In April 2009, the Inland Waterways Advisory Council (IWAC) was anxious that the outcome of the Treasury's Operational Efficiency Programme review could result in a reduction of the money needed to keep Britain's valuable waterway network in good order. A main concern is that BW would be stripped of its property portfolio which has provided a much needed source of income.
IWAC considers that BW has "undoubtedly managed the investment and property portfolio extremely effectively". IWAC has seen the consultant's report which shows that "BW has achieved a rate of return on its public assets that outstrips the relevant indices".
IWAC argues that the assets should continue to be managed by BW. A number of important reports are due to be published in the next few months which quantify the public benefits provided by the waterways and review alternative methods of funding.
The Government should "wait until it has a full appreciation of the public benefits that might be put at risk before considering new financial arrangements," argues AWAC.
Below is a copy of the letter sent from IWAC;s John Edmonds to Rt Hon Yvette Cooper MP, Chief Secretary to the Treasury:
07 April 2009
Rt Hon Yvette Cooper MP
Chief Secretary to the Treasury
Dear Minister
I am writing as Chair of the Inland Waterways Advisory Council (IWAC) to express IWAC's anxiety about how the outcome of the Government's Operational Efficiency Programme (OEP) might affect British Waterways (BW) and the inland waterways network.
IWAC was set up by the Natural Environment and Rural Communities Act 2006 to provide advice to the UK and Scottish Governments on the development of Britain's inland waterways. In 2007 the Waterways Minister also asked IWAC to act as a conduit so that the Government is properly informed of the views of inland waterway users and stakeholders. This letter is intended to discharge both of those responsibilities.
IWAC's main concern is that Britain's inland waterways are properly funded. The Government's inland waterways policy was set out in Waterways for Tomorrow and we trust that you can reassure IWAC that the outcome of the OEP will not reduce BW's opportunity to deliver the public benefits described in that farsighted statement.
Unfortunately IWAC has not been part of the OEP process and we have an imperfect knowledge of the discussions that have taken place. However the official statements that have been made and the media comments, some of which have clearly been based on detailed briefing, suggest that BW might lose control of, or lose the income from, the investment and property portfolio that it has managed successfully for many years. If this happens, BW would need replacement funding at an equivalent level. IWAC will be grateful if you will reassure us that, whatever changes are made in BW's structure and financing, the Government will provide sufficient funds to ensure that BW is able to fulfil its statutory responsibilities and, on a continuing basis, to deliver the Government's declared policies and ambitions for the inland waterways.
On the basis of Government statements and apparently well informed media speculation, IWAC understands that a number of arguments have been advanced to justify a change in the management of the investment and property portfolio currently held by BW. IWAC trusts that these arguments have been critically examined in the OEP process and that the effect of any changes on the sustainability of the inland waterways network has been fully considered. It would be reassuring to waterway users and stakeholders if you were able to give that assurance. BW has undoubtedly managed the investment and property portfolio extremely effectively. In 2000 John Prescott, as Deputy Prime Minister, specifically required BW to make full use of its development and investment opportunities; BW equipped itself accordingly and has carried out the Government's mandate with great success. IWAC has seen the consultant's report which demonstrates that BW has achieved a rate of return on its public assets that outstrips the relevant indices. As a result substantial sums have been reinvested in the waterways, the network has been enhanced and the benefits to the public have increased.
IWAC has heard the argument that it is inappropriate for a publicly owned body to manage an investment and property portfolio and that the assets should be sold to the private sector. IWAC is reluctant to get involved in ideological debate, but the fragility of this argument at a time when the Government is buying so many private assets in other parts of the economy is self evident. In any event, and because of the state of the markets, the Government will have no opportunity to sell the assets currently managed by BW at an acceptable price for several years into the future. IWAC's conclusion is that, in the absence of an alternative arrangement that will give at least the same level of public benefit, the assets should continue to be managed by BW.
Of course IWAC does not suggest the present arrangements must continue without review into the indefinite future. Our proposal is that a review would be better undertaken at a later stage when new and important information becomes available. This need not involve a lengthy delay. Several significant pieces of work will be published during the next twelve months. In June the first report from the joint Defra/IWAC research into the value of the public benefits provided by the waterways is scheduled for publication. This will be the first time that well-tried methodologies have been used to calculate values and the report is expected to produce robust conclusions for future policy making. IWAC suggests that the Government should wait until it has a full appreciation of the public benefits that might be put at risk before considering new financial arrangements.
A second suite of work is being produced by IWAC. This summer we plan to publish two reports. One will fill an important gap in the Government's knowledge by describing how all the significant navigation authorities in England and Wales fund their work at present and whether any significant changes are planned in the future. The second report will show how important recreational inland waterways across the world are funded, and will identify the strengths and weaknesses of those funding arrangements. These two pieces of work will feed into a major IWAC report planned for publication early in 2010 which will set out the options that are available for funding British inland waterways in a sustainable manner during the next two decades. IWAC suggests that it would be sensible for Government to consider the advantages and disadvantages of the various funding options put forward in our report before deciding on a new financial structure for BW.
As you will imagine, the announcement of the OEP caused considerable anxiety to the various waterway users and their organisations. You will have received letters explaining their concerns. Waterway user organisations work very closely with the many MPs who have rivers and canals in their constituencies and I have no doubt that a number of those MPs will have briefed you on the regeneration and other benefits that result from the current arrangements and on the need to provide secure funding for BW. IWAC's own assessment is that many users and their supporters are suspicious of the Government's motives in initiating this review: the prevailing opinion is that the Government is looking for a way to reduce spending on Britain's inland waterways. If the Government announces new financial or funding arrangements, it is certain that these new arrangements will be subject to close scrutiny. In the opinion of IWAC, Government Ministers will immediately be challenged to give guarantees about future funding for BW and for the wider network. Unless clear-cut guarantees are given, the likely outcome is a long and acrimonious dispute similar to that which occurred two years ago.
Because of the seriousness of the situation I very much hope that you will be prepared to meet representatives of IWAC to discuss this letter and our anxieties for the future.
I am sending a copy of this letter to Hilary Benn MP, Huw Irranca-Davies MP and Gerry Grimstone.
Yours sincerely
John Edmonds Chair of IWAC