Memorandum submitted by Shire Cruisers
(BW 15)
1. EXECUTIVE
SUMMARY
1.1 We welcome:
1.1.1 Many aspects of the recent reorganisations.
1.1.2 Reduction of administrative costs.
1.1.3 The appointment of Customer Operations
Managers, responsible for reducing breakdowns.
1.1.4 BW's partnership approach to the
successful development of Sowerby Bridge Wharf, as a model for
other sites.
1.1.5 BW's new Marina Policy.
1.2 We note that:
1.2.1 The Framework Directive's requirement
to maintain according to "use and prospects of use"
provides little security for users.
1.2.2 Reliability of the track has been
getting worse, which will accelerate following this winter's stoppage
cuts.
1.3 We recommend:
1.3.1. Improved leadership and decision-making
by middle management.
1.3.2. An intensified drive for operational
efficiency.
1.3.3 Publication of synopses of Business
Plans.
1.3.4 Consultation on targets for management
bonuses.
1.3.5 Bonuses for achieving service
levels for the track.
1.3.6 More detailed maintenance standards
in a new Framework Document.
1.3.7 A contract with government for
the provision of services to the non-paying public, including
land drainage.
1.3.8 The development of S106 Agreements
to fund improvement and maintenance.
1.3.9 More public-private partnerships
to get best value from the estate, with safeguards for navigation
and conservation.
1.3.10 Greater reliability of the track,
to reduce customer disappointment.
1.3.11 Support for the partnership between
BW and local authorities to secure further investment in the Rochdale
and Huddersfield Narrow Canals.
2. INTRODUCTION
2.1 We seem to have gone back 40 years.
The Facts About The Waterways, published in 1965, set out how
the government viewed options for disposing of the waterways.
Each waterway was examined to see whether it should be "eliminated",
turned into a water channel, or retained. We all know what happened:
it was realised that closure was vastly more expensive than keeping
the waterways open, and only three years later, the 1968 Transport
Act established the statutory framework for the waterways renaissance
which has been so profoundly helpful to many aspects of the nation's
life.
2.2 Yet now we are back in a situation where
British Waterways is openly discussing whether some waterways
may "have" to be closed to save the rest of the system.
This would be laughable, were it not causing so much damage. All
the excellent work by government, British Waterways and their
many partners is being undone by the sudden cuts in Defra grant,
and the reaction to them.
2.3 I hope your Committee will be able to
get the debate between government, British Waterways and the public
back onto a sensible path towards a properly sustainable future
for a useful waterways system which fully exploits its assets
but is not developed out of existence.
3. WHO WE
ARE
3.1 Shire Cruisers operates a fleet of 16
self drive holiday hire boats from Sowerby Bridge. Our customers
travel all three trans-Pennine canals, and use the river navigations
of Yorkshire. We provide about 10,000 visitor nights of accommodation
per year, and our customers use extensively the pubs and shops
along the way. We also operate about 50 private moorings, and
run a full service boatyard.
3.2 Our operational area includes the recently-reopened
Rochdale and Huddersfield Narrow Canals, on which we are the largest
commercial operator.
3.3 I have been active in the waterways
for nearly 40 years, am a past chairman of the Association of
Pleasure Craft Operators, and a current member of British Waterways
Advisory Forum.
4. CURRENT USERS
OF THE
WATERWAY NETWORK
AND THEIR
RELATIONSHIPS WITH
BRITISH WATERWAYS
4.1 BW is going through an extended period
of change. Although the positive results outweigh the negative,
there is a continuing adverse impact on morale. Also, the ongoing
change leaves staff unsure of what their job is supposed to be—I
know of one person unable to obtain a job description.
4.2 This has resulted in very poor communication
with the trade and other users about operational matters. I am
very pleased, therefore, that the customer service staff are now
to be embedded in the new Customer Operations departments. I also
welcome the new responsibility of the Customer Operations Managers
to keep the canal open. We look forward to better communication,
and actions more responsive to customer needs, in 2007.
4.3 Senior management is very clear about
its objectives. These become obscured as they pass down the chain,
and there is too often poor leadership by middle management. Decision
making is still a difficult and protracted process, which reinforces
the lack of clarity about aims. There is a need for significant
change in these areas.
4.4 The current emphasis on reduction of
costs in the back office is very welcome. This does not of itself
get more spent on the track, but it at least reduces the overhead.
4.5 The direct labour force spends a great
deal of time travelling, rather than working on site. This inefficiency
needs radical reform.
4.6 The most important thing BW can do for
the trade is reliably to maintain the track. The state of maintenance
is a function of:
4.6.1 Resources: clearly the reduction
in income from Defra will reduce the money spent on maintenance.
4.6.2 Efficiency: BW is quite good at
spending less by axing projects or cutting overtime, but actually
working smarter is something that comes more readily to some managers
than others. There needs to be a change of culture driven really
hard from the top.
4.6.3 Business Plan: this is not published,
so how are customers to know if BW plan to respond to demand?
"Our Plan for the Future" has not been published for
this year, understandably. I should prefer to see something much
closer to the real business plans.
4.6.4 Targets: managers are given targets,
but the public is not told what they are, still less consulted
on what they ought to be. Targets mean bonuses: we know that 87
employees earned £50,000 or more in 2005-06, but we don't
know how much of this was bonus, nor whether targets were hit,
or missed. Customers should be consulted, and targets should include
service levels, such as reductions in number and length of emergency
stoppages.
4.6.5 Standards: there are several different
ways of describing the standards to which individual waterways
should be maintained. None gives any real security to users.
4.6.5.1 Statutory: the 1968 Act
requires commercial and cruising waterway to be maintained in
a "suitable" condition for use by craft which habitually
used each waterway in 1967. The so-called statutory arrears—which
does not mean that statute permits them, but measures the extent
to which BW fall short of the statute—were put at £119
million in 2006. Restored remainder waterways do not have to be
maintained in navigable condition unless they are upgraded to
cruising status.
4.6.5.2 Framework Document: the
current (1999) Framework Document, issued under the 1962 Act,
requires BW to maintain all waterways according to "use and
prospects of use".If this Directive means anything, then
it overrides the 1968 Act, and therefore allows upgrading or downgrading
from the 1967 standard without anything being said, and indeed
removes the "statutory" from the "statutory arrears".
4.6.5.3 Waterway Standards: these
internal documents purport to show actual condition of every length,
together with a target for improvement. They are very seldom referred
to in day-to-day conversation by BW.
4.6.5.4 New standards: the Chief
Executive has said that he would like to see a new set of standards
which were more readily understandable to customers.
4.6.6. None of these standards says
anything you can pin down about reliability, water supply or ease
of use.
4.6.7 What is needed, therefore, is
a new Framework Document which gives statutory force to new, relevant
and measurable standards.
5. THE FINANCIAL
FRAMEWORK OF
BRITISH WATERWAYS
AND THE
IMPACT OF
CHANGES IN
DEFRA'S
BUDGET
5.1 Ultimately, the reduction in dependence
on grant-in-aid from Defra has to be a good thing. The very concept
of grant-in-aid relates to the making good of a financial loss,
which may have been appropriate when BW was a nationalised industry
seen as deserving of subsidy, but is quite wrong today. But there
need to be other secure funding mechanisms to provide a sustainable
future for the waterways.
5.2 There should continue to be government
payments to BW. BW provides a public service, for the recreation,
in a semi-literal sense, of millions of people. The 280 million
visits to the waterways each year by non-payers are made by people
who benefit from the restorative properties of a few hours or
even minutes by the waterside: society benefits from this injection
of sanity, and the visitors are of course themselves taxpayers.
There is no means of charging individuals for casual visits.
5.3 Therefore, the work which was planned
(see the 2004-05 Defra review) to establish a contractual basis
for BW to charge the government a fee for services supporting
casual visits, and land drainage, should be completed.
5.4 If a contract were entered into, it
might be possible for BW to improve its medium term financial
planning, with contract periods longer than three years. Such
a contract would not be attractive to BW unless its value was
similar to the current grant.
5.5 Local authorities also make valuable
payments to BW. These could be assessed in a similar way, and
it would be valuable for government to establish guidelines.
5.6 BW is exploring with Defra the possible
use of S106 agreements to pass some of the gain from future waterside
developments to BW. This could be a valuable source of funding,
and would answer BW's claim that developers free-ride on BW's
regeneration work—as do local authorities or government,
by means of the uplift in rateable value. However, local authorities
would need compelling reasons to give up part of their income
from S106 agreements, traditionally used for projects driven by
the local authorities themselves.
5.7 Even after years of PFI, it is not unusual
for public bodies to own their operational property rather than
leasing it. But BW is unique in having a vast portfolio of investment
property, on top of its necessary operational holdings.
5.8 For many years, governments have considered
whether this property might be sold off, or whether British Waterways
itself might be privatised. The 2004-05 review concluded that
BW should retain its property, and seek the best return from it.
5.9 This pressure has been increased in
the most pointed of ways by the recent reductions in grant-in-aid.
BW, having agreed with government the objective of becoming "largely
self-sufficient", is in the position of St Augustine.
5.10 So the issue of privatisation arises
once more. Substantial parts of the non-operational estate might
be included in PPPs similar to ISIS; assets might be securitised;
or parts of the estate might be sold outright.
5.11 The involvement of the private sector
is to be welcomed, since that would sharpen the focus on return
on investment. Furthermore, this question—why does BW own
all this property, and can the Treasury turn into cash—is
going to go on being asked until it is permanently answered. Until
then, it will be impossible to lay down a sustainable future for
the waterways.
5.12 It would, however, be necessary to
ensure that the proceeds were spent on the waterways, rather than
being taken by the Treasury.
5.13 I suggest that two things should be
secured:
5.13.1 A cash sum which would be realised
and spent over, say, five years, to eliminate the backlog of maintenance
(for my definition of that, see below/above).
5.13.2 A stream of income which would
be spent on continuing normal operations.
6. RECENT DEVELOPMENTS
IN THE
STEWARDSHIP WORK
AND COMMERCIAL
ACTIVITIES OF
BRITISH WATERWAYS,
INCLUDING ITS
PROPERTY PORTFOLIO
6.1 Our firm was one of the partners in
the project to restore historic buildings at Sowerby Bridge Wharf.
The project was facilitated by the Prince's Regeneration Trust.
The major player was of course BW, the freeholder and largest
investor, but the Heritage Lottery Fund, Calderdale MBC, English
Heritage, Yorkshire Forward and the tenants all played crucial
parts. Work by tenants on the final building is about to start.
6.2 We believe that this project is a shining
example of BW combining its duties to secure financial return,
and to conserve important buildings. This is not because the result
looks pretty and is well used, but because the difficulties which
were overcome were so formidable. The basic scenario is one seen
many times across the system: historically important buildings,
with poor access, where use for boating conflicts with value extraction,
and in secondary or tertiary locations with low value. This project
highlights that there is a trade-off between navigation, conservation
and financial return. Financial return may be maximised only at
the expense of the other two.
6.3 The lessons learnt here must be built
into new public-private partnerships—otherwise the conservation
and waterway elements might well be lost.
7. POTENTIAL
FOR GROWTH
IN LEISURE
AND FREIGHT
USE OF
THE WATERWAYS
NETWORK
7.1 The potential for growth, as expressed
by demand for boats and boating, is good. There are two serious
constraints.
7.2 The shortage of mooring sites will be
dealt with by other respondents.
7.3 The new marina policy, and the open
way it has been arrived at and is being operated, are a great
achievement for BW and the trade. New marinas are being constructed,
though not fast enough.
7.4 The greatest constraint on the growth
of our business is the unreliability of the track. Things have
been getting worse for some time. This winter, it has got spectacularly
worse, with the cancellation of £5 million worth of maintenance.
These were jobs which were regarded as essential and urgent. Some
works have been postponed: others, such as bad leakage on Calverley
Wood Embankment on the L&L, will be given a temporary bodge
rather than the permanent repair that engineers previously judged
essential. Thus, for an immediate saving of perhaps £500,000,
the risk of catastrophic multi-million failure is to be put off
for a year or two rather than removed. What sense is that?
7.5 At the other end of the cost scale,
small emergency stoppages are on the increase. Each such case
delays our customers: often, they are unable to complete the route
they planned due to losing, say two days out of a week's holiday.
This can then affect the following party, because the boat is
unable to return to base.
7.6 In the same way, we experience delays
because of inadequate water supply. All three Pennine canals have
water shortages where they cross the watershed. The consequence
is delay and difficulty—sometimes, stranding—for our
customers.
7.7 These difficulties mean that we disappoint
our customers far more often than would be reasonable. Without
an improvement in service levels, it will become increasingly
hard to sell holidays.
7.8 The principal restraint on the growth
of our business is the restricted water supply near our base in
Sowerby Bridge. Without more water, we simply cannot get any more
boats away.
8. RELATIONSHIPS
BETWEEN BRITISH
WATERWAYS AND
CENTRAL GOVERNMENT
DEPARTMENTS, REGIONAL
DEVELOPMENT AGENCIES
AND LOCAL
AUTHORITIES
8.1 We operate extensively on the Rochdale
Canal, providing about 30% of its traffic. We have been engaged
with this waterway since we put a hire boat on its first six-mile
isolated length in 1985. We have worked closely with Calderdale
MBC and with British Waterways over this time.
8.2 Restoration of the Rochdale was initiated
by local partnerships led by the four riparian local authorities.
About half the canal had been reopened before BW became involved.
Until then, it remained in private ownership. The advent of BW
and The Waterways Trust made it possible to obtain Millennium
and other funding for the second half of the canal. Ownership
passed to TWT, and BW took full responsibility for the canal under
a 50 year agreement, in which the local authorities committed
to make contributions to maintenance, but all excess costs and
liabilities were assumed by BW. The canal is, for practical purposes
(according to Defra), part of BW's undertaking, and a remainder
waterway.
8.3 Since full reopening in 2002, there
have been many practical difficulties. There were a series of
structural failures, including a spectacular breach at the River
Irk, which BW bravely repaired at the cost of £4.5 million.
8.4 As has hitherto been common with reopened
canals, the Rochdale was opened but not completely restored. There
are numerous structures in poor—some, dangerous—condition,
and water supply is grossly inadequate. Preliminary estimates
put the cost of putting the canal into sustainable condition,
and providing an adequate water supply, at £11 million.
8.5 BW does not have this kind of money.
BW is not theoretically obliged to maintain the Rochdale in navigable
condition. However, the Framework Directive does oblige BW to
maintain it according to "use and prospects of use".
There is use, with the prospect of a great deal more if its condition
were not so notorious, because it is such an outstandingly attractive
waterway, providing a short and attractive wide-beam route between
Manchester and Leeds.
8.6 It is therefore very disappointing that
BW has been threatening to give up, and close the canal if anything
else goes wrong. This is hardly the way to encourage investment,
whether from public bodies, or by the property developers who
are expected to create the regeneration whose promotion was the
point of restoring the canal.
8.7 BW is now working to improve its relationship
with the local authorities, and to establish a case for funding
the additional work needed to fix the canal.
8.8 I hope your committee will lend its
weight to these actions.
8.9 We also work extensively on the Huddersfield
Narrow Canal. The situation here is very similar to the Rochdale,
although technically the HNC belongs to BW rather than to TWT.
There is a similar need for further investment, and a similar
prize of regeneration.
8.10 Again, I hope you will be able to give
encouragement to the project to secure the necessary investment.
Shire Cruisers
January 2007
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