The Severn Crossings Toll - Welsh Affairs Committee Contents

4  Future of the Severn Crossings

Handover Date

69. As we have previously mentioned,[105] the Severn Bridges Act 1992 established the conditions under which the concession will end. Severn River Crossing Plc will continue tolling until "it appears to the Secretary of State that the revenue requirement has been met",[106] subject to a maximum of 30 years. The Act states that the revenue requirement is met:

... on a day if the aggregate amount of toll income received by the concessionaire on or before that day is equal to or greater than the amount which he is entitled to receive in accordance with the concession agreement.[107]

The amount the concessionaire is entitled to receive in accordance with the concession agreement is a cumulative revenue of £995,830,000 expressed in July 1989 prices.[108] The Highways Agency reviews the projected concession end date every six months using data supplied by Severn River Crossing Plc to gain assurance that the revenue target will be recovered within the concession agreement. Earl Attlee, Government Spokesperson for Transport, stated on 19 July 2010 that "the end date is currently predicted to be the first half of 2017".[109]

70. Jim Clune, General Manager of Severn River Crossing Plc, commented that the company had had no discussions with the Department for Transport regarding handover arrangements.[110] In contrast, the Deputy First Minister for Wales stated that "because of the strategic importance of the bridges to Wales, there is quite a lot of discussion with the Department for Transport":[111]

    I have had a meeting with the Secretary of State, but I know that [...] officials have had many discussions with the department about the bridges, the tolls, and the impact, and what happens when the concession period and the maintenance period end, and what happens in the future.[112]

Toll prices following handover

71. Under the Severn Bridges Act, once the Severn Crossings return to public ownership the Highways Agency may continue to levy tolls for a further five years to establish a maintenance fund for both crossings.

72. Witnesses agreed that this was an "ideal opportunity to introduce flexibilities to the pricing structure".[113] The three main options for the future strategy in relation to the toll were set out:

  • Removing the toll;
  • Retaining the toll at the current level with the money earmarked for transport infrastructure improvement; or
  • Reducing the toll—this would offset some of the other increases in the cost of road transport while providing an income stream.

73. We heard a range of views regarding the future of the toll prices. The majority of witnesses recognised the need to retain a toll in order to ensure that the maintenance needs of the crossings were met. The Freight Transport Association commented that it understood:

    ... that once back in public ownership the integrity of the Crossing must be maintained. The revenue for this should rightly come from the user.[114]

Denise Lovering, Director of Glenside Commercials accepted that "there has to be a toll, but at a lower level, and that is to maintain the superstructure and perhaps the people who have to take it".[115]

74. Witnesses commented that the Government had to resist "the temptation of looking to cash in from revenue from unrelated artificially high charges".[116] Denise Lovering agreed that the crossings should not be seen as a "cash cow" for the Government.[117]

75. Many of the witnesses argued that the toll should be reduced to a "much fairer level"[118] or to a level that would cover the operational and maintenance needs of the crossings. Chris Yewlett from the Chartered Institute of Logistics and Transport (UK) Cymru Wales noted that the maintenance of the bridge would be a "small fraction of the current toll compared with the original construction".[119] Dr Andrew Potter agreed that "If you charge the toll just to cover maintenance on an annual basis, that would keep that out of the public purse and find a way of funding it by users".[120]

76. Other witnesses argued for a continuation of the current level of tolls, with the money earmarked for specific infrastructure work in South Wales.[121] Robin Smith of the Rail Freight Group stated that the tolls:

    ... should be retained at a reasonable level [...] and the money hypothecated towards a second rail crossing.[122]

This is an interesting proposal which could bear further examination.

77. In addition, the National Alliance Against Tolls and the Campaign Against Severn Tolls (CAST) argued that the tolls should be abolished:

    Tolls should be removed and the costs of [...] future maintenance and repair should come from the £50 billion that roads users pay in taxes.[123]

78. The Deputy First Minister for Wales recognised that a range of options existed and agreed that there was a debate to be had over the future strategy of the crossings:

    You could get to a point at which the toll is pretty low, or you could say, 'This is an opportunity to have investment in the wider transport infrastructure'. Provided that the money was invested in the wider transport infrastructure, and not just put into a general pot—which would, presumably, be the Treasury pot—you could have a debate about which one of those options you would choose.[124]

79. We discussed the possible levels that a future toll could be set at with Jim Clune, General Manager of Severn River Crossing Plc. He explained that the current total operating cost made up of maintenance and toll collection, including the toll collection infrastructure, was £12 million a year. In addition, the Highways Agency spent an average of £3 million a year on latent defects. Against this, over £6 million a month was currently collected in tolls.[125] On this analysis, this suggested that the Government could make a significant cut to the toll and still have sufficient funds to maintain both bridges to the current required standard. With running costs of £15 million a year, and a current yearly income of £72 million, we estimate that the toll could be reduced to a fifth of its current level, to approximately £1.50 while allowing the crossings to remain self-financing. We recommend that the Government should seek to reduce the level of the toll at the earliest opportunity. We recognise, however, that at this level no "sinking fund" would be accumulated towards any future replacement of either bridge.

80. The Minister refused to be drawn into an "individual fiscal analysis of the bridge".[126] He did however, comment that:

    It is not just about the maintenance of the bridge. It is also about investment in further infrastructure around it as well. Dartford is an example of that. For instance, at Dartford, not only will the 50p increases over each year, or two years, enable us to do the free flow, but they will actually allow free use of the tolls when the congestion gets particularly bad so they are not chargeable.[127]

Methods of Payments

81. It was widely acknowledged that the crossings need to adopt a 'more up-to-date' technology for the receipt of tolls. Various options were considered. In its evidence, the Chartered Institute of Logistics and Transport (UK) Cymru Wales set out options for future payment methods:

    Smartcards—probably the most widespread technology currently available, such as the Oyster system in London and the concessionary pass in Wales. Any system may need to be ITSO compliant to meet national standards and offer inter-operability with other uses (e.g rail tickets);

    Contactless payment—this technology is already entering the market with Barclaycard issuing cards capable of this for purchases under £15; and

    Automatic Number Plate Recognition (ANPR)—used to enforce the London congestion charge. If the technology can be shown to be reliable at motorway speeds, this could enable the removal of the toll plazas to increase the flow along the motorways. However, consideration also needs to be given with this technology to enforcement of the tolls, for both UK and overseas vehicles.[128]

82. In its written evidence, Cobalt Telephone Technologies stated that the "secret to successfully taking credit and debit card payments for the Severn Crossing is not to impede the flow of traffic":[129]

    Any concept that involves actually plugging-in physical cards and entering PINs is operationally weak [...] What is required is a 'light touch' membership system where the motorist's vehicle registration number is already associated with both their credit card details and their mobile telephone number.[130]

83. The Minister agreed that there was a need for a more modern payment method at the crossings:

    ... I think that it is absolutely unacceptable that, in the 21st century, we have barriers to try and take money off of people when we need the money, but there are much better ways of doing it and we can learn from around the world how it has been done.[131]

84. Jim Clune, General Manager of Severn River Crossing Plc, recognised that free-flow technology was the "technolog[y] of the future".[132] However, he stated that the possibility of automatic number plate recognition technology had been considered, but explained that the current vehicle toll classifications on the crossings did not "lend themselves to automatic number plate recognition":[133]

    The best example that I can give is that of a Vauxhall Corsa private car and a Vauxhall Corsa commercial van, both of which return an identical footprint from the Driver and Vehicle Licensing Agency. We could not distinguish between the categories. In addition, our investigations have revealed that the DVLA database is not 100% accurate. [...] Therefore, we have investigated the issue of automatic number plate recognition. It would need, primarily, a change in the toll classifications that were established in the Severn Bridges Act.[134]

85. Introducing a more sophisticated payment system for the Severn Crossings would involve physically dismantling two toll plazas. Jim Clune admitted that "given that the end of our concession is now seven years away, the expense and the difficulty of converting at this stage would be totally disproportionate to the benefit".[135] He admitted that Severn River Crossing Plc would be more inclined to invest if there was the possibility of a franchise to collect the toll once it returned to public ownership.[136]

86. Mike Penning MP, Parliamentary Under-Secretary of State, Department for Transport, told us that he strongly favoured free-flow technology. In discussing the current position of Severn River Crossing Plc he stated:

    I am concerned that there is a conflict of interest here between the end game for them being 2017 [...] and actual investment in free-flow tolling.[137]

He expressed frustration that the current concession agreement made it "very, very difficult" to force the company to invest in free-flow technology:[138]

    I can force it on them, I understand—I think the Secretary of State could actually force it upon them, but then there will be the up-front costs which may well have to be incurred by the Highways Agency and my Department.[139]

87. The Minister pointed out that introducing free-flow technology would reduce operating costs:

    ... there will be substantial savings should you have free-flow because you don't have the toll booths, you don't have the costs of actually banking all that coin, and you don't have the people collecting it and carrying it. It is a balance between the two and I can see huge benefits to actually having free-flow.[140]

88. The Minister revealed that he was going to open negotiations with the company to investigate the possibility of introducing free-flow technology before the end of the concession in 2017.[141]

Future Ownership of the Crossings

89. Following the end of the concession, the UK Government will have responsibility for the operation and maintenance of the bridges. One of the bridges is entirely in England, while another is partly in England. However, owing to their significance, a number of witnesses argued that there should be shared responsibility between the UK Government and the Welsh Assembly Government.

90. In its evidence, the Road Haulage Association argued that due to the importance of the crossings to Wales and to ensure that any future strategy benefited the Welsh economy, the Welsh Assembly Government should "take responsibility" for the Severn Crossings.[142] In its report, Aberystwyth University concluded that it was "anomalous and inequitable"[143] that the Severn Bridges Act 1992 vests sole power with the Secretary of State for Transport:

    … there should at least be a co-decision framework involving the Welsh Assembly Government (WAG) and the Westminster Department for Transport.[144]

Denise Lovering, Director of Glenside Commercials also advocated "some sort of co-working".[145] While the Minister acknowledged that the crossings had a major effect on the Welsh economy, he considered them a "piece of British national infrastructure".[146]

91. The Deputy First Minister for Wales told us that that the Welsh Assembly Government would want to consider taking ownership of the bridges. He stated that the Welsh Assembly Government had raised the issue of ownership with the Department for Transport, although their response was that "it is too early to have that debate".[147]

92. The 2017 handover provides an unique opportunity to re-examine the pricing policy for the Severn Crossings. Once the bridge returns to public ownership and its current debt is paid off, the cost of maintenance and toll operation will be a small fraction of the current monies raised by the toll charges. We believe there is a strong case for reducing the cost of the toll and urge the Government to implement this when they take ownership of the crossings. Annual accounts for the crossings should be transparent and publicly available, so that the public can differentiate between the operational and maintenance costs of the crossings and any profit made. The Government must not be tempted to use the crossings as a "cash cow" when it takes over responsibility for the crossings.

93. While we welcome the introduction of credit card payment facilities, the technology exists for more superior methods of payments, such as free-flow technology. The current vehicle classification system contained in the Severn Bridges Act does not allow such technology to be implemented. We recommend that the Government amends the vehicle classification system contained in the Severn Bridges Act 1992 so that free-flow technology can be implemented as soon as possible. We believe there is a strong case to invest in free-flow technology now. We recommend that the Government pays the concessionaire to implement it, with these costs recouped from future profits when the concession has expired.

94. We welcome the UK Government's recognition of the importance of the Severn Crossings to the Welsh economy and its transport infrastructure. There must continue to be a close working relationship between the Department for Transport and the Welsh Assembly Government over the future strategy for the crossings.

95. We look forward to regular updates from the Department for Transport regarding its future strategy for the Severn Crossings.

105   See paragraph 5. Back

106   Severn Bridges Act 1992, Part 2, Section 6 Back

107   IbidBack

108   £1.8 billion at today's prices. Back

109   HL Deb, 19 July 2010, cols WA180 Back

110   Q 192 Back

111   Q 240 Back

112   Q 240 Back

113   Ev 56 Back

114   IbidBack

115   Q 109 Back

116   Ev 56 Back

117   Q 70 Back

118   IbidBack

119   Q 47 Back

120   Q 33 Back

121   Q 32 Back

122   Q 63 Back

123   Ev 63 Back

124   Q 234 Back

125   Qq 211-218 Back

126   Q 378 Back

127   Q 378 Back

128   Ev 49 Back

129   Ev w4 Back

130   IbidBack

131   Q 345 Back

132   Q 173 Back

133   Q 155 Back

134   IbidBack

135   Q 175 Back

136   Q 207 Back

137   Q 343 Back

138   Q 346 Back

139   IbidBack

140   Q 370 Back

141   Q 369 Back

142   Ev w10 Back

143   The Severn Bridge-Taking its toll on the Economy? commissioned by the Federation of Small Businesses, October 2010 Back

144   Ibid. Back

145   Q 86 Back

146   Q 383 Back

147   Q 265 Back

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Prepared 22 December 2010