Memorandum by Rolandon Water and Sea Freight
Advisory Services (IW 59)
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
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 stagelet alone the achievement of the government's
aimis still far off and much more needs to be done.
2.3 Our remarks below fall into two categoriesnational
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
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 nutor whatever the saying isand
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
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 committeethe Inland Waterways Amenity Advisory
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
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
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.
6.1 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 noneeg 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. LOCAL AUTHORITIES
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
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.
12.1 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
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).
25 September 2000