House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Memorandum submitted by Steve Davis and Dr Paul Woollam (BW 16)

EXECUTIVE SUMMARY

1. The inland waterways under British Waterways' management are delivering tangible benefits in reviving deprived areas, in maintaining our national heritage and in developing employment. These benefits are delivered to the general public, not just to boat owners.

2. The canals attract investment into rundown, problem towns and cities. British Waterways is involved in schemes that are driving £6 billion of waterside regeneration with the potential for 6,000 new homes. Reductions in Government grant will threaten regeneration projects through loss of investor confidence.

3. The revival of the network brings direct economic benefit from boating activities supporting at least 3,200 permanent and 650 part-time jobs. Reductions in British Waterways' ability to maintain and improve the network will ultimately lead to a reduction in boating and to the economic activity that this represents.

4. Cuts in Government grant mean that British Waterways will inevitably be forced to reduce maintenance on structures that, in many cases, are 200 years old and performing duties that their builders could not have conceived. This suggests a very real potential for loss of life or serious injury.

5. Unless the British Waterways grant cuts are reversed, the canal system in England and Wales is in danger of reverting to its pre-1980s state, with a significant proportion again becoming un-navigable.

6. Government has an obligation to maintain our archaeological canal-based heritage for future generations; it should adequately fund British Waterways to perform this important and unique role. It is noteworthy that 95% of the 300 million people who visited the waterways see the canals as an important part of the nation's heritage.

7. Boats and boat movements are crucial to creating the vibrant network that British Waterways seeks. The majority of visitors to our canal network come to see boats moving and the historic structures being operated.

8. Boat owners already contribute £30 million per year to British Waterways' income. Reductions in grant cannot credibly be made up by increased costs to this single group of waterways users.

9. A new approach to funding is needed that protects our canal heritage for future generations. Inevitably, much of this funding will have to come from Government. This suggests that more competition is needed to manage the waterway network, using fee-based, performance driven contracts with appropriate incentives.

10. It is notable that:

— The Scottish Executive takes a radically different view of waterways funding than does DEFRA.

— The DCMS funding to visitors ratio for English Heritage sites is 60 times higher, at £12.60 per visitor, than the DEFRA equivalent of 20p per visitor for British Waterways' network.

1. INTRODUCTION

1.1 We are Steve Davis and Paul Woollam. We are boat owners and our evidence is presented from the perspective of users of the canal network with significant experience of British Waterways' management of the system.

1.2 Steve Davis started taking regular canal boat holidays in 1990. In 1999 he bought his own boat and since then has travelled the majority of the British Waterways network. His narrowboat, Carpe Diem is moored on the Gloucester and Sharpness Canal. Now retired, he was formally Information Technology Director for the Avionics Division of BAe Systems Limited.

1.3 Paul Woollam first used the inland waterways system as a hire boater in 1963, when he was aged 16. He has owned boats on the network since 1973 and currently owns narrowboat Dream Maker moored on the Gloucester and Sharpness Canal. He is a chartered physicist employed by British Nuclear Group as a senior consultant.

1.4 Over the six months to December 2006, we have worked closely with British Waterways' South West Regional Manager, particularly in performing multi-attribute decision analysis to inform stakeholders of the options available to maintain winter opening of the Gloucester and Sharpness and River Severn navigations following DEFRA's cuts to British Waterways' grant. British Waterways accepted the outcome of our analysis, which is planned for implementation in February 2007.

1.5 We have produced a briefing paper for our Member of Parliament, the Rt Hon David Drew, which was referred to1 in the Adjournment Debate on British Waterways held on 6 December 2006, secured by the Rt Hon Sir Peter Soulsby.

2. THE SCOPE OF OUR EVIDENCE

2.1 This evidence is submitted to the Environment, Food and Rural Affairs Committee Inquiry into the work of British Waterways. With regard to the Inquiry's terms of reference, it is intended to inform the Committee from the boaters' perspective in relation to the impact of recent reductions in grant from DEFRA.

2.2 We appreciate that the majority of British Waterways' income does not derive from boat owners. However, we submit that boats and boat movements are crucial to creating the expanded, vibrant network that British Waterways seeks and that the majority of visitors to our canals come to see boats moving and the historic structures being operated. We therefore believe that the boaters' perspective on British Waterways' management has a significance that extends beyond their contribution to income.

2.3 In Section 3, we describe our view of the current heritage and socio-economic impacts of British Waterways' operations.

2.4 In Section 4, we discuss the threats to health and safety, to economic activity, including regeneration, and to heritage that we believe will result from cuts in British Waterways' grant from DEFRA.

3. HERITAGE AND SOCIO-ECONOMIC IMPACTS OF BRITISH WATERWAYS' CURRENT OPERATIONS

Background

3.1 The waterways network developed during the 1700s and was a major factor in the economic success of Britain during the next 100 years. The canal network declined in the late 1800s due to competition from railways; during the period 1920 to 1980, a large proportion became un-navigable.

3.2 Today, the canal network has been revived thanks in part to additional Government investment of £70 million for England and Wales since 19972. The network now plays an important part in the well-being of the nation with a contribution that extends well beyond hard economics; this is recognised and valued by Government3.

Heritage—intergenerational equity and sustainability

3.3 The UK canal network receives 300 million visits4 each year from people who enjoy such diverse activities as walking, fishing, bird watching, cycling, rowing, canoeing and photography. Only 3%5 of these visits are for boating activities. Academic6 and English Heritage7 studies suggest that a total benefit to health and general well-being of over £140 million per year is being derived from these visits by non-boating members of the public.

3.4 The network is unique and presents a rich architectural and ecological heritage that also attracts enthusiasts, historians and sightseers. British Waterways is charged with maintaining the built heritage in a sustainable fashion and, with 2,739 listed structures, is third only to the Church of England and the National Trust in stewardship of heritage structures. It also has responsibility for 65 Sites of Special Scientific Interest (SSSI)8.

3.5 British Waterways spent around £110 million9 per year in the years 2003-04, 2004-05 and 2005-06 maintaining the network. In part, this expenditure helped to keep listed structures in compliance with English Heritage guidelines and maintain SSSIs in line with UK and EU legislation.

3.6 British Waterways has a key role in ensuring intergenerational equity is maintained. For example, the Government has nominated the Pont-Cysyllte Aqueduct to be a UNESCO World Heritage Site10, citing its role in the improvement of transport to provide the arteries of industrialisation, symbolising the world's first Industrial Revolution and its transformation of technology.

Socio-economic impact—regeneration

3.7 Over the past few years, several deprived inner city areas have been regenerated using the waterways as a catalyst. Examples include Gloucester, Birmingham, Chester, Manchester and Chesterfield11. The economic benefits of canal regeneration include around 1,700 jobs created from the Millennium Link in Scotland12, £2.5 million extra spending per year plus around 20 new jobs resulting from the re-opening of the Huddersfield Narrow Canal13 and £235k extra spending per year in Llangollen from the creation of a 32-berth mooring basin14.

3.8 Currently British Waterways is involved in schemes that are driving £6 billion of waterside regeneration with the potential for 6,000 new homes15.

3.9 The power of the canals to attract inward investment into rundown, problem towns and cities is well recognised by local and national government and the voluntary sector. In 2005, British Waterways received £9.5 million16 from local authorities, Regional Development Agencies, Lottery Funds, Canal Trusts and the European Union for work to improve the canals, which will in turn attract inward investment creating jobs and housing for local communities.

Socio-economic impact—boating activities

3.10 The revival of the network brings a direct economic benefit to the UK from boating activities:

— Hire boat operators employ around 1,200 permanent and 650 temporary staff generating a turnover £45 million per year17 of which £3 million18 comes from foreign tourists.

— There are currently 29,000 licensed boats19 supporting around 500 jobs in servicing and spares.

— The pub and restaurant trade receives an estimated annual income of £7.5 million from boaters.

— Boat insurance produces yearly revenues of £6 million, adding benefit to the City.

— The annual moorings revenue for 29,000 boats20,21 is in the order of £25 million.

— 1,000 new boats are built per year with a value of £65 million22 supporting 1,500 jobs.

3.11 Boat licence and mooring fees paid direct to British Waterways produce an annual income of £16 million23; in addition, we judge that a further £14 million of other moorings revenue (above) goes to British Waterways24 via property rentals from marina operators.

3.12 Boat owners, although a small fraction of all waterway users, currently contribute £30 million per year to British Waterways' income.

3.13 This assessment of the economic impact of boating on the canal system is necessarily conservative and shows that a minimum of £165 million per year goes into local, often deprived, economies as a direct result of boats using the system operated by British Waterways. This boater-created economic activity supports at least 3,200 permanent jobs and 650 part-time jobs (paragraph 3.10).

3.14 The Environment Agency has 32,000 boats registered on its rivers and estimates that around 100,000 jobs are supported by the Thames alone with an annual visitor spend of £200 million25. Like British Waterways, the Environment Agency is engaged in regeneration schemes with a major initiative in the Fens Link that is estimated to deliver £12 million annual new spend in the Fens.

Socio-economic impact of British Waterways' operations—summary

3.15 A minimum of £165 million per year goes into local, often deprived, economies as a direct result of boats using the system operated by British Waterways. This boater-created economic activity supports at least 3,200 permanent jobs and 650 part-time jobs. Boat owners contribute £30 million per annum to British Waterways' income.

3.16 The inland waterways under British Waterways' management are delivering tangible benefits in reviving deprived areas, in maintaining our national heritage and in developing and sustaining employment. This view was supported by Government review, where the need for sustained Government support was also acknowledged26.

4. THREATS FROM CUTS TO BRITISH WATERWAYS' GRANT

Background

4.1 British Waterways is working towards its ambition of "... creating an expanded, vibrant, largely self-sufficient waterway network ... regarded as one of the nation's most important and valued national assets". We submit that British Waterways has made some progress in meeting that part of its vision associated with an expanded and vibrant waterway network. However, Government grants have risen from 37% of total revenue in 2001-02 to 40% in 2005-0627; clearly, there has been no progress towards British Waterways' vision of self-sufficiency.

4.2 Historically, British Waterways has been reliant on Government grants. For the reasons laid out in our evidence, we believe that, in the national interest, this should continue to be the case. However, in England and Wales, (though not in Scotland) a consistent funding mechanism via DEFRA is now demonstrably in doubt.

4.3 British Waterways has told boat owners using its system to prepare for significant price rises in 2008 and beyond, primarily to compensate for cuts in Government grant. As noted in paragraph 3.12, British Waterways currently receives about £30 million from boaters in respect of mooring and licence fees.

4.4 By 2010-11 British Waterways expects its grant income to have dropped by £16 million28 from that received in 2005-06. If this deficiency is to be made up from boating revenues, the annual cost to the average boat owner will rise by £660 to £1,900, an increase of 53%.

4.5 It is a mistake to believe that all canal boat owners are wealthy and can afford these increases. A 2005 British Waterways' survey29 shows that 34% of boat owners had a gross annual income of less than £25,000. A Government survey of Family Spending30 for 2004-05 indicates this group has an average net income of £13,900, primarily from pensions, annuities and benefits, with less than £3,000 per year discretionary spending power. An additional £660 per year payment to offset cuts in DEFRA's grant equates to a 22% reduction in the discretionary spending power of a third of British Waterways' customers. It is therefore inconceivable that boaters' current £30 million contribution to British Waterways' income could be increased sufficiently to match cuts in Government grants.

4.6 A large increase in boating costs would drive a number of boaters from the canal network, leading to the market being flooded with second-hand boats, a slump in new boat sales and some boat builders going out of business. The likely doubling of fuel costs due to the loss of "red" diesel would accelerate this trend.

Threats to health and safety through maintenance reductions

4.7 Despite Government grants, there remains a backlog of maintenance estimated at £119 million in 200631.

4.8 Above all else, British Waterways must maintain 2,000 miles of waterway so they are safe and accessible to 29,000 boats and 300 million individual visitors per year.

4.9 Since the DEFRA cut, British Waterways has been forced to reduce maintenance32 on structures that, in many cases, are 200 years old and performing duties that their builders could not have conceived. The trend of reduced maintenance is likely to continue without adequate Government funding. This suggests a very real potential for loss of life or serious injury. The eventual cost of bringing canals back up to their present standard will increase and in the meantime, damage from canal breaches and other structural failures will still have to be funded by Government.

Threats to heritage, intergenerational equity and sustainability

4.10 The recent cut in grant by DEFRA runs counter to past Government statements and puts the future of the inland waterways at risk33.

4.11 Because British Waterways has a duty of care to its employees, customers and visitors, the impact on maintenance of the DEFRA grant cuts will mean that parts of the waterways network will necessarily be closed for safety reasons. For example, the towpath through the Netherton Tunnel in the West Midlands is shortly to be closed indefinitely to visitors34, due to its poor state of repair, because British Waterways has insufficient funding for its maintenance. Although British Waterways has no current plans to close the tunnel to navigation, this will eventually become a real possibility unless adequate funds are made available properly to maintain the heritage represented by this structure.

4.12 The DEFRA cut will also threaten restoration projects28; there are nine restoration projects currently underway35. Two schemes at potential risk are the Manchester, Bolton and Bury Canals and the Stroudwater Canal, both of which are central to extensive plans for local regeneration36. Recent reports32 suggest that plans to restore the Manchester, Bolton and Bury Canal are effectively dead.

4.13 We submit that Government has an obligation, through British Waterways, to maintain our archaeological canal-based heritage for future generations. It is noteworthy that 95% of the 300 million people who visited the waterways see the canals as an important part of the nation's heritage4. We submit that it is Government's duty to fund heritage maintenance and that British Waterways' grant should accommodate its unique position, as does the DCMS grant to English Heritage.

4.14 However, we note that DCMS grants to English Heritage37 have risen year on year since 2001-02 to £125 million, twice DEFRA's grant to British Waterways. English Heritage receives 9.7 million visitors per year, one thirtieth of British Waterways' visitors, and it maintains fewer heritage structures.

4.15 British Waterways has a corporate action plan for heritage8 that aims to improve heritage skills and understanding within its staff. As with any organisation charged with maintaining historical or heritage sites, corporate memory, record keeping and learning from experience are keys to success.

Threats to regeneration and consequent reductions in economic activity from boating

4.16 Reductions in Government grants will inevitably threaten regeneration projects through loss of investor confidence. A visit to any large-scale regeneration project, particularly if it includes housing, will show that sales are predicated on a vibrant waterway location filled with boats.

4.17 In addition, reductions in British Waterways' ability to maintain and improve the network will ultimately lead to a reduction in boating, through boat owner and boat hirer disillusionment, and to the economic activity that this represents.

4.18 Unless the British Waterways' grant cuts are reversed, we submit that the canal system in England and Wales is in danger of reverting to its pre-1980s state, with significant portions again becoming un-navigable. Less people will visit, local jobs will be lost, and more Britons will holiday abroad with the consequent loss of UK revenue. This runs counter to the Government's sustainable development strategy38.

4.19 British Waterways is funding the recreation of large numbers of people who pay no direct contribution for the upkeep of the facilities they enjoy. In the longer term, funding for British Waterways needs to be provided on more rational basis. Several funding options are possible and have been discussed in the past39. In light of the current situation, it seems appropriate that these options are reviewed again.

Government and Devolved Administration funding of other waterways

4.20 As with British Waterways, the Environment Agency needs reliable future funding to maintain and develop its navigations for the benefit of the economy, our heritage and visitors alike.

4.21 In Scotland, the Scottish Executive has accepted British Waterways' need for increased funding and has confirmed that its grant will increase year on year, so that in 2007-08 it will be 28% higher than the baseline grant in 2005-0640.

Threats resulting from cuts in British Waterways' grant—summary

4.22 Cuts in British Waterways' grant cannot credibly be made up by increased costs to boat owners. Inevitably, maintenance will suffer, leading to health and safety consequences and eventual closure of parts of the network. Regeneration and restoration projects will suffer as investor confidence wanes, reducing inward investment to the more deprived parts of the country. In the long term, our national heritage will be diminished.

4.23 We submit that grant reductions will start a downward spiral of reduced boat ownership and movements, which Government could use to justify even less grant, leading to further reduced maintenance. This is a recipe for slow but sure loss of a part of our national heritage seen as important by the vast majority of people visiting the network4.

4.24 An alternative approach to funding is needed that ensures that the heritage represented by the canal system is protected for future generations. Inevitably, large parts of this funding will have to come from Government.

4.25 However, Government must have a reasonable expectation that taxpayers' money will be spent efficiently and effectively. This suggests that more competition is necessary for managing the waterway network.

4.26 The national heritage interest may be better served by splitting British Waterways into a series of specialised units (maintenance, restoration, craft licensing, property management etc) and competitively tendering the management of each for a fixed term using fee-based, performance driven contracts with appropriate incentives that encourage accelerated restoration, backlog maintenance, reductions in licence evasion and so on.

4.27 It is notable that the Scottish Executive takes a radically different view of waterways funding than does DEFRA and that the DCMS funding to visitors ratio for English Heritage sites is 60 times higher, at £12.60 per visitor, than the DEFRA equivalent of 20p per visitor for British Waterways' system.

5. REFERENCES 1 Hansard 6 December 2006 Column 127WH

2 Hansard 7 November 2006

3 "A New Future for British Waterways", DEFRA 18 February 1999; Hansard 13 February 2001

4 British Waterways Accounts 2005-06, page 7

5 IWA News Briefing, 7 January 2007

6 British Waterways press release, 6 September 2005

7 Valuation of the Historic Environment, July 2005, pages 61 and 62

8 British Waterways Accounts 2005-06, page 17

9 British Waterways Accounts 2005-06, page 5; British Waterways Accounts 2004-05, page 6

10 UNESCO World Heritage Tentative Lists Database

11 Lecture to the Institute of Historic Building Conservation, March 2001; Manchester City Centre Strategic Plan 2004-2007; DfT Report, "Walking - The Way Ahead"

12 Select Committee on Scottish Affairs, 28 April 2003

13 British Waterways press release, 2 December 2004

14 British Waterways press release, 16 November 2006

15 Office of the Deputy Prime Minister, 8 August 2006

16 British Waterways Accounts 2005-06, page 9

17 British Marine Federation, UK Leisure Survey 2004-05

18 Manager of Viking Afloat, Worcester (telephone interview) 23 November 2006

19 British Waterways Accounts 2005-06, page 20

20 British Waterways "Getting Started", 2006

21 Long term mooring prices 2006-07

22 Inland Marina Investment, pages 8 and 13

23 British Waterways Accounts 2005-06, page 94