Environment and Rural Development Committee,

Meeting date: Wednesday, May 17, 2006

Official Report 217KB pdf

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Water Environment and Water Services (Scotland) Act 2003

Good morning, colleagues. I welcome everyone to our 17th meeting in 2006 and our second meeting this week. I thank all those—including the minister—who attended Monday's meeting in Inverness. Congratulations on your stamina.

We have received a couple of apologies. Richard Lochhead has a constituency engagement and Elaine Smith is ill.

The first item on the agenda is consideration of the annual report on the Water Environment and Water Services (Scotland) Act 2003. When the committee debated the original bill, it agreed that the Executive should report to us on the annual implementation of the water framework directive. As it has done in the past couple of years, the committee will take evidence on the report.

Written submissions on this item have been circulated to members. I should point out that some of them refer to the two sets of regulations on private water supplies that we will deal with later in the meeting. As members will see, there is a bit of cross-over in the agenda. Finally, I note that John Swinney has joined the meeting to discuss this item, in particular.

I welcome to the meeting Rhona Brankin, the Deputy Minister for Environment and Rural Development. I invite the minister to introduce her officials and to make some introductory remarks. After that, we will proceed to questions from colleagues.

I am accompanied this morning by Joyce Carr and Ruth Gilpin.

I am pleased to present the third annual report to Parliament on the implementation of the Water Environment and Water Services (Scotland) Act 2003. Members will see from the report that there has been considerable progress during 2005, most notably the introduction of the Water Environment (Controlled Activities) (Scotland) Regulations 2005 (SSI 2005/348) and the associated charging scheme.

I am absolutely committed to ensuring that, in our work on this matter, we achieve the right balance between protecting and improving the water environment and supporting the social and economic interests of water users from both large and small businesses. As a result, work with water users has been an essential element in developing the regulations and the charging scheme.

In recent months, I have met stakeholders from key sectors, including the hydro-power sector and the whisky industry. Those meetings have provided valuable opportunities for discussing how we can work together with Scottish businesses to implement the 2003 act in the context of our wider economic, energy and environmental targets. I welcome those opportunities for discussion and look forward to continuing those constructive relationships.

We are now in an excellent position to move forward. In providing a single framework of proportionate controls for all activities that pose a risk to the water environment, the controlled activities regulations—CAR—make regulation considerably simpler for water users. Their timely introduction also provides businesses with certainty in planning for the future.

The annual report highlights two other achievements in 2005 that will support the future protection of our water environment. First, the consultation on a strategy for tackling diffuse pollution from rural land use outlines key measures to tackle an important pressure on our water environment. Secondly, the Scottish Environment Protection Agency's strategy for river basin management planning sets out how it will work with stakeholders to plan water resource management in Scotland. Central to both strategies is our commitment to work closely with water users.

I am happy to answer members' questions on the content of the annual report.

First, I wish to ask about a tiny point of detail. The final paragraph on page 7 of the annual report, under the heading "Working with other policy areas", mentions many areas, but not leisure. There are recreational users of water and I do not know whether they are included in one of those policy areas.

Secondly, it occurred to me while I was travelling by rail that railways run alongside and across watercourses and I wondered whether Network Rail is to be designated as a responsible authority. That would impose duties on the company.

Thirdly, what progress has been made on sustainable flood management? There is some concern that that aspect of the WEWS act has not progressed as quickly as it might. There is also some concern that financial support for flood management solutions is being allocated on the basis of the Flood Prevention (Scotland) Act 1961, rather than the principles of sustainable flood management that were brought in with the WEWS act.

Finally, is the minister confident that we have sorted out water abstraction charges to farmers who need to irrigate vegetables and potatoes?

There are three big questions there. Let us take them one at a time, and I might take supplementaries as well. Nora Radcliffe's first point was about the designation of Network Rail.

I understand that, for legal reasons, Network Rail is not able to be designated as a responsible authority.

We certainly looked into it with our lawyers; that was one of the key issues that helped us to decide who should be designated. Network Rail was considered and consulted upon but, for legal reasons, it could not be designated.

The next question was about sustainable flood management.

The Executive has set aside a large amount of funding for implementing flood management measures. As members will be aware, several flood defence proposals have been brought to the Executive and have already been funded. The Executive currently provides 80 per cent of the funding for flood management, and there will be an announcement tomorrow about the White Cart water flood management proposal and the support that that is getting from the Executive.

I am confident that the money is there. The challenge is for local authorities to come up with flood defence measures. That procedure is often very complex because it involves complex systems of consultation and can also involve local inquiries.

The national technical advisory group on flooding has been considering sustainable flood management. We need to be able to take advice from that group in the future. We are very conscious of the fact that we have a commitment to sustainable development and it makes sense to consider sustainable measures for dealing with flooding in future.

In relation to the charging schemes—

May I stop you there, minister? There might be a couple of supplementary questions on flooding.

I am aware that some reassessment of flood risk is going on, particularly in the Conon valley, although I do not know about elsewhere. Because that is happening, or has happened—no one is quite sure which—it is leading to uncertainty in the planning departments about what their responses should be to planning applications and about what development can take place. Can you give us any information about the new risk assessments?

I have no specific information about the Conon valley, but I would be happy to provide the member with information about that.

Are new risk assessments happening, even if not specifically in the Conon valley?

Any new flood prevention scheme will require authorisation under the controlled activities regulations. If you can give me more information about the perceived issues, I would be happy to respond to you on those. Other than that, I am not sure what is meant by the concern to which you refer.

I will get back to you on the matter. I have been given only vague hints that something is happening. I wondered what that was.

The minister has given a commitment to write back on the issue. You made a fairly specific geographical reference, so we will get more information on that.

I have a follow-up question about the links between the 1961 act and the 2003 act. It has been mentioned to quite a few members that there is concern about the definition of sustainable flood management. I was told that there was a possibility of a consultation on the matter, but there has been none. Do you have plans to produce a timescale for that? There is a real need to join up the dots between the traditional approaches to flood management and a more sustainable approach, which we were keen to see in the 2003 act.

There is a draft definition, along with measurable objectives and principles that have been set out for flood management, which have been produced by the national technical advisory group on flooding issues. That work will help to inform the decision-making process. There is an intention to consult on the outcome later in 2006. I am happy to give the committee more information on that.

So the consultation will take place this year.

Yes.

I am concerned that it has not moved forward, but it is useful to have your comments on the record, so that people can gear up for the consultation. A couple of other members have questions about flood management.

Minister, a moment ago you said that local authorities were under an obligation to work up flood management schemes, which is of course the case, that the money was available in the Scottish Executive for us to be able to afford adequate flood prevention measures, and that local authorities have the complex job of putting together flood management schemes. Are you absolutely satisfied that the Executive is in no way a road block to pursuing some schemes? It strikes me that there is a disparity between your comments and what we hear from local authorities, which frequently report difficulties in getting the Executive promptly and speedily to handle the applications that they make for flood prevention schemes. I certainly hear that from local authorities in the area that I represent.

Is the Executive dealing with the issues promptly enough? Can you give us an idea of how many schemes are progressing on an annual basis? When I think about the schemes in Brechin in my constituency and what I heard about the Elgin flood prevention scheme when I was up in Morayshire during the recent parliamentary by-election, it strikes me that the Executive is not exactly pushing such schemes through with a great sense of urgency.

I would be interested to know what the particular concerns are. The Executive works very closely with local authorities on drawing up schemes. It is undoubtedly a complex process. If you can provide me with information about concerns that exist in respect of particular schemes, I will be happy to look into those.

Glasgow City Council has come forward with a scheme for White Cart water, which has been given the go-ahead although the detail has not been finalised. Moray Council and East Ayrshire Council have submitted schemes for Forres—the Burn of Mosset—and Galston. The scheme for Forres has been referred to a public local inquiry; East Ayrshire council is looking to resolve objections to the Galston scheme. Aberdeen City, Perth and Kinross, Angus, Falkirk, Argyll and Bute, Highland and Renfrewshire Councils are all likely to produce schemes. Since the previous spending review, schemes in Aberdeen, East Dunbartonshire, Kilmarnock, Largs, Linlithgow, Portpatrick and Rothesay have been funded.

It would be useful to receive a note on that, as the information is in front of you. We would like a sense of the timescales. I know that in my area—Edinburgh—we still await a final outcome. Rather than your listing all the schemes, a note would be helpful.

I am happy to provide that. The flooding issues advisory committee is considering how the 2003 act sits with earlier legislation. We are conscious of the length of time that the process can take. John Swinney made a separate point that implied that the Executive has been slow to respond; I am happy to respond to specific questions.

We have inherited a system that may be cumbersome. We are considering how the 2003 act relates to the planning framework and how we can speed the process. I am happy to provide the information.

I will call John Swinney, but as every committee member wants to speak, I ask him to be brief. I do not want to prolong the discussion unnecessarily.

I suggest that the note for which the convener asked should contain timelines on when proposals were first mooted, when they were submitted and when local authorities started to consult. Such timelines would give us a flavour of the blockages in the system.

I would be happy to provide that. We have also been waiting for some councils for a considerable time. I accept that we need to be clear about where the blockages are and what we need to do to unblock them.

I want to be clear that there is no bar on applying funding made available under the 1961 act to measures such as land acquisition or compensation to landowners for flood mitigation that allows flooding further upstream. That might all be dealt with more holistically when we start to consider river basin management planning.

Absolutely. An holistic approach is a part of sustainable flood management.

So there is no bar on using funds in the way that I described.

Not to my knowledge, but I will have to confirm that.

I do not imagine that there is, but I wanted to clarify that.

I do not think that a bar exists, because some schemes include such measures. I will confirm that.

Nora Radcliffe also asked about charges for water abstraction on farms.

Farmers expressed concern and SEPA undertook a stakeholder process to consider charges for various users. Considerable discussion took place with the agriculture sector and it is true that that sector had several concerns. A key concern was irrigation for potato growing. The committee will be aware that discussions took place with SEPA until quite a late stage, and SEPA has made significant changes to the fee structure.

In defining the thresholds between the bands, SEPA underestimated the volume of water that is extracted by an irrigator, so the bands in the charging scheme were amended to reduce the subsistence charge for an irrigator from £2,230 to £446. It is important that the consultation was conducted. Significant changes have resulted from it.

It is good that the system worked well and that the exchanges from the consultation has that result, but I am still concerned that the peripatetic nature of potato growing is not recognised. If people incur a new charge every time that they change the field that they use for potato growing, the cost will be almost punitive.

My question is also on proportionate costs, such as the adjustment for irrigation for potato growing that the minister mentioned. For the disposal of sheep-dip, some of the least well-off producers in the country are now faced with bills running to the £540 mark. SEPA's charges cut across the support given to agriculture in our most deprived areas. As the minister might recall, during the debate on the rural development programme I pointed out that it was estimated that a profit of only 59p per ewe would be generated in a scheme that was being worked up in Lewis and Harris. In that context, to charge the smallest users £542 for the disposal of sheep-dip is disproportionate. Has the minister taken on board the fact that, unless we take a joined-up approach, although we might clean up the water on the one hand, on the other we will have nobody left who can use it?

Agriculture and crofting are hugely important. That is why SEPA rightly took time to work with stakeholders to ensure that the regulations were appropriate and did not impose too high a burden on the stakeholders but struck the right balance in protecting the environment from dangerous chemicals. The relatively small increase of £370 was due primarily to SEPA incurring increased regulatory costs, but the new charges apply only to those farmers and crofters who do not already have a licence. Consequently, only a small number of farmers—24 in 2004-05 and decreasing thereafter—are affected. The charges are in line with the polluter-pays principle. As the statistics that I have given show, the impact of the charges is relatively small. We believe that the regulation is proportionate given the potential danger to the environment.

It will be interesting to measure how many people leave sheep farming over the next period. I wonder whether that might be partly due to those charges, but I will ask a separate question on that later.

A lot of factors could be involved, but SEPA will continue to work closely with farmers and crofters.

The application fees apply only to new people starting. Existing situations should not be affected.

I do not know where Rob Gibson got his estimates from, but I will certainly be interested in any statistics that he might have. Given that the fees apply only to new people coming in, I fail to see how they will have such an effect.

I want to ask about the transfer of planning powers over fish farming from the Crown Estates to local authorities. I note what the report says, but can the minister give us some details on what training is being given to local authority planners on how to tackle planning in the marine environment? I am a bit worried that there will be no strategic approach to planning in the marine environment if permissions are granted or refused on a case-by-case basis, rather than with reference to the whole picture.

I have no information with me on training, but I am happy to provide that to the committee.

Like Maureen Macmillan, I am conscious that we need to ensure that we get this right. In the context of the aquaculture and fisheries bill that will be introduced later this session, we need to ensure that aquaculture regulation is as light touch as possible. We also need to ensure that local authorities have that capacity before any handover takes place. I am aware of concerns on that and I know that some local authorities have taken steps to deal with the issue. I will provide more detail on that.

I would be grateful for that.

One subject that took up a lot of time when we discussed the annual report last year was how the risk to river catchment areas is assessed. We spent about two hours grilling the then minister—the present minister has now inherited the subject. It was argued that we should assess the risk to rivers, for example, from the whisky industry, before we license. In the light of your report, do you have any comments to make on that? One argument was about the measurement at the point of abstraction of water, given that much of the water in the whisky industry is returned to the river system. We are all behind the idea of full catchment area management, but an issue arises about the proportionality of the effect on an industry that relies on clean water. We all have concerns about that. Have you updated your views on the issue?

We must ensure that the regulations are proportionate. I have had discussions with the whisky industry and visited distilleries. SEPA plans to review all licences that have been issued under the CAR in a process that is expected to take about two years and which will start later this year, in autumn 2006. The intention is for SEPA to assess the risks that are posed by all operations that are licensed in the context of other pressures and impacts on the relevant water bodies. The review will take into account the first tranche of environmental standards that are to be introduced during 2006, which will set standards that operators will be required to meet by 2012. SEPA is developing its plans for carrying out the review of licences, including the plans for carrying out risk assessments.

Basically, as I have said before, the licensing is done first and the risk assessment follows it. Is that the proper way round?

We have asked SEPA to ensure that borderline cases are assessed at an early stage of the review process, to reduce uncertainty and unnecessary costs to businesses. I have spoken to the whisky industry about that. The projected costs are not high. SEPA estimates that the average annual subsistence cost to distilleries for an abstraction licence will be in the region of £2,000. However, we continue to explore with SEPA mechanisms through which the operational procedures can be adjusted to minimise any impact on Scotland's key sectors, such as the whisky industry. I will obviously keep in close touch with the whisky industry and SEPA on how the matter is progressing.

I want to follow up some of the points that Rob Gibson raised. Because of the tiered nature of the charging scheme, the costs appear to fall on large-volume water users, regardless of the environmental risks that they pose. Is that a fair summation?

No, not necessarily. As I explained to Rob Gibson, we need to be able to make an early assessment of the borderline cases. The key point is to keep the regulations and costs to a minimum.

In developing the proposals for the charging scheme, volume was one factor that SEPA took into account—it is a proxy for risk—although it is not the only factor. SEPA worked with stakeholders to devise a range of factors so that volume was not the only parameter taken into account. For example, adjustments are made for the amount that is returned to the water course and any environmental benefits. Volume is a factor, but it is not the sole factor.

Are you satisfied that the whisky industry has a major impact on the water environment and are you sure about the extent to which the licensing scheme will impact on those businesses?

There is an initial concern about the potential risk, which is why we want to be able to carry out the risk assessment, so that we can assess whether there is a risk, how big it is, what sort of risk it is and what the impact on the environment could be. The risk assessment will be absolutely key.

Are you convinced that a licensing scheme is really necessary for industries such as the whisky industry and the hydroelectric companies and that that is the right way to go?

We would not be introducing it if we were not convinced that that is the appropriate way to go.

Obviously it is welcome that Scottish Water now has a duty to deliver sustainable development. Looking at the guidance that you have issued to Scottish Water, I notice that it states:

"Scottish Water's main contribution to achieving sustainable development will be to deliver Ministerial objectives within the charge caps set by the Water Industry Commission."

Is not it the case that really the charge cap comes first and sustainable development comes second?

No, absolutely not. The water industry, Scottish Water, has been issued with guidance on the sustainable development duty under section 51 of the Water Industry (Scotland) Act 2002. The decision that the water industry commissioner makes on the funding that is appropriate for Scottish Water for it to meet its ministerial objectives will take that into consideration. If issues come up in the course of the funding period that have not been anticipated and which have major implications, it will be for Scottish Water to go back to the Water Industry Commission to make the case for further funding. However, as I said, Scottish Water has recently been issued guidance on exercising its sustainable development duty.

So, when the Water Industry Commission is setting the charge cap, in what way does it have regard to sustainable development?

The commission must ensure that sustainable development is taken into consideration and the guidance ensures that the requirements of Scottish legislation in respect of biodiversity and sustainable flood management, for example, are fulfilled. Those requirements are in place and if anything unexpected were to come up Scottish Water would be able to return to the Water Industry Commission.

What does the WIC actually get? What sort of guidance and material on sustainable development would ministers give it? You mentioned biodiversity duties and something else, but does the WIC actually get guidance in the same way as Scottish Water does, or does it get something different?

It will have a copy of the guidance that Scottish Water has, under section 51 of the Water Industry (Scotland) Act 2002.

The commission has a duty to ensure that Scottish Water has sufficient financial resources to exercise effectively at reasonable overall cost the core functions that I have described, including those in respect of sustainability, biodiversity and sustainable flood management. It is up to the commission to decide how to satisfy that duty, including Scottish Water's functions in respect of sustainable development under section 51 of the Water Industry Scotland Act 2002. I am satisfied that that duty is on the commission. It is up to the commission to ensure that Scottish Water has the financial resources to exercise its core functions, including those on sustainability.

So the commission gets the same guidance as Scottish Water.

Yes. That is my understanding of the situation.

Let us return to sustainable flood management. To what extent do you consider a whole catchment management approach? Given that bids are coming in from individual local authorities, I imagine that they reflect political boundaries rather than catchment boundaries. For example, if a bid came in from Perth and Kinross Council, it would be reasonable to assume that there might be an impact on the coast of Fife. Do you encourage local authorities to work together? How do you ensure that the approach is joined up?

I am happy to give you specific examples of where that is happening.

The Executive gets advice from the European Union, which has agreed a communication on flood risk management. As part of that, an action programme will be developed over the next few months. The particular areas of focus in the action plan include the kind of issues that you have raised, for example improving co-operation and co-ordination through the development and implementation of flood risk management plans for each river basin and coastal zone.

The river basin management plans that are required under the Water Environment and Water Services (Scotland) Act 2003 are intended to protect the water environment from human impacts and to contribute to mitigation of the impact of floods and drought. Currently, we are in a transitional situation because work is on-going on how we can best develop sustainable flood management. We will expect flood management schemes to be developed in the future, but the schemes that are currently in place will not be as advanced as those.

I will be happy to give the committee information about where we are on the development of sustainable flood management and which particular schemes have been able to incorporate the new thinking that is emerging from Europe and from the Executive.

That would be useful.

In the section of the annual report on implementation, there is quite a large section about the progress that is being made on diffuse pollution in the agricultural sector. It is recognised that particular action must be taken in different sectors rather than having a one-size-fits-all strategy on diffuse pollution. There have been about six years of action in the agricultural sector. What impact has that had on reducing diffuse pollution? Are there measurements?

You will be aware that there was a consultation on diffuse pollution in 2005. A huge amount of work has been done with farmers and land managers on how they can take the matter forward.

On the progress to date, we have tended to give more consideration to the inputs. The nature of diffuse pollution means that it is difficult to quantify success in such a short period of time, but the issue is being examined. We can provide specific information on progress over a certain period, if that is what you are interested in.

There is quite a lot on the problems of diffuse pollution and on the particular impact of increased use of fertilisers for example. There are issues to do with phosphates. It is a matter of trying to pin down how measurable that is. I am conscious that the Department for Environment, Food and Rural Affairs has put in place initiatives specifically to deal with sensitive farming and to consider the issue from a catchment perspective. In the annual report, there is a reference to land management contracts providing support for farmers in respect of the water environment, but a slightly different approach is being taken down south of giving capital grants specifically targeted at diffuse pollution measures. Is that a practical way forward, given that we do not have any measurements of success over the past six years?

The diffuse pollution strategy is still at a fairly early stage of development. We are keeping an eye on everything that is happening down south to see how effective and efficient that approach is. We will be taking that forward over the next few years.

We could come back to the issue. I am conscious that work has been on-going in the Executive with NFU Scotland and interested parties for more than six years. We hope to see the benefits coming through, both to the farming community and in the quality of our water environment.

The consultation was going on throughout 2005. It is still being considered, but I am happy to give you an update on where we are on that.

I have a small point of detail about measures to control diffuse pollution and the fencing off of water courses. I wonder whether there is an opportunity to combine that with the core path network, which might be a useful funding stream. If farmers are fencing off water courses, they might be creating paths. It strikes me that there is an opportunity for some joined-up thinking.

We will let that one sit in the Official Report.

In the past, shellfish farmers have been concerned about diffuse pollution into the marine environment and about water quality. What contact have you had with the shellfish growers, minister? Do they think that progress has been made on diffuse pollution?

I have been in contact with shellfish farmers and, as you are aware, there are specific issues for them. In some cases, it is difficult to be certain where the pollution arises from. I have had meetings with Lewis Macdonald and the Food Standards Agency because we need to ensure that we have accurate information about the source of the problems in some shellfish-growing areas. I am happy to give the committee more information about where we are on that. In broad policy terms, I am very aware of the issues that face shellfish growers in some parts of Scotland. I am in contact with them and we will continue to try to tackle the problem. However, we need to be clear about what that problem is and to continue to ensure that we have the most up-to-date research on that. Research is on-going.

Has all the information that is required by those who will have to apply under the arrangements for water abstraction charges been published and issued to all relevant parties?

That information has gone out to all relevant parties.

I thank the minister for answering our questions. We have asked for a raft of supplementary information, which we very much look forward to receiving.

Meeting suspended.

On resuming—