Examination of Witnesses (Questions 80
- 99)
MONDAY 26 FEBRUARY 2007
MR BILL
SCHLEGEL
Q80 Chairman: Mr Schlegel has kindly
come along from the Institution of Civil Engineers, for which
we are eternally grateful because we did want some technical expertise.
As you were Technical Director of BW for five years and you were
employed there for 18 years, at least you have some guilt if things
are not as good as they should be and, although we are going to
pick your engineering expertise, there may be some things that
we will take up where things were not as good as they might have
been, and you cannot possibly escape completely. If I can start
with some questions on, to paraphrase Mr Jack's appraisal of the
legacy issues with regard to what BW's situation is in terms of
its need to deal with its problems over the state of the canal
network, he basically said they are what you could refer to as
good, bad and indifferent. What is your overall appraisal of the
situation the canal network is now in and, on the back of that,
has BW been a good guardian of that network?
Mr Schlegel: I think it is fair
to say the waterways are in better condition than they have been
for many, many years. The Millennium funding and, I will not say
generous but sufficient grant in aid over the last 10 years has
brought the waterways into better condition than they have been.
They have only recently completed the repair of safety-related
arrears of maintenance dating back for many years. I recall in
the IWA's presentation they talked about consulting engineers
looking at the state of the asset. That was actually done by eminent
consulting engineers not long after British Waterways was formed,
in the late Sixties, early Seventies, and that identified a very
significant backlog of maintenance and that was completed, I understand,
in about 2004.
Q81 Chairman: Can you put a figure
on what the backlog of maintenance is?
Mr Schlegel: There are statutory
arrears currently of £100 million.
Q82 Chairman: Is that a real figure?
Mr Schlegel: That is a real figure
and that, I believe, is the number that has been quoted in British
Waterways' statements. Their intention is to reduce that or to
wipe that out by 2012, and inevitably the reduction in funding
will slow that down. I have not heard from British Waterways in
terms of what they think that will do in terms of achieving that
target.
Q83 Mr Jack: What do you get for
this £100 million? Can you break it down for us? Give us
a flavour of what are the big areas of spending.
Mr Schlegel: There will be a number
of assets and British Waterways has many principal assets, ranging
from locks and bridges; I think they have over 900 public road
bridges, for example, some of which are opening, as we know in
the Gloucester and Sharpness Canal.
Q84 Chairman: I know very well, yes.
Do not remind me.
Mr Schlegel: They have many, many
arched bridges, which are somewhat more forgiving. They have some
very famous assets, like the Pontycysyllte Aqueduct in Wales and
the like, and all of these need considerable attention, but they
do deteriorate; they are more than 200 years old and the figure
of the safety-related assets was those that were critical at the
time when the review was done. In the Eighties it was looked at
as being could British Waterways be self-sufficient, could it
be privatised in the same way as water companies were? It was
seen that that very significant liability would prevent such a
thing. There is the maintenance of the assets that needs to be
done, but one of the things that has not been mentioned today
is the simple maintenance on a day-to-day basis: the dredging,
the grass cutting—there are 2,000 miles of waterway, which
means 4,000 miles of boundaries to maintain. That is a huge asset
to maintain and, as the waterways have improved, the expectation
about standards of maintenance have risen with that. Local authorities,
which have been mentioned more than twice already this afternoon,
do not maintain the waterway networks. It all falls to British
Waterways, and the growing expectations of the people who have
bought properties alongside the waterways is that it will be maintained
to a higher standard than perhaps it was in the Sixties and Seventies.
There is a two-edged sword with this growth and expectation: it
does bring a raised expectation.
Q85 Chairman: Can I ask you a question
I am always interested in: I know a bit about the nuclear industry;
sadly, I also know a bit about the railways. They have definitive
engineering bases, in the sense that people would refer to themselves
as a nuclear engineer or a railway engineer. Is there a person
that you would refer to as a waterways engineer, someone who is
born and bred and that is what they want to do and that is their
engineering forte, man and boy or girl and woman, to spend their
time in the waterways industry? Is there this being, and that
person has existed, does exist and should exist in the future?
Mr Schlegel: Indeed. Of course.
There are many people who have spent all of their working careers
with British Waterways. There are others who have joined industry
and then moved on to go elsewhere, which would include me. I had
previously worked in structural engineering and indeed reservoirs
and flood management before coming into waterways. I enjoyed it
for quite a bit of time but then went back to flood management.
So people do come and go but there is a long tradition and a long
understanding of the technical engineering needs of the waterways.
Q86 Chairman: Is there a surplus
of people in the industry, is there a deficit or is there a steady
state? You can get the right people to do the right jobs, particularly
with all this regeneration work; engineers who have an understanding
of the waterways do exist and can be created?
Mr Schlegel: Generally, the civil
engineering profession has a deficit in the broadest sense. In
waterway engineering, provided there is good leadership, we can
train good waterway engineers in a relatively short period of
time.
Q87 Chairman: So when someone has
done a civil engineering degree, you can take people on and they
can become waterways engineers reasonably quickly?
Mr Schlegel: We can indeed, reasonably
quickly, and in fact, British Waterways have out-sourced a considerable
amount of their work to eminent consulting engineers, who are
having to grow that talent within their organisations to be able
to service British Waterways' needs.
Q88 Chairman: One of the accusations
is that that is a weakness of BW because it is a very expensive
way of doing it. Again, there are parallels with the nuclear industry,
that if you contract out, it may seem the best solution at the
time but it can become an expensive solution in the long run.
Is that a fair accusation?
Mr Schlegel: I think there is
always a risk, and I think Network Rail was a prime example of
out-sourcing the management of risk. The employing organisations
need to be very clear-minded as to what they can out-source; what
they cannot. That management of risk is fundamental and remains
with the organisation.
Q89 Mr Jack: If and when British
Waterways come before us, should we expect them to be able to
give us some kind of definitive list in order of priority of what
constitutes the projects that are within this £100 million
current backlog which has to be sorted out by 2012? I am interested
in the consequences of shifting that work time-wise to the right
but I am not clear in my mind, with the universe of our 2,000
miles of canals, where all these projects are and what they do.
Should British Waterways be able to provide such a definitive
and objectively cast list?
Mr Schlegel: I think they should
be able to. They were well advanced in asset management in the
last number of years and I would believe that they would have
a populated list of assets that require maintenance.
Mr Jack: Perhaps we could ask for it.
Q90 David Lepper: Mr Schlegel, you
began by saying that the waterways are in a better state than
they have been for many years. That is good to hear, but we have
also talked about the backlog of work to be done. British Waterways
tell us in their evidence that the reduced grant levels in 2006-07
and 2007-08 will result in about £5-£10 million of major
work not being undertaken. They hope that that will only be of
short-term significance but they warn that if not, it could in
the long term build up to a significant under-spend on major works.
Do you share that assessment of what the last couple of rounds
of cuts have meant for them? Do they have sufficient funds to
undertake the work that is necessary simply to maintain the network?
Mr Schlegel: Without a detailed
understanding of their current asset management plan, I could
not answer that question precisely. I think inevitably cuts of
£7-£10 million, whilst significant, are not catastrophic,
provided it is not long-lasting. I do not think anyone has the
understanding as to what happens by 2008-09, and I think if these
cuts are going to continue, inevitably there will be an effect.
Q91 David Lepper: We have the Comprehensive
Spending Review coming up. Maybe there will be some good news
for British Waterways in that. We will have to wait and see.
Mr Schlegel: Just doing a very
simple calculation with the time I had on my hands during the
other evidence, the 2012 figure would seem to me to slip to at
least 2014.
Q92 David Lepper: The point at which
they become largely self-sufficient?
Mr Schlegel: Yes, 2014-15. That
is an educated guess. As I have said already, I do not have sight
of the detailed asset management plan, nor would you expect me
to have.
Q93 David Lepper: Is that slippage
of two to four years on the assumption of a continuing reduction
in grant?
Mr Schlegel: No, that is an assumption
that it gets no worse.
Q94 David Lepper: So real problems?
Mr Schlegel: Real problems if
the cuts continue to erode.
Q95 David Lepper: Do you see any
immediate signs of the impact that those cuts are having, looking
back at the state of the system as you left it and as it is now?
Mr Schlegel: No, I think it is
too early. If you were to go back, say, 15 years, there was a
very regular occurrence of—I would not describe them as
catastrophic failures but failures, and they happened with great
frequency. It is now something of a surprise when something falls
down, which I think is not quite where it needs to be, because
it should be a shock, but the asset is in much better condition
than it was. I can remember a number of years back the Monmouthshire
& Brecon Canal in Wales being washed down the hillside regularly,
some of the canals filling embankments being washed away, minor
bridges being suddenly closed because of concerns about structural
safety and the like, and it was very much a hand-to-mouth situation.
That is not the situation currently but it could go back to that
if the funding levels are not appropriate.
Q96 David Lepper: So there is a bit
of a buffer at the moment?
Mr Schlegel: Yes, what you have
had is good base-level grant but you have also had what was described
as Millennium spend, significant spend from Heritage Lottery Fund,
Millennium Fund, and the like from about 1995 onwards. There was
also European regional development funds, and that has brought
many of the assets into reasonable condition.
Q97 Chairman: Can you just give us
a feel for what I see as the equivalent of checking the points,
which is a very moot issue at the moment? I had the opportunity
to go over Pontycysyllte 18 months ago and that is an impressive
structure. Who has to literally get up there and make sure that,
after 200 years, it is not literally one day going to start crumbling?
Mr Schlegel: British Waterways
have an asset inspection process. All principal assets are subject
to a principal inspection on a regular basis but also there are
monthly and regular weekly inspections by the lengthsman on a
local basis, who is trained to observe change. It is very similar
to the rail industry. The rail industry have their permanent way
inspections under way, where they will walk the line and check
for change, and the level of detail of that inspection goes up
with frequency, of course.
Q98 Mrs Moon: Can I just check for
myself? You talked about the £100 million that was needed
in work that was outstanding. Is that in areas of the network
that are currently in use or is that also looking at expansion
of the network?
Mr Schlegel: No, that is purely
in the network that is in use.
Q99 Mrs Moon: So there is no money
in there allowing for expansion?
Mr Schlegel: No, as I understand
it, not.
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