3 Cross-border roads |
53. Travel by road still accounts for the vast
majority of journeys made by residents of Wales.
Almost 130 million journeys between England and Wales were made
by road in 2010: 
more than 16 times the number of rail journeys. Prioritising improvements
to road links between England and Wales can be problematic because
of how responsibilities for roads are shared. As set out in paragraph
5, Welsh and English authorities are responsible for cross-border
roads only on their side of the border, although the UK Government
has sometimes funded improvements in Wales where a project physically
crosses the border. CILT wanted better coordination on cross-border
road policy to ensure connectivity for Wales was "not compromised
by England-centric decision making."
Our inquiry focussed on two key cross-border road issues: improvements
around the M4 and the level of tolls and future ownership of the
Improvements to the M4
54. The M4 is the main road link between England
and South Wales, with over 60,000 journeys made between England
and Wales on the motorway each day, almost a fifth of all road
journeys between England and Wales. The motorway suffers from
congestion and poor reliability of journey times due to the high
level of traffic and out-dated design standards. The majority
of witnesses believed that improvements to the M4 on the Welsh
side of the border should be a key priority for the Welsh Government.
The South East Wales Economic Forum considered improvements to
the M4 to be the most important cross-border transport issue of
55. The Welsh Government considered improvements
to reduce congestion problems on the M4 around Newport in 2009,
but rejected them because they were unaffordable. The UK Government's
2011 Autumn Economic Statement included an undertaking to engage
with the Welsh Government on improvements to the M4.
The Welsh Government subsequently opened a consultation in March
2012 on enhancements to the M4. Proposals ranged from £45m
on improvements to a distributor road to a £830m bypass to
the south of Newport.
The Welsh Government has also agreed to consider improvements
to the M4 north of Port Talbot.
56. The Freight Transport Association raised
doubts about whether the Welsh Government had the funding to make
the necessary improvements to the M4.
ICE Wales Cymru believed that innovative finance solutions might
be needed to fund improvements to the M4.
The toll revenue from the Severn Crossings was suggestedincluding
by the Welsh Government Ministeras one potential means
of funding. Another
was increased borrowing powers for the Welsh Government.
The latter was agreed, in principle, by the UK Government and
Welsh Government in October 2012, and was also supported by the
Silk Commission, which was set up to consider current financial
and constitutional arrangements in Wales.
57. The Welsh Government told us that, since
the 2011 Autumn Statement, officials had met with their UK Government
counterparts "on a number of occasions to discuss options
for financing major strategic enhancements to the M4". It
was "too soon to say what the outcome of the discussion will
58. We welcome the Welsh Government's
consultation to explore options for improving the M4. This motorway
is a key strategic road for Wales and the UK more broadly. It
has suffered from under-investment and congestion for too long.
We call on the UK Government to continue working with the
Welsh Government on improvements to the M4, in particular to identify
attainable funding solutions for the essential improvements required
for this key strategic road.
The Severn Crossings
59. The Severn Bridge and Second Severn Crossing
in South Wales are two of the most important transport links between
England and Wales: traffic on these two roads represents almost
a quarter of all road journeys between England and Wales. The
bridges were opened in 1966 and 1996, on the M48 and M4 respectively.
Under the contract for the construction of the Second Severn Bridge,
Severn River Crossing Plc took over responsibility for the operation
and maintenance of the original bridge, and the financing of the
outstanding debt for its construction. In return, Severn River
Crossing Plc was permitted to collect tolls from both crossings
for an agreed period. This is its only source of income. The Crossings
will return to public ownership when the current concession ends
in 2018. Although the Crossings are a key route for people travelling
into and out of Wales, one of the bridges is located entirely
in England, while another is partly in England.
60. We examined the Severn Crossings Toll in
a separate inquiry in 2010.
In this inquiry we re-visited two issues from that report in respect
of the Severn Crossings which are still to be resolved: the level
of tolls and a future strategy for the Crossings after 2018.
FUTURE OWNERSHIP OF THE CROSSINGS
61. Our 2010 report on The Severn Crossings
Toll called for the urgent development of a future strategy
for the Severn Crossings, once it returns to public ownership
in 2018. However, no such strategy is yet in place. On the contrary,
our inquiry exposed a disagreement between the UK Government and
Welsh Government about the future ownership of the Crossings.
The Severn Bridges Act 1992 allows for Government to continue
tolling for up to a five years after the Concession ends to recover
its own costs. The Parliamentary Under-Secretary of State for
Transport told us that the UK Government would continue to maintain
tolls after 2018 due to outstanding debt it had incurred in respect
of the bridges. This meant there would be no reconsideration of
the ownership structure until the "early 2020s".
62. In response to the Minister's comments, the
First Minister for Wales, Rt Hon Carwyn Jones AM, issued a statement
on 5 November 2012 saying that it would be "unacceptable"
for the UK Government to retain the income from tolls beyond 2018,
and that it was clear that decisions about the future of the bridges
should be made in Wales.
63. There is a clear disagreement
between the UK and Welsh Governments over the ownership of the
Severn Crossings when the Concession ends in 2018. It is vital
that this dispute is resolved as soon as possible.
LEVEL OF TOLLS
64. In our 2010 Report, we concluded that the
UK Government should reduce the cost of the tolls when the Crossings
returned to public ownership in 2018.
Two years on, we heard again from a variety of witnesses about
how the high level of tolls was having a negative impact on the
Welsh economy. The South East Wales Economic Forum said that the
tolls on the Severn Crossings were the highest in the UK and caused
a "real problem" by discouraging travel between England
and Wales. The Freight
Transport Association described the tolls as a "direct tax
on doing business for Welsh [freight] operators, or on doing business
in Wales." A
recent Welsh Government report argued that removing the tolls
could potentially boost the economy of South Wales by £107
million due to an increase in productivity of 0.48%.
65. Once the Crossings return to public ownership,
VAT will no longer be payable on toll revenue. This could potentially
enable a reduction in toll prices with no loss of net revenue.
66. On the issue of the level of tolls after
2018, the DfT told us:
The Government has not undertaken any decision on
the level of the tolls when the commercial concessions ends. VAT
would not apply to a publicly-run toll. However prices did not
rise when VAT was first included in the toll, so it would be wrong
to assume prices would automatically go down once VAT was removed.
There may be valid reasons to try to repay the outstanding debts
as quickly as possible, for example to open the way for new arrangements
for the Crossing.
67. In response to a Parliamentary Question,
the Chief Secretary to the Treasury told the House of Commons
in November 2012 that he would consideras part of the Government's
response to the Silk Commission's Part 1 report on Financial
Powers to Strengthen Waleswhether the loss of revenue
from reducing or removing the tolls could be offset by a subsequent
increase in income tax as a result of higher job creation in Wales.
level of the tolls on the Severn Crossings hampers the development
of businesses in Wales and deters inward investment to Wales.
We are disappointed that the DfT has not agreed to reduce the
level of tolls at the end of the Concession. We are unconvinced
by the DfT's assertion that the fact VAT will no longer be payable
on toll revenue from 2018 should not necessarily translate to
an immediate reduction in the level of tolls.
69. We renew our call for
tolls on the Severn Crossings to be reduced when the Concession
ends in 2018. The UK Government should investigate how this can
best be achieved. We recommend that the UK Government bring forward
proposals for the management of the Crossings and tolling after
they return to public ownership.
70. The Chief Secretary to
the Treasury should deliver his commitment to consider, as part
of the UK Government's response to the Silk Commission, whether
the income lost through reducing or removing the tolls could be
recouped by a subsequent increase in income tax as a result of
job creation in Wales.
LEVEL OF DEBT
71. As noted in paragraph 61, the UK Government
has said it will not consider the ownership structure of the Crossings
until it has recovered its own debts for building and maintaining
the Crossing, which it expects to be in the early 2020s. When
we inquired into the Severn Crossings Tolls in 2010 we were advised
that the DfT's responsibilities for latent defects on the Crossings
had resulted in an accumulated debt of £19 million, arising
from costs being incurred that fell outside the Concession agreement.
But no indication was given that the accumulated debt could increase
72. During this inquiry, the DfT informed us
that the current accumulated deficit of costs falling outside
of the Concession was £112 million. This included costs for
"professional advice, works associated with latent defects
such as the main cable corrosion on the Severn Bridge, and £4m
of the £126m pre-concession debt from 1992". The DfT
said there was "significant uncertainty" about the
final amount of debt:
There is significant uncertainty around what the
accumulated deficit will be at the end of the concession period
because this will depend on the costs of any additional work that
may need to be carried out on the Crossings, including mitigation
of latent defects. However, with the concession period currently
predicted to end in 2018, it is estimated that the
deficit will be well over 100 million pounds, and be recovered
by the early 2020s.
We have asked for a more detailed breakdown of the
Government's debts in respect of the Crossings. The DfT have said
that a detailed breakdown of this kind is in preparation and will
be shared with us and the Welsh Government.
73. We were surprised that the
Government has now accumulated a £112 million debt on the
Crossings, which means the Government intends to retain income
from the tolls for several years after the Concession ends. It
is hugely disappointing that the Government did not make clear
during our 2010 inquiry on the Severn Crossings Toll that the
debt could increase to such a level. We are also concerned that
the accumulation of this debt will delay reducing the level of
the tolls after 2018.
74. It is imperative that
the DfT publish a full breakdown of the outstanding debt which
the Government holds for the Severn Crossings, detailing how and
when this was incurred. We also call on the DfT to provide an
explanation of why the costs resulting in this debt were not covered
in the Concession Agreement, but are instead to be borne by those
travelling between England and Wales via the Severn Crossings.
75. We will continue to closely
monitor developments with the Severn Crossings over the course
of this Parliament. We will take evidence from the Department
for Transport minister again on this matter later in 2013.
Cross-border roads in North Wales
76. Good road links between England and the north
of Wales are important to allow the large daily movement of people
between the North West of England and North Wales. Taith, the
transport consortium for North Wales, said that a number of key
cross-border routes in north Wales suffered from congestion. The
A55/A483 junction near Chester was described as a "significant
congestion bottleneck that impacts on the network in England and
Wales". The A494 Aston Hill and A49 were also said to suffer
77. The DfT announced in October 2012 that it
will fund improvements to the A55/A483 junction. The Welsh Government
Minister told us he welcomed the news but would have appreciated
prior warning from the DfT about the project:
Recently, there was an announcement on the A55/A494,
just on the other side of the Welsh border, on the Chester side
of the Welsh border, [...] which came completely out of the blue
to us. We knew nothing about it. Now, as it happens it is an enhancement
and that is great, but this is a through road for England/Wales
traffic and that is just one element of this that we just were
unsighted on. Not a bad thing, but it would have been really helpful
in terms of planning infrastructure, if there was something that
we wanted to do on our side, to have the engagement. There are
still things that slip the net and I just think we have to get
better at that. 
This appears to contradict the DfT's evidence to
us which stated that "both sides now operate on a "no
78. We are concerned that there
does not seem to be the same level of co-ordination between the
UK Government and Welsh Government on improvements to key cross-border
roads in north Wales, as there has been in south Wales with the
M4. We welcome the DfT's commitment to address the bottleneck
at the A55 and A483 junction, which is a key cross-border route
for traffic between England and Wales, but we were surprised to
discover that the Welsh Government had not been informed of this
prior to its announcement. We expect the DfT to communicate
to the Welsh Government its plans for projects with cross-border
implications prior to announcing them.
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Ev w5 Back
Autumn Statement 2011, HM Treasury, Cm 8231, Nov 2011 Back
'M4 Corridor Enhancement Measures Consultation Document', Welsh
Government, November 2012 Back
'Proposed improvements between junctions 38 and 42, M4, Port Talbot,
Welsh Government, 12 June 2012 Back
Q44 [Ian Gallagher] Back
Ev w3 Back
'Governments reach new agreement on Welsh funding', HM Government
and Welsh Government, 24 October 2012 Back
'Governments reach new agreement on Welsh funding', HM Government
and Welsh Government, 24 October 2012; Empowerment and Responsibility:
Financial Powers to Strengthen Wales, Commission on Devolution
in Wales, November 2012 Back
Ev 48 Back
Third Report of Session 2010-11, The Severn Crossings Toll,
HC 506 Back
Qq 178-9, Ev 85 Back
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by the Welsh Government', Welsh Government, 5 November 2012 Back
The Severn Crossings Toll, HC 506 Back
Ev 73 Back
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HC Deb, 6 November 2012, cols 711-712 Back
The Severn Crossings Toll, HC 506 Back
Ev 69 Back
Ev 85 Back
Ev 60 Back
Ev 69 Back