Examination of Witnesses (Questions 274-330)|
RICK LONGFORD, JOHN MCGOLDRICK AND COUNCILLOR JOHN
9 NOVEMBER 2010
Q274 Chair: Good
morning, gentlemen. Thank you very much indeed for coming up today.
I know that some of us have met before but, for the record, I
am David Davies, Chair of the Welsh Affairs Select Committee.
I just wondered if you could also introduce yourselves and then
we will start the session. There is no need to stand up. That
is absolutely fine. In fact the microphone picks up better when
you are not standing.
Councillor John Warman:
Thanks very much, first of all, Mr Chairman, for inviting me along
today to speak about the Severn tolls. May I first of all say
that I am the organiser for CASTthe Campaign Against Severn
What I would like to say today is basically the principle
that, as an organisation, we are totally against the tolls on
the Severn Bridges. We feel that, as an organisation, it spells
out disaster for the business and economy in Wales. It also affects
the south-west of England as well. It means that private motorists
have to dig deeper into their pockets every year and the tolls,
as far as we are concerned as an organisation, are nothing more
than a tax on entering Wales.
Q275 Chair: Okay,
thank you very much, Mr Warman. Don't worry, we will come back
to you. We are going to do a question-and-answer session and we
very much appreciate you coming up here today. It will be a fairly
straightforward question-and-answer session but I will just go
through and ask the others, if I may, to introduce themselves.
I am Rick Longford and I am the Economic Development Manager for
Monmouthshire County Council.
I am John McGoldrick and I am the Coordinator for the National
Alliance Against Tolls.
Q276 Chair: Thank
you all very much indeed for coming along. Can I start the questioning
by asking about the Aberystwyth University report into tolling
which suggested that for most SMEs the impact of the tolls was
not substantial? How would you feel about that? Perhaps I could
ask Mr Warman first.
Councillor John Warman:
Well, I don't agree with that, Mr Chairman. I think that it is
a huge burden on business and I have received a lot of communication
and comments from the haulage industry in Wales to say how much
of a burden it is on their business. I can also tell the Committee
here today that I have had a number of private conversations with
people who have been involved with companies at boardroom level
who wanted to set up business in Wales.
Could you name any of these companies, Mr Warman?
Councillor John Warman:
I'm sorry, I'm not in a position to do that, Mr Chairman, because
some of that was expressed to me in a confidential nature, but
what they did say was the fact that when it was discussed at boardroom
level with companies one of the issues that was brought up was
the cost of how much it would be in tolls for setting up in Wales
as an extra burden and therefore they decided not to set up in
Wales but other areas. So that is an indication, an example, I
feel, of how far it is hitting business and the economy in Wales.
Thank you, Mr Warman.
Thank you, Chair. I have only just had a chance to see the report.
I only had it sent to me yesterday so I've had a quick read through.
It is interesting to note in the report that it relates that the
ones that are having difficulties are those business sectors which
are particularly related to transport, such as the haulage businesses
and those involved with warehousing. Obviously, in Monmouthshire,
warehousing is a particularly important industry on the M4 corridor
in the areas of Chepstow and Magor. So I can see that in our location
that would probably have a greater impact. However, as you move
further away from the bridges then probably that impact goes away.
Mr Longford, am I right in thinking that tourism is actually one
of the biggest employment industries in Monmouthshire?
In one sector, yes. It employs round about 10 or 11% of the employees
within the Monmouthshire economy. So it is a significant sector
for us in terms of that.
Is it the view of the Council that the level of tolls is having
an impact on that particular sector, if not on SMEs in general?
There are some tourist businesses which are directly affected,
particularly, I suppose, again those close to the Wye Valley.
I have had a report from the tourist business in the Wye Valley
about how they have seen the perception of that tourism business
drop because of tolls. I think, particularly when we look at one-off
events such as the Abergavenny Food Festival, we would see, potentially,
tourists coming to the Abergavenny area from the Bristol area
who may well bewhat's the word?deterred from coming
because the toll is then a significant element of the tourist
I am going to bring in Geraint Davies now. I think I should just
say, with absolute respect, that we have had a nice little preamble
there but, because of the number of questions we've got, I'm
going to ask everyone, including reminding myself, that both the
questions and answers need to be fairly short and snappy if possible.
Q282 Geraint Davies:
May I ask Mr Longford how reliable he thinks the Aberystwyth study
is, in particular because it, and indeed the Welsh Assembly study,
focused on the users of the bridge and how much they used it according
to the toll as opposed to, for instance, a small builder who might
be in Monmouth who would, if there was no toll, go over to Bristol
and get some work putting up a roof but simply cannot afford to
go back and forth and never tries for that?
Secondly, there is the category of business that
says, "Okay, we'll locate in Bristol because most of the
market is on that side of the Severn", and that's it. It
is a one-off decision. Occasionally, they will trip over to Wales,
but if that toll had not been there they might have located in
Wales. Do you think those sorts of examples are not really adequately
picked up in the Aberystwyth study in terms of the negativity
of the tolls on the Welsh economy?
Yes, I think so. I think, first, that the sample size was relatively
small in relation to what the study undertook and obviously it
is covering a wide area. So, yes, I think the study needs to be
expanded or needs to be developed, particularly in the area of
actually questioning the users of the bridge as well rather than
the businesses, because I think the business users of the bridge
may well have a different viewpoint.
Q283 Geraint Davies:
Can I ask Mr Warman and Mr McGoldrick whether they have any anecdotal
evidence of builders or any other people based in Wales who don't
get business across the bridge because of the toll, or of businesses
who have simply relocated?
Councillor John Warman:
I feel that for businesses, especially at this time of an economic
downturn as well, it is a huge burden and some businesses are
going to move outside Wales. Also, the disincentive of that extra
cost of the money mounting up in a year for the haulage costs
must be a consideration for a lot of companies and there is evidence
to say about that. Can I also say that I've also had a number
of calls from people, holidaymakers, who told me to say that,
if they were not paying the £5.50 or whatever vehicle is
out there, that would be going into the pocket of a shopkeeper
in Wales. I am just giving an example of the extra money that
would be paid.
Well, first of all, I should briefly say that I have not seen
the FSB research. I'm not sure that it has been available to the
public. My understanding is that it is just based on a telephone
survey and it is not much more than that.
The other research in other parts of the country
that has taken place has come to a different conclusion. It has
come to the conclusion that tolls do have a significant effect
on a lot of businesses. Both the businesses that are there and
the businesses that are potentially there are discouraged from
setting up in that area because of the toll.
As somebody said before, obviously there is also
an effect on tourism, which is more difficult to assess because
you can't ring tourists up and say, "Are you going to go
here or there because of tolls?", although everybody is probably
aware that with things like sat navs or if you go on to things
like AA Route Finder you will see that one of the options is to
avoid tolls, which implies that there is a significant number
of people who will avoid tolls if they can.
Q285 Jessica Morden:
This is just a quick question for Mr Longford. Did you have any
evidence when Tesco decided to relocate from Chepstow over the
bridge that the bridge tolls were part of that decision?
There was no evidence that they used in any of their publications
on why they moved, but I have to say it is curious that their
excuse for moving was that they had not got a big enough premises
in Newhouse and they could be provided on that. Neither Monmouthshire
County Council, myself nor any of my colleagues were ever asked
to try to find a larger site for Tesco on this side. So when one
looks at that and suggests that potentially with 140 stores or
so in the south and south-west served by an Avonmouth facility
as opposed to 45 or so in the South Wales area, the economics
of £16.70 of toll every day for 50 to 100 lorries is quite
Q286 Jonathan Edwards:
Good morning. What evidence is there that tolls have diverted
traffic away from the M4 on to less suitable roads, and there
are particular problems maybe in Chepstow and Gloucester?
There is no specific evidence as such. I do not think there is
anything else. There is a lot of anecdotal evidence, or perceived
evidence particularly, that because of the toll regimethat
you only pay to get into Wales and not outany traffic going
out and doing the Gloucester run may well go out over the Severn
crossings and then come back through Chepstow. It has been perceived
that Hardwick Hill in Chepstow particularly is an area where it
suffers from significant heavy traffic.
Q287 Jonathan Edwards:
Do you accept that tolling regimes and road pricing schemes are
a positive tool for raising revenues, especially for transport
infrastructure, even if, after the concessionary period comes
to an end, there are to be maintenance costs and operational costs
to consider which would need a toll of some sort?
I am not in an area to be able to express a real view in relation
to that. I have no evidence, but one would suspect that the actual
bridges are vital to the Monmouthshire economy. Therefore any
reduction in maintenance and therefore potential closure would
be detrimental to the Monmouthshire economy.
Would both the other gentlemen agree with thatyes or no
on that one? Would you accept that there has to be at least a
toll in place to maintain the infrastructure?
No, definitely not. 99.99% of roads and river crossings are not
tolled. To suggest that you need a toll to maintain it is ridiculous.
The Government takes £1 billion a week from drivers and about
one-seventh is put back into the roads. The suggestion that for,
I don't know, say, the £20 million maybe it costs to maintain
the Severn Bridges you need to put in a toll, stop the drivers
and demand money from them otherwise the bridge is going to fall
down is, in my view, nonsense.
Councillor John Warman:
I know that there is a lot of traffic that misses the Severn to
go the other way to miss the tolls. It can cause quite a problem,
as I understand it, through some of the villages where they go
through. I have not got any facts or figures, but I know definitely
it does happen. From the nature of my work, I work in Wales quite
often so I can see it.
What is it you do, Mr Warman?
Councillor John Warman:
When you are not campaigning against tolls, what is it that you
Councillor John Warman:
What do I do?
Councillor John Warman:
I am a researcher.
Chair: That is fine.
Q292 Owen Smith: Good
morning, gentlemen. This is a very quick question to Mr Longford.
Have you got any specific examples of investment decisions that
have been explained to the Council as not being taken, companies
not moving to Wales or relocating from Wales as a result of the
I have no specific examples that I can give you of that because
that decisionit is usually a multiplicity of activity which
prevents people coming in, in decisions. So I have not got any
specific ones in writing.
Q293 Owen Smith: Given
that, and I think we can all see that there seems to be a lack
of empiric evidence about this one way or the other, is the Council's
view none the less that you think the bridge is a problem, in
terms of the costs of the tolling, in terms of investment in the
county, or not?
Yes, I think it is our view that the tolls are a problem. The
high value of the tolls as well is a problem. They are perceived,
from a tourist and business point of view, to be a tax on entering
Wales. It is perceived that, as you come over the bridge, you
then have to pay to enter Wales. You don't have to pay to enter
England; you have to pay to enter Wales. So, again, there is a
Q294 Owen Smith: Would
that perception be alleviated if the tolling was both ways?
It could be, but again that may well cause a delay going out of
Wales. You would have two sets of delays which also would be a
potential problem. I think it is the high rate of the toll which
is the particular problem. We have lived with tolls for a long
time so we accept that the tolls are there, but it is the high
rate that is the problem.
Mr Longford, just before I bring in Alun Cairns, I have heard
this a lotthat you have to pay to get into Wales but not
into Englandbut if you put the tolls on the other way,
surely the same people, and I am one of them, would complain,
"You have to pay to get into England but Wales is free"?
Does it really make that much difference? Wouldn't there be complaints
wherever you put the tolls?
There could well be, but I think from a tourism perspective we
are trying to attract tourists into Wales from the England area
and from that point of view it is seen as a negative.
Can I just say that, generally speaking, with the tolls around
Britain or where there have been tolls, one side of the crossing
is generally regarded as the wrong side of the tracks. It does
not really matter too much, as you said, which side the toll collection
point is on. One side will be perceived as being poorer than the
Q296 Alun Cairns:
Can I pursue some of the questions that Mr Smith followed, Mr
Longford, in terms of the question that asked whether businesses
had purposely not located in Monmouthshire because of the tolls
and whether they went the other side of the border or the other
side of the Severn Bridge? I am familiar with one organisation
that took that into account and chose to go to the Aztec Centrethe
Aztec Business Park on the English side of the crossing. That
is involved in distribution.
Now, we have also spoken about Tesco already. Are
you aware of a disproportionate make-up of firms such as that
involved in transport and haulage the other side of the Severn
Bridge so that that would potentially indicate, well, it's quite
obvious that X number of companies have gone there rather than
coming to the Welsh side?
Again, I am not aware of any specific companies who have turned
around to us and said, "The tolls are the reason that we
are not coming."
Q297 Alun Cairns:
No, but I'm asking about the companies that are established. Has
any comparison been made or do you think there is merit in comparing
the make-up of the companies, say, in the Aztec Centre and other
business parks around there in comparison with those facilities
where there are pretty near identical facilities on the Monmouthshire
side of the border?
It would be useful to do that sort of work. I am not aware of
any work that has been done in relation to that.
Just before I bring in Jessica Morden, Mr Longford, can I ask
you a specific question? If there were no tolls on the Severn
Bridge, wouldn't that have an impact on shops in Chepstow, because
at the moment there is already a lot of competition with Cribbs
Causeway? Is it not the case that we are actually keeping money
in Wales by keeping a toll there as well as perhaps some of the
disadvantages that we are both well aware of?
I think it could be argued that that is the case, but I also think
that the reciprocal is also the case where Chepstow is an attractive,
historic market town which could well pull people from the Bristol
area back to that area as well.
Q299 Jessica Morden:
Do you think there is a joined-up plan for tolling across the
Well, obviously not. There aren't any tolls in Northern Ireland
and there haven't been for over 100 years. There are no tolls
in Scotland. In most parts of England and Wales there aren't any
tolls. I live on Merseyside. If I want to go into North Wales
from where I live on the Wirral, I don't have to pay a toll to
cross the Dee. If I then go across the Conwy on the bridge or
under the tunnel, I don't have to pay a toll. Obviously, tolls
are very haphazard, and if there is any rule at all it is basically
what the authorities can get away with. In other words, in the
areas where there is the least choice to avoid the toll you are
more likely to get a toll.
Q300 Jessica Morden:
Would anyone else like to comment?
Councillor John Warman:
Yes. May I say that my organisation is against tolls anyway? I
just want to remind you, Members, if you were to speak to your
constituents, I think they'd all tell you, "Where's all the
money going that we are paying in road tax anyway? It's not all
being spent on the highways as it should be anyway. So why should
we be paying tolls on top?"
Q301 Owen Smith:
To the gentlemen who are anti-tolls, just to understand the rationale
of your organisations, is it then that you are opposed to tolls
full stop because you feel that other means of taxation such as
road tax ought to be allowing for the maintenance of bridges and
roads that are currently tolled?
Well, in brief, the mantra that we used to have, which would take
a while to explain, is that basically we believe the tolls are
unfair, unwanted and uneconomic. That they are unwanted has been
demonstrated on numerous occasions. The most successful petition
on the 10 Downing Street website was the petition against road
pricing, which is basically road tolls, which got nearly 2 million
signatures. The only two local polls that have taken place on
the question in Edinburgh and Manchester massively defeated the
idea of congestion charging. The western extension of the London
Congestion Charge Zone is due to be removed after Christmas because
of the widespread opposition to that. Almost every independent
survey which has taken place indicates that people don't like
They are also completely uneconomic. Tolled operations
cost more to construct, cost more to operatesorry, the
Chair is interrupting me. I'm sorry for getting carried away.
Chair: And why not, but
I have to try and get through all the questions.
Q302 Owen Smith:
So there is never an example, you think, even in the straitened
economic times we have right now, of the need for some sort of
PFI deals that we had with this instance, or some other means
of financing that results in tolls? You think it's always going
to be unjustified?
Well, even if you were going to have a toll operation, PFI is
the most expensive way of doing it. It probably doubles the cost
for various reasons which I won't go into. If you are going to
build a new road or a crossing, it should be judged on economic
terms. Is this needed? Is it going to contribute to the bottom
line of UK plc? If that is the case, then it should be built.
If it is not the case, it shouldn't be built. But it should be
financed out of road taxes and not out of a specific charge.
I think Mr Warman was trying to come in there on that as well.
Is that right? Did I misinterpret that?
Councillor John Warman:
I think the general principle of toll charging is not something
that the public support from my feedback or the positive responses
I have had since this organisation has started. From the feedback
I get, the majority of people have said, "We are paying our
road taxes", and this principle of going out trying to expand
the toll charges and introducing more is just a non-starter as
far as they are concerned. It is just a way of getting more money
out of the hard-pressed motorist already.
Very briefly, how many members are in your organisation?
Councillor John Warman:
I can't give you an actual figure, Mr Chairman, because I have
never counted them, but I get a lot of support from members who
contact me by the internet, by the web, and people who write to
me. Can I just say that I can't give you a figure on everybody
who is a member, but I get a lot of public support as well from
people who know of me.
That's fine. I'm just trying to get a feel. Mr McGoldrick?
We don't have a formal membership. Basically, we are an alliance.
Obviously, the individual groups have members, although most of
those are fairly informal. One group nominally has a membership
Q306 Guto Bebb:
Just on the question of tolling, it is quite clear that you are
opposed to tolling, full stop, Mr McGoldrick.
Q307 Guto Bebb:
You make the point obviously that the amount spent on roads is
about £7 billion compared to about £52 billion raised
because you used the figure of £1 billion a week, but in
the UK we have never had actually had a system where taxes are
dedicated for a particular purpose. Are you arguing that the £52
billion should be spent on roads?
No. It would be very nice if it was and the country might be better
off. I think people in general would be better off if we had more
bypasses round villages and so on. The point is that there is
a vast profit. To overcharge by about seven times and then to
demand a supplementary fee is, in our view, unfair. It is also
completely uneconomic. To a certain extent the Committee so far
has been asking about the effect on individual businesses, but
one of the recent studies that was done by Colin Buchanan on the
Humber Bridge looked at it from a completely different way. As
I mentioned in our evidence, they looked at what are called agglomeration
effects, which basically is the idea that the bigger your market
is, the more efficient it is. If you have a river and you put
a crossing across it, you increase the agglomeration effects.
If you put a toll on it, you reduce those effects. In the case
of the Humber Bridge, their assessment was that if the tolls were
removed there would be an economic gain of £1 billion.
Chair: That is quite interesting.
I understand the general point, but I just want to bring in Mr
Davies very quickly.
Q308 Geraint Davies:
On that point actually, would you accept that the bridge, in essence,
is a gateway into the South Wales economy for inward investment
and trade and as such the tolls are a squeeze on that gateway?
We have had people coming here, in particular Ieuan Wyn Jones,
who said there may be an argument that some of that toll should
be used for new transport systems in Wales and therefore there
should be a toll.
But wouldn't you accept that, if, for example, there
was a proposal which put a toll on the M6 so that the people of
Manchester could have a few more buses, there would be an outcry?
Hold on, why should we have these arbitrary tolls and messing
around with the system when, in essence, what we are stopping
is trade for South Wales or whatever region, and the case for
tolls isn't made at all?
Of course what you have just said virtually happened anyway. With
the Manchester Congestion Charge proposal, the Outer Ring of it
was the motorway going around Manchester where you would have
had to pay a toll if you went along it or you crossed it. The
vote there, in the Greater Manchester area, was 4 to 1 against
for a variety of reasons. Most people believed that it would harm
businesses inside the toll cones.
Q309 Geraint Davies:
I think the situation would be that, if you wanted to put a toll
on the Severn Bridge and it had not existed before and then you
decide to impose it, there would be a much greater outcry than
there is against the tolls as they exist at the moment.
Q310 Karen Lumley:
I see that you talked about the Humber Bridge. Do you think that
the pricing on the Severn crossing and the Humber Bridge has been
treated differently by the Government?
There are 20-odd toll crossings around the country and each one,
to a certain extent, is open to a different regime. The Humber
and the Severn are similar in so far as they are the joint highest
tolls in the country, but they have a different mechanism for
increasing the tolls on the Severn; it goes up automatically.
On the Humber, they have to apply for Government permission.
The other main difference is that the Humber has
had a massive subsidy from the Government over the years. They
have had about £500 million in subsidies because the losses
on the bridge were so great that something like £320 million
of debt was written off. They have had interest subsidies which
are worth about another £200 million; in other words, most
of the debt they did not have to pay interest on. They still feel
aggrieved that they have to pay the toll, but they have received,
compared with the rest of the country, a massive subsidy of about
Q311 Karen Lumley:
Which is not available to the Severn crossing at all, is it, so
actually we are losing out there?
It is not available to Severn and it is not available everywhere
else. It is because the tolling obviously discourages use of the
crossing. On the Humber Bridge it discouraged it, and other factors
as well, to the extent that it was perpetually in the red. Obviously,
beyond certain points, if you keep on putting the tolls up, which
they could have done legally, then it is going to be a case of
diminishing returns. If you double the toll, you might not even
get the amount of toll income that you get at the moment.
Just before I bring in Alun Cairns to ask about the methods of
toll payment, could I ask a quick question to Mr McGoldrick and
Mr Warmanit is really a yes or noand perhaps Mr
Longford as well? Would you all accept that it is better to have
the bridge with a toll than no bridge and no toll?
I would answer yes.
Councillor John Warman:
Mr Chairman, I think on the issue of the tolls, the charges and
the card that is coming in, we are still totally opposed to the
toll charge. The card that is coming in is going to be more of
a convenience, but I've got to say that there's total confusion.
What do you say thenyes? Is that a no? It strikes me that
you are probably so against the principle of any toll that you
would probably rather not have had the bridge. What about you,
Mr McGoldrick? What do you think?
If you look at the amount of traffic that goes across the Severn
crossing, if they had removed the toll on the first crossing,
then in theory, based on normal traffic flows, they should have
been able to cope without building the second crossing.
Q315 Alun Cairns: Can
I talk about the toll payment methods? Do you think that the method
of payment at the moment is sufficiently wide in terms of its
convenience and in terms of speed, Mr Longford?
No, I don't think it is. We have suffered under a long period
of time now that you can only pay by cash or there is a TAG system
as well, which has a detriment particularly. It was pointed out
by Peter Cole in a recent study from Capital Region Tourism that
this method of using cash is alien now to a lot of people who
are now using cashless systems. The bridge seems to be a long
way behind what it needs to be.
There has been a move to introduce cards for the
Ryder Cup, but as soon as the Ryder Cup was finished that was
then taken away again. I believe they have tried to reintroduce
it. It was due to be reintroduced in the current few days, I believe,
but I'm not sure whether it actually has. We need to move to something
more sophisticated such as the Inner London Congestion Charge
technique of recording people who are crossing the bridge so that
people don't actually have to stop. That stopping creates an environmental
problem at the tolls with vehicles then having to start up again.
If they could go through a toll booth without actually stopping,
then that would be a great incentive as well.
Q316 Alun Cairns:
Thank you. You have covered most of the issues that I wanted to
cover, but something I want to close down on is, do you think
it is acceptable, is it confusing, and were you made aware of,
the introduction, the withdrawal and the reintroduction of tolling?
In the answer that you gave earlier, you said, "I'm not sure
where we are now." Do you think it is acceptable as the authority
that would have an impact in that area that you don't know where
I don't think it is acceptable that we don't know where we are.
We have no communication really with Severn River Crossing plc
at all. They don't give us any information in relation to tolling
or tolling techniques.
Alun Cairns: I agree.
Q317 Owen Smith:
Do you know whether they have reintroduced it? They were meant
to reintroduce it last Friday.
I actually don't know, I'm afraid. I did come over the bridge
on Sunday and I didn't see any method at that time, but perhaps
I didn't go to the right toll booth.
Q318 Jonathan Edwards:
In terms of the evidence we had from Severn River Crossing plc
last week, they said that there would be no movement in terms
of moving ahead with a more modern system for recording until
the end of the concession period because it was not worth their
while. It seemed that the decision therefore was, do we extend
the franchise and perhaps move ahead with a more modern system
for collecting the tolls, or do we move towards public ownership
as soon as possible so that we can reduce the tolls? Given the
two counter weighting choices there, which would be the preference
of the local authority?
That's a difficult one. I'm surprised at that reaction that you
had from Severn River Crossing plcthat they were not prepared
to look at new technology, because if they would introduce that
they could then reduce their operating costs. As their operating
costs are taken away from the receipt to get this figure that
they need, then surely there would be a big advantage to doing
that. I am just totally surprised at their reaction.
Q319 Jonathan Edwards:
I think their argument was that the capital costs of moving the
toll booths, etc. would be prohibitive
I think they are making a significant profit out of the bridge
as it is and I wouldn't have thought that that was a major problem.
Q320 Owen Smith:
On that question about profits, one of the things we are wrestling
with in the Committee is the nature of the deals being struck
and the nature of the financial arrangements. They are actually
quite opaque. They tell us that it is impossible to determine
how much profit they are making right now and how much profit
they will make at the end of the scheme. You are implying that
your impression, looking at it, is that it is a profitable business
and therefore they should be investing?
Yes, I have looked at the report that was put to the National
Assembly for Wales in June 2010. At the back of that, there is
the annual tolling income. Looking at those sorts of figures,
you wonder why. They are taking £77 million a year. Their
cost of sales, which is their operation, is £10 million.
The cost of operations/repairsthis is for 2008, by the
waywas only £4.24 million. I don't think they are
spending an awful lot of that £77 million.
Q321 Owen Smith:
What about when we revert to public ownership of the bridge? Do
you think the tolling regime should remain or do you think it
should be reduced, and if it should be reduced is there an optimal
bearable toll level or should it be reduced to the absolute minimum?
That's a difficult question, I suppose, for me. I think that the
people of Monmouthshire and those that use the bridge would obviously
like to see no tolls for the reasons that have been discussed
in this meeting now. I am also concerned, as I said earlier, that
the bridges are vital to the Monmouthshire economy, that, if,
for instance, there were no tolls and therefore no income, does
that mean that the first crossing, which is obviously having significant
costs of keeping it open, would be closed, because you have another
bridge so you don't need that one? So there is a question there.
I think that we do need to see a reduction in those tolls. The
tolling regime has been 10p on every year irrespective really
of the RPI, and I think that's another area
That is an important point that you have just raised. Have MCC
got any concerns that the first bridge might close at some point
because of maintenance costs?
We have got no evidence to put it that way, but with the reports
recently that the main cables for the first crossing are in need
of serious repair or replacement that obviously is a huge cost
and there could be decisions being made about that.
Chair: We have been given
the impression that that work is being done, but that is a good
point. Thank you for that.
Q323 Karen Lumley:
During the Ryder Cup when these machines were in use, was there
any anecdotal evidence that they took longer to use or how long
they were taking to use?
We have not had any reports back on that so I am not aware of
any information relating to that.
Q324 Guto Bebb:
I'm sorry, Mr Longford, but I'm coming back to you again, I'm
afraid. In terms of the comments that you made about the profitability
of the bridge, obviously that is refuted by the Severn River Crossing
companies, who argue that when you look at their accounts you
obviously have to take into account all the financing costs. So,
in effect, your argument is almost an argument against PFI projects
per se, because if you strip out of their financial records the
issue of financing costs then obviously they are quite profitable.
But if you look at the real world scenario where they do have
to pay back the money they borrowed in order to build the bridge
in the first instance, then obviously they don't make those profits
that you claim. Is it your assertion therefore that PFI is a bad
I wouldn't be able to comment on that, I'm afraid. I can only
go on the figures that I have from that report which suggests
to me that that is the situation, that they are making a profit.
I'm sure they are making a profit as a company because they are
a private company. They are there to make a profit.
Q325 Guto Bebb:
Because their year-on-year accounts have shown losses on occasion
I'm not aware of those and not had that information.
Q326 Guto Bebb:
I just wanted to clarify that. Maybe you have a comment on PFI
in general because you did state in passing that you had concerns
about PFI as a concept.
It would take a long time to go into that. Just touching on the
profits the company makes, the problem that the company have is
that they must look over the life of the concession and basically
whether they make a profit or not under the concession depends
on how quickly the traffic flows build up. The sooner they reach
this £1 billion at 1989 prices, the more likely they are
to make a profit. If you look at their last published accounts
in 2009, they made a profit before tax of £14 million. That
was not necessarily typical, but on that they paid £10 million
to the Government. So indirectly the toll payers paid £10
million in tax to the Government. Also, as the Committee will
be aware, they are paying VAT to the Government, which the Government
is keeping, which I estimate was probably about £15 million.
So, in 2009, the Government took £25 million out of the money
that would otherwise have been available to pay off the debt.
Q327 Geraint Davies:
On that point really, do you feel that the construction of the
concession is such that the incentive of the Severn River Crossing
company is simply now to take the money and not invest? That was
said to usthat they have got no incentive to invest in
modernisation before 2017. All they are really trying to do is
to take what money they can, basically pay off the debt and make
some money within the time constraint and the revenue constraint
of the concession. Do you think there is an inherent problem there
for a consumer?
Chair: Mr Warman?
Councillor John Warman:
Yes, I just wanted to say about PFI, actually, that I think it
is just a quick fix myself. It is an easy solution. You get it
today; you have to pay for it later on. It comes back, and it
is becoming a huge problem. I think the public outside would have
said about the Severn Bridge, "Why wasn't that paid for out
of taxes anyway when the money should have been put there for
it." The money was there, but it was just an easy fix, and
I think that problem of PFI is going to come back to haunt us.
Q328 Geraint Davies:
Has Mr McGoldrick got an answer to my question because he started,
and Mr Longford?
Sorry, could you just quickly repeat the question?
Q329 Geraint Davies:
Do you believe that the structure of the concession basically
means that no money is reinvested in modernisation and the money
is just taken, as you have already said, by the Government?
Obviously, it depends on the points. The closer you get to the
end of the maximum period of the concession, which is 30 years,
the less incentive there is to invest, although they are obviously
obliged to keep the bridge in good repair. The main incentive
for the company is just somehow or other to maximise traffic as
best they can and to reach this £1 billion target as soon
as they can rather than anything else.
Q330 Geraint Davies:
But they haven't invested in credit cards or new systems, like
the Congestion Charge systems we have here. They are just saying
that it is not worth their while and they are just taking the
money they can.
Congestion charge systems using cameras, etc. are very expensive.
With the London Congestion Charge, the administration cost is
about £4.50 per vehicle per day.
Chair: That is a very
interesting point. I am ever so sorry, but we have the Minister
waiting outside and we have to start at 11.15 promptly. So I would
like to thank you all very much indeed for coming.
Chair: We shall let you
have a copy of the report when it is done.