The Department for Environment, Food and Rural Affairs has committed £800m of funding over the next 15 years to the Canal and River Trust, the charity that will be formed from the English and Welsh branch of British Waterways.
British Waterways, previously a quango, will become the country’s 13th largest charity when it becomes independent, which is expected to be in June this year.
It will receive a core grant of £39m a year from Defra, inflation-linked from 2015/16 onwards, as well as an extra grant of £10m from 2015/16 onwards, dependent on performance measures. The charity will also receive a one-off payment of £25m.
This income represents a reduction from the previous financial year, when it received government grants worth £58.9m.
A Defra statement said the charity would receive a "capped ‘last resort’ government guarantee in relation to the historic public sector pension liability", although did not provide any further details. The charity is expected to inherit a £60m pensions deficit, according to the latest British Waterways accounts..
The department has also agreed to transfer the existing £460m property portfolio to the new charity.
Tony Hales, chair of the trust, said the settlement would provide "a bedrock on which to build the future prosperity of our precious waterways".
"With greater certainty of funding than ever before, we now have the opportunity to attract new investment and new supporters and give a greater role to the millions of people who live alongside and on the waterways," he said.