Core Values by John Blundell in The Business

IT is easy to see why monster operations such as the Post Office and the BBC were never privatised. With a bit of luck, digital competition will continue to nibble away at them until they are no longer the monoliths the state tried to protect. Yet there are other entities that look so ripe for liberalisation that their continued existence in the armpit of government is baffling.

Let us consider British Waterways, which owns Britain’s canals. To most of us, it is a remnant of our industrial heritage; a footnote in our bustling freight industries. Yet this is a fine candidate for bringing to the market.

British Waterways is an agency of the permanently dopey and wrong headed Defra, with a courtesy nod to the Scottish Executive for its northerly bits. This curious hybrid, part quango and part state corporation, owns 2,000 miles, or as the European Union insists it be termed, 3,219 kilometres of canals, rivers, docks, wharfs and buildings. It is also custodian of notable engineering structures and some lovely landscapes. Owning 130 Ancient Monuments and 100 “Sites of Special Scientific Interest” – which I assume means rare newts in the water or rare bats under its bridges – British Waterways boasts an engaging portfolio of eccentricities.

It also owns superb and vastly underdeveloped property holdings. Like Network Rail it has an extraordinary set of acres in ribbons of land acquired by the canal companies as they gave birth to the Industrial Revolution in the 18th century. In many city centres, British Waterways owns acres that lie mostly underdeveloped.

You cannot talk long about canals before somebody tells you there are more miles of canal in Birmingham than in Venice. Yet look at them. There are some chic bits but most that I have seen are pretty derelict and scruffy. Some have been filled in. Others are little more than DIY rubbish tips. The unused stretches of canal are termed “remainders”. These could be cherished and dredged and turned into delightful byways.

The Competition Commission has investigated British Waterways twice. Yet it ducked the question of why we need a monopoly. Let us have diversity in ownership – as the canals had originally. There are still some heavy freight canal users but “leisure” – Latin for boating, I take it – is usually believed to be its sole realistic commercial future. In this sense British Waterways seems characteristic of much of our economy as it evolves towards services and away from manufacturing.

The Competition Commission’s investigations into British Waterways faulted the company on its corporate planning, inability to cost projects, board membership and even recording of decisions. It added the canals monopoly was poor at contracting out services. It could be much better at planning applications and was weak at controlling its staff costs too. In other words, British Waterways is a typically flawed public agency that often tries to emulate commercial competence but falls far short of its own ambitions.

This detailed assessment of British Waterways concluded: “Heritage and environment have become two of the most overloaded words in the language. However, money spent on the canal system . . . will in town centres do something to mitigate the surrounding dark satanic mills . . . and will give access to our green and pleasant land.”

It does not ask why we have to be taxed to run canals. My hunch is British Waterways is run as poorly as all those other nationalised Britishes used to be: rail, steel, coal, airways; I commend instead the happier model of privatised companies.

You can tell so much about a body by its brochures. British Waterways’ are far too glossy and generously produced.

But I should not knock British Waterways too hard. There are a few surprises. For all its failings, it has evolved from being a subsidy recipient to realising it has lucrative options – charging for boat traffic and for boat residents. I grew up only 300 hundred yards from the Macclesfield Canal and crossed it daily en route to Congleton station and the train to King’s School, Macclesfield. Today, 35 years later, I am struck when I return to my roots how the canal is in much better shape and much more in use.

I am not suggesting charging those who enjoy rambling along the canals but it does seem to me British Waterways is largely a dormant institution almost perfect for bringing to the market. It is by opening it to the daylight of capitalist skills that we will be able to see what would be possible.

Some of British Waterways’ assets are romantic. The market can assess this. The Caledonian Canal links the North Sea with the Atlantic, passing through not only superb scenery but including the Loch Ness Monster. I would love to see the merchant banker’s prospectus describing that as either a tangible or intangible asset. The Crinan Canal in Knapdale is where Kenneth Graham dreamt up The Wind In The Willows. Each canal is richly imbedded with local history and lore. This is valuable.

Whatever the delights of the more remote and heroic canals, it is surely the city centre sites that represent an asset whose value has been barely tested. Their tranquil waters beguile. Estate agents could deploy their adjectives to make every basin the most fashionable city location. To a degree this is happening but our canal owners have been less than nimble.

Yet if it were sold off and brought back to commercial vitality where would the proceeds go ? I fear they would be lost in the Treasury’s Consolidated Fund. How much more memorable and fun if the millions, perhaps billions, were simply gifted to all of us. After all we have been subsidising it from our pockets since 1962. Yes, this was a Conservative nationalisation. I would not be averse to giving preferential shares to those who own barges and other canal vessels. They are a hairy and fractious lot but there is no denying they love our canals.

This notion of returning the sleeping assets of the state to us all – in whose nominal name they are already owned – has far wider appeal. This way the BBC, brought to market, could pay us all a dividend each year – our licences being share certificates.

A popularity-hungry Labour Party seems to me slightly more open to such suggestions than its rivals whose political inventiveness seems to be little more than posturing.

The initial impetus to construct our canals came from bold engineers allied to land owners wanting to shift coal and other heavy commodities. They performed muck-shifting miracles before hydraulic excavators had been invented. Manchester became a sea port, Birmingham a tissue of waterways and the Regent’s Canal floated goods from the Indies and the Spice Islands across the rest of the nation as the individual canals linked up.

Liberated from the mortmain of bureaucratic control, our canals could surprise us all. Let us do it.

John Blundell is Director General of the Institute of Economic Affairs