British Waterways manages 2,200 miles of waterways

The Environment, Food and Rural Affairs committee said it was "extremely concerned" about reduced grants for British Waterways (BW) up to 2011.

It has urged a National Audit Office review of "conflicting accounts" from ministers and BW about its finances.

And it expressed concern at an apparent communications breakdown between them.

The committee pointed to interviews with former biodiversity, landscape and rural affairs minister Barry Gardiner, in which he "strongly criticised" the management of BW on various issues.

The minister's outbursts are not indicative of a healthy and open relationship between sponsor department and dependent body Committee's report

It also highlighted conflicting responses from BW, including one which said the minister had a "lack of understanding" about its efforts to clear its arrears.

The committee said it had been "an exceptionally tense period" adding: "The minister's outbursts are not indicative of a healthy and open relationship between sponsor department and dependent body."

It also called on British Waterways to ensure complex terms, concepts and models were "explained clearly" to the Department for the Environment, Food and Rural Affairs (Defra).

Budget shortfall

It added that a new minister was now in charge of British Waterways which it hoped would bring a "fresh start in the relationship".

The committee reported that a �7m shortfall in BW's expected budget for 2006/7 meant �5.6m of planned work had to be postponed on the Grand Union Canal, the Leeds and Liverpool Canal and the Ribble Link.

Our waterways are in a better state today than they have been since before the Second World War Jonathan Shaw Waterways minister

The organisation is also expected a shortfall in Defra funding amounting to �35m by 2011, which it says would affect major repairs and dredging.

But the government says British Waterways will get �30.1m more income between 2002 and 2012 - due to higher than expected commercial earnings and grants up to 2007.

'Effective working'

The committee also said it was "extremely concerned" at the implications of anticipated lower grants between 2008 and 2011 for "British Waterways' ability to maintain the waterways network to an acceptable standard".

Canals were the motorway network of their day 200 years ago

Responding to the report, minister Jonathan Shaw said: "Our waterways are in a better state today than they have been since before the Second World War."

But he said he was committed to "ensuring there is good communication and effective working relationships" between Defra and BW.

BW chairman Tony Hales said the past 10 years had seen a "remarkable renaissance in the fortunes of Britain's historic inland waterways".

He said British Waterways and Defra had enjoyed a "successful partnership" and were "committed to working together to secure the continued and sustainable revival of the waterways".