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23 Jun 2010 : Column 126WH—continued
We are going through tough economic times. Commuters' hours are being cut and there are pay freezes and high petrol prices, yet the tolls still go up. Severn bridge tolls are among the most expensive in the UK for cars, costing £5.50. My first request to the Minister is that he should examine the issue of toll rises, step in and
recommend a freeze in this year's tolls, particularly in the light of yesterday's VAT rise. While he is at it, will he also examine whether we could implement a reduction in tolls for those who live locally? That could be worked out by postcode area, for example. Such a scheme has been introduced on the Dartford crossing. It is easier to do on the Humber and the Dartford crossing as there is no concessionaire, but why can we not have a look at doing it in Wales?
The second issue is the payment method for tolls. Currently, people can pay to go over the bridges only by cash, including euros, or by cheque. Those who are unfortunate enough to approach the bridge thinking that they can pay by such new-fangled methods as credit and debit cards are frustrated. Many constituents have regaled me with stories of getting to the tolls, not having the right money, being escorted over the bridge and then being told to go back over the bridge and to go to Gordano services, which is a round trip of about 20 miles. That is hardly a welcome to Wales for first-time visitors and it is not much fun for the long-suffering staff collecting the tolls, who have to put up with frustrated motorists.
Paul Murphy (Torfaen) (Lab): My hon. Friend may not recall that I was a member of the 1992 Bill Committee that dealt with this issue. That was a very long time ago. Is it not right that after 18 years, the whole business of the Severn bridge and its tolls should be brought up to date?
Jessica Morden: I thank my right hon. Friend for his intervention. I agree with him. Progress was made on the method of payment of tolls by the previous Minister and it would be helpful if this Minister could confirm exactly when debit and credit card payments will begin and that the card-handling charge will not be passed on to the traveller. I would not expect Tesco to charge me more for paying by card, and I do not see why the bridges should be any different.
That brings me to the impact of the tolls on business in south Wales. The Severn crossing tolls, which are felt by many people to be a tax on entering Wales, are the highest in the UK for all but the largest vehicles. Light goods vehicles pay £10.90, compared with £2.00 for the Dartford crossing and £4.90 on the Humber. The Skye and Forth bridges are free. Heavy goods vehicles must pay £16.30, but on the Humber the charge is £10.90 or £14.60, depending on size. The Dartford crossing charges just £3.70 per heavy goods vehicle, and the Forth and Skye bridges are free.
An example in my constituency of the burden of the tolls is given by Owens Road Services, a long-standing Welsh company with a base in Newport that represents 1% of the total heavy goods vehicle traffic on the crossing. Owens pays £16,000 a month by standing order account and over £200,000 a year. The annual toll increases just come off the company's bottom line; they are not passed on to customers because contracts have to be renegotiated and times are hard. The crossing represents a charge on the Welsh logistics industry that is not paid by competitors in England.
Nia Griffith (Llanelli) (Lab):
I congratulate my hon. Friend on securing the debate. The figures that she has cited illustrate clearly what a burden the tolls are on
business. Owens, which also employs many people in my constituency, is really struggling. There is a very fragile situation economically now. Does my hon. Friend agree that we need to have every measure in place to improve the opportunities for businesses to relocate to places such as west Wales, where we know that we need to do as much as we can to help the private sector to grow?
Jessica Morden: I thank my hon. Friend for her intervention. I agree with her and hope that the Minister will pick up her point in his closing remarks. The industry is already struggling, with more than 3,000 heavy goods vehicle drivers claiming jobseeker's allowance in Wales alone.
The previous Government froze the tolls on the Humber crossing after a study of the impact on residents and businesses. There has been no study of the Severn that I am aware of, so please could the Department for Transport work with the Welsh Assembly Government to initiate one?
Jonathan Evans (Cardiff North) (Con): The hon. Lady is being very generous about interventions. As someone who is himself returning to the House, I congratulate her not only on raising this issue, but on continuing the wonderful record of her predecessor, who raised many of these issues, as the right hon. Member for Torfaen (Paul Murphy) will recall.
In relation to the charge, my understanding is that the actual real revenue is not likely to be reached until 2016. Is not the difficulty about abolishing the tolls the fact that the bridge was in essence built by a commercial company at no cost to the Government and was to be funded from the tolls? In that context, my constituents look to the ease of crossing the bridge, rather than having any expectation that in these times the tolls are likely to be either frozen or abolished.
Jessica Morden: I thank the hon. Gentleman for his intervention, but my constituents feel very strongly that the year-on-year increase in the tolls is very unfair on them locally. I promise that I will come to the concession later. I am not claiming that we should scrap all the tolls when the concession expires.
More than 31,000-31,437-heavy goods vehicles use the bridge each week. That is 4,491 a day. There are clear patterns of movement on the crossing, with most vehicles travelling between peak times. It is clear to me that a more flexible pricing structure, with off-peak travel for business, would offer incentives for people to travel at certain times of the day or night. That would reduce congestion, save on emissions and save companies money at the same time. I ask the Minister also to investigate that issue.
Finally, let us look to the future. According to the Highways Agency study of 2008, the current Severn crossings are being maintained at a constant level and require an annual maintenance expenditure of about 20% of the annual income generated from the tolls. In a few years, when the bridges are expected to be turned over to the Highways Agency-it would be helpful if the Minister confirmed the exact thinking at the moment on what that date might be-the agency will receive the revenue without the burden of debt.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): I congratulate the hon. Lady on securing this very important debate. Does she agree that it is imperative that the United Kingdom Government should ensure that the public purse is not left with liabilities for long-term repairs after the bridges are returned to public ownership?
Jessica Morden: I agree very much with the hon. Gentleman's point. I know that his party has raised it before.
With the Severn crossing due to come back to public ownership in, say, 2016-17-depending on what the Minister says-the time is right to plan for a smooth transition, with tolls being reduced to a maintenance-only charge. I would appreciate it if the Minister considered the matter. I am really grateful to have had the opportunity of this debate and for the interest shown in it by other hon. Members.
To sum up, I should be grateful if the Minister worked with the Welsh Assembly Government to initiate an economic impact study, stepped in and froze the tolls this year, and looked at things such as off-peak travel for business and concessions for local residents so that we could finally reach a conclusion on the method of payment. As I said, at the start of the new Parliament the time is right, as we approach the end of the concession, to look at what the charges will be after it ends. I am grateful to have had the opportunity to introduce the debate, and I look forward to the Minister's response.
4.11 pm
The Parliamentary Under-Secretary of State for Transport (Norman Baker): I wish first to congratulate the hon. Member for Newport East (Jessica Morden) on securing the debate. I thank her very much for her kind welcome to me in my new post. Our commitment to the issue is not in doubt, and I hope that the fact that it is taking place during another event outside the House demonstrates to her constituents her dedication to the issue-assuming, of course, that they will support England.
Before I start to discuss the tolls on the Severn crossings, I wish to make the point that, since 1945, it has been the policy of successive Governments that crossings on estuaries should be paid for by the user rather than by the taxpayer. Successive Governments have taken the view that tolls on all such crossings are justified because the user benefits from the exceptional savings in time and money that those expensive facilities make possible. It is important to make such a point at this stage. It is one that should not be forgotten, not least of all with the present financial difficulties that the Government and country face.
In specific relation to the Severn crossings, it might be helpful if I give a brief outline of their history, some of which is relevant to the issues that have been raised. The first Severn bridge was opened by the Queen in September 1966, providing a direct link from the M4 motorway into Wales, with a toll in place for use of the bridge to pay for the cost of construction. The original bridge continually operated at significantly above its designed traffic capacity, so the then Government said in 1986 that a second bridge would be constructed. In July 1988 they announced that the private sector would be given an opportunity to participate in the scheme and in April
1990 they announced the selection of the bid led by John Laing Ltd with GTM-Entrepose to design, build and finance the second crossing. That consortium was also to take over the maintenance and operation of the existing Severn bridge.
In October of that year, the concession agreement was formally signed between the Government and Severn River Crossing plc, and in February 1992 the Severn Bridges Bill received Royal Assent. The concession agreement was enshrined in an Act of Parliament and commenced in April 1992. Severn River Crossing plc then took over both the operation and maintenance of the present bridge and the construction of the new bridge. The finance arranged by the company covers the cost of construction for the new bridge and pays for the outstanding debt on the present bridge.
Construction of the new bridge started in September 1992 and the new crossing was opened on 5 June 1996 by the Prince of Wales, almost 30 years after the opening of the first bridge. The concession period is limited to a maximum of 30 years. The actual end date will be achieved when the concessionaire has collected a fix sum of money from tolls, which is £995,830,000 at 1989 prices; that is £1.8 billion at today's prices. As part of the concession agreement, Severn River Crossing plc is authorised to collect tolls to meet its financial obligations. It is worth stressing that that is the company's only source of income.
Let me make it clear why tolls are collected at the crossings. Tolls are in place to repay the construction and financing costs of the second Severn crossing, the remaining debt from the first existing crossing from 1992 and to maintain and operate both crossings. I have seen no evidence to suggest that the tolls impact on the economic viability of Wales, although I note the concerns of hon. Members about the impact of the tolls in their constituencies. Clearly, there is a cost to the crossing, which is borne by business and those who pay the tolls, but that has to be weighed against the benefits that the crossings provide in terms of more direct access into Wales, allowing users quicker access to markets than would otherwise be the case. However, I am happy to receive and to look at evidence from the Welsh Assembly, hon. Members or others. That is an open invitation to supply such information to me.
Nia Griffith: Does the Minister agree that in a situation where tolls are not the norm on other roads, it makes a firm such as Owens feel at a distinct disadvantage when it is competing with firms whose distances from the main markets and from the channel ports may be similar, but who do not have to make their route via a tollbridge, and that there is therefore a feeling of economic inequality in that instance?
Norman Baker:
I do understand that. I mentioned earlier that it is standard practice for estuary crossings to have tolls, no matter where they are. They limit the journey time and deal with-or compensate for-the geography of the area. While I understand that there is a cost involved that would not be there if a crossing were not necessary, the alternative to a toll crossing would be a much longer diversionary route. That is a matter of geography; I am not downplaying the concerns that hon. Members and others have about the impact.
As I said, I welcome any further information that they want to give me on that matter, and I will personally look at it.
Jessica Morden: Would the Minister commit to doing an economic impact study on south Wales with the Welsh Assembly Government?
Norman Baker: I do not want to commit to that here, but I will happily receive information that is supplied to me, and I will bear in mind that request as and when it comes in.
The Severn Bridges Act 1992 seeks to apply a clear structure to the tolls to give the concessionaire confidence that it will be able to meet its liabilities and manage the risks that it accepted through the concession agreement. The toll levels were set for three categories of vehicles at the time of tender and are embodied in the Act. The Act sets out the tolling arrangements and the basis for yearly increases in the toll rates. Toll rates are fixed in real terms. The new rates are introduced on 1 January each year and are increased in line with the retail price index using a formula, and rounded to the nearest 10p.
I want to stress an important point: the Secretary of State does not have the authority to set the annual tolls below the level of RPI increase without the concessionaire's agreement. The concessionaire would not be able to agree to anything that would affect their net revenue without compensation and agreement from their shareholders and lenders, which would result, if such an agreement were forthcoming, in a cost to the taxpayer.
Tolls are charged in a westbound direction only from England into Wales. The current toll prices are: £5.50 for cars, £10.90 for vans and £16.40 for vehicles over 3.5 tonnes. I do understand hon. Members' concerns that those are higher than apply in other crossings.
Paul Murphy (Torfaen) (Lab): The Minister made reference to the fact that it is an estuarial crossing, but it is unique in the United Kingdom because it goes into a part of our country that now has a devolved Government. When I served as Secretary of State, some of my conversations with the then First Minister were about how we deal with a situation where tolls are charged to come into Wales but not to go out. The impact on the Welsh economy is very severe, particularly in times such as this. The Minister ought to think a little more about the importance of having a dialogue with his counterpart in Cardiff, because of the importance of this to the Welsh economy in these difficult times.
Norman Baker: I am very happy to have dialogue with my counterpart or anyone else in the Welsh Assembly if they wish to do so. The issue has just been raised for the first time with the new Government-this is the first Adjournment debate on it. I am perfectly open to suggestions of dialogue with people from Wales or elsewhere on issues for which my Department is responsible.
I want to talk about VAT, which was raised by the hon. Member for Newport East. When VAT was first applied to the crossings in 2003, following a European Court ruling, there was no increase in the toll to the motorist. Following the Chancellor's statement yesterday, the Highways Agency will discuss adjustments within
the concession to accommodate the new 20% VAT rate with Severn River Crossing plc. We do not expect the VAT increase to be passed on through an increase in the tolls, but the concessionaire expects to receive a certain amount of money, and the way in which that can be accommodated without increasing tolls is a matter for negotiation.
I know that the hon. Member for Newport East has an interest in local discount schemes, to which she referred in her opening remarks. Any discounts or exemptions are a matter for the concessionaire to decide, provided that they comply with existing legislation. Where that is not the case, such schemes cannot be introduced without changes to primary legislation and the concession agreement. They would have a financial impact on the concession and the period required for repayment, which would impact all road users. Discounts of around 20% for regular and frequent users are offered by way of a season TAG, whereas blue badge holders and the emergency services are exempt.
I now turn to the matter of card payments, which I know the hon. Lady pursued before the election and, with some justification, can claim to have had some success on in her campaign. In March this year, an amendment was made to the Severn Bridges Regulations 1996 to allow card payments at the tollbooths. She will recognise that there are associated costs with the introduction of card payments, mainly bank transaction charges, which are estimated to be between £7 million and £10 million to the end of the concession, or approximately £1 million per year depending on usage. Implementation is expected to cost around £1.2 million, and the way in which the additional costs will be funded has yet to be agreed. Discussions with the concessionaire to resolve the financial issues regarding the introduction of credit card payments are ongoing, but work to amend the tolling software to allow for the processing of credit and debit cards has started.
One of the drivers-no pun intended-that the hon. Lady will be aware of is the Ryder cup, one of the highest profile sporting events in the world. It is due to be held in Newport between 27 September and 3 October this year, with about 50,000 visitors a day, the majority of whom will come from overseas and will not be flush with money in their pockets to pay the tolls. We want to make progress on the matter, and I hope to have it resolved before the Ryder cup begins. My officials assure me that that will be the case, and I will look into the matter to ensure that that is so.
An hon. Member also raised the issue of motorists being sent back after driving some way and finding that they could not pay by card. I understand that signs are in place close to the bridge, before the last junction, advising motorists of the current arrangements, which is that they can pay only in cash. However, if they arrive at the tolls, I have been assured that they do not necessarily have to make a U-turn; they can be issued with an invoice with an added administration fee of £5. The problem with turning motorists back has been recognised, and that is being dealt with in the way I described as an interim measure. If that was new information to Members present, I hope that that was helpful.
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