Maintenance black hole
BW is very fond of telling us that it spends about £95 million a year on maintenance but really needs to spend £30m more which it can not afford, writes Allan Richards.
However, figures published in last year's corporate plan suggest we are being conned and maintenance figures are being artificially inflated to hide spending elsewhere. In other words we have a black hole!
Steady State
BW's website contains a definition of steady state:
'We have developed a model called 'Steady State' which sets out what spend is required to maintain our waterways in a satisfactory order.'
James Froomberg, in a brief for the BW status options report, was quite clear about the spend needed to maintain steady state. The brief stated that it was about £124m (for convenience this article assumes £125m), and that the figure included the costs of customer services. He also confirmed that BW under-spent by about £30m pa on maintenance. In other words, they only spent about £95m pa on maintenance and customer services.
His figures are born out by BW's accounts which show that in the year 2007/8 BW spent £95.1m on maintenance and customer services against a government grant of £67.9m. Last year, due to brought forward government grant, this figure was £101.6m against a grant of £74.3m.
Corporate plan
Every year BW produces a three years corporate plan agreed by government. The previous plan provided a table of BW's maintenance spend, not including customer services, under various headings. It shows that BW intended to spend only about two thirds of the money needed to maintain steady state over the next three years and the under spend is about £30m pa.
However, it is the totals that grab attention because BW says it needs £274.7m over three years to maintain steady state but will only spend £184.6m. If BW is saying that steady state requires £274.7m over three years this averages out £91.6m pa not £125m!
Black hole
BW have already said that it requires £125m pa to maintain steady state, including customer services. The corporate plan suggests the figure without customer services is about £92m. Can customer services really cost £33m pa to run? Surely not!
Are BW are using this £33m black hole to hide how little they spend on maintenance? The figures published in the corporate plan suggest that they may be spending less on maintenance than they receive in government grant!
Perhaps the next time BW's chief executive suggests that boaters are only contributing 12p in the pound towards maintenance or the customers services director contradicts him by suggesting that boaters contribute just under 20% we should be brutally honest—"If government grant is exclusively for maintaining the waterways then we boaters contribute nothing. BW, what are you doing with our money?"
The answer from BW
When confronted by the above, British Waterways told us:
The figures that Alan is quoting namely £274.7 and £184.6m exclude our expenditure on Major works which is in the region of £33-£35m per annum. This is the spend on major engineering works such as lock refurbishments, embankment repairs etc.
The steady state model for major works assumes a spend of £35m per annum. Over the last few years we have spent between £33m and £35m. This year the current forecast is £30m. This is where the £90m difference occurs.
In the Annual Report we quote the total cost of core waterway expenditure plus major works to compare with the £124m steady state assumption however in our corporate plan these are two separate figures.