| 1. | The waterways network is a public asset, and Government has a responsibility to keep the network in good order. We therefore commend the commitment of Government, British Waterways and individuals over the past decade in improving the waterways network, and their success in doing so. Vibrant and flourishing canals and rivers provide significant economic, environmental and social benefits. Government should carry out a study to determine the full social benefit of the waterways network as a basis upon which to make future funding and strategic decisions. (Paragraph 18)
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| 2. | We acknowledge the difficulties British Waterways (BW) has faced in the last two years in having to cope with lower-than-expected grant levels. The 2006-07 in-year budget cut was particularly disruptive because BW had already committed resource to a series of projects. We have previously criticised the Department in our Report on Defra's Departmental Report 2006 and Defra's budget for not providing sufficient certainty to its delivery bodies about grant reductions. The Department should have recognised the particular disruption an in-year budgetary cut would have caused to BW, and should have looked at other ways to bring its budget into balance. We commend BW for adapting to these financial pressures at short notice. (Paragraph 23)
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| 3. | we are extremely concerned at BW's forecasts of the impact of a RPI -5% settlement on the maintenance of its waterways network. (Paragraph 40)
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| 4. | We would welcome the National Audit Office's (NAO) view on the correct interpretation of the conflicting accounts given by the Department and BW about BW's finances between 2002 and 2012, taking into account whether BW's forecast income streams from a variety of sources—property, Government grant or elsewhere—are sufficient to maintain the network during the coming years. We recognise that the NAO has no audit access rights to BW and thus the NAO's work would need to be on the basis of a review of papers held by the Department and of seeking the views of British Waterways, as appropriate. (Paragraph 42)
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| 5. | The most important outcome from the CSR 07 negotiations must be to secure the future stability of the waterways network; something that the Government and BW both desire. We trust that BW and Defra will put their recent disagreements aside and work together closely to agree a CSR 07 outcome that ensures this stability. We expect Defra to consider carefully BW's claim that additional capital funding will be necessary for each year of the CSR 07 period if its grant settlement continues to reduce in real terms. (Paragraph 43)
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| 6. | We recommend the Department for Culture, Media and Sport look favourably on introducing methods by which the Waterways Trust could adopt a free-entry policy to the National Waterways Museum—common with some other national museums—and thus increase visitor numbers to provide greater security for the care of the national assets which are its responsibility. (Paragraph 45)
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| 7. | We agree with BW senior management that it is healthy for the organisation to aim to lessen its dependency on Government in the long-term. If BW is to keep its ambition to become "largely self-sufficient", both Government and BW need to provide much more detail about what exactly this means in practice. They must also produce a detailed plan about how it can be achieved. Government should make it clear that it recognises the waterways network as a public asset and that it has a national responsibility to ensure the network is kept in good order. It must also recognise that income from property development is finite and may not always be available to compensate for further reductions in Government support. (Paragraph 51)
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| 8. | We recommend that Government fully support, and provide assistance to, BW to ensure that it achieves its ambitions to operate on waterways other than those it owns or manages. Government should also grant BW an increased borrowing capability. We also confirm that there is a strong case for providing BW with income gained from planning obligations under Section 106 of the Town and Country Planning Act—or from planning gain supplement, if introduced by Government—in respect of the increase in property prices realisable from waterside developments. (Paragraph 62)
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| 9. | We fully support BW's desire for a longer-term funding contract with Government to provide greater stability to the waterways network, and remind Government that this was recommended in the Policy Review of 2004-05. Government should ensure such a contract is agreed sooner rather than later. (Paragraph 63)
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| 10. | We conclude that there is a strong case for other Government departments—such as Culture, Media and Sport, Transport and Communities and Local Government—to make a direct contribution to BW's funding, to reflect the contribution BW makes to the agendas of those departments. We recommend that Government prepare proposals to ensure this is achieved, as part of the next CSR review. (Paragraph 65)
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| 11. | We welcome BW's confirmation that privatisation is not a serious option for BW's future structure, and we strongly share this view. The waterways network is a public asset providing wide benefits to society and thus some Government funding will always be necessary. In its response to this Report, Government should rule out privatisation as an option for the waterways network, and make clear its reasons for so doing. However, as part of the Government response, BW should state why privatisation was included in its strategic options brief in the first place. It should also present to this Committee the financial analysis which confirmed privatisation as an option. (Paragraph 69)
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| 12. | We recommend that BW develop an environmental heritage strategy for the waterways, in tandem with the Waterways Trust. This should involve all interested parties, and could be orchestrated through the British Waterways Advisory Forum. (Paragraph 74)
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| 13. | We are disappointed that British Waterways (BW) did not inform us in evidence about the introduction of its trial tendering system for mooring allocation, and note the concerns of the boating community that the new system may further increase the cost of boating. We are concerned that the permanent introduction of such a system could make boating too exclusive. (Paragraph 78)
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| 14. | We are concerned that inadequate maintenance of the waterways network could adversely affect the business of holiday hire-boat companies, cruise companies and others who depend on the network for a living. BW must ensure that the views of those companies are heard when it is prioritising its maintenance work responsibilities, particularly in the context of the current financial pressures and a possible shortfall in spending on 'major works' on the network during the CSR 07 years. (Paragraph 81)
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| 15. | We also note boaters' concerns that significant increases in licences and mooring fees could have an adverse impact on growth in leisure boating on the network. The boating community is already facing increasing costs because of the recent removal of the EU derogation covering the use of red diesel fuel for leisure boats, despite the Government's opposition to such a move. We recommend licence and mooring fees should be kept at a level that maintains a high level of individual participation on the network. (Paragraph 82)
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| 16. | In its response, BW should state its expectation of how many of the 10,000 new marina berths required by 2015 will be occupied by boat-residents. (Paragraph 83)
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| 17. | If the Government is serious about transferring more freight onto the waterways, companies themselves require further financial incentives to make this move, in addition to the existing Freight Facilities Grant. We recommend that the Government conduct a review to examine the possibility of introducing a carbon credit scheme to encourage more businesses to move onto the waterways. (Paragraph 92)
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| 18. | Given the potential carbon savings to be derived from an increase in freight transportation on the waterways, we recommend that Defra form a joint industry/Government body fully to evaluate the opportunities that exist for freight and make recommendations as to where the responsibility for promoting the uptake of these opportunities should rest. (Paragraph 93)
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| 19. | Whilst we acknowledge that recent moves—such as the creation of the BW Advisory Forum—are in the right direction, BW needs to do more to develop an effective direct relationship with the users of its network, particularly those who are significant 'customers' such as boat residents, operators and licence holders. (Paragraph 97)
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| 20. | BW has room for improvement in the way it works with others on projects. Given the complicated nature of partnership arrangements, it is vital that BW devote resources to developing mutual trust with other organisations in the public, private and voluntary sectors. It should also ensure that it employs good management at all levels who can demonstrate effective communication and listening skills. We support a closer formal relationship between BW and the Local Government Association (LGA) so that examples of best practice can be collated and promoted to those areas where the relationship between BW and local authorities can be improved. (Paragraph 101)
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| 21. | Issues related to the waterways are of key importance to local authorities in many parts of England and Wales. We were therefore disappointed by the initial lack of evidence from local authorities to our inquiry, and the fact that we had to prompt the LGA for a submission. (Paragraph 102)
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| 22. | Government itself often benefits from expansion of the network because of regeneration effects and the income generated through property development. Given these benefits, Government should make clear in its response its current position on the expansion of the network, and how it aims to address the real possibility that many projects will not get off the ground because of the funding pressures on BW. (Paragraph 105)
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| 23. | In its response, BW should set out its current strategy for flood risk management and for responding to flood emergencies, and say how it expects this role to develop in the future. We call upon Government to ensure that its independent review of the 2007 floods fully takes into account the role of BW and its waterways network in the future strategy for flood risk management and emergency flood response. (Paragraph 109)
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| 24. | 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. (Paragraph 122)
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| 25. | 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. (Paragraph 123)
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