DEFRA CONSULTATION – A NEW ERA FOR THE WATERWAYS: IWA PRELIMINARY ANALYSIS OF THE KEY ISSUES

DEFRA CONSULTATION – A NEW ERA FOR THE WATERWAYS:
IWA PRELIMINARY ANALYSIS OF THE KEY ISSUES

 

1.    IWA has been calling for a third sector model to run Britain’s waterways since the middle of the last century, so we welcome that the Government shares our vision to establish a ‘National Trust for the waterways’. We are in no doubt that this is the right way forward for the management of Britain’s inland waterways.

 

2.    We applaud the Government’s decision to provide the New Waterways Charity (NWC) with the British Waterways property portfolio and a long term contract through to 2022/23. These initiatives demonstrate real commitment to the project to create a new charity for the nation’s waterways. However from the outset IWA has expressed certain reservations. These are that:

 

  • The funding package must be sufficient to ensure that a sustainable charity can be delivered in the long term.

  • The governance arrangements must encourage community engagement consistent with localism so that local ‘ownership’ of waterways can lead to tangible benefits for the waterways.

  • With the decision to phase the integration of the Environment Agency navigations by 2015/16, the Government needs to plan now for an orderly transfer.

3.    We will want to explore in further detail how the status of the commercial, cruising and remainder waterways will be dealt with to meet the charitable purposes of the body in a manner that sustains and enhances existing usage.

THE FUNDING PACKAGE

4.    IWA is concerned that the funding package on offer is insufficient to enable the waterways to be maintained in a manner consistent with NWC aims, taking risks that are simply too great for a successful launch of the NWC.

5.    Defra’s Arm’s Length Body funding announcement in December 2010 was a cut for British Waterways grant this year to £41.5m compared to £48m in 2010/11 – a reduction of 13.5%; thereafter the contract to be let to the charity is to a value of £39m per annum in nominal terms (no inflation so the contract falls in real terms over time) – a reduction of nearly 19%.

6.    IWA’s best estimates based upon published information are that British Waterways has been allocating in the region of £150m per annum for direct expenditure on the waterways in England and Wales. However in 2008 a KPMG report commissioned by British Waterways concluded that British Waterways was operating with a funding deficit of circa £30m per annum to achieve ‘steady state’ (meaning in all round good condition with maintenance conducted promptly) for its network. So the company should be spending about £180m per annum.

7.    In commercial income British Waterways receives about £35m from property and about £61m from other revenue sources at present (utilities, boat licences, moorings, marinas etc) so in total about £96m. Together with a £39m government contract for the NWC this is about £15m per annum short of what the charity needs to continue with a similar budget available to British Waterways now, and about £45m short of achieving ‘steady state’.        

8.    The company’s own projections are that under the current financial scenario its spend on major works will have to go down from £22.6m last year to £15.5m this year and to £10.2m in the first year of the charity. The implications are that whereas British Waterways had planned to reduce the percentage of its assets in poor or very poor condition to 10% the percentage is now up to 20% and rising. Even with assumptions about new resources which appear to be highly optimistic – for example within the first decade from a starting point of zero a rise to £13m in donations – on the central assumptions the assets in poor or very poor condition could be as high as 26% at the end of the first 10 years of the NWC.   

9.    There are many options that Government could pursue to achieve a package to alleviate these financing difficulties. Elements it could incorporate into a sustainable funding package include to:

  • Meet the past service pension liabilities of British Waterways so that the charity starts with a clean sheet on pension liability. 
  • Provide a transition fund both to cover the increased costs needed for a successful launch of the charity and the costs of promoting broad based local ownership of our waterways, including finance to pump prime locally determined projects.
  • Index the indicative funding.
  • Provide certainty of funding beyond 10 years.
  • Find funding for the cost of bridge repairs which have risen exponentially for British Waterways given the nature and axle weight of today’s commercial traffic, including the option of transferring responsibility for maintenance of road bridges to the relevant local highway authorities.

10. However Government might choose to give the charity a better start so that this flagship Big Society project has a real chance of success from the outset, the cost would only be the equivalent of 180-550 metres of the high speed rail London-Birmingham project (HS2). About 180 metres equals what British Waterways has been spending. 550 metres would bring the network up to a good fully maintained standard.

GOVERNANCE

11. The consultation concludes that the charity should begin life with fair representation and that any decision on whether or not to become a membership organisation should be a matter for the charity to consider in due course.

12. IWA is aware that some believe that the charity should begin as a membership organisation. Membership:

  • Can be a way of raising funds;

  • Can ensure broad based representation without the sense of exclusivity which ‘fair representation’ might convey; and

  • Need not suffer from undue influence by a vociferous minority (e.g. a model similar to that adopted by the Woodlands Trust would solve this issue).

13.  However, IWA recognises that there are counter arguments in favour of ‘fair representation’. The consultation does not present a fully argued case of the advantages and disadvantages of the fair representation and membership approaches. Defra will need to listen carefully to the arguments presented to it and reach firm conclusions taking full account of those views.

Local Partnerships

14. Some of the Local Partnership areas may be simply too large to be practical or effective. Where areas are diverse both in terms of community and waterscape the NWC will need to consider whether it will be appropriate to have more than a single Partnership.

15. It would also boost enthusiasm for and engagement with Local Partnerships if they were able to determine expenditure priorities for both:

  • A significant proportion of locally raised funds; and

  • A discretionary element of funding allocated by Partnerships from central charity funds, to supplement mandatory funding to meet nationally determined standards for waterways.

THE ENVIRONMENT AGENCY NAVIGATIONS                 

16. The Government has stated that it is committed to transfer of the Environment Agency navigations by 2015/16, subject to affordability and the agreement of the NWC Trustees.

17. Whilst IWA accepts the decision that the Government has taken to phase integration of the Environment Agency navigations, we believe that the charity will not be operating to its full potential until that integration takes place. The full advantages to be gained when the Environment Agency navigations are incorporated are:

  • A stronger focus on the core mission of these waterways in the best interests of the community, with improved scope for a genuinely new body through cross fertilisation.

  • A simplification of the management of the waterways to the benefit of business and the public.

  • An improved ability to gauge and respond quickly to changing customer needs.

  • Better value through the economies of scale to be achieved through the creation of a single organisation, and a co-ordinated system with, for example, a single navigation licence.

  • More scope for the development over time of a national identity, like the National Trust, The National Parks, and the national museums; increasing usage, volunteering and charitable donations.

18. So IWA considers it vital that the process of proper preparation and implementation planning, including a funding line, should be underway right now. In this way the 2014 review of the charity and the next Government Spending Review should be no more than exercises to confirm that the arrangements for transfer are on track and there should be no issues to cause the NWC Trustees to question whether they can absorb the EA navigations.

WATERWAYS CLASSIFICATION

19. IWA considers that the Government should review not just the classification of the ‘commercial’ waterways, but also the ‘remainder’ waterways.

The Commercial Waterways

20. The Government believes that the statutory obligations placed upon British Waterways to maintain the commercial waterways may be unaffordable for the charity. IWA does not disagree that the statutory commitments under the Transport Act 1968 to maintain waterways for freight traffic may be too onerous for the charity to bear, but believes that commercial waterways should be retained where there are reasonable prospects of a commercial waterway becoming economically and environmentally sustainable and also where losses incurred on a commercial waterway are marginal.

21. This would allow these waterways to remain available for commercial use should industry choose to make greater use of the waterways for freight of its own volition or because Government provides greater financial incentives for freight to move from road to water to secure climate change or other environmental benefits. Once a waterway becomes unsuitable for larger commercial traffic it is unlikely to be brought back into serious commercial use in the future.

22. IWA believes that a structured Working Group should be set up to advise the Secretary of State on the issues and alternative options, if any, when proposals are received to close a commercial waterway; and that where additional funding is required to maintain waterways for commercial traffic, this should be funded from the Department for Transport’s budget as a transportation issue.

The Remainder Waterways

23. ‘Remainder waterways’ are those that British Waterways is required to deal with in the most economical way consistent with public health, amenity and safety. However, since there is no requirement for remainder waterways to be kept in navigable condition the most economic way possible can also mean abandonment.

24. However, many waterways which have remainder status are actually navigable. An example is the Kennet & Avon Canal which has been navigable for many years but which has only recently been reclassified to ‘cruiseway’ status.

25. A remarkably large number of waterways currently classified as remainder are actually maintained to cruiseway status, as justified by the level of use.

26. IWA believes that the Government should review all the ‘remainder waterways’, in consultation with stakeholders, so that those remainder waterways that are used for navigation now are recognised by Government by a reclassification to ‘cruiseway’ status before the NWC vesting day. This would provide the appropriate statutory protections, such as protection from adverse bridge or water supply decisions.