special Areas of Conservation, Special Protection Areas or other Sites of Special Scientific Interest, but stands ready to proceed with curtailment in cases where no agreement can be reached. (Consultation paper paragraph 7.11). In that connection, the Agency is drawing up guidelines on the assessment of the compensation which might be payable (paragraph 7.6). The Agency will also seek to refine the water abstraction charging scheme to accommodate compensation costs and charges for drought orders (paragraphs 8.5, 8.11 and 8.16).

1.11 The Government confirms that the Environment Agency should plan to convert most abstraction licences to time-limited status on a prioritised basis in accordance with the Agency's Abstraction Management Strategies (paragraph 7.13). The Government considers that the arrangements for the management of time-limited licences through the Abstraction Management Strategy process should provide significant re-assurance to abstractors about the consequences of conversion. Changes in primary legislation will provide further incentive, but the Government remains of the view that truly responsible abstractors should have little need of persuasion that voluntary conversion to time-limited licences is an essential ingredient of their environmental credentials.

1.12 As soon as Parliamentary time allows, the Government will bring forward legislation for the following changes:

• Alterations to the application and succession requirements so that the only precondition is right of access to the point of abstraction. (paragraphs 3.4 and 5.7).

• The establishment of two new forms of abstraction authorisation - permits and consents -and the removal of most authorisation exemptions currently given on grounds of use (paragraphs 3.22, 3.29 and 3.36).

• Provision of Environment Agency powers to remove "exempt area" status and to establish volume exemption thresholds on a catchment basis; and to establish a Register of exempt abstractions where appropriate, with non-registered exempt abstractions losing protection from derogation in these regions (paragraphs 3.34 and 5.4).

• Provision of the power to revoke an authorisation without compensation after 4 years without beneficial use (paragraph 5.11).

• Removal of the defence against civil action in respect of future financial losses incurred as a result of continuing water abstraction (paragraph 5.15).

• Removal of administrative details from primary to secondary legislation (paragraphs 6.3, 6.6 and 6.9).

• Additional Environment Agency enforcement powers to deal with breaches of authorisation conditions (paragraph 6.12).

• Removal, from 1 July 2012, of the right to compensation if a licence without time limit is curtailed on the direction of the Secretary of State on the grounds that the abstraction is causing significant environmental damage (paragraph 7.17).

• Provision of powers for the Environment Agency to require abstractors to enter into enforceable water management arrangements, and recover the reasonable costs of such agreements from the abstractor (paragraph 9.4).

• Provision of Environment Agency powers to compel (i) one water company to seek bulk supply from another and (ii) transfer of abstraction licences from one water company to another (paragraph 9.11).

• Provision of Environment Agency powers to require provision of information from abstractors relevant to the Agency's discharge of its duty to secure the proper use of water resources (paragraph9.16).

• Creation of a statutory requirement for all water companies to agree publicly available drought plans with the Environment Agency (paragraph 9.22).

• Creation of enforceable duties upon (i) water companies, to conserve water in carrying out their functions, and (ii) all other abstractors, to use water abstracted under authorisations in an efficient and effective manner (paragraph 9.27).

Structure of the paper

1.13 Although this paper is broadly self-explanatory, it assumes some knowledge of how the current system operates, and has considerably abbreviated many of the arguments for different approaches which were presented in the consultation paper. The chapters which follow have the same numbers and headings as those in the consultation paper to which they relate. Each consultation proposal is reproduced in italics. Readers who require more background information are referred to that paper, available from the address shown on the back cover of this paper or from the Department's Internet service (www.dtlr.gov.uk/).

¹ The Review of the Water Abstraction Licensing System in England and Wales - Consultation Paper. DETR and Welsh Office, June 1998.