The IWA was established 50 years ago for the retention, restoration, conservation and development of Britain's navigable canals and rivers. In that time the Association has assisted and supported many restoration groups, chiefly in the voluntary sector, to restore some 400 miles of waterways, with as many miles again currently under active restoration. Through the 1980s and 1990s in particular, the Association has been advising groups on sources of public and private sector funding, both national and international, that may progress restoration schemes, and since 1994, the National Lottery distributors, particularly the Millennium Commission and Heritage Lottery Fund (HLF), have been the subject of considerable interest to the Association, its individual and corporate members, and the many groups—voluntary, private and public sector—undertaking such schemes.

  A large number of applications for waterway restoration have been made to HLF since its inception with, it has to be said, not inconsiderable success. Of those applications that have failed to secure funding from HLF, there have undoubtedly been some that missed one or more of the key HLF criteria. However others appear to have failed, or been delayed to an unacceptable extent, by practices within HLF that we feel are unreasonable.

  These can broadly be covered under two headings:

1.  Retrospective application of changes in the rules.

2.  The "moratorium" on inland waterway restoration schemes.

  1.  We accept that Trustees will from time to time wish to "encourage" certain types of project, relax some of their rules, or tighten up on others. From our experience however, these changes have been implemented not just on new applications coming in after the change but on applications that may have been made months earlier under the "old rules". Particular examples have been the decision to reject schemes that include virtually any element of "new build" and applications for feasibility studies. Both of these were permitted under the original rules and applications were made on the understanding that these were acceptable schemes.

  In the latter example, an applicant who had made an application for a feasibility study for restoration of part of a canal was advised by HLF to re-submit the bid for a study for the whole canal, only to be told when this had been submitted that HLF were no longer funding feasibility studies. In another case, an applicant had to wait 10 months for a substantive response from HLF, that response being that the rules had changed and the bid should be withdrawn and resubmitted to meet the new requirements. This practice cannot be reasonable. The majority of waterway restoration applications have been for six or seven figure sums and require an inordinate amount of time, effort and money to put together.

  Quite simply, if such bids are submitted under one set of rules, they should not then be capable of being rejected because of a subsequent change in the rules.

  2.  The "moratorium" on waterway schemes is quite probably unique; we know of no other sector that has had its applications temporarily frozen in toto by HLF. We are not aware of any other funding body ever having adopted such methods before. We remain to be convinced that the moratorium is within the terms of the 1993 Act, and the absence of any reference to it in HLF newsletters and press releases lends credence to our suspicions.

  In the case of waterway schemes, HLF are awaiting the result of a study by the Inland Waterways Amenity Advisory Council (IWAAC) into the current state of all waterway restoration schemes irrespective of whether such schemes are the subject, actual or potential, of any applications for grant funding, let alone HLF funding. The IWAAC study was commissioned by the Minister then responsible for inland waterways, not by HLF. It was not, as we understand it, commissioned with the intention of assessing the value of waterway schemes.

  Clearly if such a study, commissioned at such a high level, becomes available, then the Trustees are quite entitled to refer to it in order to assist them in their deliberations, in the same way that they may seek advice from bodies such as English Heritage on the merits of particular schemes that they are asked to support. We do not accept however that they can "freeze" all applications for an entire sector while they wait for the results of a study that may take months to materialise. Indeed, it is far from certain that the results will actually be of any significant use to the Trustees.

  In the meantime, costs are rising, matching funding disappears as we move past financial year-ends, and most of the frozen applications will have to be withdrawn and re-submitted with revised business plans, new funding partners etc.

  We do not accept that HLF should be allowed to freeze an entire sector's applications, simply because a third party has commissioned what may be a useful study into the activities of that sector. HLF should continue to accept and assess waterway restoration projects on their merits, alongside all of the other applications they receive. Once the IWAAC study is available, then they are at liberty to use it as a source of hard data, as they see fit, if it can assist them.

  Further, in judging bids from one sector against a "prioritisation list" produced by a third party body for much wider purposes, HLF are not only destroying the "open competition" for grants within a particular sector, that is surely at the heart of the bidding system, but potentially destroying the competition between our sector and other sectors. The legislation as we interpret it requires HLF to treat all bids on equal terms, and to allocate funds to schemes that meet the required criteria and offer greatest value for money; waterway schemes will now have to score well on the IWAAC criteria, as well as meeting HLF criteria and offering better value than non-waterway bids. This is surely contrary to the "open market" that Lottery distributors were intended to operate.

  It should also be said that the IWAAC study will only help HLF judge the merits of one waterway scheme against another; it is far from clear how it will help HLF decide whether a waterway scheme is "better" than a church re-building scheme, or a museum, or a medieval wetland, and 99 per cent of the competition for funds comes not from within the waterways sector, but from outside it.

  In summary, the Association asks that:

—  the moratorium on waterway restoration schemes be immediately lifted and that all existing applications be processed alongside schemes from other sectors;

—  in the interest of equity between competing sectors, prioritisation lists are either adopted for all sectors or for no sectors, other than as a source of hard data about the subject matter of the bids under consideration; and

—  when HLF chooses to change the rules, or vary its criteria, that these have a non-retrospective effective date, ideally at least a couple of months hence, that only affect applications received after that date.

  Finally, we would welcome the opportunity for a representative of our Committee to give oral evidence should the opportunity to do so arise.

June 1998