22nd. March. 2005
Droitwich MP Peter Luff has angrily denied claims from local Labour and Liberal Democrat politicians that the re-opening of the Droitwich Canals was endangered by Conservative plans for British Waterways. Commenting, he said,

"There is not a shred of truth in the allegation from local Liberal Democrat and Labour politicians that Conservative plans for British Waterways endanger the Droitwich canals re-opening. I am sorry that the Chairman of the Droitwich Canals Trust, who is also the Liberal Democrat candidate for Mid Worcestershire, has brought the canals into the party political arena. Until now we had succeeded in keeping the canals out of party politics.

"The truth is that a Conservative government is absolutely committed to continuing the renaissance of our canal network - we just don't believe that British Waterways should risk taxpayers' money by becoming a major property speculator. I suspect those who have criticised our policies simply don't understand what BW is doing. As Tim Yeo, our shadow secretary of state for Transport has explained,

"A serious area for government concern, and one which we share, was the acquisition of Wood Wharf in London that same March. Wood Wharf is not part of the canal system. It is part of London’s docklands, an eight hectare (20 acre) site in the north east corner of the Isle of Dogs, but the BWB acquired it as “the single most valuable property development” in their portfolio. This collection of low-rise industrial, office and warehouse units was bought by BW as part of a “master plan” for mixed development with the London Borough of Tower Hamlets. It is now being taken forward by BW with a consortium of the Canary Wharf Group and Ballymore Properties Limited, with the purpose of creating 1,500 new homes, 3.5 million square feet of commercial floor space, including a new hotel, shops and offices, and a central garden. There will be some waterside leisure activities, but these will be in the context of buildings with heights ranging from seven storeys for the residential buildings to 35 storeys in the commercial area.

"In our view it is wrong for such an agency to risk taxpayer funds in speculative commercial ventures. Last year £197.4 million total revenues in the profit and loss account produced a £4.8 million loss transferred to reserves, and the consolidated cash flow statement showed £49.7 million capital expenditure, but only £19.7 million receipts from fixed asset sales."


Here is the full explanation of our policy from Tim Yeo, expressed in a letter to Conservative MPs:

A number of you will have received correspondence from constituents concerned by what they have heard about the James Committee proposals for British Waterways. In particular many people have been prompted to write by an article in the Guardian last Saturday 26th February which gave a biased account of our policy and has caused concern to canal users and Party supporters.

Let me begin by saying that we are absolutely committed to a vibrant canal network and that our policy is not to see any canals closing. Indeed, we are proposing to focus the British Waterways Board (BWB) on its canal and waterway activities, which we believe are at the core of its remit. The James Committee, set up by Michael Howard to ensure that taxpayers get value for money, conducted a detailed investigation into the BWB. The James Committee noted that instead of focusing on operating the British canal network, the BWB was “more akin to a state-subsidised property speculator” and that it did not need its investment property to discharge its navigation function. The Committee recommended (a) a programme of disposals from the BWB investment portfolio and (b) BWB to contract to its original function as a navigation authority.

BW Group’s tangible fixed assets at 31st March 2004 stood at £490 million, of which operational property, excluding the canal track, towpaths and reservoirs, had a book value of £42 million, while investment property, including freehold land, buildings and structures, accounted for £418 million.

Since the James Committee proposals were announced, the BWB has made statements about the impact of our policies which we believe to be factually incorrect. For example, the Chief Executive of BWB was quoted in the Guardian article as saying that the organisation had a £150 million maintenance backlog and that “any cuts would put visitors at risk.” This is strangely at odds with his Chairman’s 2004 Report which stated that the safety-related maintenance backlog had been eliminated eight months ahead of schedule after expenditure of £93.8 million over seven years. In fact, the £150 million referred to by the chief executive relates to what the Board classifies as “statutory arrears.” Even this is not so clear a classification might appear, since BWB now overlays the standards for economy laid down in the Transport Act 1968 with a more subjective interpretation of a 1999 Framework Document.

The Conservative party is not alone in expressing concern about BWB’s operations. In 1999, the Deputy Prime Minister announced his intention to phase out BW’s outstanding debt, “thus removing from BW the need to take out new loans to repay existing loans.” However, by March 2001 the Government found it necessary to increase BW’s borrowing limit to £35 million. Clearly, they were not happy with the state of BW’s finances or the Board’s financial decision-making. They determined that thenceforth BWB would have to receive government consent for “all expenditure projects over £3 million or where there are novel or contentious features or to take an interest in a body corporate in excess of 49%.”

A serious area for government concern, and one which we share, was the acquisition of Wood Wharf in London that same March. Wood Wharf is not part of the canal system. It is part of London’s docklands, an eight hectare (20 acre) site in the north east corner of the Isle of Dogs, but the BWB acquired it as “the single most valuable property development” in their portfolio. This collection of low-rise industrial, office and warehouse units was bought by BW as part of a “master plan” for mixed development with the London Borough of Tower Hamlets. It is now being taken forward by BW with a consortium of the Canary Wharf Group and Ballymore Properties Limited, with the purpose of creating 1,500 new homes, 3.5 million square feet of commercial floor space, including a new hotel, shops and offices, and a central garden. There will be some waterside leisure activities, but these will be in the context of buildings with heights ranging from seven storeys for the residential buildings to 35 storeys in the commercial area.

In our view it is wrong for such an agency to risk taxpayer funds in speculative commercial ventures. Last year £197.4 million total revenues in the profit and loss account produced a £4.8 million loss transferred to reserves, and the consolidated cash flow statement showed £49.7 million capital expenditure, but only £19.7 million receipts from fixed asset sales.

We do not question the canal reopening and restoration projects, such as the admirable plans for Droitwich, which have won the financial support of Worcestershire County Council, Wychavon District Council, Advantage West Midlands and the Heritage Lottery Fund. On the contrary, the whole thrust of our proposal is that we believe the BWB should focus greater attention on such development schemes and less attention on commercial property speculation.

There are, of course, understandable concerns about how BW would manage the transition to a more focussed navigation authority. I am pleased to say that George Osborne, as Shadow Chief Secretary to the Treasury, accompanied by a member of my team, met the chief executive and finance director of BW this week and had a constructive discussion. George made clear that the James Committee proposals called for a phased programme of disposals and that a future Conservative government would sit down with the BW leadership to discuss how this could be implemented while meeting BW’s operational objectives.

Although we will look to BW to continue its efforts to improve efficiency and reduce costs, George gave an assurance that we would not leave BW under-resourced following any reduction in its rental income from investment properties. I am sure this statement will give you and all canal users an important degree of comfort.

Finally, I can assure you that none of our proposals will be implemented without further study and consultation, and nothing will shake our commitment to having an attractive and viable canal system.

ENDS