BW maintenance spend plummets

Published: Friday, 19 November 2010

A RECENT press release from BW claims that this winter our waterways will benefit from 'a £50m vital makeover of dozens of historic locks, bridges and aqueducts, as well as the hanging of over 100 handcrafted oak lock gates', writes Allan Richards.

As with many other BW press releases, it sounds really good but is totally misleading.

The £50 million

The press report makes it sound like BW has found some extra money, and the general public will no doubt be fooled. Unfortunately, this is not additional funds that have been found, neither is it a 'vital makeover'. BW have made the mistake of regurgitating last years press release which made a similar claim but for £60m.

A Freedom of Information Act request on that press release put the record straight. BW was forced to admit that the £60m is not its spend on major engineering projects during 'winter works' but simply part of the £101.6m total spent that year on maintenance. Indeed the £60m was a sum spent over a seven month period!

Rather a long winter!

The 100 lock gates

A hundred lock gates sounds a large figure until you look at the maths. It is true that some very old gates can be found on the system (see David Hymers latest column), but a few years ago, BW stated that on average, gates need replacement every 20 years. More recently, they have said 20 to 25 years. The 1,650 locks on BW's canals and rivers have over 5,000 gates. Even taking the higher figure of 25 years, BW have to replace 200 gates per year.

Could it be that the reason narrowboatworld carries so many photos of dilapidated and leaking gates is that year on year BW replaces fewer lock gates than it needs to?

Will BW be replacing 300 lock gates next year to make up this years shortfall? Not a chance!

The real figures

This year BW is spending 12% less on maintenance than it did last year or the year before. The actual figures are £101.6m in 2008/9, £101.6m, again, in 2009/10 and just £89.2m this year. That is a drop of £12.4m. These figures are taken from audited annual reports and chief executives' report, July 2010.

Incidentally, the chief executives' report is normally published with board minutes and other board papers on BW's website. The July report is rather conspicuous by its absence and had to be obtained using a Freedom of Information request.

Perhaps BW would rather the public believe its press releases than the figures it provides to its Board.

Reworded

To represent an accurate picture regarding the maintenance of our waterways, BW's press release should have read 'This year we intend to spend £89.2m on the waterways which we are charged by government to maintain in satisfactory condition. This is a 12% reduction on the amount we spent last year and the year before. To maintain our waterways in satisfactory condition we need to replace 200 lock gates a year. This year we will only replace 100'.

Hiding the decaying state of our decaying canals hardly encourages the public to get involved in saving them!

The funding gap

However, even a reworded press release would be misleading as it does not take into account the funding gap. In its 2008 status options report, consultants KPMG confirmed that BW's waterways were deteriorating due to the gap between what BW were spending (about £100m pa) and what they needed to spend.

The report stated 'We estimate there is a funding gap [in England & Wales] of at least £29m per annum between the cost of maintaining the waterways and the funds available to BW'.

In very round terms, BW needs to spend about £130m a year to prevent the canals deteriorating. But in the last two year BW has spent £30m less than that. This year they will spend over £40m less.

It gets worse

One would have thought, with the funding gap increasing from £30m to over £40m this year, it could not get worse. Unfortunately it does.

Despite spending £12.4m less than last year BW still can not balance its books! This year its expenditure will exceed its income by some £10.5 and it will have to sell off some of its assets (e.g. property, joint ventures, BWML) to make up the shortfall.

That is quite a comedown for an organisation that intended to both eliminate its maintenance backlog (which now stands at over £300m) by 2012. It's also a massive comedown for an organisation that wanted to become independent of government grant by 2012 to find that even with grant in place its income is some £50m less than it needs simply to stop the waterways deteriorating (much less improve them).

The bottom line

Many people's eyes glaze over when figures are quoted, so let's make it simple. This year BW will only spend about two thirds of the sum needed to prevent our canals deteriorating from the condition that they were in a year ago.

Next year and in subsequent years Defra cuts to grant will widen the gap and the gradual deterioration of our canals will accelerate.

Any potential financial benefits from being a charity will not kick in for many years. Indeed, with EU doubts on the legality of state aid for such an enterprise, we could be in a worse position financially if the new charity did not have BW's assets and a long term funding contract.

In denial

BW's chairman must take ultimate responsibility for the accelerating and perhaps terminal decline of our waterways. Already there is talk of abandoning some canals so that money can be spent elsewhere.

However, when questioned on these figures, BW's Chairman Tony Hales replied:

"'Allan, we don't expect the £30m underspend to increase and overall we expect to hold the current state of the waterways within the budget this year. We are spending a small amount of our long-term capital also to boost expenditure this year, as agreed with government."

It would appear that the chairman is in complete and utter denial!