Government CRT funding statement

[Orwellian]

I detect the hand of Nigel Johnson the then Legal Director, in this piece of legislation and, to be fair it is what a prudent lawyer should have done to protect his employers position. Although Parry said they weren't contemplating any such action these legal provisions might prove useful. Better a smaller viable waterway network than no network at all?

[magnetman]

I thought it was interesting that he used the word 'declassifiction' rather than 'reclassification' in the interview.

 

I wonder if the CRT have an SIS man at the helm.

 

 

 

 

 

 

 

 

[Allan(nb Albert)]

46 minutes ago, Orwellian said:

I detect the hand of Nigel Johnson the then Legal Director, in this piece of legislation and, to be fair it is what a prudent lawyer should have done to protect his employers position. Although Parry said they weren't contemplating any such action these legal provisions might prove useful. Better a smaller viable waterway network than no network at all?

Absolutely agree.
 

[IanD]

2 hours ago, Allan(nb Albert) said:

It is a shame that some people still believe that government somehow held BW to ransom and don't accept what actually happened. Hales & Evans were actively promoting less reliance on government grant whilst increasing public benefit 20 years ago!

Here is a copy and paste from from a post I made on this forum in March 2022 -

It's true that BW and the government both backed the transfer of the canals to CART in the belief this would work both financially and operationally.

 

Sadly they were both wrong... 😞

 

I wonder if there's been any other similar decision in recent years which was taken because people believed it would make things better, but turned out to be wrong when reality took over from over-optimistic rhetoric?

 

Trying to shift the blame to BW doesn't alter the fact that the canal system and financing of it we have today simply isn't working, and that the only body that can really change this is the government, not CART... 😞

[Ronaldo47]

36 minutes ago, IanD said:

 I wonder if there's been any other similar decision in recent years which was taken because people believed it would make things better, but turned out to be wrong when reality took over from over-optimistic rhetoric?

 

Post -Weinstock GEC after it got rebranded as Marconi would be a contender for the title. I still have some of the glossy bumph they issued which described how they were going to transform the company. They certainly managed that, although not quite in the way they expected.

 

A couple of decades earlier, the previously-well-run J.Lyons company went bust after taking out seemingly attractive low-interest loans denominated in Swiss Francs that they couldn't service after the value of Sterling fell, resulting in their take-over by Nestlé. 

Edited July 16, 2023 by Ronaldo47
J Lyons added

[robtheplod]

We need to get Government ministers into boating asap.... can we crowd fund to get them a boat??   MP's only really care about what effects them after all!  

9 hours ago, IanD said:

II wonder if there's been any other similar decision in recent years which was taken because people believed it would make things better, but turned out to be wrong when reality took over from over-optimistic rhetoric?

 

Where do we start? 

[Allan(nb Albert)]

8 hours ago, Ronaldo47 said:

 

A couple of decades earlier, the previously-well-run J.Lyons company went bust after taking out seemingly attractive low-interest loans denominated in Swiss Francs that they couldn't service after the value of Sterling fell, resulting in their take-over by Nestlé. 

CRT is currently operating with a £150 million long term loan from Union Bancaire Privée (UBP SA) secured against assets. UBP SA is a private Swiss bank in Geneva.

 

The loan is at a fixed rate of just under 3% and has been used to buy investment assets rather than to spend on CRT's waterways.

 

With CRT's investment assets also producing less than 3% return the loan is having a neutral effect on CRT's finances.

[Midnight]

1 hour ago, robtheplod said:

We need to get Government ministers into boating asap.... can we crowd fund to get them a boat??   MP's only really care about what effects them after all!  

Where do we start? 

 

 

Let's get real, no amount of campaigingn nor emails to MPs will bring a significant change of heart from the government who are in crisis already with strikes, Ukraine, Covid debt and the NHS. The solution lies with C&RT itself. Only by working smarter will there be any hope for navigation in the coming years. With the current management there's little prospect of that. 

[IanD]

10 hours ago, Ronaldo47 said:

Post -Weinstock GEC after it got rebranded as Marconi would be a contender for the title. I still have some of the glossy bumph they issued which described how they were going to transform the company. They certainly managed that, although not quite in the way they expected.

 

A couple of decades earlier, the previously-well-run J.Lyons company went bust after taking out seemingly attractive low-interest loans denominated in Swiss Francs that they couldn't service after the value of Sterling fell, resulting in their take-over by Nestlé. 

All true -- I worked for GEC before the worst of the rundown -- but not the elephant in the room I was hinting at which has turned out to be in a class of its own for buyer's remorse... 😉

[David Mack]

17 minutes ago, Midnight said:

The solution lies with C&RT itself. Only by working smarter will there be any hope for navigation in the coming years. With the current management there's little prospect of that. 

You keep saying that, but what realistically could a different management do differently that would make a material difference, given the funding that CRT has now and for the foreseeable future?

Increasing licence fees is already on the cards and will make a positive difference to the financial position. Other existing sources of funding are limited in their scope for increases and raising a significant amount directly from the public has already been found to be unachievable. Cutting management and administration costs or reorganising contracting arrangements, might make some difference, although there would be a concomitant risk of damaging the level of service, but in any event such cost savings as might be achieved would be small in relation to the funding gap. How does rearranging the deckchairs in the boardroom make any real difference?

Edited July 17, 2023 by David Mack

[IanD]

31 minutes ago, David Mack said:

You keep saying that, but what realistically could a different management do differently that would make a material difference, given the funding that CRT has now and for the foreseeable future?

Increasing licence fees is already on the cards and will make a positive difference to the financial position. Other existing sources of funding are limited in their scope for increases and raising a significant amount directly from the public has already been found to be unachievable. Cutting management and administration costs or reorganising contracting arrangements, might make some difference, although there would be a concomitant risk of damaging the level of service, but in any event such cost savings as might be achieved would be small in relation to the funding gap. How does rearranging the deckchairs in the boardroom make any real difference?

 

It doesn't, but some people -- mostly Tory supporters but not all -- seem to hate CART so much they'd rather blame them than admit where the fault really lies... 😞

 

Let's face it, it's an excuse often trotted out by the government -- all it will take to fix [NHS, social care, teaching...] is magical new thinking and reorganisation and "efficiency savings", when the actual problem is not enough money. But blaming management -- or even front-line staff, that's so obviously the problem with the NHS -- is a handy diversionary tactic...

Edited July 17, 2023 by IanD

[Tacet]

2 hours ago, Allan(nb Albert) said:

CRT is currently operating with a £150 million long term loan from Union Bancaire Privée (UBP SA) secured against assets. UBP SA is a private Swiss bank in Geneva.

 

The loan is at a fixed rate of just under 3% and has been used to buy investment assets rather than to spend on CRT's waterways.

 

With CRT's investment assets also producing less than 3% return the loan is having a neutral effect on CRT's finances.

The last paragraph is a bit of a leap.  It rather depends on the rate of return of the invested £150m rather than the overall rate.

 

More generally, the cost of managing the investments does look to be an unusually high proportion of their income. 

[Midnight]

20 minutes ago, David Mack said:

You keep saying that, but what realistically could a different management do differently that would make a material difference, given the funding that CRT has now and for the foreseeable future?

Increasing licence fees is already on the cards and will make a positive difference to the financial position. Other existing sources of funding are limited in their scope for increases and raising a significant amount directly from the public has already been found to be unachievable. Cutting management and administration costs or reorganising contracting arrangements, might make some difference, although there would be a concomitant risk of damaging the level of service, but in any event such cost savings as might be achieved would be small in relation to the funding gap. How does rearranging the deckchairs in the boardroom make any real difference?

 

C&RT took on the task knowing the targets, they didn't achieve them. The current regime have failed miserably. What would happen to you if you failed to achieve your targets?

I accept you may have a different view if your boating is in the south or midlands but look at the state of the northern canals. Hire boat companies on their knees and up for sale. Boaters unable to plan, unable to return back to base - the new norm! These past two years our boat club has seen many cancellations for visitor moorings from those unable to cross the Pennines and it's summer - the main season for cruising. 

 

Stick to the knitting with smarter working, leaner management structure and a focus on fundraising that doesn't cost more than it brings in. Is the current management capable of that? No evidence so far. Read Theresa Coffey's statement it's full of dissappointment. No mention in the statement about well-being, marketing and the like. "The Trust is responsible for maintaining navigability and safety of its waterways including reservoirs, embankments and other infrastructure." 

 

7 minutes ago, IanD said:

 

It doesn't, but some people -- mostly Tory supporters but not all -- seem to hate CART so much they'd rather blame them than admit where the fault really lies... 😞

 

Still planning to cross the Pennines with your new boat Ian?

 

[IanD]

14 minutes ago, Tacet said:

The last paragraph is a bit of a leap.  It rather depends on the rate of return of the invested £150m rather than the overall rate.

 

More generally, the cost of managing the investments does look to be an unusually high proportion of their income. 

Taking out loans to buy investment assets and get income from them has been a commonly used tactic in recent years, usually used by organisations -- such as some local councils, and CART -- who have had static or reduced government funding in the face of rising needs, and are desperate to fill the funding gap instead of cutting services. It used to look like a good idea, but now circumstances have changed it doesn't... 😞

 

Whether the costs of managing CARTs investments are higher than similar (relatively small) organisations -- as opposed to generic big-business management costs -- remains to be seen. Are there any figures to show this?

Edited July 17, 2023 by IanD

[David Mack]

1 hour ago, Midnight said:

C&RT took on the task knowing the targets, they didn't achieve them. The current regime have failed miserably. What would happen to you if you failed to achieve your targets?

The whole basis of the transition from BW to CRT has not turned out as those proposing it wished. At the time there were voices that said the numbers didn't stack up, and so it has proved to be. Which isn't to say the picture would now be rosy if BW were still running the show. With their grant being determined on (iirc) a 3 year cycle, do you think the government would have kept the grant up at the same level in real terms over the last decade and looking to the future?

But we are now where we are, and the clock can't be turned back to BW days. So the question is what can CRT, whether under the current management or whole lot of new faces, or indeed some successor organisation, actually do about the situation?

1 hour ago, Midnight said:

Stick to the knitting with smarter working, leaner management structure and a focus on fundraising that doesn't cost more than it brings in.

So what do you actually mean by 'smarter working? Or is it the sort of buzzword that government ministers like to use when failing to adequately fund the NHS, education etc.?

What sort of 'leaner management structure'? For starters what comparisons can you bring about how the management structure (and pay and bonus levels) compare with similar organisations in the public/private/charity sectors? Do you really think that CRT is some overbloated gentleman's club? Do you not think that in setting up and running the organisation the Board has not considered this issue numerous times? How, in practical terms, could things be done significantly cheaper?

[IanD]

4 minutes ago, David Mack said:

The whole basis of the transition from BW to CRT has not turned out as those proposing it wished. At the time there were voices that said the numbers didn't stack up, and so it has proved to be. Which isn't to say the picture would now be rosy if BW were still running the show. With their grant being determined on (iirc) a 3 year cycle, do you think the government would have kept the grant up at the same level in real terms over the last decade and looking to the future?

But we are now where we are, and the clock can't be turned back to BW days. So the question is what can CRT, whether under the current management or whole lot of new faces, or indeed some successor organisation, actually do about the situation?

So what do you actually mean by 'smarter working? Or is it the sort of buzzword that government ministers like to use when failing to adequately fund the NHS, education etc.?

What sort of 'leaner management structure'? For starters what comparisons can you bring about how the management structure (and pay and bonus levels) compare with similar organisations in the public/private/charity sectors? Do you really think that CRT is some overbloated gentleman's club? Do you not think that in setting up and running the organisation the Board has not considered this issue numerous times? How, in practical terms, could things be done significantly cheaper?

 

Just like Brexit... 🙂

 

Exactly that.

Edited July 17, 2023 by IanD

[cuthound]

4 hours ago, Midnight said:

 

 

Let's get real, no amount of campaigingn nor emails to MPs will bring a significant change of heart from the government who are in crisis already with strikes, Ukraine, Covid debt and the NHS. The solution lies with C&RT itself. Only by working smarter will there be any hope for navigation in the coming years. With the current management there's little prospect of that. 

 

In my experience "working smarter" only produces good results when a new way of working can be found, such as introducing technology to speed up previously manual processes, or improved computer systems to better integrate various departments.

 

There is little scope for CRT to do this on the maintenance side of CRT, particularly as there is a strong move towards heritage "repairs" such as using wooden lock gates rather than the cheaper and longer lived steel gates. However improved computer systems could improve the performance of boat movement tracking and enforcement.

Edited July 17, 2023 by cuthound
Clarification

[MtB]

50 minutes ago, cuthound said:

 

In my experience "working smarter" only produces good results when a new way of working can be found, such as introducing technology to speed up previously manual processes, or improved computer systems to better integrate various departments.

 

There is little scope for CRT to do this on the maintenance side of CRT, particularly as there is a strong move towards heritage "repairs" such as using wooden lock gates rather than the cheaper and longer lived steel gates. However improved computer systems could improve the performance of boat movement tracking and enforcement.

 

 

I always imagine "work smarter" means turn up wearing a new suit and tie.

 

 

And nicely polished shoes, obviously.

 

 

[Midnight]

2 hours ago, David Mack said:

The whole basis of the transition from BW to CRT has not turned out as those proposing it wished. At the time there were voices that said the numbers didn't stack up, and so it has proved to be. 

 

So that was the first failure by management. 

The next phase of funding is conditional. The same old, same old is hardly likely to meet those conditions? 

5 minutes ago, MtB said:

 

 

I always imagine "work smarter" means turn up wearing a new suit and tie.

 

 

And nicely polished shoes, obviously.

 

 

Or clean boiler suit?

[Tacet]

On 11/07/2023 at 17:52, Allan(nb Albert) said:

 

Firstly, it is no longer just a property portfolio because CRT also has acquired significant non-property assets. The latest figures are from the 2021/22 Annual Report and are as follows -

The value of CRT's investment assets (property and non-property) was £1.14 billion.
These produced a gross return of £51.4 million.

However, it is wrong to say that £51.4 million goes into the general pot for running CRT. That is because of the expenditure needed to raise that sum - £17.7 million.

 

The actual contribution made to the "general pot" was £33.7 million (for comparison that was just under 50% of CRT's employment costs of £70.3 million).

Put another way in 2021/22, CRT's £1.14 billion of property and non-property assets produced a net return of just under 3%.

By a peculiar coincidence, some of those assets were purchased with a £150 million long term loan with CRT paying interest of just under 3%.

 

 

4 hours ago, IanD said:

Taking out loans to buy investment assets and get income from them has been a commonly used tactic in recent years, usually used by organisations -- such as some local councils, and CART -- who have had static or reduced government funding in the face of rising needs, and are desperate to fill the funding gap instead of cutting services. It used to look like a good idea, but now circumstances have changed it doesn't... 😞

 

Whether the costs of managing CARTs investments are higher than similar (relatively small) organisations -- as opposed to generic big-business management costs -- remains to be seen. Are there any figures to show this?

Assuming Allan is not spinning the figures to make CRT look bad, from what he says the net income is only two thirds of the gross income.   Or £17.7m is the expenditure needed to raise £51.4m.  A quick glance at the accounts - and the expenditure does not jump out so I don't know what is included.   For example, interest on borrowings?  The accounts seem to show a 4.3% income return on property investments too.   One third is very high; no doubt some assets require the landlord to repair the property in some manner.

 

 

[IanD]

6 minutes ago, Tacet said:

 

Assuming Allan is not spinning the figures to make CRT look bad, from what he says the net income is only two thirds of the gross income.   Or £17.7m is the expenditure needed to raise £51.4m.  A quick glance at the accounts - and the expenditure does not jump out so I don't know what is included.   For example, interest on borrowings?  The accounts seem to show a 4.3% income return on property investments too.   One third is very high; no doubt some assets require the landlord to repair the property in some manner.

 

 

My point was that without knowing exactly what is and isn't included in the figures -- especially "costs", and what counts as net and gross -- and having something closely comparable (size and investment mix) to compare it to, saying that CARTs ROI is lower than expected is pretty much meaningless -- and at least it wasn't massively negative like the councils who are going bankrupt because of unwise property investments... 😉

Edited July 17, 2023 by IanD

[Tacet]

4 minutes ago, IanD said:

 

My point was that without knowing exactly what is and isn't included in the figures -- especially "costs", and what counts as net and gross -- and having something closely comparable (size and investment mix) to compare it to, saying that CARTs ROI is lower than expected is pretty much meaningless -- and at least it wasn't massively negative like the councils who are going bankrupt because of unwise property investments... 😉

It wasn't a clearly made point then!  As a rough guess, if it does not include the costs of borrowings, the costs (i.e. including repairs, routine refurbishment, empty rates and management etc) might more typically be around 15% for a mixed portfolio.

 

The ROI can tend to be a bit misleading in any event.  The income return should be based on the current value - not the historic costs of acquisition or investment.  If CRT manages to keep the income stable and secure a substantial increase in capital value, the % return will appear to fall.  But if CRT experiences a reduction in capital value (not good news, surely) the % return increases. 

 

 

[Alan de Enfield]

45 minutes ago, IanD said:

 

My point was that without knowing exactly what is and isn't included in the figures -- especially "costs", and what counts as net and gross -- and having something closely comparable (size and investment mix) to compare it to, saying that CARTs ROI is lower than expected is pretty much meaningless -- and at least it wasn't massively negative like the councils who are going bankrupt because of unwise property investments... 😉

 

C&RT has already sold of (at HUGE losses) its failed investments in a Pub chain, and a shopping centre etc etc.

[IanD]

58 minutes ago, Alan de Enfield said:

 

C&RT has already sold of (at HUGE losses) its failed investments in a Pub chain, and a shopping centre etc etc.

As have many councils, where it turned out that they made the wrong bet -- because that's what investment is really, it's gambling on what will happen, and the value of investments can go down as well as up, especially if economic conditions change... 😉

 

All of which suggests that people/bodies who don't properly understand the risks (or the market they're entering) shouldn't make big investments which look attractive but might go horribly wrong. Unfortunately a lot of people think they know more about this than they actually do, and get burned as a result -- CART being an example of this, all the bankrupt councils being another... 😞

Edited July 17, 2023 by IanD

[MtB]

54 minutes ago, Alan de Enfield said:

 

C&RT has already sold of (at HUGE losses) its failed investments in a Pub chain, and a shopping centre etc etc.

 

That was BW, Shirley.