Memorandum submitted by Inland Waterways
Advisory Council
IWAC'S APPROACH
As British Waterways (BW) has acknowledged,
the decision to withdraw from the Cotswolds restoration is "a
huge disappointment". Others will no doubt give their views
on whether they believe BW's decision was justified. However IWAC's
role is to provide strategic advice and IWAC can best discharge
that responsibility by drawing attention to the lessons that can
be learnt from the current controversy.
BW'S RECORD
Fifteen months ago IWAC's predecessor body surveyed
the waterways restoration work being undertaken across Great Britain.[6]
1 The report paid tribute to BW's commitment to restoration, noting
that
"BW has been widely and purposefully active,
both in the lead and as partners, in most of the major projects
which are making progress".
However the report also carried the warning
that, with increasing financial pressures,
"BW may be forced to make hard choices in
trying to maintain all its current projects and will certainly
be inhibited in embarking on new projects."
IWAC recognises that the choice, as BW saw it,
between reopening the full stretch of the Monmouthshire and Brecon
Canal in 2009, with the consequential advantage to the economy
in Wales, and continuing with the Cotswold Canal Partnership,
with its corresponding regenerative effects to the economy in
the region, was extremely difficult. IWAC accepts that BW would
have much preferred to continue with both projects and only came
to the conclusion that it did not have the necessary resources
to fund both after careful analysis and consideration. BW has
drawn attention to its duties under the Transport Act 1968, and
IWAC understands that Defra supports the conclusion that BW's
primary obligation is to maintain its existing network.
However, IWAC believes that BW should recognise
that its decision to withdraw funding from the Cotswold restoration
may have a potential damaging effect on BW's reputation and lead
to a lack of confidence amongst future waterway restoration partners
in the future. Therefore, BW should consider taking clear steps
to provide reassurance on its commitment to restoration projects
in the future, within its budgetary constraints.
IWAC urges the Government to be clear and supportive
about BW's restoration role in the future.
BW should also be alert to the second risk to
its reputation. After BW had worked through its backlog of repair
and refurbishment, there was a general expectation that the network
was in good condition. The Mon and Brec breach was a very unpleasant
shock and the subsequent revelation that other parts of that canal
need substantial work raises unfortunate questions about the efficacy
of BW's safety inspection work.
BW will want to reassure itself, the Government and
the waterways communities that the breach in the Mon and Brec
is not symptomatic of a wider problem.
FINANCIAL RESILIENCE
By any reasonable judgement the outcome is extremely
unfortunate. A major restoration, which is generally regarded
as being highly desirable, is now in jeopardy and the expected
regeneration benefits may not materialise. To avoid a similar
problem occurring in the future IWAC believes that important lessons
should be learnt and remedial action should be taken. In particular
IWAC believes that this incident brings into sharp focus the need
for BW to have a financial structure which provides greater resilience
against sudden shocks like the breach in the Monmouthshire and
Brecon Canal.
Although BW is required to operate commercially,
the company has to manage within constraints that restrict its
ability to respond to unexpected events. BW's Grant in Aid allocation
is not guaranteed beyond the current year and BW does not have
an easy opportunity to borrow on the open market. Both constraints
mean that BW has to take a very cautious view of its forward spending
commitments. These constraints are not offset by any contingency
arrangements that would allow BW to increase its GIA in any year
when unexpected operational and financial pressures occur. So
BW inevitably has to adopt policies that have a shorter time horizon
and a lower risk than is reasonable in an organisation charged
with managing a national asset that, for reasons of its nature
and its age, is liable to suffer unexpected collapse with the
need for urgent and costly repair.
IWAC believes that urgent consideration should
be given to implementing policies that give BW a greater degree
of financial resilience.
VALUING THE
BENEFITS
Of course IWAC accepts that greater financial
flexibility will not remove the need, from time to time, for Government
and BW to make hard choices between projects, whether these projects
involve repairs or extensions to the system. In evaluating options,
both Government and BW should have access to high quality information
about the benefits that are likely to arise from different forms
and levels of investment. Unfortunately such high quality information
is not generally available.
The Efra Sub-Committee has recommended that
research should be undertaken to establish the benefits of the
waterways. IWAC has made a similar recommendation and has developed
a research programme to fill the gaps in existing knowledge. IWAC
is now working with Defra on a 2-3 year programme of research
which will help to inform future policy making across Defra and
other Government Departments by evaluating the potential benefits
of investing in the waterways, by identifying the main beneficiaries
of such investment and by indicating how the greatest benefit
can be realised. The research will also generate a national value
for the waterways sector.
IWAC urges the Efra Sub-Committee to support this
important programme of research.
FUNDING THE
WATERWAYS
It is important to see BW's decision to withdraw
from the funding of the Cotswolds restoration in the context of
recent events. After a decade of quiet progress, the past two
years have been characterised by a series of disputes and controversies
about the funding of the waterways. These disputes have exposed
the uncomfortable fact that the present system owes more to custom
and history than to any rigorous analysis of need and opportunity.
In the light of the recommendations in the Efra Sub-Committee
Report and with so many members of the waterways communities questioning
the current arrangements, IWAC believes that the time is right
for a reassessment of funding methods and for a serious consideration
of a wider range of options.
To start the process IWAC is planning two fact-finding
projects over the coming year:
On the basis of these studies and other work
IWAC expects to produce a major report early in 2010 advising
Government on the funding options relevant to the inland waterways
in Britain.
IWAC very much hopes that the Efra Sub-Committee
will give its support to this initiative.
Inland Waterways Advisory Council
March 2008
6 Inland Waterway Restoration & Development Projects
in England, Wales & Scotland, published by IWAAC December
2006 Back
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