Fears the canals could become a magnet for flying dumpsters in the funding line
Bosses say the channels could become hotbeds for flytipping and abandonment because of the way the responsible body receives the money.
Scottish Canals has been forced to operate on one-year budgets since 2019, preventing it from retaining profits or funding longer-term regeneration projects.
Chief Executive Catherine Topley has said the Forth & Clyde Canal in Glasgow could even slip back into the dereliction from which it was saved just 25 years ago, jeopardizing its proven health benefits and key role in reducing risk of flash floods.
The Kelpies equine statues and the nearby Falkirk Wheel on the canal each attracted some 500,000 visitors a year before the pandemic, generating vital additional revenue. Topley said future projects of this scale would be extremely difficult as they “would take many years to deliver and that’s a very difficult thing to do when you’re working on annual budgeting.”
A new canal bridge being built at Stockingfield in Glasgow is a two-year project, while the Claypits Nature Reserve in Hamiltonhill, completed in 2021, took five years.
Topley said the Scottish Government had yet to approve Scottish Canals using money from the sale of land for canalside housing in Glasgow to fund upgrades to canalside buildings.
The houses would provide significant rental income and repay the planned £1.3million investment within a few years.
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She said: ‘We need to find a way to operate that allows us to keep our income to grow, because spending a year means thinking a year. “We have a 250 year old canal, so we have to think much longer than that.
“The canal is a community asset – it boosts business, housing and community projects, and mental and physical health, which is really important.”
Topley said the closures showed how quickly the canal could return to its former state, when people used it to throw away rubbish such as old sofas and doors. She added: “There is a real risk, without proper channel investment and use, that it will revert to that space that is not of value to the community, and very quickly it becomes a health risk rather what an advantage.
“It would be dangerous because research has shown that canals absorb a lot of rainwater and mitigate flash floods as we see changes in the environment.”
Earlier this year the public spending watchdog refused to sign off on the accounts of the quango in charge of Scotland’s inland waterways due to a £51million ‘defect’ in its finances.
Audit Scotland said it had taken the “highly unusual step” of issuing a disclaimer due to multiple concerns about Scottish Canals’ finances.
The watchdog said the way Scottish Canals recorded and valued its assets meant they could not be sure whether the 2020/21 accounts contained “material misstatements”.
The £20m-a-year quango falls under SNP Transport Secretary Michael Matheson. It is responsible for the maintenance, management and development of Scotland’s five canals – Forth & Clyde, Union, Monklands, Crinan and Caledonian – and their associated land and property assets.
Last year Scottish Canals changed from a public company to a quango and therefore had to follow new UK Treasury rules on the valuation of its waterways and infrastructure.
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Although it carried out the required valuations for investment property, land and buildings, it failed to secure valuations for around £51m of specialist assets including Helix Park and the landscape Kelpies, dredging equipment, lock gates and canal basin widening works.
These assets had not been valued before. A subsequent valuation, to estimate the cost of replacing these assets in their current condition and current use, subsequently raised further concerns about the accuracy of Scottish Canals’ fixed asset register.
Concerns were raised over the qualification of the valuer chosen by Scottish Canals, with items being registered as assets which were not assets and assets being registered without proof of ownership.
This required the auditors to ‘issue a disclaimer on the accuracy of Scottish Canals’ financial statements’. Auditors also questioned some ‘management judgments’ at Scottish Canals, including recording maintenance work as capital expenditure, such as repairing existing towpaths where it was ‘difficult to identify’ the creation of a new asset.
The auditor concluded that some revenue expenditure had therefore been incorrectly recorded and, although “unable to quantify the value of the expenditure affected … concluded that it was likely to be material”.
Audit Scotland said the turnover of Scottish Canals’ finance team in 2020/21 has increased the challenge of fully adopting the UK Treasury rules that recently applied there.
A Transport Scotland spokesperson said: ‘We fully recognize the benefits canals provide and are committed to supporting Scottish canals to continue to provide them.
“Like all other public bodies in Scotland, Scottish Canals operates in a challenging environment where public funds are extremely limited.
“Since 2019, its capital grant has increased by 87%, along with an increase each year in resource funding – plus additional funding to mitigate the impact of Covid.”