The House of Commons Environment, Food and Rural Affairs Committee (EFRA) has today published a follow-up report on British Waterways which concludes that if Government wants to obtain the public benefits of canal investment, it should bear the costs.
The report notes that it is estimated that in the first seven years after public investment in waterside regeneration, there are about £6 worth of direct economic benefits for every pound of public money invested. It also notes that these are usually public benefits rather than financial benefits to BW.
The Committee says that canal restoration can produce knock-on benefits such as more jobs and visitor income. But the risks have to be spread more widely among the public sector instead of just BW, which often gets little immediate direct benefit from such work.
The report noted the improvements in the relationship between BW and DEFRA, which had been adversely commented upon in EFRA's original report on BW in 2007. The Committee welcomes the setting up the Interdepartmental Working Group which could lead to a more flexible approach to waterway funding.
The Committee's inquiry was prompted by BW’s decision in February this year to withdraw from the partnership to restore the Cotswold Canals.
The Committee concludes that BW should have consulted its Cotswold Canals restoration partners about its withdrawal earlier, so that they could have had a chance to see if alternative funding was available.
The Committee is "unconvinced" of BW's need to spend up to £600,000 on a report by consultants on its future structure when it is by its own admission short of money. It seems unlikely that there wasn't the expertise within BW, DEFRA or the public sector to conduct the study at lower cost, something which BW should now explain.
British Waterways’ chairman Tony Hales welcomes the report as "an extremely useful contribution to the debate". He adds that the committee's work could only help to enhance the prospect for future waterway restorations.
BW disputes the amount it is paying to consultants, giving a figure of£350,000. The results from this study, due this month, are expected to "set the framework for a debate on the longer term strategy for the waterways in the period to 2020".
(The committee's full report can be read here.)
BW has a statutory responsibility to keep existing waterways open and safe for navigation. As that is a task that needs £125 million to do properly and as they only have £100 million to do the job it is clear that there is no money to spend on non-navigational matters. This particularly when they have the Mon & Brec to repair and the £10 million costs of last years floods to cover.
EFRA also questions whether it is sound management to spend several hundred thousand on the KPMG structure review. As useful as that study might be, I would agree but I was under the impression that BW initiated the study because they were asked to do so by the former Waterways Minister. If that is the case, should not Government pick up that tab (as indeed they should the cost of containing last year's floods)?
All in all, this announcement is encouraging. It demonstrates a growing realisation that the waterways have a profound impact on the agendas of many other Government departments and we can only hope that the Ministers responsible will recognise this by supporting the Interdepartmental Working Group - another recommendation of EFRA - that has been set up by Waterways Minister Shaw to garner support for the waterways from all its beneficiaries.
2 comments:
I'm sitting here, trying to fathom out how BW are going to put a positive spin on the Environment Food and Rural Affairs Select committee's latest report that was published this week. The report's conclusions seem stark and the committee's view on the Cotswolds Canals debacle, which prompted their latest enquiry is unambiguous.
"BW should have consulted earlier with its partners to enable them to consider whether alternative funding could have been put in place before BW's withdrawal from the project was put into the public domain."
OK, not a complete surprise, but the other conclusions are maybe far more damning.
The committee did not feel that BW or DEFRA yet have a clear strategy to meet the shortfalls BW have identified in their major repairs budget over the next three years. Nor could the committee find any clear plan about how BW expects to manage the downturn in commercial property income, their pride and joy, that they had previously been so confident would save the day, and might fill at least some of the £10 million pounds a year funding gap they identified in their evidence last Summer.
In the evidence BW offered this time round they admitted that funding gap has not significantly changed, despite the slightly better DEFRA settlement BW received compared to the one they had originally modelled and based their evidence to the Committee on last Summer.
Add to this Tony Hales' comment to the committee that BW have since also revised their predicted commercial income downwards by £45 million over this and the next two financial years and we apparently have an organisation that is running at a deficit of over £20 million a year and hasn't yet worked out what to do about it?
On restoration generally, the committee's comments suggested that BW's current policy towards restoration funding was completely unsustainable and they must look to a different funding model in the future. The committee also implied that BW had not taken a sufficiently strategic view over the overall benefits and long term opportunities of restoration work. The further implication seemed to be that someone has a lot to do before they can make any case for the benefits of third party and cross department funding and that BW should not be left to their own devices on this question.
However the cherry on the cake for me was the committee's comment on the BW Status review.
"We find it hard to believe that analytical capability does not exist in BW, DEFRA or other public organisations that could have conducted this study at lower cost to public funds. BW should now explain why it was necessary to spend money of this order at a time when it was facing significant pressure on its finances sufficient for it to withdraw its support for the Cotswolds Canals project."
Having attended both the recent evident sessions, I do wonder if this comment has just a hint of sarcasm? Or is that particular turn of phrase some sort of Parliamentary code? To those of us who deal with BW on a daily basis, the suggestion that BW lacks analytical capability and more worryingly, lacks the capability to find it elsewhere at a sensible price, comes as no surprise!
I wait with interest to see how DEFRA and the BW board will respond to the report in the Autumn.
My view is clear. BW have lost financial control and the continued upkeep of their waterways is in jeopardy unless they come up with something pretty quickly. Robin Evans was paid over a quarter of a million pounds in 2006/7 for presiding over this mess and collectively the directors of BW received pay and benefits in excess of two million pounds during that same year. Yet in the midst of all this they failed to maintain clear working relationships with their sponsoring department, a relationship which the committee reports the parties have only started to re-build substantially in the last six months.
I think some new leadership is urgently needed in BW.
Simon
Thank you for that detailed response, Simon. You raise some worrying points.
IWA yesterday issued a statement in which it welcomes the findings but "takes no pleasure in noting the Select Committee’s criticism of British Waterways".
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