Canals were the motorway network of their day 200 years ago

British Waterways has had its government grant cut by �1m in Wales and has said it will have to cut its development budget.

According to campaigners this has already caused a delay to the restoration of the Montgomery Canal.

The past decade has seen a resurgence in canal use for tourism and leisure.

BBC Wales' current affairs programme Eye on Wales, found that the root of the funding issue is the Department for Environment, Food and Rural Affairs (Defra) payments to farmers in the wake of the foot-and-mouth crisis.

Its attempts to claw some of that money back have included cutting its grant to British Waterways by �7m for the whole of the UK.

British Waterways has said it will honour its maintenance and repair budget but its major development budget will be reduced - something which has already had implications for a project to restore the Montgomery Canal.

Restoration delays

"British Waterways' input into that has been reduced directly as a result of the Defra cuts by 25%," said Alan Platt, chairman of the Shrewsbury and North Wales branch of the Inland Waterways Association.

He said the future of the restoration would be put "back a stage to no small extent" and that although money from other sources was available, this had to be match funded.

A reduced budget meant British Waterways would find it more difficult to carry out as much development work in future, according to the body's external relations manager Eugene Baston.

Asked about the Montgomery restoration, he said: "It will mean a delay in going ahead but in place of that its about working with people like the Countryside Council for Wales and the Heritage Lottery Fund to attract these additional third party funds.

"Where we can't fund development ourselves, we are very, very adept at being able to attract that sort of funding."

The canals are part of the history of this country. They're 200 years old. Colin Evans, canal enthusiast

Increasing licence fees and mooring charges are among the ways British Waterways will raise funds.

Its budget is being looked at within a spending review that is under way and privatisation, although not government policy, is also an option.

There are currently more boats at work on the canals than at the peak of the industrial revolution when they transported coal and iron.

Colin Evans, who owns a narrow boat on the Monmouthshire and Brecon Canal, hopes that financial troubles will not jeopardise the renewed interest in the waterways.

Mr Evans, secretary of Goytre Wharf Boat Club near Abergavenny, said: "The canals are part of the history of this country. They're 200 years old.

"It's an artery, if you like, of our ancestors, of how they used to operate. So I think it would be a great pity if the government turned its back on the network and such an asset that the country has."