Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of Witnesses (Questions 521 - 539)




  521. Good morning, Minister. I am sorry to have kept you waiting but all the best prima donnas always have to wait for their entrance. Would you be kind enough to introduce your colleagues and tell us whether you are going to make any opening remarks?
  (Lord Whitty) Yes. This is Mr James Bradley and Mr Colin Jones from the Waterways Branch in the Department. If I could just say a few words, Chairman.

  522. Please do, my Lord.
  (Lord Whitty) Thank you very much. We have approached the waterways as a potential for an awful lot of different things. I think back in 1968, when there was the last real assessment of the waterways, they were regarded still primarily as simply a declining transport asset. We have recognised there is an awful lot more that can be done by the waterways. We introduced measures last year to unlock British Waterways' potential and we extended that with the White Paper this year on Waterways for Tomorrow. We are looking at regeneration and we are looking at a contribution to heritage, a contribution to recreation and a contribution to conservation as well as, in a limited sense, a contribution towards transport. There are also exciting new possibilities in terms of communications and water management and water transfer. We believe there is a new era for inland waterways. We think we have set the framework in these various statements and White Papers and we think British Waterways and the Environment Agency are getting on with the job.

  523. Do you think your new era will include some kind of streamlining of the structure of navigation authorities?
  (Lord Whitty) I think it is true to say that if we were starting from scratch we would not design the structure responsibilities as they are now.

  524. You did talk about the fragmented approach but, given where we are, are we going to streamline things?
  (Lord Whitty) I think the decision that was taken a couple of years ago by Ministers was not to alter the structure and to encourage a high degree of collaboration across the industry, particularly between British Waterways and the Environment Agency. That now seems to be working. The opportunity for looking at the Environment Agency's responsibilities in the Quinquennial Review is coming up shortly anyway. Until that is done I think a degree of stability is required for the staff and a period to allow the collaboration to work, and it does appear to be working.

  525. Might that review include a review of the navigation functions and the suggestion that they might be taken away from the Environment Agency and given to British Waterways?
  (Lord Whitty) It will look at all the functions of the Environment Agency and it could, therefore, look at the navigation responsibilities. I do not wish to pre-empt any outcomes from that.

  526. No. Nor would we seek to make your mind up for you, we are the most humble of Committees.
  (Lord Whitty) I have always noted that.

  Chairman: We might seek to influence you possibly.

Mr Stevenson

  527. Minister, in your Transport White Paper you indicate the potential to divert about 3.5 per cent of the UK's road freight traffic to water. At the moment freight on our waterways is about one per cent. What needs to be done specifically to achieve that target?

  (Lord Whitty) That target relates to all waterborne transport. It relates, therefore, to coastal shipping and the bulk of that would be coastal shipping and an increase in coastal shipping and estuarial tidal waterways. The contribution of the non-tidal waterways to that would be very small and in relatively limited locations, such as the area in Yorkshire, e.g. the Ouse and various other locations, there is not much of the inland non-tidal waterway which is appropriate for today's freight, but there is some and British Waterways are determined to make the best of that. There is also some in the port areas, like the Manchester Ship Canal. The bulk of that 3.5 per cent is not inland waterways.

  528. We have heard evidence to suggest that one of the obstacles -there are a number—and challenges to developing more non-coastal freight usage for our waterways, the sort of thing you have just described, is infrastructure, bridges that are too low and that sort of thing. Would you agree that is a significant obstacle? What do you suggest should be done to remove that obstacle?
  (Lord Whitty) As I say, the bulk of the canal network is both narrow in itself and bridges are low and, therefore, it is unlikely to provide substantial commercial traffic in today's terms. There are areas of canals which do not suffer from that and where some substantial increase in freight could take place and that requires investment. We have beefed up the Freight Grants system in inland waterways which has been in place since 1981. The bulk of money spent under that has been in the last three years, £18 million. We are extending that and I think you had early notice of setting up the study group to look at further possibilities for freight. I would be wrong to give the impression that the bulk of the canal network would be usable for freight, this is in very particular locations on both the tidal and the non-tidal networks but not across the canal network as a whole.

  529. All of the canals in North Staffordshire were built to carry freight. That was a long time ago I accept.
  (Lord Whitty) All canals were built to carry freight.

  530. Now you are saying that in the main it is not practical.
  (Lord Whitty) All canals were built to carry freight but, being realistic, in today's terms the bulk of the freight required, and we are talking about the most appropriate freight to be carried on canals apart from a few niche markets, would be bulk freight, the size of the canals and the size of the vessels that could go on our canal system suggest that it would not be appropriate through most of North Staffordshire or elsewhere.

  Mr Stevenson: Could I ask a question about your written evidence. In your evidence you say that one of the Government's specific objectives is to "encourage the transfer of freight from roads to waterborne transport where this is practical, economic and environmentally desirable."

  Chairman: Could you identify where that is?

  Mr Stevenson: Document IW57, the memorandum from the DETR, paragraph nine.

  Chairman: Do not tell me that you did not bring your own evidence with you, that would fill me with delight.

  Mr Stevenson: It is the sixth bullet point down.


  531. I am sure it is not the first time you have read this, my Lord?
  (Lord Whitty) Absolutely not.

Mr Stevenson

  532. I have forgotten my question now. It is a conspiracy, that is what it is. No, I have not really. When you are trying to determine where this is practical economically, what sort of analysis do you do? Do you do cost benefit analysis on such potential projects?
  (Lord Whitty) Yes, and BW would be required to show a rate of return on it.

  533. That was my next question, what sort of rate of return is required?
  (Lord Whitty) The indicative rate of return is eight per cent, which is broadly speaking what is needed for most public enterprises. There is a balance. Some projects, particularly in the regeneration area, the heritage area, might not meet the full eight per cent, others would have a higher figure, but that is the indicative figure and we would expect projects to work out at at least eight per cent.

  534. That indicative figure, doing the same analysis on, for example, a road development, is that eight per cent as well?
  (Lord Whitty) Generally speaking those road schemes we go ahead with have a rather higher return figure than that but, of course, it is subject to a very wide system and the new approach to appraisal in relation to roads does bring in a lot of other factors which are not easily monetarised into the traditional Treasury formula, shall we say.

  535. The traditional Treasury formula, yes. You see what I am trying to get at, I am trying to get Government's approach to cost benefit analysis. It seems to me if we are making a reality of this transfer where practical and economic then we need to look at the rate of return expected and the cost benefit analysis to see how that compares with other modes of transport.
  (Lord Whitty) I think we are talking about two different things because in the one context we are looking at the rate of return for British Waterways or other public sector owned capital investments, so it is the money that is returned, the money that British Waterways make on the project. When we are looking at road projects or transport infrastructure generally then we do have a wider perspective, including on waterways proposals, which looks at the broader cost benefit in terms of the benefit to traffic of achieving modal shifts, of the environmental impact, the safety impact and so forth. All of that is brought into the new approach to appraisal. That would be the same in relation to waterways projects as it would to motorway or other projects. The rate of return is, if you like, a public sector internal accounting indicator. The assessment as to whether a project should go forward or not is a much broader question.

  536. Can I ask one more question? Just trying to reflect this objective into the Ten Year Transport Plan, can you identify what funding has been specifically allocated over that ten year period to develop waterborne freight?
  (Lord Whitty) The specific allocations relate to the first three year period. The overall £180 billion figure does not include an allocation for waterborne freight but the first few years relate to the Freight Grants provision and the assessment of waterways in the allocation to British Waterways and to the Environment Agency in developing a waterways network in general. There is not a ten year figure, there are various three year figures. The Freight Study Group is looking at this very point.

  537. I am pleased to hear it because when we compare that with other forms of transport there are figures, are there not? £60 billion allocated to roads, £60 billion to rail, £60 billion to local transport. Why has there not been a specific figure identified for this objective, which is a very important one?
  (Lord Whitty) As I say, in the first period there are allocations. We are allocating a fair amount to the local transport plans, which can include waterway provisions, and we are allocating money through integrated transport within the road and rail budget. It would be a relatively small figure, if that is what you are driving at, out of those £160 billion.

  Mr Stevenson: I would like to come to that. That was not what I was driving at, I was simply trying to equate the objective of promoting this transfer with the non-identification specifically of funds in the Ten Year Plan to do that.

  Chairman: He is just asking you whether you are serious in that actually.

Mr Stevenson

  538. There you have it.
  (Lord Whitty) Yes, we are serious. We think that a lot of the developments will be commercial developments identified by British Waterways acting commercially during that period and would not, therefore, need—


  539. Is that what we are relying on?
  (Lord Whitty) If we are talking about the transport aspect, yes, we are relying on that. We would expect British Waterways to invest in partnership or in terms of a return to themselves in that period. The waterways network, of course, is kept, is maintained, largely through Government grant but the investment in transport facilities, apart from the Freight Grants, would be a commercial decision for British Waterways.

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