Examination of Witnesses (Questions 521
WEDNESDAY 29 NOVEMBER 2000
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
(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
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.
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
528. We have heard evidence to suggest that
one of the obstacles -there are a numberand 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.
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
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.
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.