Sunday, 4 April 2010

Alive and well: Smoke and Mirrors

A few things have come zipping over cyberspace over the last few weeks which reminded me of something I said in the past: my view that the current debate about the future structure of British Waterways is a load of smoke and mirrors.

(In my book it's the also increasingly looking like the dying throes of a failed BW senior management who have led BW to the edge of oblivion, and are now desperately scrabbling around for a way out.)

The real question for me remains the question I first raised at the BW AGM, back in the Autumn. "The fear is, as was mentioned, this doesn’t address your £30m a year funding gap."

Allan Richards is more blunt on the point than me in in his article in Narrowboatworld this week. Allan's started from a slightly different angle but one I recognise very well: from puzzlement at the apparent love affair with the BW property portfolio?

He, correctly in my view makes, the point that BW's property portfolio remains the problem, not the solution. He then accuses:
  • BW of being misleading about how much income it will actually generate from its property portfolio over the coming years,
  • and the Inland Waterways Association of falling for it.
The point that £45 million is the best the BW property ever produced seems to me well made. Don't forget this was in the 'good times' during the peak credit property boom period, before 'the fall'. In reality two years later the equivalent figure had of course moved about £120 million the other way! Even on the most optimistic view, it's going to take BW a few years to get their income back to the glory days of 2008/7?

What do we do in the intervening years, while we wait for the catch up? It seems we may find out soon!

Perhaps by no coincidence, I found independent confirmation that any catch up in BW's commercial income will not be forthcoming any time soon. Quite the opposite. It seems likely to be another year of loses in BW's commercial portfolio.

Who says so? - Why the BW Board!

Recent BW Board papers, (minute 10/006 in British Waterways Board Minutes – 28 January 2010) predicted the following outcome for BW's "trading results" for the current year: "The deficit for the year [i.e. 2009/10] was expected to be in the region £12-14 million."

More interesting still was the subsequent Board minute (10/007):

"It was agreed that the move to the third sector was totally predicated on the property endowment remaining with the waterways and this point was understood by many of the supporters of the third sector move. Thus, whilst momentum for the idea was building, the Board would have to withdraw the proposal if the ‘new’ BW was not allowed to keep the property endowment."

(No wonder BW are so p'd off by those of us who cast doubt on the wisdom of keeping the property portfolio!)

To my suspicious mind the quote above from the Board minutes suggests that the the Third Sector proposals might be more about BW finding excuses to keep hold of the property portfolio than about whether that is a financially sound thing to do.

Either way, would someone please explain? (Yes, I have asked BW!)


  1. Allan Richards9 April 2010 at 18:04

    Actually, the true figure for BW's losses over the 2009/10 financial year may be much higher that the £12-14 million stated in the January 2010 board minutes!

    Repayment of a loan of £12.9m from Port of London Properties has been deferred so the true figure is probably in the region of £26m.

    At some stage in the future this £12.9m will have to be repaid. In the interim the interest will have to be paid......


    Allan Richards


  2. I am tempted to start a sweep stake? What is your prediction for how much money BW have lost in 2009/10?

    I am sticking with my, "they are going down by £30 million a year at the moment" line!

    (Usual exemptions apply; employess of DEFRA, BW, its accountants and auditors etc may not enter!)