British Waterways: DEFRA Strategic Steer
for Business Planning
INTRODUCTION
1. Since the EFRA Committee enquiry Defra
and British Waterways have been considering the form and content
of an agreed strategy for BW in England and Wales which will give
Defra Ministers an assurance that the Government's priorities
will be taken into account in decision making by the BW Board.
In the immediate future there is a need to agree delivery priorities
to be attached to the allocation Defra will provide to BW for
the CSR period 2008-9 to 2010-11. This needs to be framed within
a shared longer term strategic direction the pace and extent of
which will be influenced by the outcome of the current BW review
into its organisational status.
2. The allocation for the CSR period will
reflect an increased injection of capital reflecting the importance
of maintaining the network to us and to help secure immediate
and longer term reduction in taxpayer support for ongoing operations.
It will also seek a BW commitment to help fund the Government's
priorities from its commercial capital pot over the 3 years of
the CSR period whilst plans are developed to increase BW's self
sufficiency in the longer term.
DEFRA'S
STRATEGIC PRIORITIES
3. Defra recognises that its sponsorship
of British Waterways enables BW to discharge its duties in England
and Wales as the custodian of the canal network for posterity
on behalf of the Government and reflecting statutory obligations.
For Defra this is one of our "Licence To Operate" areas
(LTO) which needs to be got right in the public interest and for
the reputation of the Department. Realistically, BW will not be
central to the delivery of the two key outcomes for the Department
captured in its PSAs on climate change and the natural environment;
but Ministers are committed to recognising the importance of the
LTO areas (egs of others are flood risk management and animal
health) in their decision making on allocations in what is a very
tough CSR period.
4. Government's priorities for BW in England
and Wales can be divided into three areas—(i) maintaining
the network in satisfactory order; (ii) achieving the shared Govt/BW
longer term vision of moving towards greater self sufficiency
through the growth of commercial business and other funding sources(these
are to some extent inter-dependent—as growth of income can
allow more investment in the network, and therefore prioritisation
between them is not easy); and (iii) delivering a range of additional
public benefits that are not indivisible from maintaining the
network, eg developing opportunities for sustainable transport/freight,
affordable housing, biodiversity enhancement, small scale renewable
energy projects etc. The Government broadly favours (i) as the
first and foremost priority, especially as this has a strong linkage
with the delivery of many public policy priorities such as regeneration,
sustainable landscapes and communities and public health. But
a balance must be struck with the other two as all are clearly
important. Further detail on each priority is as follows:
(i) Maintaining the network in satisfactory
order.
The canal network is an important and treasured
national heritage asset that when in good order delivers strong
public benefits; but it has to be used and valued by the public.
It fits within the Defra Intermediate Outcomes of achieving sustainable
living landscapes and promotion of recreation within the environment
(walking, canoeing, boating, angling etc)—but also contributes
significantly towards a wide range of other Defra and OGD objectives
such as regeneration, regional economic performance, local environment
quality, conservation of heritage, sustainable communities, public
health etc. BW can contribute to a wide range of PSAs; but the
primary contribution is almost certainly towards economic prosperity
and regeneration as maintaining the network in good condition
enables it to give uplift in waterside property values and stimulate
business growth. It is worth mentioning that maintaining navigation,
apart from being a statutory function, is important as boats add
to the public draw and uplift in waterside values as well as bringing
to life the heritage landscape. A suite of indicators to reflect
progress will be needed and we support the development of an overall
stewardship score which reflects both the condition of the assets
and how well used they are, both on and alongside the waterways.
Such an indicator will be central to our measurement of progress
under this priority.
(ii) Supporting the current BW vision
to be largely self sufficient.
Whilst the term "largely self sufficient"
has imprecise meaning and BW is working on a possible revision,
we do want BW to grow its commercial business and alternative
sources of funding so it can both invest more in the network and
reduce central government's commitment over time. There is a critical
balance here between the short and longer term—prioritising
self sufficiency for the future might not deliver as many benefits
as improved investment in the network in the shorter term; maximising
the quantifiable best economic return from investment might therefore
not always be the Government's priority if eg it resulted in a
loss of confidence in the waterways because of a shortage of immediate
investment. Furthermore the Status Review might deliver some opportunities
for increased income in the future and the network needs protecting
until these are achieved. It is worth noting that BW's investment
in waterside property development/joint ventures with partners
is supported not just because it might reduce Defra's financial
commitment by growing the commercial business but because it can
transform local economies and communities and is a strong contributor
to regeneration and regional economic performance at the same
time as enabling BW to invest more in the waterways over time.
(iii) Delivering a range of additional
public policy benefits from BW operations.
BW contributes to a wide range of policy objectives.
Whilst most BW waterways' public benefits are delivered through
(i) and (ii) above they also deliver a range of other benefits
which are not incidental but are additional and need to be consciously
planned, eg sustainable transport including freight; affordable
housing; biodiversity enhancement and carbon reduction through
micro energy generation. In many of these areas there are opportunities
for BW to run innovative projects that can provide national exemplars.
However, the Government recognises that such work has a cost attached
and would need the injection of additional resource if (i) and
(ii) were not to be adversely affected.
5. The overall Defra steer is that (i) is
our top priority because it is the platform for delivering so
many public benefits both now and for the future, but Government
remains keen for BW also to do what it can to deliver (ii) and
(iii) ie to become more self sufficient and to deliver additional
public policy benefits where there is a good case for so doing
and this will not have a damaging effect on delivering (i) and
(ii).
6. Defra does not intend to be prescriptive
in telling the BW Board how to discharge its statutory responsibilities
or set detailed priorities between the additional public benefits
identified above; indeed we look to the Board to strike a balance
between the objectives, taking account of the costs and benefits
and considering the Government's priorities as set out in its
PSAs in deciding what they can reasonably achieve. In implementing
these priorities we will expect of course BW to continue to consider
its reputation and the perception of stakeholders, especially
given Government is the shareholder. Our intention is to assist
such prioritisation through working with the new Inter Departmental
Group on Inland Waterways (IDG) in developing this strategic steer
and inputting into BW's Corporate Plan so it can be formally endorsed
by Defra as reflecting the Government's priorities for the period
it covers.
EXPANSION OF
THE NETWORK
7. BW's current vision is to expand the
network and the Government remains supportive of this ambition
in principle given the possible public benefits described. However
the Government is not in favour of expansion if this compromises
BW's ability to maintain the existing network through creating
additional ongoing financial liabilities. Provided BW is satisfied
that any such ongoing maintenance costs can be contained without
such a risk, including without putting pressure on Government
grant, we recognise that there will be particular circumstances
where the multiple public benefits, including those to BW customers,
of say connecting two separate stretches of canal can be significant.
Restoration of unused canals can also capture the imagination
of the public and produce tremendous volunteer resource but clearly—given
the financial constraints—we would expect the capital funding
to come from other sources than BW and Defra, eg RDAs or Lottery
funds, and, as noted, that BW would seek to make sure its ongoing
additional maintenance costs were covered by future return in
some way. This also applies where restoration is to deliver wider
regeneration benefits rather than waterways/BW business benefits
ie where wider public benefits greatly outweigh future returns
to BW. However Defra acknowledges that in exceptional circumstances
BW might have to invest some of its capital on a de minimis
seedcorn funding basis to get worthwhile projects off the ground.
BW CORPORATE PLANNING
8. As noted, the BW Board's decision making
in relation to the balance to be struck between the objectives
and priorities above will be reflected in the Corporate Plan for
each rolling three year period. We would like the rationale behind
the Plan to be sufficiently articulated for Defra to have clarity
on what is being planned and why, including the trade offs that
have been considered. This should set out the link to the Government's
strategic objectives as reflected in its PSAs, which would be
helpful to Ministers in endorsing the Plan. It should also have
good indicators of projected achievement which can be monitored.
Every time the Corporate Plan is signed off by Ministers they
can then consider if they agree with the balance that has been
struck by the Board or if they would prefer some adjustment. We
can also then consider if there are additional benefits which
Government might wish to buy, engaging OGDs in the IDG. It will
probably be necessary to see some updated longer term projections,
eg of commercial income, to give context to the Plan period and
to help the assessment of risk.
"THE DEAL"
9. Defra is keen to work with its delivery
partners on articulating an agreed "Deal" which will
guide the way in which we work together and what can be expected
of each other. It must be of mutual benefit to be satisfactory
and is likely to involve some cultural change by both parties.
The Deal will help to consolidate the progress Defra and BW have
been making on the relationship issues identified by the EFRA
Committee earlier this year. The draft Deal is attached at Annex
A.
Department for Environment, Food and Rural Affairs
March 2008
DEFRA/BW DEAL
Defra and BW will:
— promote greater understanding between
Defra and BW (both Executive and Board)
— work together on customer focus
and effective engagement with stakeholders
— adopt a "No Surprises"
policy, giving advance notice of intent, sharing press notices
in advance and problems arising
— notwithstanding the need for appropriate
accountability, both parties should seek to develop a "No
Blame" culture, taking responsibility for their own decisions
— provide sufficient quality and staff
resource to enable effective engagement with each other
Defra will:
— give clarity on our strategic priorities
— give as much certainty of funding
over three year periods as we can
— not seek to micromanage BW
— support the search for greater freedoms
to enable BW to increase income
— work harder across Whitehall to
promote the benefits of Inland Waterways to inform policy and
encourage additional support
— support BW in the decisions it has
to take in operating commercially
— encourage access to Ministers and
senior officials and work to build trust
BW will:
— manage risk with the BW Board being
accountable for its decisions
— work to achieve clarity for Defra
in BW decision making, investment and outputs given the complexity
of the BW business, with appropriate suite of indicators, so Defra
can monitor delivery and Ministers can have effective engagement
in the business planning process
— keep Defra informed as agreed under
the Financial Memorandum and as monitored by the Quarterly Shareholder
Meeting
— seek to adopt a positive position
on wider Government objectives including sustainable development
and diversity
— work in partnership with the wider
Defra network to achieve Defra's objectives efficiently
Sarah Nason, Deputy Director,
Defra
13 February 2008
Robin Evans, BW Chief
Executive
28 February 2008
Terms of reference for Interdepartmental
Group
To provide a focal point for
— more effective cross government coordination
on inland waterways matters.
— a fuller understanding and recognition
of the contribution that the inland waterways can make to government
policies for climate change, environmental improvement, public
health, recreation, regeneration, heritage, planning, transport
and community cohesion.
— Discussion on proposed research into
the social and economic value of the waterways and undertake a
refresh of government policy for the waterways.
— Discussion on key strategic issues
Witnesses: Jonathan Shaw MP, Parliamentary
Under-Secretary of State (Marine, Landscape and Rural Affairs),
Mr Robin Mortimer, Director, Natural Environment Group,
and Ms Sarah Nason, Deputy Director, Environment Agency
Sponsorship and Waterways Division, gave evidence.
Q101 Chairman: Ladies and gentlemen,
welcome to the second and final evidence session of our short
inquiry into current issues affecting British Waterways. I am
delighted that these occasions are proving an irresistible draw.
If nothing else, I notice that representatives of British Waterways
back here for the second time in 24 hours. We are delighted to
see you but we are even more delighted to welcome formally before
the Committee Jonathan Shaw, the Parliamentary Under-Secretary
at Defra. Jonathan, this is your first time before the Committee
and I know colleagues would want to extend their welcome to you,
and we hope you will be very happy during your stay with us and
indeed your stay in the Department. We also welcome Robin Mortimer,
the Director of the Natural Environment Group at Defra, and Sarah
Nason, Deputy Director, Environment Agency Sponsorship and Waterways
Division, which I think ranks as one of the longest titles that
we have had for some time. Minister, when we had your predecessor
before us we got the impression that things were not quite as
they ought to be in terms of those warm, cosy and friendly relationships
that ministers always have with bodies which in Defra's case report
to it. I think it might be helpful to us, in the light of the
signing on 13 February of this year of the Defra/British Waterways
deal, if you could tell us what you have done to bring harmony
back into the relationship between your Department and British
Waterways as witnessed by this document.
Jonathan Shaw: Thank you, Chairman,
and thank you for that warm welcome. I am delighted to be here
and I am grateful to have the opportunity to talk about the waterways.
Coming to your question, my answer is that in politics you have
different relationships with the same people and so sometimes
those relationships are difficult and sometimes those relationships
are good, and I think that is the experience of people who hold
ministerial office. I think that what we have seen in recent months
is an acknowledgement by all sides following the very helpful
and critical report that this Committee published saying that
we could not carry on as we were. It was obviously a period of
conflict but I think that we have moved on from that and hence
the deal, the new arrangements, and again that is something that
the Committee recommended. We have put those in place and I am
satisfied that they are working well.
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