[Mr. Eric Martlew in the Chair] — Inland Waterways (West Midlands)

– in Westminster Hall at 12:00 am on 27 March 2007.

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Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Alan Campbell .]

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands 9:30, 27 March 2007

I am delighted that you will be presiding over this debate, Mr. Martlew. I will start with some of the history of this issue. In 1994, the Monopolies and Mergers Commission produced a report on British Waterways which said that the high costs of meeting its extensive public service obligations meant that there was a need for it to be publicly funded. The report said:

"It has to maintain a 200-year canal system in a safe condition. This outstanding heritage from the first industrial revolution has many fine listed structures which are expensive to keep in good repair. Indeed the whole canal network is part of the nation's heritage and many canals are themselves listed. British Waterways also has extensive environmental responsibilities, including over 60 sites of special scientific interest and hundreds of conservation areas and areas of special landscape character."

It is not surprising that in 1989 a report of the Environment Committee concluded that

"Given the history of the system, it is unlikely that the Board can ever run its affairs on a wholly commercial basis. Much of the value of the canal network to the community at large lies in its land drainage functions and unquantifiable environmental benefits. It is therefore inevitable that the BWB will continue to rely on public funds for a significant proportion of its annual turnover."

In 1999, two years after a Labour Government were elected, a report entitled "Unlocking the Potential" about plans for the future funding of British Waterways stated:

"Total income has been insufficient to meet the needs of the canal network and a backlog of maintenance, currently estimated at £260 million has built up. Of this, some £90 million is work that poses a serious public safety risk. The Government considers that this backlog of safety-related maintenance is unacceptable."

Based on the funds available to British Waterways, the Government calculated that it would take 15 years to eliminate the backlog. In order to reduce that time frame to seven years, the Government generously allocated an additional £8 million per annum to British Waterways in the 1998 comprehensive spending review. That forward-looking approach led to a renaissance for our inland waterways.

When the Department for Environment, Food and Rural Affairs reviewed the performance of British Waterways between 1999 and 2004, it found that it was successful in many areas and had achieved a step change in the condition, management and reliability of the inland waterways infrastructure. The safety backlog had been eliminated—not the whole backlog, but the safety backlog—and six major restoration schemes had been completed, which cost £177 million and created more than 200 miles of new navigation, together with the associated urban and rural regeneration. That included major new developments, such as the Millennium Link and the famous Falkirk Wheel. British Waterways raised the profile and public awareness of waterways and realised the potential for educational, leisure, and recreational activities. It fully embraced partnership working and achieved a significant growth in directly earned income—an amazing 30 per cent. in two years—by the market pricing of moorings and licences, and through innovation and the professional management of its property portfolio.

Among the many recommendations of the DEFRA review was the long-term funding of British Waterways on a contractual basis. Yet, just two years later, in 2006, not only was there no visible sign of a contract but British Waterways was subjected to an in-year cut of 12.5 per cent. Most of that was imposed well into the financial year, when a very large part of the budget was already committed, so the effect of such a cut was even deeper.

Photo of David Taylor David Taylor Labour, North West Leicestershire

I congratulate my hon. Friend on obtaining this debate and on receiving an award from the Inland Waterways Association for her campaign work in the midlands. Does she agree that the economic case is very strong, particularly when we consider that IWA figures show that as many as 300 million visits a year to the inland waterways network do not contribute to the cost of maintaining the network? Therefore, it is entirely appropriate for the Government to maintain the revenue and capital grant to the IWA at its current level. Any further cuts or a failure to restore those cuts would be myopic and would make Mr. Magoo look like a visionary.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

Absolutely. I am pleased that my hon. Friend mentioned the large numbers of visits to the canals because many people perceive that canals are just for boaters. In fact, only 3 per cent. of visits made to the canal network are by boaters. He makes a valuable point about not being able to charge people who use the towpaths, unless we have turnstiles on the towpath, which, even this Minister must admit, is not a serious possibility. My hon. Friend's point is important because it is vital that we understand the public role of British Waterways.

As I was saying, because the 2006 cuts were late in the year, the effect was deeper than a 12.5 per cent. cut. In fact, it represented more than 20 per cent. of the available spend for British Waterways. On the last working day before Christmas in 2006, British Waterways heard that its budget for 2007-08 was to be the same as for the previous year, with the same cuts in funding and no allowance for inflation. So, the budget will be even less than the year before. That is a different scenario from the vision outlined in "Waterways for Tomorrow". DEFRA Ministers have made light of the cuts and have pointed out that British Waterways' ambition is to be largely self-sufficient by 2012. Clearly, the chief executive, Robin Evans, wants British Waterways to generate its own income and to exploit new income streams, but I do not think that he intended to suggest that British Waterways should itself take on such an extensive and demanding public role.

The Government cannot afford to take a back seat because investment in our waterways generates huge public benefits.

Photo of Janet Dean Janet Dean Labour, Burton

I congratulate my hon. Friend on securing this debate. She makes a powerful argument for restoring the funding needed to maintain and improve our canals, such as the Trent and Mersey canal, which passes through my constituency, and other canals, such as the Uttoxeter canal. The Caldon and Uttoxeter Canals Trust has launched an initiative to try to bring back life to the Uttoxeter canal. Does my hon. Friend agree that there is the potential to link the Uttoxeter canal with the quarry north of the A50 and Uttoxeter? A feasibility study needs to be done on that, but without the return of funding, such initiatives, which have been developed elsewhere in the country, would not be possible.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

Absolutely. The project mentioned by my hon. Friend is close to my heart because it would start at Froghall on the edge of my constituency. I agree that if British Waterways does not have the staff to support such valuable initiatives, which are generated by enthusiastic volunteers, the chances of getting a feasibility study off the ground are slim.

Photo of Bill Cash Bill Cash Conservative, Stone

As the hon. Lady knows, the Uttoxeter canal passes through my constituency; indeed, she mentioned Froghall. On the question of the outline feasibility study, I am sure that she knows that Staffordshire county council, Staffordshire Moorlands district council and East Staffordshire borough council have all endorsed that project, and that the feasibility study is important to see whether the matter can be got under way.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

Absolutely. In fact, we were lucky that a feasibility study was made into the Leek arm of the Caldon canal, which made a valuable case for its development. With those councils and all that political support behind the initiative, it is vital that the expertise of British Waterways is brought to bear in order to ensure that the study and, eventually, the restoration project gets off the ground. Given that British Waterways has sustained a cut of 180 jobs, the chances of its being able to provide such support are much less than before the cuts were implemented.

I was talking about the huge public benefits that investment in British Waterways can deliver—benefits that press all the right buttons in delivering Government targets. They include the healthy living agenda, with walking, cycling and running along the towpaths, regeneration for rural areas and for the inner city, a reduction in carbon emissions, education, biodiversity, and a range of other targets across a range of Departments. There has been much debate about which Department best fits with inland waterways. I do not want to discuss that now, but it behoves the Department with that responsibility to take on board the full range of benefits that inland waterways can deliver—through bilateral and trilateral meetings with other relevant Departments.

I would like the Minister to say what he understands to be the role of inland waterways and British Waterways in delivering Government targets across the board. It would be wrong to take a narrow DEFRA view of what inland waterways can deliver.

Photo of Peter Soulsby Peter Soulsby Labour, Leicester South

I join other hon. Members in congratulating my hon. Friend on securing this debate, which is on a vital issue. She says that she does not want to say much today about the question of departmental responsibility, but does she not agree that the benefits of the inland waterways network are educational and include heritage issues, and that matters such as freight transport and urban regeneration are at the core of the work done by British Waterways? Does she also agree that the fact that none of those are the core responsibility of DEFRA is a fundamental part of the problem and that, far too often, British Waterways and our waterways network are peripheral to the Department's and the Minister's responsibilities?

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

I could not agree more. My hon. Friend is absolutely right. That may be one of the problems, because our inland waterways deliver so much; yet DEFRA does not seem to consider them to be a priority.

The Minister may have thought that I was exaggerating when I said that the cuts in British Waterways budgets threaten the survival of the smaller, vulnerable canals such as the Caldon in my constituency. However, I am sure that he will say that my constituency has seen tremendous investment in the canals; we certainly have seen the successful restoration of the first lock and basin of the Uttoxeter canal at Froghall, which is now an enhanced visitor destination with access to all walking paths. We have also seen work done on the Harecastle tunnel on the Trent and Mersey canal.

In reality, however, the future of the Caldon canal is far more dismal. As a cul-de-sac, it does not have the same status as the canals on the north-south through route on the national waterways network. Many of the structures on the Caldon have been awaiting maintenance for years. In the light of current funding cuts, those works are likely to be postponed for even more years. For instance, piecemeal repairs have been made to the Hazelhurst aqueduct and embankment over the last few years rather than the necessary major work that was planned. Its structural failure could easily cause the Caldon to be closed, which would have far-reaching effects for the local economy and the entire canal network.

We should remember that the Caldon was reopened by a dedicated band of volunteers back in 1974, and there is a real risk that, within living memory, whose who reopened the canal could see it close again. The water supply from the Rudyard, Knypersley and Stanley reservoirs is vital to the local canal network, yet some of the valve mechanisms are now on the list of structures at risk. The maintenance of the 200-year-old network has to be kept up, because failures of small elements such as sluices and culverts can have a catastrophic effect. For instance, we have already seen the closure of the Long Butts bridge on the Caldon between Baddeley Green and Norton Green. It would cost £130,000 to replace, so when it closed for two months a sticking-plaster job was done. It is therefore fragile and can no longer be used by vehicles but only by pedestrians.

The staff cuts and reorganisations are already having an impact. It is not possible to get rid of 180 jobs and not have an impact on the canal network. British Waterways has always played a vital role in leading and underwriting the construction risk of regeneration projects. It can no longer be assumed that it will continue to do so, which puts the Burslem port and Leek basin developments on hold.

In Leek, the Caldon canal corridor study to investigate the potential for the restoration, extension and development of the canal in the town is ready to go to the council, but without British Waterways' expert assistance—the result of the staff cuts—it is likely to be put on the back burner. There are plans to bring the Uttoxeter canal back to life, as my hon. Friend Mrs. Dean said, by opening a 13-mile stretch from Froghall in my constituency to the wharf in Uttoxeter. That has the potential to be a real gem of a development.

As Mr. Cash indicated, local councils are already on board, but a full feasibility study needs to be undertaken. That is less likely to happen given the impact of the funding cuts.

Photo of David Drew David Drew Labour, Stroud

I congratulate my hon. Friend on securing this debate. I declare an interest in that I chair the Select Committee investigation into British Waterways, but I do not want to say anything about that now.

Does my hon. Friend agree that one of the problems with the reopening of canals is that a partnership between a range of bodies is required? Although it may not always be appropriate for British Waterways to be the lead body, it will nevertheless play an important part, and that needs to be brought to the surface because it faces financial changes.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

Absolutely. British Waterways plays a vital role in underpinning all those restoration projects. It will not always be possible for bands of volunteers to bring the whole team together, right across the voluntary and political sectors. British Waterways always plays a vital role. Indeed, the chief executive of British Waterways, Robin Evans, has always believed the organisation's vision to be one of expanding the network. Will that change under the new regime? I hope not, and I hope that the Minister will comment on network expansion.

Another victim of the cuts has been British Waterways' central freight unit. The unit has been disbanded, and responsibility for freight has passed to already hard-pressed regional offices. That is likely further to deprioritise freight and reduce the degree to which water freight can help the Government achieve their key environmental objectives by cutting carbon emissions. Coastal and inland shipping emits 80 per cent. less carbon dioxide per tonne per kilometre than road haulage. It also helps relieve congestion by taking lorries off the roads.

There is an extensive network of inland waterways in the west midlands, but it is hugely underused by freight. Nevertheless, the potential is there. The west midlands freight quality partnership is conducting a feasibility study of two waterways—the Wolverhampton level and the Birmingham level—which together provide 87 miles of lock-free transport into the centre of Birmingham, including from the M6.

The Severn-Trent canal proves that things can be made to work. In 2005, a brand new water transport service began on the river Severn, and that was the first time in 10 years that the river had been used for freight transport. Locally quarried aggregates are extracted from a quarry near Ripple and transported 2 miles north by barge to the Cemex plant at Ryall near Upton-upon-Severn in Worcestershire. On average, that happens four to seven times a day.

It is intended that there will also be a twice-weekly service whereby some 65,000 tonnes a year of newly-processed material will be loaded back on barges. Material will be transported down the river Severn, via the Sharpness canal and the Gloucester docks, to the Cemex ready-mixed concrete plant 2 miles south of Gloucester.

When did the Minister last meet his transport colleagues to discuss the carriage of water-borne freight, and what conclusions did they reach? For the Department for Transport to be awarding funds to transfer freight from road to water under the freight facilities grant scheme while DEFRA forces British Waterways to close its central freight unit does not seem to me to be joined-up government.

In case the Minister considers that the issue of British Waterways cuts is not urgent, I should like him to consider just two examples in which urgent action is demanded but money may not be forthcoming due to funding cuts. Those cases have already been covered in the press.

The first is that of Netherton tunnel, near Dudley, which is more than 3,000 yd long. It was the last major canal tunnel to be built in Britain, in 1858, but it could be the first to close, because it has begun to sink as a result of mining subsidence. The bottom of the tunnel is getting closer and closer to the top of the water, making it more difficult for boats to pass. At the same time, the two towpaths have been disturbed by subsidence and were closed to the public before Christmas. I understand that one towpath may be reopened, but no one can say when the works will begin.

Photo of Lynda Waltho Lynda Waltho PPS (Rt Hon David Hanson, Minister of State), Northern Ireland Office

The Netherton tunnel will determine whether the Stourbridge arm of the canal stays open. I visited the canal yesterday and the two towpaths are still closed, although the tunnel has been reopened to boats. There is a real fear among boaters and other users of the paths that the whole thing will be closed down, which would cut off Stourbridge from the rest of the network. That would be sad, given that in May the Staffordshire and Worcestershire canal society will celebrate the 40th anniversary of the Stourbridge arm's reopening.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

That is devastating news. I picked up the Netherton tunnel issue from the press and I had assumed that my information was pretty up-to-date, but my hon. Friend has updated us further by telling us that the towpaths are still closed. It appears that there will not be any opportunity to open them in the near future. Will the Minister say what is happening in the case of Netherton tunnel? It would be appalling if the 40th anniversary celebrations were put off because of the effect of these short-sighted cuts.

As I am sure my hon. Friend is also aware, a stone's throw from Netherton tunnel is Tividale aqueduct, which is a grade II listed, double-span aqueduct. Its stone-arch parapets are falling down. If British Waterways does not receive the £150,000 that is needed to repair it right now, it will get worse. In the meantime it is an eyesore that is also being vandalised—it is getting worse day by day. Those are just two examples, picked from the press, of places where the cuts are biting on canal infrastructure and where urgent action is needed if things are not going to get worse and more expensive to repair.

In conclusion, I ask the Minister what progress is being made on developing the long-term contractual agreement between British Waterways and the Government that was flagged up way back in 2004? Even if the Minister cannot say now that funding will increase over the long term, a contract would at least ensure that British Waterways did not face the in-year cuts that so devastated it in 2006. Given that the contract was flagged up as an issue way back in 2004, I should like to ensure that there is progress towards achieving an agreement.

What discussions has the Minister had with British Waterways on the forthcoming comprehensive spending review and on British Waterways' future funding level, given that the present lower level of funding will not sustain the organisation's vital role in clearing its backlog of statutory maintenance work and in helping to expand the canal network? Any organisation can sustain a year of cuts, but if the year of cuts leads to lower funding over time, that will be completely devastating. Those of my hon. Friends who have spoken have already indicated where the cuts are having an impact and the desperate effect that is being seen in their own areas.

Will the Minister make urgent representations to the Treasury to ensure that the canals are seen not just as the responsibility of DEFRA but as the responsibility of a wide range of Departments? So vital are canals to the Government's agenda on healthy living, regeneration, biodiversity and climate change that they must be prioritised in the comprehensive spending review. The British Waterways budget should be restored and sustained over a long period. There has been a renaissance in inland waterways due to Government investment, and recent years have been a marvellous period for them. It would be very short-sighted of the Government to turn back the clock.

Photo of Owen Paterson Owen Paterson Shadow Minister (Transport) 9:59, 27 March 2007

It is a pleasure to serve under your chairmanship, Mr. Martlew. I begin by congratulating Charlotte Atkins on bringing this important matter to the attention of the House and I endorse much of what she said.

On your way north, Mr Martlew, you might one day turn left and visit my area. You would find a lot of canals there, and it is poignant that we are discussing this subject in the bicentenary year of Thomas Telford. The Llangollen canal has a spectacular viaduct at Chirk Bank, which has attracted international names such as Harrison Ford and Calista Flockhart. A little further on beyond my patch there is the Pontcysyllte aqueduct, which is a world heritage site.

The Montgomery canal in my constituency is a spectacular example of what Governments of both parties have done. The Minister last time made some rather tiresome party political comments, but I would like to stress that this development has been supported by Governments of both parties. Aston lock was restored in 1994. There is a site of special scientific interest beside the canal. I entirely endorse the comments by the hon. Lady that the vast majority of people who visit canals are not boaters; they are pedestrians—people who go to walk beside the canals.

We have seen a tremendous voluntary effort in the area. There is national Government money and local government money and there has been a tremendous effort by volunteers, with people coming up from Birmingham for weekends. As a result, a large section of the Montgomery canal has been reopened and there is more to come. New businesses, such as Barry Tuffin's boatyard, have been created. Such businesses simply would not have existed when there was only bog and mud.

At the other end of my constituency, the Shropshire Union canal is extremely busy, taking traffic up towards the Mersey, going through Market Drayton. The size of that network is significant. The Shropshire Union covers 66 miles within my area—that is, it goes outside my constituency but is reachable from my constituency. Similarly, the Llangollen is 46 miles long and the Montgomery is 33 miles long. Another waterway is 10 miles long. That is 155 miles in total. The group of canals in that geographical area attracts a significant number of visits: 8.3 million a year. Gross direct and indirect spending arising from canal visitors is £54 million, and up to 1,500 direct and indirect permanent full-time equivalent jobs are supported.

As the hon. Lady clearly explained, much of that could be put in jeopardy. Great work has been done over the past 20 years through state action and voluntary action, but due to the cataclysmic incompetence of DEFRA in handling single farm payments, the Government are liable to be fined £130 million and pay £40 million in compensation. It is utterly disgraceful that an area of activity that is completely separate from single farm payments will be penalised.

The sums are pretty simple. The income of British Waterways is £100 million. The subsidy is £60 million, and there is £30 million from the Heritage Lottery Fund and local authorities. If that subsidy is changed radically without planning and at very short notice, it is very hard for British Waterways, which is working its way towards making itself self-sufficient, suddenly to have that reverse dumped on it without being able to plan ahead.

My constituents are very angry. Michael Limbrey, the chairman of the Montgomery Waterway Restoration Trust, who has done a huge amount of work on the issue, reckons that phase 1 restoration of the Montgomery would bring in 100 to 120 long-term jobs, but that that

"could increase to 250-300 with associated developments".

He says of the cuts:

"This could all be very significant for a rural canal like the Montgomery, and if implemented could put the restoration at risk, and prejudice all that has been achieved so far."

Ken and Lindsay Green of Whitchurch said that

"the cuts are to pay the fines imposed on DEFRA for the late payment of farm subsidies. We are just gobsmacked that everyone should be penalised because some people can't do their jobs properly."

Mr. Green says:

"When I ran my own business anyone making that sort of mistake would be sacked."

Similarly, Mr. Alan Wisener from Market Drayton said:

"Why should our Waterways and other environmental departments suffer because of gross bad management by DEFRA?"— in other words, because of farming subsidies.

Let me explain what this amounts to. As the hon. Lady said, there will first be a degradation of the network, which in the long term will lead to more expensive costs. I have been told that, at Calveley, just outside my patch, in the seat of my hon. Friend Mr. O'Brien, the towpath is falling into the canal. At Audlem bridge, again just outside my area, £90,000 is needed. In my area, there is Greaves bridge at Ellesmere, which is a listed 18th-century structure. It will need £150,000 to repair, because the foundations are falling in. If the foundations do fall in, the long-term bill, and the disruption, will be immensely greater.

I raised the question of breaches with the Minister in our last debate, initiated by Sir Peter Soulsby, and I have raised it in questions, but I had a wholly unacceptable reply. There were two breaches on the Llangollen, in December 2005 and June 2006. That is the busiest waterway in the country. It is also one of the main means of feeding water to Hurleston reservoir, feeding large numbers of homes and businesses in the Cheshire area. Let us imagine what will happen if there is a significant breach. There are 16,000 boat movements on the Llangollen a year, which could be jeopardised, along with that water supply.

I would like the Minister to give us a very clear answer, because the last time we debated this, my hon. Friend Tony Baldry, who had previously been a junior Minister in the Department of the Environment, said that there was a contingency fund. No Opposition Member is asking for a penny more money from the Treasury. We are just asking that, if there is a breach, which would cause serious damage to the network, the Minister considers using contingency money, which every Government have done for many years.

I would like a clear commitment about what will happen if there is a major breach on the network. The most recent breach was in January on the Brecon and Monmouth canal, which cost £300,000. Luckily, the water just emptied out into a field, but one of these breaches could pose a danger to human and animal life and cause massive disruption to legitimate businesses and jobs. Will the Minister state categorically whether he would be prepared to use contingency funds? They do exist. They have all been allocated; they have all been voted through. It is not new money. If the Minister will not do that, why not?

As for the safety backlog, if British Waterways had continued on the course on which it had been led to believe it was set, it would have eliminated the statutory arrears by 2012. Given that there has now been this complete hiccup, when does the Minister consider that the arrears will be eliminated?

On the British Waterways website, there is an interesting comment at paragraph 5.3.6:

"BW is currently only able to operate commercially on or adjacent to waterways it owns or manages. This restricts both its direct activities and those of its joint ventures. DEFRA and the Cabinet Office are currently considering ways in which this restriction could be removed."

It seems extraordinary that an organisation with great expertise in managing waterways can operate only on stretches of water contiguous to its existing network.

Photo of Peter Soulsby Peter Soulsby Labour, Leicester South

Does the hon. Gentleman agree that the most significant areas of waterway on which British Waterways is not able to operate are those that are managed by the Environment Agency? I understand that it would be a comparatively straightforward matter for those areas to be brought within the area in which British Waterways can use its very considerable experience and expertise to invest.

Photo of Owen Paterson Owen Paterson Shadow Minister (Transport)

I am glad that the hon. Gentleman pressed that point, because I was about to make it. I wanted to draw the Minister's attention to our rivers. The Severn is currently navigable only as far as Bewdley; in the 17th and 18th centuries, it was navigable right up through Shropshire. In towns such as Bridgnorth, one can still see the remnants of the island that divided the main river from a weir, which generated power, and the channel through which boats travelled.

There is a triple hit on this. If we made our rivers navigable again, we would have a very significant source of renewable clean energy. Unlike ridiculous wind farms, which demand vast amounts of public subsidy and do not work, water has been a source of power in this country for centuries. I have been told that the Rhone supplies 10 per cent. of France's energy. If we made the Severn navigable, we could use the power from the weir for green energy. We would then get much more activity through the river, by using the lock system. That would have a further impact on general employment outside matters directly related to boating.

I entirely endorse what the hon. Gemtleman said. We have an organisation, British Waterways, which has great expertise in managing waterways. Why on earth can it not get involved in other projects on stretches of water not contiguous to its own network? Everyone would like British Waterways to stand on its own two feet. Everyone would like it to escape from the clutches of DEFRA and the requirement for subsidies. It seems extraordinary that British Waterways is precluded by statute from taking advantage of our natural river system, which could be a tremendous source of energy and of employment and prosperity.

Photo of Joan Walley Joan Walley Labour, Stoke-on-Trent North 10:09, 27 March 2007

I congratulate my hon. Friend Charlotte Atkins on instigating the debate. It is very important that we debate canals in the west midlands. It forms part of what is happening to British waterways altogether and to canals throughout the country. The fact that so many west midlands Members are here to support her sends the Minister the powerful message that we want to find a way to work with him to resolve the problems facing our canal structure.

Let me briefly set out my concerns. For some of my first 10 years in Parliament I shadowed the then Transport Minister, and one issue that was constantly raised was what we could do about inland waterways and how we could ensure that we got the investment that we needed. As my hon. Friend made clear, the Labour Government brought about a real renaissance in investment in the canal structure and built on much of the preparatory work that went on before 1997. I was proud of the fact that what had begun as a transport policy ended up as a far-reaching policy that made it clear that canals were important and that we needed to invest in them. The money that the Government allocated to canals meant that we started to deal with some of the huge backlogs.

The Government therefore have a strong and proud record on this issue, but we now face another problem, as we have heard. Problems with single-pot payments and farm subsidies, as well as the mistakes that have been made, mean that the canal structure has become a scapegoat as we try to find the money that we need for other purposes. I understand the problem that the Minister has to solve and I sympathise with him, but I hope that the debate will allow him to draw on the help of those of us who are present and include us in a partnership, because we can ill afford to lose this money and we need to make good the losses. He has been spectacularly successful at encouraging investment in canals, and that has made it all the more clear to people across the country that we cannot afford to lose what is there now. Given that we have seen local canal partnerships with local authorities, with British Waterways taking the lead, and that we have introduced other regeneration initiatives, I hope that the Minister can introduce similar measures now.

Most hon. Members present have met representatives of British Waterways and will know that there is a need for a new mechanism that will work across Departments and through the upcoming comprehensive spending review process, as my hon. Friend the Member for Staffordshire, Moorlands suggested. We need a pooled budget so that we can make good the current shortfall at DEFRA using money from transport, regeneration and other budgets. Such a measure is urgently needed because, without it, we will lose momentum on important initiatives. We cannot wait for repairs and we cannot have years of indecision only for projects not to go ahead—such urgent decisions must be made now. I want the Government, the Minister and the Treasury to be committed to finding a way of working towards all that.

Let me briefly flag up a couple of other issues. I am grateful for the work that the British Waterways Board has done in my constituency, particularly under the inspiring leadership of Derek Cochrane. I am sad that he is one of the casualties of the cutbacks and is taking early retirement. Of course, he will do great work elsewhere, but he will not oversee the initiatives that are ready to proceed in my constituency. Much of the local knowledge that British Waterways Board staff have built up will be lost once they leave, having become casualties of the cutbacks of which we are afraid. When that happens, who will lead the continuing renaissance that our canal structure needs? It is incumbent on the Minister to tell us what he can do with British Waterways to have those posts reinstated.

When I first came to the House, several hon. Members—you might well have been one of them, Mr. Martlew—told me, "Joan, I've recently been to your constituency." When I expressed surprise and asked why they had been there, they said that they had gone through the canal structure—along the Trent and Mersey—to visit the wonderful tourist attractions in my area, including the potteries and the magnificent Staffordshire moorlands. Many people go to the hidden jewel in our area—the spur of the Caldon canal, to which my hon. Friend the Member for Staffordshire, Moorlands referred, which starts just by the Trent and Mersey and goes through both our constituencies. Many stop off at the improved towpath by the Middle Port pottery, from which, I am pleased to say, the "Antiques Roadshow" will be broadcast in May. Such people come to the area to celebrate the renaissance and regeneration that we have seen, and there have been improvements to the towpath across my constituency, from Burslem right the way up to the Harecastle tunnel. It is essential that those repairs to the tunnel continue, because, without them, Stoke-on-Trent will be completely cut off from a major thoroughfare.

I know many of the volunteers who worked so hard all those years ago to dig and reinstate the Caldon canal, and we will not sit back and see it taken away—no way. We are working with the Inland Waterways Association and everybody who values the canal. We cannot afford to lose parts of the infrastructure that provide the canal with water, such as Stanley reservoir in my constituency and Knypersley pool, to which my hon. Friend referred. At Westport lake, Brownhills high school is building an eco-school as part of a regeneration initiative, but such projects will be under threat if we do not move ahead.

Regeneration is not the responsibility only of DEFRA and British Waterways. There is a great deal of commitment on this issue, and we must find a way not only of reinstating the money and getting the continuing commercial agreement and contracts to which my hon. Friend referred, but of getting funding from other Departments to ensure that we build on what we have. Above all, I want the big Burslem port regeneration project in my constituency to go ahead, and we need the British Waterways Board to help with that. Hundreds of years ago, people met in the The Leopard in Burslem to plan the canal system, and I do not want to have meetings there so that people can complain about the system's demise. We must find a way around this problem and we are here to work with the Minister to do that.

Several hon. Members:

rose—

Photo of Eric Martlew Eric Martlew Labour, Carlisle

Order. Three Back-Bench Members wish to speak, but I want to start the winding-up speeches shortly after 10.30 am. Hon. Members can figure that out for themselves.

Photo of Bill Cash Bill Cash Conservative, Stone 10:17, 27 March 2007

My constituency has quite a network of canals running through it. The Uttoxeter canal has been mentioned, and I pay tribute to Mr. Mike Maryon, who is a county councillor and the chairman of the Uttoxeter restoration committee of the Caldon and Uttoxeter Canals Trust, which is a registered charity. In the past few days, he has held a meeting about the improvement and restoration of the canal, and Charlotte Atkins rightly referred to the need for a feasibility study to help that work get off the ground. Staffordshire county council, Staffordshire Moorlands district council and East Staffordshire borough council have offered their support, but they are, of course, looking for grants, and I look to the Minister in the hope that we may make some progress on the issue. As Joan Walley said, Derek Cochrane is enthusiastic about the proposals for improving the Uttoxeter canal.

The Uttoxeter canal is a rural canal with an interesting history. It was completed in 1811, but closed in 1849. It did not last that long as a canal, but that it is not to say that it does not have enormous opportunities and could not be a hidden gem in the area that I have the honour to represent.

Several hon. Members, including the hon. Member for Staffordshire, Moorlands, have properly referred to the problem of the cuts, which are making life extremely difficult for those with the statutory duty to maintain canal systems. The Minister would do everybody a service by indicating—if not today, certainly in correspondence—just how the statutory duties imposing obligations on canal systems can be fulfilled if money is not made available. A statutory duty can be enforceable against the local authority or, in this case, the inland waterway authority. It is an impossible situation for Parliament to tell such authorities that something must be maintained and, when cuts are imposed, to say, "You've got to find the money, but the question remains how you are going to do it."

I am sure that the Minister will be good enough to respond. I hope that he will forgive me for having to leave. Cheadle fire station has lost one of its appliances, and I have a meeting with the chief fire officer at half-past 10. I hope that he will be kind enough to take that into account.

There is another side of the equation that is a matter of grave concern in the context of cuts. Stone, in my constituency, lies at the heart of the canal system in the midlands. About 7,500 narrow-boats pass through the town every year. That is extremely important to our local economy, resulting in large numbers of visitors. I have a letter from Stone town council to the Secretary of State for the Environment, Food and Rural Affairs drawing attention to the deep concern of Stone town council, and Stafford borough council of which it forms part, about the impact that the cuts will have on the local economy. How and to what extent that can be remedied is a question to which I know hon. Members will be concerned to hear the Minister's answer.

In conclusion, an important part of our economy is tied up in the canal system, whether in tourism, recreation or walking, along with opportunities for improvements for people who live in the area. I sincerely hope that against the background of DEFRA's failures in the context of the single farm payment, the Minister will have something constructive to say on the subject. I hope that he will come up with some useful comments and observations and with some money to help with the feasibility study and the improvement and restoration of the canals. I also think that the Public Accounts Committee should take note of the matter, because of the necessity of maintaining the canals and the cuts that are causing so much difficulty in running them.

Photo of Bob Laxton Bob Laxton Labour, Derby North 10:23, 27 March 2007

I am conscious of the time, so I shall be speedy. My interest in canals goes back many years. I own a narrow-boat. I am not a Member for the west midlands, but I probe into them—aiming, steering, at the helm or however it is described, through the west midlands toward the BCN. For those who are not aficionados, the BCN is the Birmingham canal navigation, where one can see the huge impact that canals have made. Regeneration in the centres of our major cities, such as Manchester and Birmingham, has been immense, and much of it, although not all, built around the revived canal network.

My concern is simply that this debate is a bit of a two-edged sword. On one side, we need to raise the concerns of all users of our inland waterways, whether boaters like myself, cyclists, runners or people who want to go peer at flowers. That is absolutely legitimate. We should do it, we should do more of it and we should do it louder and longer. We should raise that profile. The other side of the sword, though, is that if we are not careful, we will generate in the wider public a view that the canal network is all doom and gloom—that it will all go back to being bogs and infested ditches with trickles of water down the middle, and will all fall apart. If that happened, it would be an absolute tragedy. Why? Because British Waterways, notwithstanding the cuts in grant aid from DEFRA that it has had to endure, has been eminently successful in its redevelopment work and remains so. It is doing tremendous work through joint venture companies such as ISIS and one of its other commercial arms, British Waterways Marinas Ltd, which has generated large profits that have been ploughed back into British Waterways.

The conundrum that we face is that on one hand, we should raise such issues, but on the other, we must consider the view of developers, speculators, homeowners and all those who want to live by water. According to the figures, the values of residential properties by water are 20 per cent. higher than those that are not. Everyone seems to want to live by or on water, and I can readily understand that. I see the look on your face, Mr. Martlew. You may not want to live near water. In fact, at times you have had far too much water, with the floods that your constituency has had to endure. You have suffered personally from too much water, but many people like to live by it.

For that reason, we must ensure that we raise the issues but remain optimistic that the canals will remain and improve, and that opportunities for investment and development along the wonderful network of waterways are enhanced and improved. If that does not happen, British Waterways will find that the income that it is trying to generate to maintain the network falls away. It will not just suffer from the sizeable reduction—although DEFRA may say that it is a minor one—in the money made available to it. It will be unable to generate the sort of funds that enable it to maintain the network, and that will send it into a downward spiral.

I want to hear the Minister's views about future funding for British Waterways. To my friends and colleagues here, I say that while raising these issues, we need to maintain a buoyant approach, if they will excuse the pun, to the future of British Waterways. We must ensure in managing the system that it remains as financially successful as it has been in the past, if not more so.

Photo of Lorely Burt Lorely Burt Shadow Minister (Business, Innovation and Skills), Shadow Spokesperson (Business, Enterprise and Regulatory Reform) 10:28, 27 March 2007

I congratulate Charlotte Atkins on securing the debate on this important subject. In the west midlands, we have a proud history of the cut, as it was called in the black country, where I was born and raised. The cuts, bridges and tunnels transformed the west midlands during the industrial revolution, but they are still very much a part of life there today. It is therefore extremely concerning to hear of the redundancies that have been announced—80 of the 180 redundancies will fall within the midlands. We are grateful to Advantage West Midlands for the £400,000 boost. It is welcome, but it is hardly likely to soften the current Government cuts.

I was concerned to hear from Lynda Waltho about the threat to the Netherton tunnel, an intrinsic part of the Black Country living museum, which is probably the biggest tourist attraction in that part of the country. That is extremely concerning. Enthusiasts all over the west midlands are concerned about the state of the canal system, and many of my constituents have written to me about the state of the network generally and in my constituency, because towpaths are overgrown and there is graffiti and other undesirable problems.

The cuts are putting our canals and waterways under threat and are having an impact on a wide range of users—not just boat users but holidaymakers, anglers, ramblers and cyclists. Canals are an important community asset because of their natural environment, and they bring wider benefits to local people than their recreation uses. Clearly, tourism will be the first area to suffer. Local pubs and restaurants on canals will be hit hard, as a number of them make their living out of local people's delight in enjoying canals. It is not only boaters who enjoy being by canals and locks.

I have mentioned the number of paid staff who will be affected by the cuts, but it is also worth mentioning that the number of volunteers will greatly diminish if staff are not there to organise, help and motivate them.

Photo of Lynda Waltho Lynda Waltho PPS (Rt Hon David Hanson, Minister of State), Northern Ireland Office

I am concerned about a particular group of volunteers. The hon. Lady will know the Bonded Warehouse, which is part of the Stourbridge regeneration. It is staffed by volunteers who spend most of their days there and who have helped to regenerate a whole part of Stourbridge and the Stourbridge arm. I am very concerned about the effect that the cuts will have on them, their futures and the future of my constituency. This is at the heart of what they are about, and it looks as though we do not care; that is why I am so concerned.

Photo of Lorely Burt Lorely Burt Shadow Minister (Business, Innovation and Skills), Shadow Spokesperson (Business, Enterprise and Regulatory Reform)

I am grateful for the hon. Lady's intervention. I know the Bonded Warehouse well and have spent many a happy hour there.

We are talking about cuts of 12.5 per cent., which are largely related to the loss of revenue caused by the Government's appalling bungling of the single farm payment scheme. We hope that the Contingencies Fund will be used to reverse the short-term cuts that arise from that loss of income. I call on the Minister to give full weight to the social, economic and environmental importance of the waterways network when determining future grant levels for British Waterways.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs) 10:33, 27 March 2007

It is a great pleasure to speak in the debate, which I congratulate Charlotte Atkins on securing. She is the primary sponsor of early-day motion 90, which now has more than 200 signatures, and she has asked many written questions on this matter. During our Westminster Hall debate of 6 December, she raised concerns about the Leek and Caldon canals, and I believe that earlier this month she campaigned with members of the public beside the Caldon canal at Cheddleton, so no one could doubt her commitment.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I could not possibly comment on that.

This is an important subject. British Waterways is involved in £6 billion-worth of waterside regeneration, including at the Olympic site—quoting figures about the Olympic site always makes me nervous. It manages 65 sites of special scientific interest and more than 1,000 locally designated wildlife sites. It also manages 2,200 miles of canals and rivers, to which there are 300 million visitors a year, 5 million visits by coarse anglers and 9 million visits by boaters. There are also 29,000 canal boats on those waterways. About half of this country's population live within 5 miles of a British Waterways canal or river. British Waterways also manages 11,000 principal assets such as bridges and tunnels, and 12,000 other assets such as embankments, buildings and lock gates. It needs a long-term asset management programme of an estimated £35 million a year—at 2004 prices—to ensure sustainability. That is a significant and important catalogue of what British Waterways does.

We do not want the impact of cuts to be felt either in the west midlands, where waterways have an historic role, or nationwide. Important capital projects have suffered from reduced investment or have been deferred in the hope that funds will become available. The bridge at Trub farm on the Rochdale canal has been able to find an alternative source of money to cope with the £586,000 reduction in British Waterways investment, but others have not been so lucky. There has been a £464,000 reduction in investment in the Ribble link, and there have been deferments of investments of £208,000 for the Coates lane retaining wall on the Leeds and Liverpool canal and £176,000 for the Milton Keynes culvert. There has been a £250,000 reduction in investment in the Rowlington embankment on the Grand Union canal, which has led to a winter stoppage, and there have been deferments of investments of £252,000 for the refurbishment of Aston locks Nos. 9 and 11, of £133,000 for the Tividale aqueduct repairs, and of £592,000 for the refurbishment of the Vale Royal lock at the Weaver navigation. An investment of £485,000 for the refurbishment at Calverley Wood embankment has been deferred, and there are reduced schemes for 2007-08.

There have been further deferments of investments of £540,000 for the piling works at the Shenton embankment and £544,000 for the construction of a new pedestrian bridge at the Long Horse bridge on the River Trent. The maintenance of the Caldon canal has been put back and, as we have heard, towpaths along the Netherton canal and tunnel have been closed. Those are sad statistics to read out, especially given that so many hon. Members care so much about these important assets to our nation.

British Waterways has been told to expect a retail prices index minus 5 per cent. funding formula for the forthcoming comprehensive spending review. It cannot maintain its renovation programme with the current budget plans and probably needs at least £5 million a year more to maintain the network at current levels. The Minister in our last debate on this matter said that it was clear that because the Government have funded waterways so generously in the past, they probably need not continue to be so generous. That is similar to the argument that we hear about the NHS, but just because something has been funded generously in the past—the Government wrongly call it investment, although they have been generous to the NHS and, to some extent, British Waterways—does not mean that that funding can stop. That is the fundamental problem, and is a great shame. I look forward to hearing from the Minister what we can expect for British Waterways.

My hon. Friend Mr. Paterson spoke passionately about the canals in his constituency, with particular reference to Thomas Telford, including the popular Montgomery canal and the Shropshire Union and Llangollen canals. He also touched on a matter of great importance—the breaches, particularly to the Llangollen canal. I would like the Minister to answer his question about contingency funds. I doubt whether the Minister will give a commitment, but this is a good opportunity to find out what is available.

I agreed with my hon. Friend's comments about what he called the triple hit. If the River Severn were navigable above Bewdley, which is just outside my constituency, there would be a possibility of harnessing green energy from hydro sources. That has been done on the Wye and generates good, clean, sustainable energy. We would also have better transport links, which would move more traffic from the roads on to the waterways. Best of all, more people would be able to take holidays here, which would mean less air travel and would therefore bring a third environmental benefit.

Other hon. Members have made important and passionate speeches about their love of the canal system. Mr. Laxton created some wonderful images; I could almost see him in his cap at the helm. He was right about the public relations element to this debate, because we must be conscious not to run down the image of British Waterways or the important work that it does. Its efforts are tremendous. I look forward to going on a canalling holiday because it sounds such fun, and because of the environmental benefits that my hon. Friends have mentioned. I am unable to do so in my constituency because the canal there is still full of mud. All credit to the teams of volunteers who are digging it out, because they do a great job and we should be proud of them.

This is a sad debate to be having again. There are a great many questions for the Minister to answer, and I look forward to hearing his responses. We need to know why British Waterways is having its budget cut in this way. We have all assumed that the reason is the Government's grotesque mishandling of the Rural Payments Agency; that has not been confirmed, so perhaps the Minister will do so.

Lord Rooker has apologised in another place for the initial assertions that cuts will not affect the programme of work. They were clearly not true. Perhaps the Minister will apologise for Lord Rooker's earlier statements, because cuts of this nature do impact on the programme of work. Ministerial discussions need to take place between the Department for Environment, Food and Rural Affairs and the Treasury about the budget for British Waterways. No such discussions had taken place by the time that I last asked about that. Given the importance of the work of British Waterways, perhaps they have now taken place. I think we should know whether they have.

The future of British Waterways is of great importance. Considerations for moving responsibility for British Waterways into the Department for Transport or the Department for Communities and Local Government have been mentioned in this debate, because of the cross-departmental remit involved. The area is clearly not a priority for DEFRA, and that is a tragedy. It might have fitted better under the old Department of the Environment, Transport and the Regions, because the subject does not sit comfortably with the DEFRA brief. We can only assume that that is true because of the nature of the replies that we have received on this important debate.

The reduction in lottery funding could have a disastrous impact because money is now being diverted to the Olympics, and thus other funding sources will have to be found. Such sources may simply not exist. The DEFRA grant is not the only source of revenue for British Waterways, but it is a very important one. It is also one of the keys to unlocking other sources of money and investment opportunities.

The danger of letting the waterways slip into disrepair will affect £6 billion-worth of waterside regeneration, including homes and businesses. I cannot think of anything worse than threatening people's homes and businesses, which is why I agree when the shadow Chancellor talks about the importance of stability and sharing the proceeds of growth. We understand how important people's homes and mortgages are, and how important public expenditure is. That is why we want to share the proceeds of growth.

More than 300 million visitors a year could be affected by this situation. I mentioned that there are 29,000 boat owners, but we have also heard about the freight businesses and recreation—people admiring flowers were even cited; all those people have a valid claim on the Government's ensuring that their beloved canals are maintained. A failure to ensure that inland waterways are maintained will undermine their regeneration and sustainability agendas. We hear all the time about the importance of sustainability, so it is a great shame that we do not see the evidence of that. In fact, we see the opposite—the damage that the cut will do.

There are a lot of unanswered questions. Thanks to Sir Peter Soulsby, we tried on 6 December to resolve them. We now need to know more specifics from the Minister. We do not want to be fobbed off with the usual, "Oh, we have been generous in the past" or to be told, "This is just a DEFRA budgeting alteration." We want to know exactly what the Government are doing and why they are doing it, and to be confident and sure that all the good things that we have heard about from hon. Members today will be safe and secure in the Government's hands. Unfortunately, the evidence shows that that will not be the case.

Photo of Barry Gardiner Barry Gardiner Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Biodiversity, Landscape and Rural Affairs) 10:44, 27 March 2007

I am delighted to be able to respond to a debate that has been going on for some time. I congratulate my hon. Friend Charlotte Atkins not only on securing this debate, but on her studious care and attention to the inland waterways network over a number of years. It has recently resulted in her being awarded the Titania Salver by the Inland Waterways Association. I hesitate to quote from the citation that was used on that occasion, because I suspect that she was partly given the award for her browbeating of me and my Department. The association is conscious of all the work that she has done in her constituency and the surrounding areas for inland waterways over a long period. May I say only that as she has been awarded the Titania Salver, I am pleased to play Bottom to her Titania?

A number of hon. Members have spoken. My hon. Friend Joan Walley made her point courteously. Mr. Cash made his point in an impartial and neutral way—the same point was made in a rather less courteous and extremely party political fashion by Mr. Paterson. The point has recurred throughout the debate, so I should attend to it.

I shall not attempt to read out a prepared speech, because much of the discussion that has taken place during parliamentary questions and in other debates in the House over the past months has laid down certain facts in this debate. My seeking to respond to the specific questions raised by colleagues and other hon. Members this morning would be a better use of the available time. First, I shall tackle the key issue assertion that the situation relates in large part to failures in DEFRA's administration of the Rural Payments Agency and the single farm payment.

I should make it clear that DEFRA was seeking to find, in-year, £200 million from within its budget. I have detailed in writing to many hon. Members the exact breakdown of that sum, but I shall rehearse it briefly: £95 million was in respect of legacy issues; £40 million was to help meet various other pressures that had arisen early in 2005-06, such as compensation, structural funds, the final cost of foot and mouth disease and property rent increases; and £55 million related to work on flood management, waste, IT and research and development delayed from the previous year.

So, some £95 million was devoted to legacy issues coming into the year. Some £65 million related to tighter fiscal rules; a surplus capital charge budget was no longer available to fund programme expenditure due to the clarification of fiscal rules. Some £10 million was needed for extra emergency preparation for dealing with avian influenza. Earlier this year, I received many letters from members of the boating community up and down the country saying that this was all a waste of time and asking why on earth we were spending money on avian influenza. I think that subsequent events put a stop to those rather foolish letters, and that the £10 million was deemed to be well spent on the extra readiness that we put in place.

Out of that total of £200 million to deal with pressures, only £23 million—11 per cent. of the total—related to the extra RPA running costs in that financial year. It is extremely ill informed or disingenuous for anyone to suggest that the in-year £3.9 million cut in British Waterways' budget resulted principally from the situation at the Rural Payments Agency. That is just not true; it is not the case, and I hope that this debate has provided the opportunity to lay that to rest at long last.

Now for the figures. My hon. Friend the Member for Staffordshire, Moorlands referred to a 12.5 per cent. cut in the budget, which I shall try to clarify again—I have done so in writing many times—because it is inaccurate. The indicative baseline figure that was set under the 2004 spending round for 2006-07 was in fact £62.59 million. My hon. Friend has held ministerial office and is an experienced Member of Parliament, so she knows that the formal allocation is always worked out before the financial year and that it does not usually bear a strict correlation with the final year of a three-year comprehensive spending review period.

The formal allocation for 2006-07 was £59.429 million. That represents a reduction in the indicative baseline of £3.171 million or 5.066 per cent. Following that, there was an in-year cut—this is the one to which everyone refers—of £3.9 million, representing 6.6 per cent. of the budget. The total is £7.1 million, which even on the indicative baseline figure—that is what my hon. Friend used—represents 11.3 per cent. However, as she knows, as I know and as every Member in the Chamber knows, the actual in-year cut relates to the formal allocation—it always does—which was a cut of 6.61 per cent.— £3.9 million.

I do not want to be tendentious, and I am not trying to say that £3.9 million does not matter, because it does, or that it is a drop in the ocean, because it is not. A cut of the order of £4 million from a total budget of £189.4 million is a sizeable amount for any public body to find and, as my hon. Friend clearly indicated, because it was in-year, it was all the more difficult to find, because many of the funds had already been committed.

I am not trying to diminish the difficulty that such a cut in-year can pose for an organisation, but if we believed that every single one of the difficulties, cutbacks and figures to which hon. Members referred this morning related to that £3.9 million, it would have been multiplied many times. Things were being ascribed to that one-off in-year cut—I emphasise that it is a one-off in-year cut—that were simply not tenable.

Photo of Owen Paterson Owen Paterson Shadow Minister (Transport)

Will the Minister comment briefly on the impact that the European Union's £130 million fine will have on DEFRA's budget? Will he also comment on the British Waterways document, which states:

"The grant levels in 2006-07 and 2007-08 are less than planned and will result in circa £5-£10 million of major works not being undertaken"?

Photo of Barry Gardiner Barry Gardiner Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Biodiversity, Landscape and Rural Affairs)

I am happy to reply to both those questions. Will the hon. Gentleman remind me of the first one?

Photo of Owen Paterson Owen Paterson Shadow Minister (Transport)

I asked about the EU's £130 million fine, and then about the £10 million reduction in major works.

Photo of Barry Gardiner Barry Gardiner Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Biodiversity, Landscape and Rural Affairs)

In relation to possible EU fines, a contingency sum will be included in the DEFRA budget. It is a contingent liability, and has not affected this year's funding. It is available if and when the EU levies a fine against the Government; it is a matter for negotiation between the Department and the Treasury, and is accounted for with a contingency sum. I emphasise that it is a provisional liability that will lie in the accounts. It has had absolutely no effect, and the hon. Gentleman knows that. He understands the working of departmental finance and is more than well aware of the situation. It is somewhat mendacious of him to suggest otherwise.

The hon. Gentleman's other point was about the extent of the reduction in capital work this year. From memory, there was a £5.6 million reduction this year in work that has not been proceeded with as a result of the cuts. He is talking about a reduction in the 2007-08 budget, but I do not know where he got the figure because there has been no projection of it from which to make the cut.

Photo of Joan Walley Joan Walley Labour, Stoke-on-Trent North

I know that time is pressing, but the concern is that whatever the extent of the cuts for the British Waterways Board, it is resulting in the loss of key personnel, which reduces its ability to lead. It is that leadership role that results in additional moneys being lost through the failure to bring down other funding streams.

Photo of Barry Gardiner Barry Gardiner Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Biodiversity, Landscape and Rural Affairs)

I am glad that my hon. Friend raised that issue, and I stress that, as was confirmed in public by Robin Evans at the boat show earlier this year, where there was a public debate on these matters, the £3.9 million funding cut this year has had absolutely no impact on British Waterways' restructuring programme. That programme was always planned as part of its commitment in its "Waterways for Tomorrow" report, and the efficiencies that it planned better to deliver for the future of the network.

Those elements should be clearly separated out. It may be convenient to hide behind the cuts and to say that the restructuring programme was then imposed, and I accept that British Waterways may have brought that programme forward by a few months in response to the cuts, but the restructuring was always planned as part of its commitment to reduce the in-year grant in aid from the Government.

Before time runs out, it is essential to address the points about British Waterways' long-term funding. We are working with it to develop a long-term future funding model, and to give it the flexibility to engage in more commercial activity to help it to improve its income stream and to enable the Government's grant in aid to be reduced over time. That has always been its intention. We are awaiting its proposals for a regulatory reform order to that effect.