Review of the Waterways Freight Facilities Grant Scheme

Abstract

The main purpose of the study has been to review the workings of the Waterways Freight Facilities Grant Scheme (Section 36 Grant). Views of industry and institutions regarding the use of canals for the movement of freight were obtained in a series of interviews, together with information on the workings of the Grant Scheme. Case studies were used to test the effect of possible changes to the Grant Scheme. During the period of the study the ramifications of the progress of the Rail Privatisation Bill through Parliament meant that the situation regarding the Section 8 Grant (the equivalent grant for rail freight facilities) has become somewhat fluid. Major revisions, extending the scheme to cover lorry miles saved on motorways, have been announced; an additional grant to cover track costs is also proposed for rail, but the method of application or assessment is not yet clear. In order to encourage more traffic to switch to using waterway in the medium term, we recommend that: -Section 36 Grants should be extended to cover the high quality road network (including motorways), and that a higher valuation should be placed on the benefits than in the case of Section 8 grants, reflecting the higher benefits of water transport relative to rail. -That a new "waterways operating grant" should be available to operators of waterway craft, also at a higher rate per tonne kilometre than the proposed rail track costs grant. -That the reduction in road accidents and congestion be taken into account when valuing the benefits of inland waterway transport. Even with these revisions, however, we conclude the Section 36 grants will have a modest effect, in general only diverting traffic to water where this does not involve transhipment. Also, few waterway flows offer the sort of long run contracts necessary to justify a grant. As a result, we conclude that, Section 36 Grants will have limited success in satisfying the Department of Transport's overall objective of causing goods to be moved by inland waterway as opposed to road "where this would be in the interest of any locality or of some or all of its inhabitants". In our view a more successful method of achieving the Department's objective in the long term would be to encourage firms receiving or despatching commodities suitable for carriage by inland waterway to locate in premises alongside the canal network. This is even more important where the company is engaged in the import of raw materials. Such a method would require changes to the guidelines on planning and industrial development