You absolutely need some kind of licensing setup for canals, to avoid standard tragedy-of-the-commons outcomes with too many boats (particularly houseboats) on a limited amount of water. There are also safety issues -- the canal byelaws define various rules which are the waterborne equivalent of traffic regulations, to prevent collisions and other accidents. Licensing fees also fund keeping the canals maintained.

I suspect that some of the regulatory environment here is the shape it is for historical reasons -- canals were originally commercial waterways with heavy traffic, not a more lightly-used pleasure/leisure environment.