Sheffield and South Yorkshire Navigation Canal

– in the House of Commons at 12:00 am on 25th May 1976.

Alert me about debates like this

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]

9.37 p.m.

Photo of Mr Peter Hardy Mr Peter Hardy , Rother Valley

I was somewhat surprised to learn a few moments ago that this debate would take place at a rather more civilised hour than I had expected. The subject deserves consideration at a sensible hour because it is an important matter for South Yorkshire.

I have been interested in the Sheffield and South Yorkshire Navigation Canal since before entering this House, when I

was involved in local government in South Yorkshire. The scheme submitted in 1967–68 was rather more ambitious than that currently under consideration. I thought it was a good idea, but it did not succeed.

However, the scheme submitted during the period of the last Conservative Government was a splendid one and it is before the Minister now. It was supported by the people of South Yorkshire when it was first submitted and they still support it today. We were very angry when the Conservative Government took a view which we regarded as absolutely absurd. They attempted to abolish the British Waterways Board—an attempt which we regarded as ludicrous—and tried to demand that the board should give concrete guarantees of the increases in tonnage from each of the users of the canal over a 10-year period. No commercial organisation can give firm guarantees about what it will be doing in 10 years' time. That is an unreasonable proposition.

I was glad that we criticised it when in opposition and I hope that there will be no attempt to impose similar guarantees now that we are in government. Like most people in South Yorkshire, I believe in consistency in politics as far as possible and we tend to be realistic and consistent.

The scheme for the improvement of the canal is a very good one. I hope that the questions which I shall ask the Minister will receive satisfactory replies. We were extremely grateful for the Minister's visit to the area, during which he went sailing on the canal. He will have realised that along the banks on the northern part of the area of the canal, which it is proposed to modernise and improve, there is a great deal of dereliction, both in my constituency and in the constituency of my hon. Friend the Member for Dearne Valley (Mr. Wainwright). The scheme would involve a considerable improvement to the environment.

I ask my hon. Friend about the calculations which the Department of the Environment has carried out. How much has it put down in its valuation for the environmental factor? That is an important factor. As I have said, in Yorkshire we are realistic. We cannot expect the Government to put in a great deal of money merely to improve our environment. There has to be a commercial attraction. I hope to re-emphasise and underline the real commercial atractions which the navigation offers to my area and the country.

I think that the Department has taken an excessively cautious and pessimistic view in its consideration of the facts and the traffic which the new canal would carry. That can best be illustrated by the position of the steel industry. Only today I have spoken to Sir Monty Finniston about the bar mill in my constituency. I am proud of the mill. I am very pleased with it because it represents the sort of priority and the sort of investment which Britain has to carry out. The bar mill, which is about to operate at full force, is highly competitive. It is confidently expected in the steel industry that it can compete successfully with anything else of its kind in the world. Sir Monty believes that it will be the most successful steel industry unit of its kind.

Anyone who doubts my comments need only look at the commercial success of the Rotherham area of the British Steel Corporation, the most successful area within the country. It has a record of sustained success. Over the past few months it has broken output records week by week. The Rotherham area, with a successful record behind it is confident that the bar mill can be a tremendous success. It is expected that from my area of Thrybergh it will be sending 200,000 tons of steel bars a year into Europe, and another 200,000 tons to North America.

It is logical to assume—the corporation and others in my locality have analysed the matter—that the most effective and economic form of transportation should be used. That is why the corporation wants to convey 400,000 tons of steel bars on the canal. If it is to do so, the improvement will have to take place.

The savings from transporting the steel bars on the canal would amount to £3 a ton. Without that advantage the mill can be a tremendous success, but with that advantage it could be a world beater. I want to see my constituency and the surrounding areas given the chance to justify the investment which the corporation has put into this huge mill, and the modest investment which we in South Yorkshire urge the Government to approve for the canal modernisation.

The British steel industry is not entirely occupied by the public sector. In South Yorkshire there is a thriving private sector. Both that sector and the BSC are anxious about the increasing problem of scrap shortage. There are already problems about scrap supply, and we have not yet got over the recession.

I am anxious to ensure that as we surmount the difficulties, and as other parts of the corporation in addition to the Rotherham works begin to increase their working hours and the number of shifts worked a week, we do not find ourselves held back by an appalling shortage of scrap steel. I have spoken about this matter in the House in recent weeks so I shall not labour the point. It is likely to be a cause for delay and disappointment, and it is one that needs to be avoided. If we can avoid it in the months ahead we cannot do so in the long term. There have been too many mini-mills and are furnace developments for that. The pressure on scrap is very serious. For that reason it is obvious that during the next few years we shall have to substitute iron for scrap. For that reason, there is now a proposition that Britain should be reducing iron ore and bringing it to replace scrap metal in some inland steel areas. I hope that that will apply in South Yorkshire.

There is a real prospect that we shall have to bring in about 500,000 tons of either pelletised iron ore or sponge iron to the private steels, and most of that will be taken up in the South Yorkshire area. The most economic way of transporting that huge quantity of scrap substitute is by canal. But if we are to carry out that economic activity, the canal will have to be modernised. I suggest that to guarantee sustained operation in our steel industry, whether public or private, the small amount of money involved in the modernisation of this canal is entirely justified.

I remind the Minister, although I am aware that he knows a good deal about the factual basis, that the British Waterways Board will have to spend a lot of money in any case. If the canal is to remain as it is—a reluctant memorial to small-scale industry of the past—the British Waterways Board will have to spend about £1½ million to carry out its obligations and arrears of maintenance. If it downgrades the canal so that it offers no value to South Yorkshire, the board will have to spend over £1,100,000 to carry out its obligations, but it can modernise the canal for an additional £4·3 million.

I cannot understand why there has been delay, nor can the organisations in South Yorkshire which have examined the matter calmly, fairly and dispassionately. When my right hon. Friend came to Rotherham we believed that we had put before him a formidable and, indeed, unanswerable case. I do not think that he had an unfavourable view. But it seems that the calculations of our bureaucracy compel Ministers to take a dismal and unfavourable view.

I am not an accountant, but I understand that we do not apply the same accountancy procedures to all methods of communication. For example, roads costs are written off in the year in which they are incurred. There is no interest on capital. But in the case of the British Waterways Board, investment has to be repaid over 25 years at the going interest rate. I believe that we should be consistent and logical. We should apply the same basis of accountancy procedure regardless of the form of transport communication that we are considering. Roads are heavily favoured. I am not opposed to roads, but I am in favour of sensible use of effective transportation, and the type of transportation will be that which is best in the circumstances.

We already have a canal. All we need to make that canal a navigable waterway to give the industrial area of Yorkshire an immediate link with huge markets in Europe, and perhaps trans-shipment to other continents, is reasonable generosity. If the Government were prepared to be generous, I should not object to a different system of assessment and accountancy procedures being applied to one form of transport as opposed to another.

The Government's transport policy document explains the arrangements for roads, but it does not go into detail about the arrangements for either railways or waterways. That is a pity.

My right hon. Friend will correct me if I am wrong, but I understand that the rate of return which these accountancy methods would place upon the British Waterways Board would be 15 per cent. From the calculations which have been given to me, I suspect that the British Waterways Board, on the figures that the Department of the Environment is prepared to accept, could achieve a rate of return of 13 per cent. Unfortunately, the figures which the Department of the Environment appears willing to accept seem to be excessively cautious—almost unforgivably cautious, if I may speak as a Member of Parliament for the area affected.

My right hon. Friend may well believe that the potential traffic which will be generated from Park Gate from the British Steel Corporation would be 100,000 tons, yet this afternoon it was confirmed to me by the Chairman of the Corporation that a potential of 400,000 tons is realistic. I know the capacity of the bar mill. British Steel Corporation is not given to exaggeration. I believe that its assessments are reasonable. There are other potential forms of freight traffic available to us.

I know that my right hon. Friend is concerned to see a decent environment. He will appreciate that of all the areas of Britain only one at present is creating more derelict land than it is clearing. That area is in the southern part of Yorkshire. I do not refer only to the South Yorkshire Metropolitan County, because there are areas of West Yorkshire that also create difficulties. In my area we have hundreds of acres of derelict land. The South Yorkshire County Council, that splendid authority, is carrying out an imaginative programme of land clearance. But if we are to shift some of this colliery spoil, we should realise that it could be shifted most economically by water.

The cost of shifting that spoil is often the biggest obstacle to its removal. Therefore, anything that prevents, discourages or deters us from improving our environment is offensive. The canals could play a part in carrying substantial tonnages of colliery spoil in an inexpensive way, which would make it possible to carry by that means many more tons than might otherwise be possible.

Adjoining my area in the constituency of my hon. Friend the Member for Dearne Valley are large areas of limestone quarries. I know that the Steetley Quarry organisation will be happy to have its stone transported in huge quantities by canal because it would represent a saving of several pounds per ton over any other form of transportation.

Therefore, we believe that we have identified real prospects for improving freight traffic. I do not believe that the estimates which have been given to the Department of the Environment are overoptimistic. In an answer given to me by the Department only a few days ago, I was told that only 1·5 million tons of these materials could be identified per year. I believe that that is a gross under estimate. I believe that the traffic forecasts in the posession of the British Waterways Board amount to a total of 2,460,000 tons per year—more than double the figure accepted by the Department as realistic. That would seem to me to justify giving a higher priority to this project that it currently enjoys.

I am not speaking purely for myself in this matter. On Friday last I saw the leader of the South Yorkshire County Council, Sir Ron Iremonger. He confirmed that his authority continued to be passionately in favour of this scheme—so much so that it is prepared to back it with finance. It is prepared to give every possible assistance because it believes the scheme is in the essential interests of the area.

The same is true of the Rotherham Borough Council, which acted as host for the meeting at the Rotherham Town Hall attended by my right hon. Friend. Again, the same goes for the Doncaster Metropolitan Authority and all the smaller authorities in the areas involved. The concern goes right across the board into chambers of trade and chambers of commerce in the area, which are all strongly in favour of the project. Support has been expressed by the British Steel Corporation, the National Coal Board and private industry, particularly the Independent Steel Producers Association, which has expressed itself in strong support.

Furthermore, there has been support for the project from the Labour movement. The regional conference of the Labour Party has expressed strong approval for this scheme. The trade unions in Sheffield and Rotherham support the proposal, as do the Yorkshire trade councils and their associated bodies. I am sure that one would have to go a long way in South Yorkshire to find somebody who was not convinced about the desirability of this project.

Therefore, I hope that my right hon. Friend will be prepared to give his blessing to this scheme. It may be that he will have difficulty in working out how he should apportion that part of the money of the Department of the Environment which can be spent on the matters for which he is responsible. But I believe that, if he is optimistic about Britain's future and if he agrees with me about the achievements of the area which I represent, and of the areas around it, he will realise that we have made a tremendous contribution to the economic prosperity of Great Britain and that this canal gives us an opportunity to maintain and to improve that.

If my right hon. Friend cannot do that, we shall feel not merely disappointed but very angry, because it seems to us that we shall have been shackled by a bureaucracy and we shall be sad that it has had an excessive influence on my right hon. Friend.

We think that it is a very desirable scheme. No matter from which basis it is examined, we believe that the scheme should go forward. In my view, the potential over the next 10 years is immense. The cost of the lost opportunities since the Conservative Party made the sad mistake that it did two or three years ago in relation to the same scheme speaks for itself. It would have cost a couple of million pounds. It would already have been making the contribution which I hope that this scheme will make in a very short time.

9.56 p.m.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

I am grateful to the Minister and to the hon. Member for Rother Valley (Mr. Hardy), even though I was not able to speak to him personally about it, for allowing me a couple of minutes to support him in this debate. As the Member for an industrial constituency in West Yorkshire, I am sure that he will not deny that a topic concerning canal transportation and the importance of the waterway system in South Yorkshire must also be related to the needs of the county as a whole and to its industrial benefits as a whole.

The Minister will be aware that in Yorkshire at the moment we have a keen discussion going on about transport policy. He will be aware, too, of the schemes which have been prepared for the extension of the MI motorway—a motorway which will affect my constituency substantially by driving the westerly route right through it. He will also know of the enormous costs involved—some £91 million—in the original estimate for the extension of the M1 from Kirkhamgate to Disham.

If the right hon. Gentleman sets that against the £4·3 million required for the development of the South Yorkshire Waterway, as so eloquently proposed by the hon. Member for Rother Valley, he will recognise the concern that we in Yorkshire feel that the Government, without due consultation with local interests, both industrial and environmental, may arrive at decisions based upon extending national networks without sufficient examination of the peculiar regional requirements of West and South Yorkshire.

I urge upon the right hon. Gentleman that, when he and his Department look carefully at the proposals for the extension of motorways or for the extension and improvement of the canal system, he will recognise that, in sheer value for money, the £4·3 million required to improve the South Yorkshire Waterway system represents extreme value as opposed to the somewhat doubtful value of spending about £100 million on the motorway extension.

Secondly, I hope that the Minister will also consider whether employment will be safeguarded if we ignore the development of our natural assets of waterway systems and rail systems. It must be admitted that we in Yorkshire have some of the oldest industrial structures in the country. Many of us feel that a correct analysis of our rail system or, indeed, our waterway system has gone partially by default because—I admit this—previous Administrations have tended to set the contribution on one side—

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]

Mr. Shaw:

The fact that this has been the case in the past is no excuse for the Minister to take a similar shortsighted view. I welcome the way in which the hon. Member for Rother Valley has put the case.

May I remind the Minister that many of us on this side of the House, representing Yorkshire constituencies, have asked for a transport commission which might examine the requirements of the region and the various modes of transport required. This has been repeatedly refused. I hope that the Minister, in his reply, will comment upon it. I would support the case for the extension of the South Yorkshire canal system because, in respect of value for money, such a proposal ought to be accepted in preference to the simplistic extension of the motorway system with such great environmental damage which will result.

10.1 p.m.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

My hon. Friend the Member for Rother Valley (Mr. Hardy) should be congratulated not only on the way in which he has presented an original case but also on the way in which he has gathered his facts. This case has gone on for a long time. It has been of interest not only to people in Yorkshire but also to those in the rest of the country who believe that there is a future in waterway navigation and who have been dissatisfied with what they regard as an anomaly in the way in which waterways, as distinct from roadways, are funded. In three debates in this House it has been extremely difficult to get at the root of this question, which has been well illustrated by my hon. Friend.

It is worth noting in passing that the Select Committee on Transport Investment in the last Parliament made a specific recommendation as to investment in waterways. This is something which has not yet been taken up. Perhaps as a result of the consultation paper, to which I shall return, this is now the time.

My hon. Friend drew attention to the basic difference between the calculations of capital returns on roadways and waterways. This is relevant to this particularly imaginative scheme. On 18th May I tried to get some information from the Department of the Environment. I asked the Minister in a Written Question to explain why he made a distinction between authorising and designating capital expenditure on roads and that of new waterways. The Minister for Transport replied: New waterway construction for commercial purposes is appraised on the normal financial criteria applicable to nationalised industries generally, though social costs and benefits may in appropriate cases be taken into account. I hope they are in the case of South Yorkshire. Road schemes, for which a commercial test is inappropriate, are judged against cost-benefit criteria."—[Official Report, 18th May, 1976, Vol. 911, c. 458.] This is a distinction of great importance. We all know that there is plenty of money for roads, but if one tried to do a distinct calculation on the precise return one would find that there was no extra return on a specific road unless it was a toll road, because the vehicle licences are paid anyway so it is a net charge on what remains of the Road Fund and on the Exchequer. Roads cannot be calculated in that way. They go through a different system.

The fact that waterways sometimes had some of their own vessels—in other words, that a proprietor of the waterways had some craft on that waterway—is a historical accident. It is a historical accident that the British Waterways Board now runs certain craft on British waterways, because all sorts of other craft run in much the same way as happens on the road. The waterway can in many circumstances be compared with a roadway. There are private vessels and private cars; there are commercial barges, some owned by British Waterways, and commercial vehicles, some owned by British Road Services. There are private contractors on waterways and private haulage contractors on the roads, all using the common track.

We come back to the common problem of track cost and how it is paid for. Waterways have much more in common with the track costs of roads than those of railways. No one can put his private coach on a railway but he can put his private vessel on a waterway.

Now we come to the future. It may be that imaginative schemes such as that in South Yorkshire are not widespread. I am not saying that there is a big case for building new waterways, although we might investigate that in future, but there is a big case for improving existing waterways like South Yorkshire at relatively little cost but great advantage. What is overlooked is that waterways as track fulfil many more functions than just navigation—recreation, including fisheries and generally lolling by the waterside, industrial water supply, flood control, water cooling for power stations, land drainage and irrigation for farmers in the summer. We know how important the last has been in South-East England, particularly in the last two years. There is also the bulk transfer of water from one catchment area to another. I would not claim hydro-electric power, because the quantities are so small, but there are possibilities of pump storage.

So waterways can, and do in many parts of the world, fulfil a variety of purposes. One has only to think of the Tennessee Valley Authority. I do not think that the present Government will wish to be behind the American Government of 1934, or whenever it was that Franklin Roosevelt introduced that multipurpose water scheme, but that is what they are by applying the financial criteria they use. If ever there was a case for applying positive cost-benefit analysis, surely it is on waterways because of their multi-purpose use. The Government, for reasons best known to themselves, do not apply it to waterways but they do to roads, which is quite illogical.

Finally, let us consider the ways in which cost-benefit analysis has been applied in the past to construction of track—not water track but rail track. It was the Conservative Government of Mr. Macmillan under the well-known Minister of Transport, Mr. Marples, who constructed a railway which it was known would lose money from the day it opened, on straight calculations, never mind the interest. One of the good things that Mr. Marples did was let the Victoria Line go ahead, because cost-benefit analysis showed that it would benefit London.

Am I to understand that although a Tory Minister of Transport over 15 years ago could construct the Victoria Line, a Labour Department of the Environment today will not allow the South Yorkshire Navigation to be constructed on the same sort of financial criteria? I can hardly believe that. But if that is what the Minister will tell us tonight, I hope that it is not the end of the story.

These are the crucial points which lie behind the whole of the South Yorkshire Navigation controversy and the way in which the Treasury, perhaps—I do not know how far the Treasury has a finger in the pie, but I should be surprised if it does not—fails to distinguish between capital for multi-purpose transport, agriculture and recreational purposes which are most suited to the cost-benefit analysis. Railways are much more suitable to the capital return analysis which the Government insist must be applied to waterways.

Therefore, although I do not expect that my hon. Friend will be converted tonight—although I know that he is willing to be converted in this matter—I hope that, as a result of the practical example produced by my hon. Friend and the strong case that there is for the South Yorkshire Navigation, we shall hear some words of encouragement which will allow those of us interested in this vital matter to see our way forward. I believe that in the construction and improvement of waterways the Government would not only get the wholehearted consent of those who use them for recreation and navigation, but would appeal to the imagination of the British people as a whole, who want to see projects of this kind imaginatively conceived and carried out.

10.10 p.m.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

I am most grateful to my hon. Friend the Member for Rother Valley (Mr. Hardy) and other hon. Members who have spoken rather passionately on this subject this evening. I certainly do not object to that, because I conceive it to be part of my duty as Minister responsible for water resources to encourage a degree of passion about the subject, and to encourage the building up of an informed opinion throughout the country about the importance of our canal system and of getting a national network of canals. That will come about only when people understand the historical significance of our canal system and appreciate that in these changing days a system built up for the Industrial Revolution as a method of transportation can now have an entirely new purpose in recreational and leisure terms.

I do not object to anything that has been said along those lines and I am well aware of the fact that the more I encourage amentity organisations to make noises of that kind, the more often my hon. Friends will get up and press me on this subject. At the conclusion of my remarks I shall return to this point and to the Government's general proposals for dealing with the future of the canal system, and particularly for retaining it as a national entity, and a proposal to create an inland waterways national navigation authority. But, however much any of us wish to move in this direction, we are having at this time to judge every proposal for spending public money and for public borrowing to finance public works against very strict criteria.

Hardly an hour goes by in this Parliament when we do not have our financial affairs vigorously examined around the world, with the total cost of public borrowing a matter of national concern. There is hardly a moment in the House when these aspects are not brought before us.

I must say at once to my hon. Friend the Member for Rother Valley, who knows that I am sympathetic to his cause, that there could not be a less propitious moment for us to be considering this matter. That is one reason why I shall come back at the end of my remarks to my view on how this whole question ought to be determined in future. I entirely agree with my hon. Friend on the history of this project. The proposal was first put forward in 1966 and rejected by the then Minister. The British Waterways Board continued to work on it and put in a new application in 1972. Successive Governments have been considering it since.

I want to say a word on the basis of assessment. I must tell my hon. Friend the Member for Newham, South (Mr. Spearing) that he is not right to say that we apply a different cost benefit analysis to canal considerations from those we apply to the road system. The principles we apply—and I shall tell the House how we have computed the figures and how we have done our arithmetic in this case—are exactly the same.

It is true that the techniques differ, but they have to do so because the road system is free and there are no tolls. When we come to compute the cost of canals, within that computation we have to allow for the tolls that will be paid by the users. That does not apply to the road system and, therefore, the two systems are not entirely on a parallel line. We apply the same principle of cost benefit analysis as with the road programmes.

The basic requirement for all public investment is that it should show a return in excess of 10 per cent. in real terms for low-risk projects. That is the criterion which the Government apply. With higher risk projects the Government and the Treasury require a higher rate of return than 10 per cent. to justify the higher risk to public investment. There is extreme uncertainty about the traffic which would be generated on the canal. I have no quarrel with the figures given by my hon. Friend the Member for Rother Valley and I shall return to them.

On the figures available to us, on any calculation the canal would be a high-risk project. We should certainly look for more than a 10 per cent. return on the investment. The appraisal includes not only the financial return to British Waterways Board but also environmental benefits and side benefits to users, such as the British Steel Corporation, who would gain from cheaper, faster transport.

The total cost of the scheme for the Sheffield and South Yorkshire Navigation has been calculated at £5·4 million. That includes £1·5 million for arrears of maintenance, most of which would be necessary even if no improvement were to be made. The largest element within that £1·5 million is for the environmental improvement which my hon. Friends and everyone in South Yorkshire want.

We started our calculations by subtracting that £1·5 million from the £5·4 million, which leaves the net additional cost of improvements at about £4·3 million. That is the figure against which we have tested the return. This is public expenditure which can be financed only by borrowing from the Exchequer. It has been suggested that local authorities might put in money, but this would be for their own investment in, for example, new roads necessary to provide access.

The hon. Member for Pudsey (Mr. Shaw) waxed eloquent on the relationship between investment in roads and investment in canals. We must remember that canals do not go exactly where we want them to go. If we were to use the canal system more traffic would have to be taken there in the first place to secure anything like the return which the hon. Gentleman wants. There is no suggestion that the local authority would meet part of the cost of the scheme as distinct from the environmental improvements. Therefore, the financial returns have to be judged almost entirely on the calculation of the new traffic that would be generated.

The background of the steady decline in commercial traffic on waterways is a factor which must be in the Government's mind. Between 1969 and 1974 traffic fell by almost half. Twenty years ago traffic on the canal system was five times as great as it is now. The reasons for that are clear to us all. There has been a tremendous shift of traffic on to the roads, especially since the development of the motorway network. To some extent the same difficulty faces the railway system. In 1972 the British Waterways Board—

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

I should like to press on, as I am anxious to put the Government's thinking before the House. If I have time I shall give way at the end.

In 1972 the British Waterways Board consultants identified potential new traffic. I do not know why my hon. Friend the Member for Newham, South is so amused.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

If my hon. Friend gives way, I shall tell him. He has spent 20 minutes replying to the points made by my hon. Friend the Member for Rother Valley and I hope that he will now give way.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

My hon. Friend the Member for Newham, South so exaggerates his arguments that it is impossible to take him seriously. I have been on my feet for 10 minutes, not 20 minutes.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

But my hon. Friend has 20 minutes in which to make his reply.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

That just shows how unwise I was to give way. I am sure that my hon. Friend the Member for Rother Valley would have made a more relevant intervention.

In 1973 the board approached firms to identify traffic likely to be offered for tender. The Department's officials made direct inquiries of major users to try to assess how much they would actually use the waterway.

I am grateful for what my hon. Friend the Member for Rother Valley said about my visit to the area, because it was after that and after I met the local authorities—to whom I pay tribute for their realism and enthusiasm—that we did the sums again and made further specific inquiries of all the firms, including those about which we have heard tonight.

As a result of that—including 400,000 tons from the British Steel Corporation about which the chairman of that corporation wrote to me—the most optimistic figure that we could estimate was that new traffic would amount to 1·15 million tons over five years. That is the second essential ingredient in our calculation.

But that much tonnage, which is as much as we could get even after consulting all the organisations that have been mentioned, is not sufficient to produce an adequate return. In our calculations we threw in everything but the kitchen sink to produce the extra tonnage which we hoped the canal might attract in order to achieve an adequate rate of return. That is what we all wanted, but it was difficult. The Government reluctantly came to the conclusion that it was not possible to allocate additional resources or to switch resources to justify a £4·3 million investment in the canal.

The canal cannot be compared with the Victoria Line. I wish that we had on the canal a thousandth of the people who use the Victoria Line. It is not realistic to compare the canal with the motorway system, much as I should like to do that.

I must tell my hon. Friend the Member for Rother Valley that we have not been shackled by bureaucracy, but we have been shackled by constraints on public expenditure in one of the most difficult economic periods in the history of the country.

Photo of Mr Peter Hardy Mr Peter Hardy , Rother Valley

My hon. Friend talked about the cost of roads. Is he aware that the quarries, the bar mill and other industrial users of the canal do not need new roads because they are already adjacent to the canal? The Minister talked of the assessment of the figures after his visit to Rotherham. Does he remember the formidable economic and environmental case argued by an ex-mayor of Rotherham, Mr. Stanley Crowther? He suspects, and I share his suspicion, that the figure of 100,000 tons was among the figures considered, not 400,000 tons.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

No. I have given the figures. I repeat that 400,000 is what we have included. I am willing to meet the British Waterways Board or anyone else. I am giving the figures because I want my hon. Friends to analyse them as I have had to analyse them. If there are any doubts or difficulties about them, I hope that my hon. Friends will come and see us again.

What are we to do in view of all this? It is clear that the Government cannot take a decision to proceed with the scheme on this basis now, but we face the same problem, although not in such an acute form, for the rest of the canal system. I am as anxious as anybody to see the rest of the system developed and used, particularly for recreational and leisure purposes, and where practicable for transportation.

Therefore, in the consultation document about the future of the water industry which I published recently I made it perfectly clear that one of the proposals on which we were inviting consultation was a proposal that the board, and therefore the whole of our canal system, should move into a new national water authority and be merged with the water industry as a whole. I believe that that will happen It is sensible, and the amenity interests are coming round to the view that it is the only logical way in which we can bring our canal system up to date for recreational purposes. This decision would then be taken not so much by me or the Government as by the new national water authority, as part of its appraisal of the requirements of the water system as a whole.

We have moved in that direction for the simple reason that there is a multimillion-pound backlog of work required on the canal system just to bring it up to date. There are arrears of maintenance, and we can see no prospect of obtaining the sort of money needed through the normal Treasury channels. Therefore, we can save the canal system, bring it up to date and use it as a modern recreational and leisure amenity facility for the people only if it is brought within the whole of the water industry. That would give it a much firmer foundation and a much wider opportunity to obtain the necessary public investment.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

Will the Minister comment on the question of a transport commission for the region so that the problems of canals, railways and roads can all be examined at the same time?

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

I should not like to comment on that, because I have not thought about it.

When the Conservative Government reorganised water administration in 1973 they proposed that the canal system should be broken up on a regional basis. We bitterly opposed that, as did every amenity interest. We want a national network of canals so that the system can be maintained as a whole. We want additional canals built to bridge the gap in the north between east and west and so that people can sail round the whole country.

I am convinced that our proposals will give us that possibility for the first time. I also believe that it will keep alive the possibilities for this canal. I am as anxious to do that as is my hon. Friend who kindly initiated the debate, and whose continuing interest I much value.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.