Issue date: 28 April 2011
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.
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 transform British Waterways into a charity. 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 Environment Agency navigations by 2015/16, that the Government should be planning now for an orderly transfer.
We will also 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
IWA is concerned that the funding package on offer is far too fragile, taking risks that are simply too great for a successful launch of the NWC.
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%.
IWA’s best estimates based upon published information is that British Waterways needs 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.
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 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’.
The company’s own projections are that under the current financial scenario it’s spend on major works will have to go down from £22.6m last year to £15.5m this year and £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 are projected to be around 22-22% by 2032.
There are many options that the 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.
• Fund the cost of bridge repairs which have risen exponentially for British Waterways given the nature and axle weight of today’s commercial traffic.
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 per annum could be as little as 200-600 yards of HS2.