The Trust has made significant progress in achieving ‘reduced dependency’ on Government funding – this is the language used in our 2012 agreement: there is no presumption that the Trust would achieve complete independence from government funding. The grant is now down to less than 25% of our income and falling further – it will be close to 20% by 2027. So, we are fully meeting the expectations set out when the Trust was created. We recognise that we must continue to increase all income streams to provide the investment that the ageing canal network needs and continue to reduce dependency over the long term.
Last year the Trust’s income, excluding government grant, was £172.5m – almost £50m higher than ten years ago. Income from our property estate continually outperforms the industry comparators, and we’ve seen a large increase (over 50% in ten years) in the income from utilities and other uses of the network, for surface water discharges, water transfers, renewable energy etc. The meeting heard from the Trust’s fundraising director, who outlined our ambition to achieve a step-change in charitable donations.
Costs are a critical factor as well. There are rising costs of keeping the network open and safe – for example the huge costs of looking after our reservoirs, and the impacts of more frequent extreme weather events (neither of which were fully understood or accounted for back in 2012). Many of our costs – of energy and construction materials – have risen by much more than the 20% increase in the Consumer Prices Index since 2021.
It is important that any assessment of the Trust’s future long-term funding takes both aspects into account.
The Trust welcomes all boaters onto our waterways and licensed boat numbers continue to rise. The most significant growth is in boats without a home mooring – nearly doubling since 2012 – which shows the growing popularity of this form of boating. We have no plans to stop continuously cruising boats, indeed this form of boating is explicitly permitted by the legislation that governs how the Trust operates as the navigation authority.
As outlined in Matthew’s presentation in the Meeting, the new surcharge for boats without a home mooring is to reflect the added utility they receive, and the additional costs incurred by the Trust. We welcome all boats; whose movement around the network helps to animate many of our waterways, albeit sometimes also increasing costs for the Trust in managing this.
The Trust only provides around one in ten of all the permanent moorings on our network. The vast majority are provided by private operators. The Trust does not have a strategy to significantly expand the permanent moorings we provide, but, if the opportunity arises, we will look to develop additional sites where demand is not being met, notably in London, although the very limited water-space means there are few options to increase moorings there.
HVO is also known as ‘Renewable Diesel’ and it can be used as a substitute for diesel to power boats. The Trust has used HVO in some of our workboats and, in terms of performance, we found that HVO was just as efficient as conventional diesel fuel for our usage. There is still an issue with the widespread availability of HVO, and a slightly higher cost, so we’ll be expanding its use to other boats gradually. We are not a supplier of fuel so have little influence over availability (some marinas and boatyards now offer it). We would support wider supply as part of measures to make inland boating cleaner and greener.
The strong partnership we have developed with British Canoeing (BC) provides a practical, pragmatic way of securing income from paddle sports. We have a share of all BC membership fees, in return for which BC members are licensed to paddle on our navigations. Hence our income has increased in recent years in line with the increase in BC membership – and last year was circa £300,000. In addition to direct income, comprehensive safety advice and insurance are benefits that come with BC membership i.e. it provides more than just an income benefit for the Trust.
People who want to canoe or paddle-board can go to our Paddler’s Portal and licence directly with us. We are making this easier to use as we know many casual canoeists might not be BC members. However, if this was the sole way to access our network legally, it could introduce significant costs in licensing and enforcement, as it would make it very difficult to identify and capture all unpowered craft across the network on each visit (the latter being quite different to narrowboats, with canoes and paddle boards, by their nature, being far more portable/transient). We believe that we would be unlikely to gain significant income if we did not continue the current arrangement with BC. We know that many BC members don’t use our navigations, so we gain from it being an all-inclusive payment that offsets the lower amount paid per member.
We acknowledge that the number of lockages in the past year has fallen, though this doesn’t necessarily reflect a decline in the attractiveness of cruising. There are various factors that can affect lockage figures, for example water availability and restrictions on boating on some waterways. In the current cost of living crisis, the cost of fuel and running boats may also be a factor, with those owning boats making fewer or shorter trips. We know this summer has also seen some reduction in hire-boat use which would also impact on lock usage. We will continue to monitor the long-term trend.
Our policy is for Elsan facilities to have no more than one day’s cruise between them. There will be times when facilities are out of use, and we try to respond quickly to get them up and working again as soon as possible, although this is challenging given the frequency of failures and the evidence we see of some misuse. The facilities in Leeds have unfortunately been subject to repeated misuse, costing the Trust thousands of pounds to rectify. We’re currently in the process of identifying an alternative, more secure location so that we can provide a facility in Leeds for our customers.
The Trust seeks to improve access for all users where possible, albeit there are many factors that limit what we can do and what we can afford. There are a limited number of rivers in England where we are the navigation authority, and we are usually not the landowner on either bank, so improved access points would likely require a partnership approach, including with the owner of the land and the riverbank. We work with partners including British Canoeing to fund these improvements where they can be identified. We also seek improvements to towpath access points and improvements for accessible boating as well as improved access for paddle sports.
As discussed during the Meeting, the Trust has a Towpath Code. Our policy is for towpaths to be shared spaces for everyone to enjoy. We ask everyone to be thoughtful and considerate when using towpaths. Pedestrians (including boaters mooring or using lock flights, and anglers) have priority and we ask cyclists to slow down for others, regulating their speed to take account of other users. Of course, not everyone currently follows those principles, which is a problem for other users, particularly on the busiest towpaths, and we continue to campaign to promote responsible safe use that respects others in line with our Code.
Regarding restricting access, with 2,000 miles of network that is open to all – with many thousands of access points – this would neither be practical or desirable. We want our towpaths to be traffic-free routes for those who want to cycle slowly to enjoy the environment and respect other users.
We will continue to target known hotspots and raise awareness through our Share the Space campaign, as well as making physical changes where these are appropriate and resources permit. In the past ten years, with external funding, we've improved 25% of our towpaths. Many of these improvements reduce the levels of conflict by increasing usable space and introducing improved surfacing, which makes towpaths easier to use all year round and more accessible to a wider range of users. We are also working closely with local authorities to help ensure that cyclists have a range of safe and attractive alternative routes so that those who are in a hurry at peak times can be guided away from the towpath, leaving them as the leisurely, relaxed routes they are best suited to be.
No, we firmly believe the re-branding in 2018 – which cost a small fraction of our total expenditure – has been a success, being more distinctive and engaging, making it easier to promote our work and connect with new audiences (and of course any switch would incur additional costs).
The nature of the Liability Driven Investment (LDI) assets held in the pension fund ensures that any interest rate impacts on the value of the pension liability is offset by the change in value of the LDI assets. This was experienced during the 2022/23 year where the value of the assets reduced in line with the reduction in the value of the liability due to high interest rates, and therefore the overall funding position remained consistent with the position experienced in the previous low interest rate environment. Holding LDI assets in the fund is our protection against the impacts of interest rate changes on the liability, up or down, with an offsetting change in the assets. The Trust’s Pension Fund Trustees and the fund advisors review the suitability of the assets held under certain scenarios and have agreed that the LDI assets remain effective within a balanced portfolio, and hence the fund continues to hold these LDI assets going forward.
The value of the LDI assets and the value of the total fund liability will change as interest rates move going forward. The ‘loss’ experienced in the asset value in 2022/23 will recover in line with any reduction in interest rates, but future gains in the value of the LDI assets will be offset by increases in the liability of the fund.
The overall pension loss experienced in the year was a result of the macroeconomic conditions, where the performance in equity and property markets reduced and asset holding values declined. Unlike the LDI assets held that hedge changes in the liability with an offsetting change in the asset value, other pension investment assets held in the fund are more aligned to overall value changes in investment markets, but sufficiently diversified to manage any risk associated with any specific investment asset type. The total value of the fund assets are expected to change as the investment markets change, and recovery of the scheme losses experienced in 2022/23 can be expected as the overall investment markets recover. The long-term future forecast changes in scheme asset values and fund liabilities are estimated by the fund advisors and reviewed by the Pension Fund Trustees on a regular basis, with any action agreed where necessary, and the advisors and Trustees remain confident that the scheme is able to meet its future liabilities as they fall due. Members of the scheme should not be concerned following the reported valuation loss in the 2022/23 year, moving the fund from a position of 106% funded at March 2022 to 100% funded at March 2023.
The actuarial valuation is a triennial process with the March 2019 valuation being updated to the March 2022 valuation during the 2022/23 year. We therefore will not receive an updated actuarial valuation until the position to March 2025 is updated during the 2025/26 year. The fund actuary has updated the value of the assets and liabilities to March 2023 and this update along with the outcome from the March 2022 valuation report is disclosed in the Trust’s Annual Report for 2022/23. Members of the fund will also receive a summary update in their upcoming newsletter.
We will be able to provide more clarity about the increase in licence fees later this month when the latest Bank of England inflation forecast is published, and the Board has decided upon the level of increase that will apply from April 2024. The increase in income will provide an important contribution towards the rising costs of looking after the ageing canal network at a time when government funding is reducing (in real terms now and ahead of cuts post-2027). We have been clear that we are looking to increase income from all sources and that boaters alone can’t be expected to make up all of the growing gap in funding. An increase in fees has a larger effect over the long-term than just in the year concerned, because in effect it is carried forward into all subsequent years (unless fees come down at a later date). With boat licences accounting for nearly £25m of the Trust’s income, a 1% higher increase in fees would be expected to generate an additional £250k in the first year, adding up to roughly £2.5m in additional income over ten years. Our aim would be to grow income from other non-grant sources so that the proportion of our income from boat licence fees does not rise significantly above the current 11% share that it is today.
Details of the Trust’s income is available in our Annual Report & Accounts. Income from donations last year was £5.6m, with £3.4m expenditure incurred which includes the cost of face-to-face fundraisers as well as the costs of publicity and campaigns. However, it would be over-simplified to directly compare the two. Much of the expenditure goes on securing income for the longer term rather than just that raised in the year, and we are in a phase of re-building our fundraising capacity to grow higher incomes for the longer term. Like many investments it requires expenditure today that may take some time to generate higher returns. As Maggie described in the Meeting, we are seeking to make a step-change in our fundraising in the years ahead.
In practise, a third-party can put up a sign on their property asking people not to moor alongside the towpath. And, whilst it doesn’t have legal standing, and the Trust will politely ask for any misleading signs to be removed, the Trust can’t force them to take it down if it is on their property. In extreme cases, if there is an instance of aggressive or abusive behaviour towards moorers, we would ask you to get in touch with us and also to alert the police.
We appreciate the sentiment and note that there is a sculpture on the Leeds & Liverpool Canal at Bridge 25 in Halsall, where digging of the canal started in 1770. Away from our network, we understand there are memorials on the Manchester Ship Canal and on the Royal Military Canal. We would be happy to see a further memorial introduced if there was public support but would not be able to allocate any funds to this.
