Supplementary memorandum submitted by
Dr Paul Woollam (BW 16a)
1. Q363: Is DEFRA
the right parent body for British Waterways?
1.1 In my response to Q363, from Mr David
Lepper, on whether DEFRA is the right parent Department for British
Waterways, I said that I saw no difference between BW being funded
by DEFRA or by DCMS. After careful reflection, I am now persuaded
that BW would be better funded by DCMS. My principal reasons for
this are:
— As I made clear in my evidence, I
believe that heritage and intergenerational equity are the fundamental
matters that should drive BW. BW's remit should be to maintain
and restore the heritage ("the track") as a working
waterway network, not to operate as a real estate management company.
DCMS is responsible for heritage management in a wide range of
areas and therefore has far more expertise in this matter than
DEFRA. It is also in a position to assess the UK's total heritage
funding requirements and to make informed decisions on needs,
priorities and the relative magnitude of funding.
— The most likely significant increase
in inland waterways freight over the next decade is associated
with the Olympic Park, which is in the remit of DCMS.
2. Q357: Is BW's objective of moving to a
position of self-funding a realistic proposition?
2.1 I responded to Q357, from the Chairman,
on whether BW's objective of moving to a position of self-funding
is a realistic proposition, by saying that BW should not aspire
to self-funding—the Government grant should remain. This
response is consistent with my evidence.
2.2 However, as I started to explain in
response to Q357, I believe that BW could be better organised
and operate more efficiently. I would like to develop this explanation.
2.3 BW should develop a robust, costed long-term
(for at least 25 years) strategic plan for maintenance and restoration
of the canal network, based on its own comprehensive understanding
of present and future needs and taking advice from a wide range
of stakeholders including restoration and boaters' and other canal
users' groups. BW's sponsoring Department would endorse this plan,
which would include income generation.
2.4 The plan would be used as a primary
input to negotiations with Government to secure long-term, ring-fenced,
funding commitments to maintain and restore the canal network
and its heritage on behalf of the nation. Such Government commitments
should be consistent with funding for other UK heritage maintenance
and so would best come via DCMS (see response to Q363 above).
2.5 In return for a long-term commitment
to Government funding, BW would inject competition into the management
and operation, including maintenance and restoration, of the canals
to achieve maximum taxpayer benefit for running of the heritage
that the waterways represent.
2.6 To achieve this, BW would split itself
into a small number of specialised units—maintenance of
the existing navigable network, restoration (including stakeholder
engagement), craft licensing, property and so on—and would
let competitive contracts for the management of each of these
units, either for a fixed term—perhaps 5 years—or
(in the case of a restoration project) for completion. Most existing
BW staff would remain employees of these specialised units, which
would be transferable entities.
2.7 Successful bidders would take ownership
of a particular BW unit for the period of the contract. Their
contracts would include an incentivised fee structure that encouraged—as
appropriate to the unit of which they had taken ownership—accelerated
backlog maintenance, accelerated restoration of the canal network,
reductions in licence evasion, efficient operation of BW's commercial
assets etc, to ensure delivery of the Government agreed 25-year
plan with maximum value generated for the taxpayer.
2.8 No Company would own more than one BW
unit and contracts would reflect a requirement to act cooperatively
in the best interests of the national network.
2.9 BW would retain a small central organisation
mandated to maintain and update the 25-year rolling plan, and
to let and to run the contracts for management of each unit. This
organisation would act as the conduit for Government finances.
It would manage the contracts via a series of challenging and
stretching key performance indicators (KPIs) and, specifically,
would not micromanage. Its primary function would be strategic,
to maintain and develop the canal system on behalf of the nation.
2.10 The property management contract would
be incentivised to ensure that the remaining property portfolio
generated a long-term income stream (through leases and rents)
rather than being sold in pursuit of short-term gain. This approach
would be clearly laid out in BW's strategy, endorsed by Government.
Government grant in aid would take appropriate account of this
income stream. BW would work in partnership with development companies
regenerating run-down urban areas, but would retain, through its
property management contractor, both long-term interest (to protect
heritage) and income.
2.11 If the property management, or any
other, contractor did not perform adequately, by failing to meet
KPIs, their contract would not be renewed.
Dr Paul Woollam
April 2007
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