It's a towpath ! If you want to ride around on a billiard table smooth ten yard wide track try the nearest velodrome. If your bike is sooo delicate it snaps in half every time you hit a pebble bin it and buy a real one.
All roads, paths, footpaths [irrelevant here, or should be] and cycleways COULD be made smooth as glass but no one, repeat no one would be prepared to pay the extra taxes to cover the costs, [remember the road tax, which cyclists don't pay anyway doesn't contribute to the road upkeep, or so everyone keeps saying].
I've ridden that route hundreds of times when it was far worse than it is now. It is NOT a cycleway, although cyclists can use it. If it's too tricky looking where you're going and, {horrors !!!] having to slow down sometimes, use the road.
Your wrong on 2 important points - it is a cycle route and it has not been funded with any tax payers money.
The route is actively promoted by Sustrans and LCC (amongst many) as a cycle route - google Aire Valley Towpath Route - in addition to being quoted often as a viable commuting route for those cyclists that would prefer a quieter alternative to the very busy A65 into Leeds. In order for the towpath to serve this purpose, it needs to be of a certain quality, but the reality is (as Paul L points out) large sections that simply make the route untenable as a commuting route.
The second thing you are factually incorrect on is the funding for this (you'd know this if you had read the article) which has come from The Canals and Rivers Trust (a charity I support) and Sustrans (also a charity).
There is also another reason why these improvements are needed - there have been deaths on the route partially attributed to its poor condition. Again google can help you read these if you wish but personally I feel if a route is going to be promoted (for all users) as a safe passage into Leeds then it needs to be of a certain standard.
Lastly, for the benefit of the wider audience, I am in no way suggesting we tarmac every mile of towpath we have. I mentioned I am a active supporter of the Canal and River Trust and I am a keen towpath cyclist. I am well aware of their limitations but I am also aware of their benefits.
So, by all means cycle on a towpath as a bimbly sight seeing ride with all the muck and pebbles you can take (I do and love it), but if councils, tourist boards or an actual cycling charity promote it as a viable multi-user route into a major city then it needs to be of a certain standard.