‘If the public sector wishes to obtain external benefits from canal restoration schemes, the bodies responsible for obtaining those benefits should bear the risk, says the report.

‘Defra, with BW and other interested government departments and public bodies, should develop a mechanism to score and prioritise public investment in canal restoration according to the external benefits that would be created, and should agree how the financial risks of such projects should be borne, the report concludes.

'The committee’s main conclusion that the bodies which benefit most from waterway restoration should also bear the risks involved goes to the heart of the matter,' said BW chairman Tony Hales. 'I am grateful to the committee for the time they have given to debating and raising awareness of this important subject – its work can only help to enhance the prospect for future waterway restorations and that must be a good thing.'

In response to the committee’s comments on the timing of its announcement about withdrawal from the Cotswold Canals Partnership, Mr Hales said: 'I have had many discussions face to face with waterway user groups and other stakeholders since our announcement. We have noted the committee’s comments whilst concluding that there was no one ideal way to break such difficult news to stakeholders including our own staff employed on the project whom we believed had to hear first.'

• At a cost of £350,000, BW has commissioned an external review into its institutional status to investigate options for securing future savings and income. The review, which is due to be published later this month, was commissioned with the backing of DEFRA, to address issues relevant to future strategy, says BW.

View the full text of the EFRA Select Committee report: British Waterways: follow-up (Eighth Report of Session 2007-08) or its press release entitled: 'If Government wants to obtain the public benefits of canal investment, it should bear the risks, concludes House of Commons Committee', go to www.parliament.uk/efracom on 1 July 2008.