House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Seventh Report

11 BRITISH WATERWAYS' RELATIONSHIP WITH GOVERNMENT

110. Perhaps the most striking issue that arose from our inquiry related to the current state of the relationship between British Waterways (BW) and its sponsor Government department in England and Wales, Defra. Evidence received in the early stages of the inquiry had already suggested that the relationship between the two organisations was strained. Save Our Waterways (SOW), for example, was "extremely concerned" at the relationship because the "restrained nature of press releases issued by British Waterways suggests that they are unable to voice their true concerns about the [grant] cuts".[200]

111. Concerns about the tense state of this relationship were confirmed during the course of our inquiry. On two occasions Barry Gardiner MP, the Minister for Biodiversity, Landscape and Rural Affairs, strongly criticised the actions of senior British Waterways management. The first was when the Minister gave evidence to us on 23 April 2007; the second was in a letter the Minister sent the Chair of BW on 10 June 2007 following media reports that BW could be privatised.

Minister's criticisms in evidence, 23 April 2007

112. In the evidence session on 23 April 2007, the Minister criticised BW on a number of grounds, and repeated some of these criticisms in a Westminster Hall debate two days later. His criticisms included: BW had failed to respond to Departmental requests for information in good time; BW had lacked transparency about the reasons for postponing its target date to remove arrears; and BW had lacked transparency about its financial projections. We briefly cover each of these below, including BW's response.

FAILURE TO RESPOND QUICKLY TO DEPARTMENT'S REQUESTS

113. The Minister told us that he had been asking BW for "many months" for specific financial information and projections relating to BW's plans to achieve 'steady state' status; information he received only three days before the evidence session.[201] Although the Minister acknowledged that BW had previously provided information in response to the Department's requests, this had "never been adequate".[202] Consequently, the Minister had to "apply greater and greater stridency" in his approach to obtain the information.[203] He made similar comments in the Westminster Hall debate of 25 April:

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114. BW, however, provided a different version of the events. It said:

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BW added that the only previous request for this information from a senior civil servant was on 6 March 2007, and this had been provided to the Department just over a month later.[206]

115. The Minister told us that he would provide "a full trail of correspondence available", including "notes, where they exist, of telephone conversations".[207] We subsequently received a number of pieces of correspondence between BW and Defra from late 2006 and early 2007, including some extracts of minutes at meetings.[208] However, we were not provided with any notes of official telephone conversations. The correspondence we received reinforces BW's story that the information requested was provided: it does not provide evidence to support the claim that the Minister had been waiting for information for "many months".

INFORMATION RELATING TO BW'S 2012 ARREARS TARGET DATE

116. The Minister said that the correspondence from BW provided new information relating to BW's decision to postpone its target to remove its arrears from 2012 to 2016. He said that BW's letter acknowledged, for the "first time" publicly, that there were many factors that led to the target date being missed, whereas previously BW had been emphasising funding factors for this decision. The Minister said that the letter showed the main reason for the postponement of the target was, in fact, a "mistake in their modelling", because BW had failed to include thousands of non-principal assets in its original plan of the network.[209]

117. When asked about the Minister's comments, BW's Chief Executive told us he was "very disappointed" to read the Minister's "clear lack of understanding of what we had done, and what we are doing".[210] BW told us:

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118. Correspondence we received between BW and Defra supports BW's claims that information relating to the postponement of the 2012 arrears target date, and the reasons for postponing the date, were provided to the Department on several occasions from June 2006 onwards.[212] When we asked BW why the Minister had therefore been confused about issues surrounding the 2012 arrears target, BW's Chief Executive said he did not know, but suggested that the Minister was "probably struggling to find someone to interpret the wealth of information that we had given within the department".[213] We were told that many of BW's usual civil servant contacts in the Department—who had a "very good grasp of what we were doing, where we were spending our money, how our money was allocated and where our priorities were"—had recently been transferred elsewhere, and "that knowledge probably may have gone with them".[214] BW recognised, however, that the concepts and business terms used in its correspondence were "complex" and that it must "clearly renew our efforts to explain them to the Department".[215]

FINANCIAL PROJECTIONS

119. The Minister said that new financial figures he had received from BW showed BW would receive £30.1 million more income by 2012 than it had forecast in 2002, even with a RPI -5% settlement for the Comprehensive Spending Review 2007 period.[216] In response, BW said that the Minister's interpretation was not helpful because much of this additional income had been earned in the past, and already spent in that period. We covered this issue in more detail in our chapter on 'Funding levels in the Comprehensive Spending Review 2007 period' (see paras. 33-43).

Minister's letter to BW Chairman, 10 June 2006

120. In the aftermath of the Minister's comments, both the Minister and BW stressed that efforts were being made to improve the relationship. The Minister told us that, since the evidence session, he had met with the Chair of BW on two occasions, and both organisations were "jointly committed to improving the flow of information between BW and my department".[217]

121. By June 2007, however, it was clear that the relationship between the Department and BW was still poor. Following newspaper reports that Government was considering the privatisation of BW, the Minister sent a letter to the Chair of BW, which he then provided to us.[218] In the letter, the Minister criticised BW for including privatisation—despite specific instructions not to—in the strategic options review brief that it had sent out to business consultants, which was subsequently leaked to the media (see paras. 66-69). The Minister opened the letter by saying:

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It also stated:

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Our views

122. We were extremely surprised when, giving evidence to us, the Minister criticised British Waterways (BW) on several points, including a lack of transparency and not providing requested information for "many months". The correspondence we received between the Department and BW supports BW's claims that it did inform the Department about changes to its business plans and its 2012 arrears target as early as July 2006. We have some sympathy with the Minister, however, that BW could have explained these issues more clearly, particularly the reasons for postponing its 2012 target date. Communication between Defra and BW must be improved. BW relies on Government for much of its funding, and therefore has a responsibility to ensure important business decisions and complex terms, concepts and models are explained clearly to its sponsor Department. The Department must also ensure those officials who deal with BW on a regular basis have a thorough understanding of these concepts, so they can brief ministers accordingly.

123. The tone and language used in the Minister's letter to BW on 10 June 2007 reaffirm recent problems in this relationship, despite prior announcements from both sides that things were improving. We acknowledge this is already an exceptionally tense period in the context of the recent grant reductions, ongoing negotiations about grant levels in the CSR 07 period and high-profile lobbying by the waterways movement. However, the Minister's outbursts are not indicative of a healthy and open relationship between sponsor department and dependent body. A new minister is now in charge of BW; we believe this is the perfect opportunity for a fresh start in the relationship between the Department and BW. They must now both work to improve relations in the final negotiating period of the CSR process and beyond.

200 Ev 319, para 5 Back

201 Q 429, Q 432, Q 433. Back

202 Q 455 Back

203 Q 455; Q 452 Back

204 HC Deb, col 293WH Back

205 Ev 243, Overview Back