Defra's priorities for BW

1.  We welcome the improved relationship between Defra and British Waterways since our Report in 2007. Their commitment to improved communication is very helpful, as is the greater clarity about Defra's priorities for the network and the extent of BW's autonomy to manage itself. (Paragraph 22)

Interdepartmental Working Group

2.  We welcome the formation of the Interdepartmental Working Group, and expect Defra to ensure that other Departments send appropriately high level representatives to its meetings. We look forward to receiving a report from Defra on its work and achievements before Parliament rises for the summer recess. (Paragraph 26)

British Waterways' budget for 2008-09

3.  BW's grant under the CSR settlement is not enough to prevent continued underspending on its major works programme, but the CSR round was a tight one. In the circumstances a "flat cash" settlement for BW is acceptable. However, given the gains that have already been made in improving the condition of the canal network, Defra and BW should now jointly produce a strategy indicating how the improvements will be sustained against a background where current property market trends will make it more difficult for BW fully to realise its income potential from waterside developments. (Paragraph 34)

British Waterways Status Options review

4.  We are unconvinced by the need for BW to spend up to £600,000 on a report by consultants on its future structure when it is by its own admission short of money. We find it hard to believe that analytical capability does not exist within BW, Defra or other public sector organisations that could have conducted this study at lower cost to public funds. BW should now explain why it was necessary to spend money of this order at a time when it was facing significant pressure on its finances sufficient for it to withdraw its support for the Cotswold Canals project. (Paragraph 41)

Our views

5.  Defra, in cooperation with British Waterways and other interested government departments and public bodies, should develop a transparent mechanism to score and prioritise public investment in canal restoration according to the external benefits that such spending would create, and should agree principles as to how the financial risks of such projects should be borne. (Paragraph 65)

6.  BW should also reappraise the implications for its long term financial strategy of constraining its enthusiasm for restoration projects. Such ventures can provide BW with new income streams when canalside developments on BW land are associated with such projects. It is likely that BW will need increasingly to rely on income from canalside developments in the future. A reduction in restoration projects involving BW may therefore in the long term adversely affect BW's move towards achieving an even greater degree of financial self-sufficiency. (Paragraph 66)

BW's decision to withdraw from the Cotswold Canals Partnership

7.  BW should have consulted earlier with its partners to enable them to consider whether alternative funding could have been put in place before BW's withdrawal from the project was put into the public domain. (Paragraph 67)