House of Commons Environment, Food and Rural Affairs Committee British Waterways: follow-up Eighth Report of Session 2007–08 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 18 June 2008 HC 438 Published on 1 July 2008 by authority of the House of Commons London: The Stationery Office Limited £0.00 Environment, Food and Rural Affairs Committee The Environment, Food and Rural Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Environment, Food and Rural Affairs and its associated bodies. Current membership Mr Michael Jack (Conservative, Fylde) (Chairman) Mr Geoffrey Cox (Conservative, Torridge & West Devon) Mr David Drew (Labour, Stroud) Mr James Gray (Conservative, North Wiltshire) Patrick Hall (Labour, Bedford) Lynne Jones (Labour, Birmingham, Selly Oak) David Lepper (Labour, Brighton Pavilion) Miss Anne McIntosh (Conservative, Vale of York) Mr Dan Rogerson (Liberal Democrat, North Cornwall) Sir Peter Soulsby (Labour, Leicester South) Dr Gavin Strang (Labour, Edinburgh East) David Taylor (Labour, North West Leicestershire) Paddy Tipping (Labour, Sherwood) Mr Roger Williams (Liberal Democrat, Brecon & Radnorshire) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the Internet via www.parliament.uk. Publications The reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/efracom Committee staff The current staff of the Committee are Chris Stanton (Clerk), Nerys Welfoot (Second Clerk), Sarah Coe (Committee Specialist—Environment), Marek Kubala and Joanna Dodd (Inquiry Managers), Andy Boyd and Briony Potts (Committee Assistants) and Mandy Sullivan (Secretary). Contacts All correspondence should be addressed to the Clerk of the Environment, Food and Rural Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5774; the Committee’s e-mail address is: [email protected]. Media inquiries should be addressed to Laura Kibby on 020 7219 0718. British Waterways: follow-up 1 Contents Report Page Summary 3 1 Introduction 5 The EFRA Committee inquiry in 2007 5 This follow-up inquiry 5 British Waterways 7 Funding of British Waterways 7 2 BW’s relationship with Defra and other Government departments 10 The new “Strategic Steer” from Defra to BW and the “Deal” between them 10 Defra’s priorities for BW 10 BW’s Corporate Plan 11 Interdepartmental Working Group 11 British Waterways budget for 2008–09 13 British Waterways Status Options Review 15 3 British Waterways’ regeneration and restoration work 17 Benefits of waterside development 17 Regeneration and the expansion of BW’s network 17 Restoration 18 BW’s withdrawal from the Cotswold Canals restoration project 20 History of the restoration project 20 British Waterways’ decision to withdraw from the Cotswold Canals Partnership 21 Reaction to BW’s decision 23 Defra’s view 24 Our views 25 BW’s decision to withdraw from the Cotswold Canals Partnership 26 4 Conclusion 27 Conclusions and recommendations 28 Formal Minutes 30 Witnesses 31 List of written evidence 31 List of unprinted evidence 34 List of Reports from the Committee during the current Parliament 35 British Waterways: follow-up 3 Summary In summer 2007 we reported on British Waterways (BW). We urged the Department for Environment, Food and Rural Affairs (Defra) to ensure adequate funding of the waterways network under the Comprehensive Spending Review. We also expressed concern at the poor relations that existed at the time between Defra and BW. We were prompted to examine this subject again by BW’s decision in February 2008 to withdraw from the partnership to restore the Cotswold Canals so as to be able to fund urgent repairs to the Monmouthshire and Brecon Canal. We decided to focus on BW’s regeneration and restoration work, but we have also received evidence on how Defra and BW are working together. We are encouraged by the work BW and Defra have done since summer 2007 to improve and clarify their relationship. The strategic guidance to the BW Board from the Department reflects the importance the Government attaches to BW maintaining the existing network. They have undertaken to communicate effectively with each other, and have agreed how they will work together. These are important steps forward. We welcome too the establishment of a group within Whitehall to bring together all the government departments with an interest in BW’s work. BW received slightly more financial support from Defra than it expected from the Comprehensive Spending Review. While not enough to avoid underspending on its major works programme, in the present climate the settlement is acceptable. BW’s property development work produces a substantial proportion of its commercial income. But restoration of canals produces little if any direct benefit to BW, and BW has often carried all the financial risk in such projects. Canal restoration schemes can be of great value to the areas where the canals are restored, producing knock-on benefits such as more jobs and visitor income. What BW’s decision on the Cotswold Canals demonstrates is that it is not reasonable to expect a BW Board charged primarily with maintaining the existing waterways network to take on substantial risk from such projects, especially in present economic conditions. If the public sector wishes to obtain external benefits from canal restoration schemes, the bodies responsible for obtaining those benefits should bear the risk. Defra, with British Waterways and other interested government departments and public bodies, should develop a mechanism to score and prioritise public investment in canal restoration according to the external benefits that would be created, and should agree how the financial risks of such projects should be borne. British Waterways: follow-up 5 1 Introduction The EFRA Committee inquiry in 2007 1. Last year, the Environment, Food and Rural Affairs Committee inquired into the work of British Waterways (BW). Our terms of reference were to examine how BW was working towards its ambition of creating “an expanded, vibrant, largely self-sufficient waterway network”, in the context of the policies set out by the Government in its 2000 document, Waterways for Tomorrow, the 2004–05 policy review of British Waterways, and recent changes in Defra’s budget. 2. We reported in July 2007. We commended the commitment of Government, BW and individuals over the past decade to improving the waterways network, and their success in doing so. We said that the waterways network was a vital public asset, and that the Government had a responsibility to keep it in good order. We were concerned at the implications of likely lower Defra grant levels in the Comprehensive Spending Review 2007 period, from 2008–09 to 2010–11, on BW’s ability to maintain the waterways network to an acceptable standard. We recommended that BW and Defra work together closely to agree a CSR 07 settlement that ensured the long-term stability of the waterways network. We expected Defra to consider carefully BW’s claim that additional capital funding would be necessary for each year of the CSR 07 period if its grant settlement continued to reduce in real terms. We considered it imperative that BW was granted every opportunity to deliver strategies that could help generate more of its own income. 3. Our inquiry showed that relations between BW and its sponsor department in England and Wales, Defra, had been tense, and that communication between Defra and BW needed to be improved. This follow-up inquiry 4. On 4 February 2008 BW announced that with effect from April 2008 it was withdrawing from the Cotswold Canals Partnership, a collaboration with other partners including Stroud District Council, the South West England Regional Development Agency, the European Union, Gloucestershire County Council, the Waterway Trust and the Cotswold Canals Trust. The Partnership’s aim is to restore the Stroudwater Navigation (7 miles/12km) and the Thames and Severn Canal (29 miles/46km) to form a link between the Thames and the Severn. BW said that its withdrawal followed a review of funding commitments for the next financial year and the diversion of significant funds to make progress with the urgent first phase of a repair programme for the Monmouthshire & Brecon Canal in Wales, which was expected to cost about £15 million over four years.1 5. We announced on 22 February 2008 that we were reopening last year’s inquiry into British Waterways as follows: 1 BW press release, 4 February 2008 6 British Waterways: follow-up The Environment, Food and Rural Affairs Committee will hold a one-off evidence session on British Waterways (BW), to follow up its work in this area last year (Seventh Report of Session 2006–07, HC 345–I). The Committee will take oral evidence from both Defra and British Waterways to examine BW’s regeneration and restoration role, with particular reference to BW’s decision to withdraw from the Cotswold Canal Partnership.2 6. We received an unusually high number of memoranda—124. We are very grateful to all those who took the trouble to respond to our call for evidence. 7. Most of the memoranda we received fell into one of three broad categories: • A large number came from BW’s regeneration partners around the country. The great majority expressed satisfaction with BW as a partner and support for BW in its work, and asked us to encourage this to continue. The large number of such responses is partly explained by the fact that BW told us that it had suggested to its partners that they might wish to write to the Committee with their views of their experience of working with BW.3 • Some supported the repair of the Monmouthshire and Brecon Canal.