The Webmaster does not necessarily endorse this
approach, but includes it here for the sake of discussion. The opinions, and
the figures, are those of the author.
The initial reaction has naturally been to focus on
reversing the cuts in the government grant and budgets which have brought
things to a head. However, we need to recognise that those cuts are just a
symptom, and deal with the underlying issue.
The real problem is that grant and departmental budgets have
never been a suitable way for the government to support the waterways. They are
set annually, and are very dependent on the politics at the time and the
competition by other functions for funding. This makes this approach
unreliable. However, the navigation authorities need dependable long-term
income, because waterway structures need maintenance every year. If they don't
get it, usability and safety decline, and the deferred work costs much more to
do later. Also, government is never going to put waterways further up the
funding list than (e.g.) schools and hospitals, so once grant is reduced, it is
very unlikely to be restored permanently.
A crisis can be both a threat and an opportunity. I think
we have an opportunity here to change the waterways funding approach
beneficially and permanently.
I am proposing to achieve this through an endowment. This
would be a one-time capital transfer of a large additional real estate
portfolio from the governement to BW, which BW would then manage for capital
gain and income. This new income would allow the grant to be completely
eliminated.
BW would then be financially secure, because it would be
living off its own investments. It already has a significant property
portfolio, and manages it reasonably well (getting a substantial amount of its
annual income from it now), so although BW might need to gear up its property
staffing, but it would not be taking on a new or unfamiliar task.
As BW would be required to maintain the value of the
capital, this value would remain on the books and the transfer would not be
seen as additional government spending overall. On the other hand, the
elimination of the grant would be classed as a (politically attractive) cut in
government spending. The endowment is thus both politically and financially
attractive.
The government has a huge amount of real estate (which does
not have to be by the water) it could transfer.
Note, though, that this approach could not be applied to EA,
as it is part of a government department and not allowed to hold property. So,
part of the plan would be the transfer of the EA navigations to BW, something
which is long overdue anyway.
This would result in further savings, e.g. by elimination of
EA Navigation's head office (its operational staff would transfer to BW). It
would also very desirably make unnecessary the current EA Harmonisation scheme,
through which EA is trying to push length X beam charges on to its other
regions, which will result in further large increases for boaters on those
waters (Nene, Great Ouse, Medway, etc.).
I estimate that the value of the endowment needed to replace
all annual expenditure by government on BW and EA waterways to be about
£1.5 billion. BW already has a portfolio worth about £0.5 billion.
So, there are two parts to the funding problem.
- First, we need to persuade the government to reverse the
cuts for a year or two, so that the current maintenance programs do not have to
be damagingly and uneconomically interrupted.
- Second, we need to use that year or two to establish a
long-term secure funding basis for the waterways..
If we do only the latter, we are sure to lose. If we do
both, we and the waterways as a whole can win significantly.
Posted by Adrian
Stott to uk.rec.waterways on 8 October 2006 |
