Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence

Memorandum by Rolandon Water and Sea Freight Advisory Services (IW 59)

1.  Introduction

  1.1  I am aged 55 and qualified as a chartered accountant in the late 1960s and have since had a varied career in commerce and accountancy practice, being head of corporate finance in a small merchant bank in the 1980s. Rolandon Securities (which I own) has a separate waterways freight planning consultancy which find solutions to problems. My primary occupation now is as finance director of a stock exchange quoted company engaged in central London residential property development of brownfield sites.

  1.2  I was General Secretary of the Inland Waterways Association (1971-74) and was a member of its Inland Shipping Group. One of my main waterway interests now is the increased freight use of the larger waterways, estuaries and smaller ports. From 1990-96, I was non-executive director of the Isle of Wight based Carisbrooke Shipping plc, which ran a fleet of over a dozen short sea and coastal vessels with capacity up to 4,000 tonnes.

  1.3  An Executive Summary is at the end.

2.  White Paper

  2.1  This is the most encouraging Government statement for many decades. We particularly draw attention to "the Government wishes to encourage the transfer of freight from roads to waterborne transport where this is practical, economic and environmentally desirable" (paragraph 6.68) and, importantly, "there is a close inter-dependency between tidal and non-tidal waterways in terms of freight transport . . . facilitating the movement of freight between the two types of waterway is crucial to increase the level of freight movements" (paragraph 6.65).

  2.2  However, this is only the start; the middle stage—let alone the achievement of the government's aim—is still far off and much more needs to be done.

  2.3  Our remarks below fall into two categories—national and local government authorities.

3.  National Government

  3.1  We understand that one of the key matters that your Committee is reviewing is whether there will be adequate resources to implement the Government's policy as outlined in the White Paper.

  3.2  We believe the answer is "not yet" so far as freight is concerned, primarily because:

    —  there is no Government Agency charged with overall responsibility for encouraging the freight use of waterways.

  3.3  The White Paper laid particular emphasis on the close inter-dependency between tidal and non-tidal waterways and said that facilitating the movement of freight between these two types of waterways was crucial to increase the level of freight movements (paragraph 6.65). No single authority is concerned with encouraging this. There is a plethora of navigation authorities (primarily involved with leisure), various port authorities (primarily involved with ships) and different harbour authorities (primarily concerned with marking ship channels and regulating pilots).

  3.4  It is perhaps no accident that the increased leisure use of canals more or less coincided with the creation of a separate, dedicated organisation in the form of British Waterways in the 1960s-70s.

  3.5  We therefore propose there should be a statutory authority, funded by central Government, charged with encouraging the freight use of all waterways, regardless of ownership. We propose it should concentrate on the larger waterways and estuaries, but do not rule out the part which smaller waterways can play in heavily crowded urban and other areas. The new authority would be able to make grants to navigation, port and harbour authorities to encourage them to undertake works beneficial to water transport. We do not advocate that the separate authority would own any of the waterways. The new authority would be responsible to the shipping Division of DETR.

  3.6  Membership of this new authority lies outside the purpose of this paper but very senior personnel of navigation etc authorities ought to be included to provide proper liaison at the right level.

4.  Level of Freight Facilities Grants (FFGs)

  4.1  FFGs have not really worked. Since they were brought in for waterways in the early 1980s, less than £5 million has been paid out. Whilst it is true that the rate of grant has increased since 1997 when the FFG unit of the DETR was strengthened and whilst there are believed to be some schemes in the pipeline, the amounts are still not significant.

  4.2  Why is this?

  4.3  We believe there are four main reasons:

    —  inadequate publicity in business circles (although there are leaflets and a video, the lack of grants made and anecdotal evidence suggests the availability of grants is not getting to the right places);

    —  complexity of calculation;

    —  undervaluation of the environmental benefits which lie behind the decision whether to make a grant and undervaluation of the level of grant itself; and

    —  they apply only to capital costs of equipment and do not cover running costs (although paragraph 6.68 of the White Paper raises the possibility, after consultation, of grants for non-capital costs).

  4.4  Paragraph 6,68 of the White Paper about consulting "to extend the FFG scheme to encourage additional applications" indicates the Government accepts that the present FFG system has not worked adequately.

  4.5  The FFG calculation is carried out in two parts: (a) an assessment of the environmental benefits of moving goods by water, not road and (b) a comparison of road costs and waterway costs.

  4.6  In the first instance, if traffic is taken off urban roads, a "value" of £1.50 per mile is "awarded". Rural roads are "valued" at £1 and motorways and most dual carriageways at 20p. The "value" for each year of expected use is aggregated on an annual discounted basis and the aggregate "value" sets the maximum limit of an FFG. This method adversely affects possible freight movements where long term use in unpredictable and so a two or three year contract (with the possibility of an extension) is discouraged. It is not clear where these "values" have come from but the paucity of grants made to date makes it clear that this "value" is not high enough.

  4.7  We propose that the "values" be substantially increased (say, trebled) immediately (subject to limits below)—see paragraph 4.10 below and that the relationship between the "value" of different roads be reviewed.

  4.8  Once the difference between road and waterway costs has been calculated, the different per annum is then subjected to a discounted cash flow calculation taking into account possible tax allowances on the equipment being purchased and the expected number of years during which the cargo may be carried. The net result is then compared with the environmental "value" mentioned above; the later "value" cannot be exceeded. Whilst this method may (or many not) be theoretically correct, it introduces an element of complexity which is irrelevant, bearing in mind the low sums involved. A sledgehammer has been invented to crack a nut—or whatever the saying is—and the result is that the sledgehammer is killing the nut.

  4.9  We propose a simpler approach. Provided that the environmental benefit "values" (enhanced as we propose) exceed, say, 25 per cent of the cost of equipment etc covered by the grant application, the annual difference between road and water costs should be multiplied by a substantial figure, say 10 (unless (a) it can be shown clearly that the cargo could not be carried for 10 years (eg a gravel pit with a shorter life expectancy) or (b) there is to be a contact in place for a longer period eg a 20 year waste contract. In either case, the shorter life or longer contract life should be used as the multiplier). The grant paid would be the result of the multiplication.

  4.10  It is recognised that on occasions the grant may exceed the cost of the equipment etc. If this is because of the length of the contractual period during which the cargoes are to be carried, then we consider this is acceptable as it reflects the environmental benefit. However, in other cases, the maximum grant would be 100 per cent. There should be no objection to a grant at this level. For example, port improvements have recently been carried out at Truro in Cornwall with the benefit of 100 per cent grants from a mixture of UK and European sources. Barge operators will still have to finance their running costs. However, it would be undesirable for grants to exceed 100 per cent where there was the strong likelihood of a transfer of cargo from road being of a short duration.

  4.11  This approach may offend purist economists but until grants reach a significant figure, it does not matter. What does matter is that the Government's objective will have been achieved.

  4.12  The White Paper hints (paragraph 6.68) at FFGs for non-capital costs. We propose that FFGs should cover extra handling costs which may be involved in a transfer to barge. For example, the Hull coal terminal has a conveyor belt designed for unloading ships which is not reversible to enable barges to be loaded from the terminal. Loading barges therefore incurs extra costs which can be sufficient to swing the balance away from waterways. Another instance is the recent construction of a glass factory at Eggborough in Yorkshire built about 1.5 miles away from the Aire and Calder Navigation, a waterway capable of carrying 500 tonne barges. Had it been built alongside the canal, its raw materials (about 500,000 tonnes per annum) could have been delivered by barge. FFGs are already available for the construction of wharf facilities but they should also be available to compensate for the extra costs of handling into lorries for the last 15 miles of the overall journey.

  4.13  Given its proximity to Parliament, it is ironic that Westminster City Council did not seek FFG's when deciding in 1995 to cease sending their waste by barge.

5.  Freight Study Group

  5.1  We welcome the proposed Freight Study Group (paragraph 6.68). We consider further thought needs to be given to its constitution, aims and powers if it is to be effective.

  5.2  We have been impressed by the Government's reaction elsewhere in the White Paper to its statutory amenity advisory committee—the Inland Waterways Amenity Advisory Committee ("IWAAC").

  5.3  We propose that the FSG similarly be given statutory backing and be set up in the forthcoming Transport Bill. We propose:

    —  that, as with IWAAC, the Government appoints its members. As with IWAAC, certain organisations will "expect" representation;

    —  the aims should be wide ranging and should especially encompass the close interdependency of tidal and non-tidal waterways previously mentioned. It should be able to study freight patterns (especially imports and exports) in order to identify what traffics are and are not suitable candidates for waterways. It should be able to study possible new waterways/improvements to existing ones eg widen the River Nene from The Wash to Peterborough and so link with the A1; improvements to the lower Trent to avoid low tide problems already afflicting sand carrying barges. "Study" should include commissioning research. It would be empowered to publicise and promote the freight use of waterways; and

    —  like IWAAC, it should have a permanently paid secretariat. This is essential. Otherwise, we fear it will become a talking shop without adequate resources to follow up matters discussed.

  5.4  There could be some overlap with the new authority that we propose in paragraph 3.5 above. However, as the White Paper specifically refers to a "Study" group, we have not proposed greater powers for the study group, but there is a case for a combined authority.

6.  Licences

  6.1  It is an odd historical afternote that barges still pay a toll based on the cargo they carry and the distance travelled. This is a hangover from the days of the Turnpike Road and ought to be abolished.

  6.2  Lorries pay a fixed licence fee regardless of how far they travel.

  6.3  We propose that barges should pay a fixed licence for all waterways (except in areas where they already pay none—eg the Tidal Thames). Bearing in mind their environmental and energy saving advantages over lorries, this licence fee should be at a low level. The precise amount should be fixed after consultation with operators. As with road licences, the money should go to the Government. (Possibly collected by British Waterways as agents).

7.  Incentives to navigation authorities

  7.1  The Government already offers Track Access Grants to train operators to compensate for the charges made by Railtrack. Oddly, no such grants are available to barge operators (in some cases, tolls can be 25 per cent of the amount barge owners can charge their customers); this makes a mockery of the concept of a level playing field.

  7.2  As the navigation authorities are commercial enterprises (unlike local or central government authority highways departments), they will need incentives to provide and improve the waterway track and facilities. This could be achieved in various ways but the key aspect will be to link it to tonnage carried and facilities provided. The White Paper (paragraph 6.69) already mentioned grants being paid direct to navigation authorities for freight infrastructure (a commendably wide definition). If possible (we are aware of possible limitations from the European Union), we propose that annual grants should be paid by the Government (may be via the new authority mentioned) to navigation authorities related to the amounts carried.


  8.1  Local authorities need to be encouraged to make greater use of existing powers and, where relevant, to be granted new powers.

9.  Section 106 Planning Agreements

  9.1  When granting planning permission for new developments (whether residential, industrial or commercial), local authorities commonly impose certain obligations on the developer, eg highway improvements, social housing needs, provision of public walkways. Developers accept these requirements (perhaps reluctantly, but they do) and take the resultant costs into consideration when buying the land; if they already occupy the land, then they take these obligations into account in their costings.

  9.2  We propose that Section 106 agreements be used where there is a proposed development alongside a navigable waterway (of whatever size). This would require demolition or excavation materials to be taken away by barge. It would also require bulk building materials eg steel rods, concrete reinforcing rods, bricks on pallets etc to be brought in by barge. It would not require all materials to be brought in by water eg ready mixed concrete. This proposal is especially relevant in built up areas and would reduce road traffic.

  9.3  Dependent upon the precise circumstances, this proposal could be extended to all developments within, say, 100 yards of the waterway. Relevant factors will include the location of loading/unloading points for use on a temporary basis.

  9.4  Similar rules were applied in Berlin during its rapid rebuilding in the 1990s.

  9.5  We have proposed to DETR that PPG13 be amended in this way.

10.  Waste by water

  10.1  The White Paper refers to a feasibility study being carried out for the Waste by Water partnership to carry waste in sealed containers in barges from Hackney in London to a waste plant alongside the River Lee at Edmonton.

  10.2  Greater Government pressure needs to be placed on local authorities on this matter. Waste is one of the few bulk cargoes for which local authorities are responsible and they can have an overriding influence on how it is transported. MPs can see daily on The Thames how 500,000 tonnes a year is taken down the River from Wandsworth etc. Local authorities in Northwest London ensure trains are used to take refuse to the Bedfordshire former clay pits. But other local authorities are not so aware of the environmental need to avoid using roads. For example, much of Hertfordshire's waste goes by road to Bedfordshire, not by water to Edmonton.

  10.3  Naturally and rightly, local authorities want value for money. However, is this being judged correctly? Do local authorities care if their waste goes on other council's roads? Do they weigh in the balance the effect on their own roads?

  10.4  As part of a "partnership" between central and local government, local authorities should be encouraged to review all environmental benefits, as well as financial costs, when assessing how their waste is to be carried.

  10.5  We propose that the Government should provide such encouragement by paying a fixed amount for each tonne, which is taken off the roads. This should be part of the Government's waste policy.

  10.6  In view of the volume of waste, this incentive should apply to all navigable waterways, not just the larger ones. This proposal has particular potential impact on conurbations and large urban cities.

  10.7  The use of barges to carry waste to refuse incinerators is particularly appropriate. We are aware that there is concern expressed about the gases emitted from such incinerators. We are investigating reports of a new American steaming process which can alleviate this problem. Incinerators needing steam are naturally placed alongside waterways, thereby facilitating the transport of waste by water.

11.  Financial assistance

  11.1  It is generally accepted that it is desirable for local authorities to provide financial assistance to the operators of buses and trains, partly as a social service and partly to reduce road traffic in urban areas, especially in the major conurbations.

  11.2  It is therefore logical to suggest that in the same crowded areas local authorities should be empowered to provide financial assistance to barge operators to enable them to take cargoes off the roads. The amount of assistance would need to vary from area to area and according to circumstances. We see this as a "partnership" between local authorities and private enterprise.

  11.3  The 1968 Transport Act empowers local authorities to provide assistance for the leisure use of waterways and this power has been taken up enthusiastically.

  11.4  We propose that the forthcoming Transport Bill should similarly empower local authorities to assist financially the greater freight use of waterways. Again, the power should relate to all waterways. As with leisure, discretion about the use of this new power should rest with local authorities.

12.  Miscellaneous

  12.1  Planning policy guidance note 13 deals with transport and a consultation draft was issued in November 1999 with a final draft due later in 2000. It makes encouraging mention of water freight but, of course, is only a guide. Whilst this can be important in preventing wrong things happening, a more pro-active approach is needed.

  12.2  This could, in part, come about through the development of the Government's Local Transport Plans. However, bearing in mind the way in which freight on waterways has been neglected over many decades, old habits will die hard. The Government will need to be very hands on if it is to achieve its aim. Either the FSG or the proposed new authority could take a lead.

  12.3  Concern has been expressed over wharves being lost to unsuitable re-development eg Thames wharves becoming residential sites; and an operating Leeds sand wharf being closed down for redevelopment.

  12.4  In the case of the River Thames, there is now a list of protected wharves. This arose from a central Government initiative from John Gummer and Steven Norris. It was not left to local authorities, port or navigation authorities.

  12.5  We propose that the Government sets up working parties consisting of local authorities, navigation authorities and others to consider giving protected status to wharves, particularly in urban and industrial areas. There is nothing new in this proposal, some local authorities have already given protected status to the line of derelict canals in order to make sure that nothing inhibits their restoration. Waterways transport is ideally placed to be used by waterside factories/storage depots and it really is nonsensical that these areas should be given over to other activities. There should be a presumption in favour of a site continuing to be available for barge use, rather than a presumption against.

  12.6  We accept that there is a degree of overlap between some of our proposals in this paper. This is deliberate as we recognise that your Committee (and the Government) may wish to review a range of options.

13.Executive summary of the proposals in this paper

    —  There should be a statutory authority solely charged with overall responsibility for encouraging the freight use of waterways (paragraph 3.5).

    —  Freight facilities grants should be increased. The environmental "value" attributed to taking traffic off roads should be substantially increased, say, trebled (paragraph 4.7).

    —  A simpler approach to the calculation of FFGs is advocated. Provided the environmental benefit "values" exceed, say, 25 per cent of the cost of equipment covered by the grant application, the annual differences between road and water costs should be multiplied by a substantial figure, say 10, in calculating the grant payable (paragraph 4.9).

    —  FFGs should be available for extra handling costs as well as capital costs (paragraph 4.12).

    —  The Government's proposed Freight Study Group should be given statutory backing like the Inland Waterways Amenity Advisory Committee (paragraph 5.3).

    —  The Government should set up working parties to consider giving protected status to wharves, particularly in urban and industrial areas (paragraph 12.5).

    —  Barges should pay a fixed licence fee as lorries do (paragraph 6.3).

    —  Navigation etc authorities should be incentivised to encourage barge traffic by being paid annual grants related to the annual tonnage carried (paragraph 7.2).

    —  Local authorities should use section 106 planning agreements to require certain materials to be taken by water where there is a proposed development alongside a navigable waterway (paragraph 9.2).

    —  Waste is one of the few bulk cargos for which local authorities are responsible. The Government should encourage local authorities to transfer waste disposal traffic from road to waterway by paying a fixed amount for each tonne transferred (paragraph 10.5).

    —  The forthcoming Transport Bill should empower local authorities to assist financially the greater freight use of waterways to take cargos off the roads (paragraph 11.4).

John Dodwell

Managing Director

25 September 2000

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