The future of British Waterways - Funding level
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The key question is whether the UK Government will support the change in BW's status by guaranteeing the necessary level of funding until the new organisation can secure new sources of income. For some time the Treasury has tended to focus on the property portfolio and the Minister's parliamentary answer of 24 June offered some reassurance on that issue:
"For the third sector model to work, British Waterways will have to have access to its estate, or a large proportion of it, for it to gear up funding for sustainable funding in the future. I can assure him that it will not proceed unless it is locked in, in that way. Those are the negotiations that we are taking forward with British Waterways."
Retention of the property portfolio
The financial stability of the new third sector body requires not only the retention of the property portfolio but also the retention of funding equivalent to the Grant in Aid (GiA) currently paid to BW. There has been some suggestion that the UK Government's preferred outcome is for the new body to retain the property portfolio but to lose, year on year, an increasing part of current GiA. This could mean, for example, that the new third sector body might need to sell part of the property each year to make up for the lost grant which, in turn, would reduce its opportunity to earn development income in the future.
Later this year IWAC aims to publish a report setting out the options that are available for the funding of the inland waterways of England and Wales. Our expectation is that we will identify new sources of income for BW. The additional income sources will be useful and should help to reduce BW's deficit but will not be large enough to replace GiA.
Government funding will need to continue
Our examination of the income figures drives us to the conclusion that if the new third sector body is to maintain its waterway network at the present state of service and maintenance, the existing level of government funding will need to continue while the new third sector body strives to develop the sources of income that, in the longer term, might make it more independent of government financial support.
Governance
Establishing a fair and effective governance structure for the new third sector body is far from straightforward. IWAC believes that, as a matter of principle, a third sector waterways body should be democratic in both structure and outlook. However achieving this ideal with sufficient safeguards to avoid a takeover by sectional interests is likely to be more difficult than has been so far been explained by either BW or Defra.
Many respected third sector organisations base their governance structure on the creation of a sizeable membership. Members join because they have a strong commitment to the aims of the organisation, and sometimes because they receive membership benefits and concessions. In many instances members elect the whole or part of the organisation's governing council.
Comparison shows difficulties
A comparison with the National Trust illuminates difficulties that could be faced by the new third sector waterways body if it strives to become a membership organisation. The National Trust has added to its membership base by offering members free admission to its properties; the new waterways body would have no such opportunity because access to the waterway corridor is free and likely to remain so.
BW's key clients are boaters and anglers, many of whom might become members. On its own, that would create a rather narrow membership base. The new waterways body could attempt to increase membership numbers by introducing a low subscription rate which might appeal to a wider cross section of the population. This would probably be worth doing but success would depend on the new organisation being widely perceived as worthy of charitable support. In the absence of membership concessions, boaters and anglers would probably dominate the membership.
Having a narrow membership base would very likely lead to serious difficulties. The core justification for a third sector organisation to run the waterways is that the waterways would be run for the benefit of the community at large. A governing body overwhelmingly made up of boaters and anglers would be unlikely to achieve this objective; it would inevitably focus on matters of direct interest to these user groups, and whenever there was a conflict between the perceived needs of boaters or anglers and other members of the community, the governing body would probably appear partisan and unrepresentative.