Memorandum submitted by Louis Jankel (BW
03)
1. "The Committee will examine how
British Waterways is working towards its ambition of creating
`an expanded, vibrant, largely self-sufficient waterway network',
in the context of the policies set out by the Government in Waterways
for Tomorrow (published in 2000), the most recent policy review
of British Waterways (carried out in 2004-05), and recent changes
in Defra's budget."
1.1 The key word is "self-sufficient".
There is no realistic chance that British Waterways (BW) will
be self-sufficient in the future unless there is a fundamental
reappraisal of the fiscal constraints their status attracts. British
Waterways wish to achieve a future without Grant in Aid (GiA)
but currently need the best part of £60 million to "tread
water" and there is still £119 million backlog of capital
remedial work some of which has "Health and Safety"
implications. It is not rocket science to see that this dichotomy
is almost irreconcilable—in fact it will need rocket science
to achieve such an aspiration unless the freedom to raise capital
secured against assets is extended to corporate British Waterways.
The current funding system with these in year cuts, now incorporated
into 2007-08, shows just how almost impossible it is for British
Waterways to effect any serious planning for the future under
the current funding structure or even under the current government
department structure.
1.2 If British Waterways can offer sufficient
undertakings that their capital works on the canal system will
be given the priority that is concomitant with that of being the
canal navigation authority, then release from government imposed
fiscal regulatory limits should be encouraged as a matter of urgency.
This must not include any thought about removing British Waterways
from public ownership.
1.3 Is Defra the right department of government
to be the funding agency for the canals? Panic is a fair description
of Defra's implemented solution to their self-inflicted catastrophe,
which "infected" British Waterways and the other agencies
on whom in year cuts have been imposed. This is the reality even
though Defra seem to have tried to convince their ministers that
the cuts have nothing to do with farming subsidy. In the world
of commerce such corporate guardianship as manifested by Defra
would attract serious disparagement and inevitable sanctions.
Defra's antics are no way to run any business.
1.4 By definition, British Waterways must
have a close working relationship with Defra, The spirit of Waterways
for Tomorrow has now been totally undermined by the continuing
of the 2006-07 in year cuts into the 2007-08 funding allocations.
The most recent press statement from Tony Hales, welcoming the
2007-08 £55.5 million (compared to the 2006-07 £62.5
million) has much to liken it to Caesar's salutation to his friend
Brutus while the "Defra friend" plunges the dagger into
BW's chest. Clearly, that which is blindingly obvious to us all,
is that these cuts are seriously injurious but are to be whitewashed
over in the interest of public unity. British Waterways have made
a statement that leaves them looking more than slightly ridiculous.
I look forward to the Select Committee cutting through the obviously
prepared positions to establish the actuality.
2. CURRENT USERS
OF THE
WATERWAY NETWORK
AND THEIR
RELATIONSHIPS WITH
BRITISH WATERWAYS
2.1 It would help the Select Committee if
they added the descriptive noun "customers" to "users".
Some of us, including myself, pay upwards of £5,000 pa to
British Waterways and other customers pay out even more. The current
customers are predominantly the 30,000 boat license holders. Everyone
else including the commercial enterprises, from pubs to boat fabricators,
rely exclusively for their prosperity on a vibrant leisure boating
public. Many British Waterways developments acquire added value
from having the association of canal/waterway infrastructure.
Even the fishermen; ramblers and cyclists who enjoy and take for
granted the wonderful country pathways, need the boater customers'
near £20 million fees to help pay for the maintenance of
their towpaths. It is certain that British Waterways have a very
ambivalent relationship with their customers and negligible relationships
with their users—perhaps just the fishermen.
2.2. Occasionally British Waterways manage
to anticipate their users' needs but more often than not, they
manage to generate serious conflict with their customers. Many
unaffiliated boaters, who happen to be the majority of the British
Waterways customers, consider that their views are never reflected
within consultations between British Waterways and their consultation
vehicle, the National Navigation User's Forum (NNUF). Because
of the need for NNUF spokesmen to refer back to their committees,
this forum is an unwieldy decision maker. How much weight will
the Select Committee give to the evidence from the NNUF members
during this consultation?
2.3 The Select Committee could consider
recommending the introduction a similar system that has proved
very successful with the Environment Agency. The FERAC consultation
committees in particular offer a public debate on proposed policy
and ensure wide discussion before adoption. A broad range
of users views can be heard and considered. All users, many of
whom have no input to any policy, could be enfranchised and seen
to be enfranchised.
2.4 Many customers feel they are a "milk
cow" for British Waterways to exploit by their apparent monopoly
on the canals.
2.5 Never has new boat fabrication been
at a higher level. These boats need mooring facilities and there
is no real initiative by British Waterways to address this problem.
By refusing to even approach satisfying the supply needs, mooring
charges are racing ahead of inflation. Residential boating facilities
are so scarce that waiting lists can be as much as 10 years—in
the major cities, even more. There is no doubt that a more holistic
approach to the entire boating communities' mooring needs could
go some way to satisfying the pressures that are building within
the boating population and at the same time increase mooring income
by spreading it more effectively. Such policies would encourage
more competitive rates that all boaters could then afford.
3. THE FINANCIAL
FRAMEWORK OF
BRITISH WATERWAYS
AND THE
IMPACT OF
CHANGES IN
DEFRA'S
BUDGET
3.1 Many consider British Waterways' financing
is on a knife's edge. The infrastructure they are required to
care for is on average some 200 years old. The canals have never
managed to attract adequate funding to restore them to a condition
that would guarantee a safe future. The imposed "in year"
cuts tell the tale. A document, just released by British Waterways,
elucidates the number of planned maintenance jobs that have been
re-scheduled for this winter or even cancelled. The phrase "patched
up" is used in most instances where the work cannot be postponed
but cannot now be fully funded. An engineer will relate that such
"patching up"' will prevent immediate failure but that
expended money in the "patch up" will be ultimately
entirely wasted, as the original fundamental remedial work still
needs to be carried out at a now later date and at the original
planned cost. These imposed cuts are in reality very expensive
short termism that has plagued the waterways for decades.
3.2 The tragedy that is the forced shedding
of 180 jobs is a loss of irreplaceable experience from British
Waterways' skills pool and just exacerbates the trend of the past
decades.
3.3 Addressing the capital needs; consider
the practises of other navigation authorities. The Environment
Agency navigation department is currently establishing an asset
register. This register is to specify each and every asset:
— the cost to bring the asset into
good order;
— the expected maintenance cost to
ensure continued good order;
— the expected life of the asset; and
finally
— the cost, at current values, of the
replacement of the asset.
This exercise is no more than any Plc would
see as its fiduciary responsibility to its shareholders. The Environment
Agency will have established a definitive Grant in Aid programme.
Some policy makers think the monies received from boat registrations
should cover for the Environment Agency navigation revenue budgets
and preserve Grant in Aid for its original purpose.
3.4 Such a policy by British Waterways could
once more direct Grant in Aid back to its original function of
infrastructure maintenance. This level of information will allow
a 25-year investment plan to be established so that government
can immediately see and be seen to inflict damage by any future
funding reduction from the established plan. It might be a useful
exercise for government to establish if, once it has seen the
reality, it has the stomach to fund a continuance of the nation's
waterways. British Waterways has a £119 million capital backlog
programme and the cuts covering 2006-07 and 2007-08 will see this
figure rise—not fall. Has anyone in Defra any idea as to
the cost of annual maintenance work needed to ensure the £119
million capital backlog list does not grow? I doubt it.
4. RECENT DEVELOPMENTS
IN THE
STEWARDSHIP WORK
AND COMMERCIAL
ACTIVITIES OF
BRITISH WATERWAYS,
INCLUDING ITS
PROPERTY PORTFOLIO
4.1 The management of the waterways requires
and should demand a policy that bears a relevance to its business.
British Waterways is guardian of a 200 plus year heritage; accordingly
it should have a plan that considers the needs to perpetuate this
national asset for posterity.
4.2 Defra seem content to accept panic funding
cuts and no forward planning past three years and that being subject
to half-yearly reviews. Their supposed request for a long term
funding plan from British Waterways has as much to do with treasury
forward spending budget requirements as much else.
4.3 The current Defra funding policies have
not proved efficacious. They have now proved to be damaging and
manifestly impractical.
4.4 The future of our canals should reside
exclusively with British Waterways and to that end, with safeguards
in place, British Waterways should be given complete fiscal freedom
to manage their own destiny. The company should be given a guaranteed
subsidy for a fixed number of years to wean them off Grant in
Aid. Management by targets!
4.5 The continued development of British
Waterways' £538 million property portfolio is undoubtedly
a fundamental role, as this activity must play a key role in the
future funding of the waterways. Perhaps it is time to open up
the potential of this portfolio and see the proposed developments
along with past developments to establish that a reasonable Return
on Capital has been and is attained for each asset and that value
for money is being achieved. The National Audit Office are obviously
perfect for such a task. The potential income and the future contribution
such income will deliver to the waterways upkeep, could be established
and introduce, as targets, into future long term funding plans
of the waterways.
4.6 Once this exercise has been completed,
the inevitable logic of changing the British Waterways financial
constraints becomes irresistible.
4.7 Stewardship of the waterways and bringing
their heritage into the 21st century is the British Waterways'
paramount duty but one has a sneaking feeling that it will be
the first casualty of continuing funding cuts. Management actions
and capital investment underline that British Waterways have an
unwritten lore that nothing should impede their property development
plans. Canal infrastructure "patch up" will continue
to live long and prosper! British Waterways has never been deluded
into considering itself as a charity and will view stewardship
in this context.
4.8 British Waterways, once released into
a free capital market, must have safeguards introduced to be a
reminder that their core activity is managing the waterways. Only
last year even Defra had to remind them of this!
5. POTENTIAL
FOR GROWTH
IN LEISURE
AND FREIGHT
USE OF
THE WATERWAYS
NETWORK
5.1 The potential for growth in the wider
leisure industry is enormous. More and more UK families are taking
two or more annual holidays. The waterways have a real chance
to increase their share of this holiday market. Hirings continue
to grow. As mentioned new boat builds have never been more numerous.
Carbon footprints will be a good promotion point!
5.2 Hopefully the Olympics will offer a
real opportunity for the local rivers and canals to be utilised
in servicing the developers' needs and significantly reduce the
"lorry" events/activities. Hopefully the Olympic legacy
funding can develop this further.
5.3 The boating holiday hire industry, with
sympathetic understanding from British Waterways, will continue
to expand and continue to attract future boat owners. Promoting
this side of the waterways' commercial activities is an investment
that cannot be ignored. Every other aspect of canal life will
grow and prosper with the resulting commercial expansion.
5.4 With Defra showing little interest in
supporting waterways investment, there must be little corporate
incentive to develop and invest in the leisure industry, commercial
enterprises or into any other area of the waterways. The future
of the waterways is clearly in a fragile state and future health
and wealth creation is plagued by the vagaries of funding, so
precisely demonstrated by these current Defra imposed cuts!
5.5 Defra's current policies towards the
waterways are inflicting damage and potentially irreparable damage.
British Waterways have just announced their intention of closing
their special department dedicated to expanding commercial freight
and delegating the task to various regional offices. One must
presume the two members of head office staff dedicated to commercial
traffic expansion will be made redundant! If these job losses
are not budget cut driven then British Waterways are giving up
on active development of commercial traffic.
6. RELATIONSHIPS
BETWEEN BRITISH
WATERWAYS AND
CENTRAL GOVERNMENT
DEPARTMENTS, REGIONAL
DEVELOPMENT AGENCIES
AND LOCAL
AUTHORITIES
6.1 Over the past couple of years, it is
very clear that significant pressure has been exerted by Defra
onto both British Waterways and the Environment Agency to put
up and shut up. It is to the credit of both chief executives that
they have managed to inform the public and users quite so precisely
of the problems these cuts have caused.
6.2 However it is clear that a climate of
fear exists within general ranks of British Waterways as well
as the Environment Agency in case their "relationship"
with Defra is tested. Those who have watched the reporting of
the outcome of negotiations with Defra over the past couple of
years are more than aware that there is now the heavy hand of
retribution already raised. The statement on the new funding allocation
for 2007-08, issued by the British Waterway's chairman, is incredible
and so patently denies reality that it could not be an involuntary
comment and its sentiment is certainly not shared in private by
a large number of BW senior executives.
6.3 None of the Defra civil servants directly
involved with financing waterways now have any personal knowledge
or experience of boating or indeed the waterways. They should
begin to consider that they would be better servants to this country,
not to mention better guardians of tax payers money, if they began
to listen to the people charged with the waterway upkeep and also
if they came out off their exalted and rather arrogant isolation
to engage with the boater customers, the industry's de facto
"secondary funding group".
6.4 To my knowledge not one member of the
decision making group within Defra own or operate a boat, nor
use the waterways in any way save as fishermen or ramblers. That
lack of subject knowledge by the responsible government department
is certainly not the case in almost every other branch of government
where knowledge of the arena in question is retained.
6.5 I offer an extract from an e-mail received
from a senior navigation authority employee to a sensible commercial
suggestion and you will see why it must be anonymous. "It
would be political suicide to do such a thing. We are expected
to be `aligned' with Defra, however hard that may be for myself
and some of my colleagues!"
7. IN CONCLUSION
I ask the Select committee to consider:
(a) If British Waterway's aspiration of "Self-sufficiency"
is anything more that a political sound bite.
(b) "Customers" as effectively
the "secondary funding group" and a specific entity
within users.
(c) The representation of boaters within
British Waterways' policy generation and introduce consultative
statutory committees along the lines of the Environment Agency
FERACs.
(d) If it makes commercial sense to require
Defra to commission, from British Waterways, a comprehensive "Asset
register" to establish a precise investment requirement to
maintain the waterways in good order.
(e) If the taxpayer would benefit by the
National Audit Office viewing British Waterways' property portfolio
and establish if value for money is achieved and establish targets
it would be reasonable to expect from the development of the portfolio
to supplement British Waterways' income.
(f) If the relationship between Defra and
its funded Agencies is a healthy one or if it is one of an autocratic
and ill-informed bully to minions.
(g) If the current corporate financial restrictions
placed on British Waterways have relevance any longer and if everyone's
aspirations for British Waterways would be better served by freeing
them up.
(h) The fiscal plight of British Waterways'
boater customers, the majority of whom are pensioners on fixed
incomes. During 2006 they faced:
— boat licenses to rise by 137% over four
years;
— moorings charges increased by as much
as 25%;
— electricity prices doubled on 1 November;
— service price increases: eg pumpout prices
rising from £4 three years ago to £12.10 today; and
— fuel costs about to double with the loss
of derogation.
With inflation (CPI) at 2.9% is it any wonder
boaters feel aggrieved?
I thank the committee members for their time
in reading my submission.
Louis Jankel
January 2007
| 
