Written evidence from the Federation of
Small Businesses
I would like to inform you that The Federation
of Small Businesses (FSB) commissioned Aberystwyth University
to investigate the economic impact of the Severn bridge tolls
on the economy. I believe this research will be of much benefit
to the Committee.
I would like to point out some highlights of
the research. There are several general policy conclusions and
options to be drawn from the arguments presented during the research:
Firstly, there is a general case to be made
for the systematic management of the road transport network in
order to promote efficiency and economic welfare. If capital costs
are to be recovered through charging then, logically, on grounds
of equity, all road enhancements should recover their cost from
proportionate charges, not simply those which are exceptionally
expensive. Any new piece of road infrastructure brings benefits
in terms of enhanced safety, improved access and reduced costs,
and these considerations, alongside concerns to manage the financial
cost of road building and repair, deal with the associated environmental
consequences of increasing traffic, and regulate congestion, provide
a platform for a system of universal road pricing. Yet, until
a politically acceptable and practically feasible scheme for achieving
this can be designed, piecemeal tolls and congestion charging
will cause distortions which affect mobility and accessibility.
While most will be of minor significance, some of the more acute
of these emerge from our survey findings.
Secondly, the importance of a European policy
perspective emerges from our study. Unlike the case at Humber,
where the Bridge divides a city and acts as an intra-urban link,
the M4 crossing is a key through route, which is also highly significant
in trans-European terms. Treating the crossing differently and
continuing to levy a toll on the Bridge section of this route
should be considered in the light of overall commercial circumstances
in the EU, including comparative location conditions and the arrival
of low cost Member states, which are already seen to pose a threat
to business competitiveness in the UK. Interestingly, there is
also some support among stakeholders for the development of a
pan-European system of road pricing—if it is accepted that
such charges are inevitable—which would create "a level
playing field" for all EU commerce and enterprise.
Thirdly, and as a consequence of the appreciably
greater impact on businesses on the South Wales side of the Crossings,
it is anomalous and inequitable that the Severn Bridge Act 1992
vests sole power with the Westminster Secretary of State for Transport,
over the decision to end or modify the toll charges. Strategic
supervision of national transport infrastructure (which is a legitimate
function for the UK Government) needs to be balanced by consideration
of the more pronounced local consequences: there should at least
be a co-decision framework, involving the Welsh Assembly Government
(WAG) and the Westminster Department of Transport who will effectively
be co-owners of the crossings when the capital cost has eventually
been defrayed. The well-known maxim that "devolution is a
process, not an event" should focus attention on this anomaly,
and as with rail transport issues, seek a greater voice for the
devolved administration in determining issues of considerable
local importance. An early inquiry by the Assembly's Economic
Development and Transport Committee could establish the scope
and relevance of any legal reform.
The findings of this report indicate how important
it is to more effectively communicate the rationale for continuing
to charge a toll to users of the Crossings. It is now a common
public perception that the cost of maintenance is a relatively
small proportion (under 5%) of the toll revenues—and this
report indicates that the cost of the charge falls disproportionately
heavily on Welsh businesses.
In terms of options for the future, however,
recession and the squeeze on public spending make it highly unlikely
that the annual revenue stream from the Severn Bridge toll of
approximately £70 million will be given up lightly; furthermore
a maintenance-only charge would probably cost more to collect
than it would yield. Clearly, policy beyond 2016 is not clear
cut and there is a strong case for reviewing the continuation
of uniform charges—and for an opening up of the debate.
So what are the real options with respect to
removal, freezing, and real-terms reduction for policy development?
In pragmatic terms, current legislation provides for the Westminster
Department of Transport to have the sole power of decision; and
a likely and welcome scenario might be a freezing of tolls in
nominal terms, and limited take for five more years, post-amortisation.
However, given the impact reported by businesses that are highly
dependent on the Crossings, there are good arguments for a smarter
approach, designed to offset detrimental impacts. This might include
discounted toll rates for regular business usage; purchase of
multi-trip toll cards; revision of the ratio of charges for different
categories of vehicles to reduce costs for commercial traffic;
and (although these would not be welcomed by the transport sector)
peak time differentials.
Finally, although revenues from the Seven Crossings
toll will belong by statute to the Westminster Department of Transport
and consequently would be absorbed by the Exchequer into income
from general taxation, there is an undoubtedly strong moral basis
for such proceeds to be shared with the Welsh Assembly Government.
Additionally, since the charges are borne entirely by road users,
there are highly persuasive arguments in support of the view that
this share should be exclusively hypothecated to improvement of
the Welsh transport infrastructure, either directly for road maintenance
and improvement, or for the enhancement of public transport systems
in a rational and integrated way throughout Wales, with the aim
of promoting both social and economic objectives, minimising environmental
impact and reducing road congestion.
October 2010
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