Severn Crossing Toll

Written Evidence from the Department of Transport

Severn River Crossing Tolls

Introduction

1. The Department for Transport welcomes the Committee’s interest in the Severn River Crossing Tolls.

2. This Memorandum is submitted by the Department for Transport and follows the structure of the Committee’s questions contained in the press notice announcing the inquiry.

The impact of the tolls on the Welsh economy including businesses, local residents and tourists

3. The Severn Crossings provide a key transportation link supporting the local economies of England and Wales. Around 13 million toll paying vehicles use the crossings westbound per annum.

4. Prior to the construction of the Severn Crossings, drivers travelling to Chepstow from the south of England would have used the A40 and A48 adding an additional 50 miles on today’s journey via the crossings. With rising fuel costs it is more viable to use the Severn Crossings than making the 50 mile detour using the A48 to avoid paying the westbound toll.

5. Currently we have seen no evidence that tolling is a disincentive to industrial investment in South Wales. Indeed the new Severn Crossing has greatly improved the transport links into Wales which is likely to have supported business investment in Wales and in particular South Wales.

6. At a recent debate on the Severn Crossings, Transport Minister, Norman Baker MP said he would consider any evidence presented on the effects of the tolls on the Welsh economy.

The current level of toll prices and the available methods of payment

7. The tolls are in place to repay the construction and financing costs of the second Severn Crossing, the remaining debt for the existing crossing from 1992 and to maintain and operate both crossings.

8. The toll levels are set for three categories of vehicles and are embodied in the Severn Bridges Act 1992. This Act sets out the tolling arrangements and the basis for yearly increases in the toll rates. 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.

9. Tolls are charged in a westbound direction only. The current toll prices are: £5.50 for cars, £10.90 for vans and £16.40 for vehicles over 3.5 tonnes.

10. Any discounts or exemptions are a matter for the Concessionaire, Severn River Crossing Plc (SRC), to decide, providing they comply with existing legislation. Discounts of around 20% for regular and frequent users are offered by way of a season TAG. Blue badge holders and the emergency services are exempt.

11. Previously the Severn Bridge Regulations 1996 stipulated that all tolls leviable at the Severn Crossings shall be paid in cash or using a pre-payment agreement (TAG). In March this year an amendment was made to the Regulations to allow card payments to be accepted at the tolls.

12. There are associated costs with the introduction of card payments, mainly the bank transaction charges. These are estimated to be between £7m - £10m to the end of the concession; approximately £1m per year depending on usage. Implementation costs are expected to cost around £1.2m.

13. Work to amend the tolling software to allow for processing credit/debit card payments has started and discussions are ongoing with the Concessionaire to resolve the financial issues around the introduction of card payments.

14. The Highways Agency (HA) is working towards implementing a card payment system at the tolls before the Ryder Cup begins in October.

The current condition of the bridge and the costs associated with ongoing maintenance

15. SRC is required to maintain both Severn Crossings in accordance with the Concession Agreement. A rigorous schedule of inspections is carried out and regular review meetings are held between SRC and the HA.

16. A programme of cable inspections on the M48 Severn Bridge (opened in September 1966) began in April 2006 after corrosion was found in the suspension cables of bridges of a similar age and construction in other parts of the world. Significant levels of corrosion were found and a programme of works to tackle corrosion followed.

17. A full dehumidification system has been installed to address the corrosion. The system, which pumps dry air into the cables to reduce humidity, has been operational since December 2008. Reports show humidity levels within the main cable are below the target level of 40% relative humidity. In addition, an acoustic monitoring system has been installed to track the rate and location of any further deterioration. A second round of inspections is currently underway to gain a detailed understanding of the level of corrosion and to verify the success of the dehumidification. This work is due for completion later this year.

18. Existing or latent defects are not covered under the terms of the Concession Agreement. Therefore, any costs associated with existing defects, such as the main cable corrosion work, will be met by the Government. The programme of mitigation and inspection work carried out to tackle corrosion has cost £15m so far, with the second inspections costing a further £4m.

The future of the bridges after the crossings has reverted to public ownership

19. SRC will continue tolling until it receives the defined sum of £995,830.00 (in 1989 prices), subject to a maximum of 30 years. After this time both bridges will be handed over to the Government. The Concession is due to end in the first half of 2017.

20. The Government has the power to continue tolling for up to a further 5 years following the handover of the crossings to recover its own costs which may have been incurred. This would be for costs that fall outside of the scope of the current Concession e.g. cost of cable corrosion work.

21. The Concession Agreement sets out the requirements for transfer of the crossings to the Secretary of State at the end of the concession period. SRC is required to carry out any necessary maintenance and repair works on the crossings prior to handover. End of concession planning meetings are held regularly with SRC to ensure handover arrangements are in place when the concession ends.

22. Once the crossings have been handed back to the Secretary of State the cost of future maintenance and repairs will be the responsibility of the Government.

23. No decisions have been made regarding the future of the crossings once the concession expires. The Department is willing to look collectively at what happens after 2017.

September 2010