Memorandum submitted by the British Marine
Federation (BW 45)
EXECUTIVE SUMMARY
— The UK has a successful and growing
leisure marine industry. On inland waterways there is a vibrant
business community, wholly comprised of small firms. These enterprises
make an important contribution to the £2.8 billion generated
annually by the boating sector for the UK economy and the 35,000
jobs that it sustains.
— Government support for inland waterways
over recent years has promoted a renaissance in the sector, boosting
participation in boating, and enabling regeneration in run down
rural and urban areas.
— Cuts to the British Waterways (and
Environment Agency) budgets threaten to undermine this progressive
agenda.
— The boat hire market, in particular,
is very fragile and will be hard hit by increased costs for license
registration and fuel prices, at a time when the cost of living
is increasing and the public is thinking hard about how it spends
its disposable income.
RECOMMENDATIONS
— We believe that DEFRA and the Treasury
must recognise the role of inland waterways as a driver in the
UK's leisure industry, and the critical role played by British
Waterways and other navigation authorities.
— DEFRA and HM Treasury must engage
with the leisure marine industry to see first-hand the impact
that the cuts could have on a fragile sector.
— DEFRA and HM Treasury must meet the
commitment set out in the Government policy paper (Waterways for
Tomorrow) and provide navigation authorities with the certainty
of funding that will enable them to continue to manage the national
asset that is our inland waterways in a professional manner.
INTRODUCTION
1. The British Marine Federation is pleased
to respond to the EFRA Committee's inquiry into the work of British
Waterways, a DEFRA sponsored public corporation, but feel that
the scope of the inquiry should have included the Environment
Agency as the navigation authority for our rivers which has also
suffered DEFRA cut backs.
2. The British Marine Federation is the
national trade association for UK companies operating in the leisure
marine industry. The BMF has 1,500 member companies, who are all
small and medium sized enterprises.
3. The UK leisure marine industry nationally
is a successful and growing sector of the UK economy. The revenues
generated by our industry have grown steadily over recent years.
Most recent industry statistics released in January 2007 demonstrate
our continuing successful performance with revenues of £2.8
billion, of which over 33% represent exports. Our industry now
employs around 35,000 people. The growth in boating on inland
waterways has been a significant contributor to this success in
recent years.
4. Approximately 40% of BMF members have
interests in inland waterways, operating businesses on the canal
network, navigable rivers and the Norfolk broads. Operators of
hire boats, passenger boats and hotel boats deliver visitors to
our inland waterways, including many international tourists. These
operators, together with others who build boats, operate marinas,
moorings and boatyards, contribute significantly to the rural
and urban economy.
5. Those individuals who operate businesses
on the canal network depend on British Waterways to manage and
maintain the environment in which their businesses exist and can
remain viable. These businesses, themselves also make a significant
investment to the network by providing facilities and services
for the general public. To continue to make this investment confidence
in the market is required and confidence in BW's ability to operate
efficiently is crucial to such investment decisions.
6. In addition to being responsible for
the maintenance of the network, BW is also the monopoly landlord
of many of these businesses who lease property owned by them.
Other businesses which are riparian freehold landowners must pay
fees to BW to connect to the waterway network. BW has a unique
position of power over all of these businesses and has the ability
to influence the business environment in which they operate. There
is no doubt that under funding of British Waterways, coupled with
a drive to raise alternative sources of income, would have knock
on consequences for these businesses.
RELATIONSHIPS WITH
BRITISH WATERWAYS
7. The BMF has always endeavoured to maintain
constructive working relationship with British Waterways, the
Environment Agency and the Broads Authority as the three leading
navigation authorities in the country. The BMF has traditionally
had a good track record of working in partnership with British
Waterways and we have been pleased to cooperate in addressing
issues like the Foot & Mouth Disease crisis, problems that
existed with the Boat safety Scheme and pursuing marketing initiatives
to promote inland waterways.
8. The relationship between the BMF and
British Waterways became extremely strained for a two-year period,
between 2004 and 2006. This situation arose out of a dispute
concerning BW's commercial activities in the marinas and moorings
market. This was resolved via mediation in February 2006 and both
BW and the BMF have worked hard over the last year to rebuild
the relationship between BW and the industry. BMF has welcomed
the positive approach taken by BW management and non-executive
directors.
9. The appointment of a BW non executive
director with specific experience of competition and fair trading
issues is welcomed and the BMF has been pleased to be involved
over the summer of 2006 in a working group that has developed
a BW fair trading code of practice.
10. As a national representative trade body
for the inland marine industry, the BMF considers itself to be
a stakeholder in our inland waterways. BW recognise the BMF as
a strong voice for those small businesses based on our inland
waterways. We also consider ourselves to be a stakeholder of British
Waterways as one of their recognised user groups, and a potential
partner with them on various projects beneficial to our waterways.
11. The establishment of the British Waterways
Advisory Forum in 2005 has significantly improved BW's relationship
with waterways stakeholders. The BMF was pleased to play an instrumental
role in the working group that developed the terms of reference
for the BWAF. The Executive Director of the BMF has been Chairman
of the BWAF (elected by stakeholder members) since its inception.
THE FINANCIAL
FRAMEWORK OF
BRITISH WATERWAYS
AND THE
IMPACT OF
CHANGES IN
DEFRA'S BUDGET
12. BW is the public corporation that is
responsible for the management and maintenance of the country's
inland waterways (predominantly the canal network system). BW
performs this function with grant-in-aid from Government and income
generated from commercial activities. BW carries out this function
on behalf of the public of the United Kingdom and it is widely
perceived as the public corporation, which is the arm of
Government that manages the canal network and as the "guardian"
of this inland waterways national asset.
13. "Waterways for Tomorrow",
published in 2000, was the first policy statement by Government
on inland waterways for over 30 years. It was widely welcomed
by the inland waterways community, including the boating industry,
as it set out a positive vision from Government of the benefits
arising from the promotion of inland waterways and its encouragement
of a modern, integrated and sustainable approach to their use.
14. In publishing "Waterways for Tomorrow"
the Government identified that the country's inland waterways
are a national asset that should be enjoyed by all. The investment
by Government thought grant-in-aid is therefore fully justified
and very important to the future well being of the infrastructure.
Government grant-in-aid recognises that BW is providing a public
service, the cost of which cannot be fully recovered from all
users at the point of use. The pursuit of alternative sources
of funding needs to be carefully managed and a core element of
GIA retained. This is required to offer the certainty to effectively
manage the waterways and reflect the contributions already made
by UK tax payers.
15. The BMF and the inland marine industry
is very concerned about the impact of changes in DEFRA's funding
to the navigation authorities that manage our inland waterways.
Cut backs in this financial year have had significant impact on
the ability of navigation authority management to manage professionally.
There is deep concern about funding commitment for the future
to the end of the CSR period in 2010/2011. The claw back this
year has already forced BW's management to cut their cloth accordingly,
resulting in an announcement of 180 job losses. Only time will
tell exactly what impact this will have on the quality of service
that our members and the boating public receive from BW. However,
there is already deep rooted worry about the loss of experience
and expertise from the organisation. There is also strong concern
about the prospects of increases in boat licences that could significantly
increase the costs of boating on our canals.
16. If the Government is committed and serious
in it's views about our waterways as a national asset, there is
an argument that DEFRA and HM Treasury should provide grant-in-aid
at levels that will see our waterways maintained at a level that
can be widely and safely used by all and safeguarded for future
generations. Above all, the navigation authorities and BW in particular
need certainty about future levels of funding in order to be able
to business plan and manage their waterways professionally.
RECENT DEVELOPMENTS
IN THE
STEWARDSHIP WORK
AND COMMERCIAL
ACTIVITIES OF
BW INCLUDING PROPERTY
PORTFOLIO
17. The BMF is of the view that overall,
BW has taken a very professional approach to its stewardship of
the canal network. Over recent years this has seen an elimination
of a backlog of safety related maintenance, they have played a
significant role in urban and rural regeneration and successfully
completed restoration projects that have opened up waterways bringing
economic, social and environmental benefits as well as opening
up new markets for our members.
18. The BMF believes that BW needs to perform
its statutory responsibilities with the ethos of a public service
organisation. We also recognise that maximizing revenue from commercial
activities demands a professional commercial approach. To balance
both of these cultures within one organisation requires great
care, governance and accountability. The BMF has experienced difficulties
where BW have chosen to pursue commercial activities that compete
directly with our members business. However, we are confident
that measures put in place over the last year will overcome problems
in this area and that there are mechanisms in place for redress
where there might be problems. There needs to be a balance, to
ensure that a drive to seek revenue from elsewhere does not cause
conflicts and put small firms, that are a vital part of the rural
economy, out of business.
19. BW's property portfolio is a significant
asset that needs to be managed to the benefit of income generation.
It is a legacy that the modern day BW has inherited from the past.
BW needs to manage its property portfolio in such a way that it
generates revenues that can be ploughed back into the canal network.
POTENTIAL FOR
GROWTH IN
LEISURE AND
FREIGHT USE
OF THE
WATERWAY NETWORK
20. Leisure use of inland waterways has
grown significantly over recent years and there remains potential
for further growth. 3.5 million people enjoy boating and watersports
on the coast and inland waterways of our country. The success
of the inland marine industry reflects the growth in boating on
our inland waterways, which in 2006 totaled up to 448,000 participants
in canal boating. This figure does not include canoeists, and
other small craft.
21. Continued growth is dependent upon boating
remaining affordable and accessible. It is currently a socially
inclusive past time and recreation. A direct result of the DEFRA
cuts will be an increase in boat licences. This comes at a time
when inland boat users face a significant increase in the costs
of marine fuel due to the European Commission ending a UK derogation
that has permitted a lower rate of duty on red diesel. The accessibility
of boating is dependent on boat owners having places to moor their
boats on the canal network. There is currently a shortage of marinas
and moorings, which both BW and the private sector need to work
in partnership to ensure supply meets demand.
22. The recent increases in the cost of
living are also almost certainly going to have an impact on the
market, as both the general and the boating public make choices
about how to spend their disposable income.
23. The inland waterways of our country
offers great opportunity for the carriage of freight. The Department
for Transport has invested in studies and grant schemes to explore
and encourage the potential for increased carriage of freight
by inland waterways. It is greatly disappointing that BW's dedicated
freight team have been subject to job losses that BW have announced
as a result of the DEFRA cuts.
RELATIONSHIPS BETWEEN
BRITISH WATERWAYS,
CENTRAL GOVERNMENT,
RDA'S AND
LOCAL AUTHORITIES
24. BW is a public corporation whose responsibilities
cross cut many central Government departments. They have been
a great catalyst for regeneration (DCLG). They benefit the environment
(DEFRA) and related education (DfES). They host a vibrant inland
marine industry (DTI). That industry also contributes to tourism,
BW manage a vital part of British Heritage and provide a base
for sport and recreation (DCMS). Canals can form a viable network
for the transportation of freight (DfT). When all these factors
come together they provide vital economic benefits (HM Treasury).
This situation begs a question about which Government department
should sponsor responsibility for inland waterways.
CONCLUSION
25. This evidence sets out the views of
the BMF as the trade representative body for the inland marine
industry . It highlights the critical role that British Waterways
and other navigation authorities play in the success (or failure)
of this sector of industry.
26. Overall, British Waterways have managed
the waterways for which they are responsible in a professional
manner that has been beneficial to the growth of boating on inland
waterways and the success of our industry. The claw back of grant-in-aid
by DEFRA in this financial year and the prospects for future funding
now represents significant threat to the future of this successful
sector of industry.
27. The BMF would welcome the opportunity
to present oral evidence to this Committee Inquiry.
British Marine Federation
January 2007
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