Select Committee on Mersey Tunnels Bill Minutes of Evidence

Examination of Witnesses(Question 120-139)

Mrs Charles George and Miss Joanna Clayton

Thursday 30 January 2003

120. MR GEORGE: Under this Act it could not be transferred. Of course, Parliament has a power to pass further legislation. It merely records at present that a resolution has been passed that the tunnels remain under the ownership and implicitly that also means under the control of the Authority and the Executive as it has been since 1986. It does not amount to a contractual or other form of commitment for the future but it is a very clear statement as to what was the democratically arrived at position as at the autumn of 2002.

121. MR CUNNINGHAM: Can I follow that up. Would it preclude, for example, if the owners decided that it was in the best interests of the public hypothetically that they should, for example, contract the management of the tunnel out to a private organisation? That has happened in the past, you retain the same owners but farm it out.

122. MR GEORGE: There are two matters. First of all, whatever is in the preamble makes no difference to what are the actual legal powers to do anything. Secondly, as a matter of ordinary statutory law, as the hon. Member points out, there are a variety of powers which enable all authorities to contract out certain matters. What they may not do is to contract out a power to raise a toll and that is why that would require specific legislation. Already, of course, when it comes to painting the tunnel or doing various things like that, Merseytravel are perfectly empowered to employ a private firm of contractors to do the painting or alternatively they may use their own workforce but there is nothing unlawful in them going out. Similarly there are various other activities of theirs which they could perfectly lawfully contract out and they are in no sense committed not to do so by the resolution they have passed to retain ownership of the tunnel. This is very much looking at the whole question of a franchise for the tolls.

123. MR JENKINS: That is clarified.

124. MR GEORGE: If I can then turn on to the Bill's purposes, the Committee will have seen that in the Explanatory Memorandum four heads are referred to and it may be of assistance if I take them in turn and just work through them.

125. The first of the Bill's purposes is to amend the statutory provisions, and I am quoting from the Explanatory Memorandum, "relating to the levying and revision of tolls for use of the tolls, particularly so that in future tolls are annually revised with reference to inflation". So that the Committee can see exactly how this works in the new legislation, if I could ask the Committee in the Filled-up Bill, therefore in the document we were just looking at, A30, to turn to page 142, there is a new section 91(7). It was a five but it has become a seven. That section (7) and at the top of the next page, 143, the new (8), (9) and (10), are statutory provisions which incorporate a provision for an annual review of tolls in the light of the movement of the RPI.

126. As I explained this morning, there is an outstanding debt of just under £100 million, the trend of the debt is downwards, and I explained to the Committee this morning that there will be an important moment in 2014/15 when one lot will be paid off, another lot of the debt will be paid off in 2025/26, but the debt will remain until 2049 when the outstanding Public Works Loan Board debt will be paid off. Meanwhile, operating costs and refurbishment costs can be expected to rise broadly in line with inflation although, of course, as I said this morning, there is a possibility that there will be a requirement for major additional safety and other works. There may be emergency requirements. There is always the possibility that tunnel usage will fall off because none of us knows what may happen to oil prices and what may be the future trends in terms of car numbers and, therefore, toll income.

127. The present funding system, as I explained this morning, led to the crisis of the late 1980s and the intention now is to have a system which prevents those unsatisfactory features by linking tolls automatically to RPI.

128. I mentioned the matter of the Dartford and the Severn Tunnels. If I could just pause for them. The language which I have just drawn Members' attention to in those provisions in the Bill looks very complicated but it is, in fact, lifted word for word from two other statutory provisions.

129. The first of those is section 9(3) of the Severn Bridges Act. The Committee will be able to look that up. It is in the bundle at A35, page 223. So this formula, although, as I say, when one first reads it, it looks very complicated, it is a tested formula, which has worked in the case of the Severn Bridges, and it has worked there for 10 years. That where it originates from. In the case of Dartford, a similar wording has been used for the A282 trunk road, Dartford-Thurrock Crossing Charges Scheme Order 2002, and one will find that in the bundle at A39 page 262. So this formula and this way of approaching it has appeared in previous legislation, and that legislation, I am reminded, was, of course, central government legislation, in the first instance. The previous administration of course brought forward the Severn legislation, and then it has been borrowed and used by the draftsman for the Dartford Order, which is a very recent Order, because it is only going to come into effect on 1 April 2003. It has worked for the Severn all these years, and it is now to be introduced for the Dartford Crossing, and it appears to us to be an appropriate mechanism also to be used in Merseyside.

130. Those are the financial arguments for index linking, but can I mention that there is also a transportation argument which I need to mention. I am told that in Dartford in fact they have had index linking since 1988; it has simply been revised in the new Order, which makes various changes, but the basic RPI system has been there for some while. The transportation argument is this. Public transport costs, that is, the cost of going on a bus or on a train, themselves rise broadly in line with RPI, and unless the tunnel tolls rise in a similar way, the result is that year by year private car travel via the tunnel will become cheaper than comparable public transport modes. If that happens, there will be an inevitable consequence that people will gradually make what is called a modal shift, that is, they will cease to use public transport, and they will move to the private car if that becomes a cheaper method of crossing the Mersey.

131. That is plainly undesirable, for two reasons. First, it runs diametrically contrary to the policies being pursued locally and nationally of increasing the public transport modal share, but I do emphasize that the RPI linking will not have the effect of making private transport relatively more expensive vis-a-vis public transport. The aim is merely to maintain the existing equilibrium. Both will continue to rise with the RPI. There is no proposal in this Bill to raise tolls above the rate of inflation and no proposal to effect a form of penalisation of the private car. The aim is to keep the balance between cars and public transport at the same level, both rising with RPI, instead of having a situation where public transport rises at RPI but tolls rise below.

132. MR FIELD: I have a point to leave with you, Mr George. One of the proposals by the Promoter on whose behalf you are speaking is to ensure that any surplus funds are in fact put towards the generality of public transport schemes. I want to leave that with you as a thought. Clearly, that would have some impact on the relative expensiveness of public transport, and therefore the point you make in terms of RPI is not necessarily one that is entirely on all fours with that point, because if there is a relative imbalance in terms of public transport, there is clearly an argument that suggests that increasing it in line with RPI will in fact disturb that equilibrium. I was not looking for an answer at this juncture. It is a point I wanted to make. Presumably you will be addressing the issue of the other plans of the Promoters in due course.

133. MR GEORGE: I am going to come back to the question of usage of the surplus, which is, as you point out, a separate point. I believe that there is now a fairly general acceptance of the principle of the RPI. The question, as I say, of what to do with any surplus is a separate matter. So far I have simply been dealing with the question of trying to maintain the costs of the passenger who is travelling in a private car and the cost of a member of the public going by bus to try to make sure that they both continue to rise at the same rate, basically the RPI rate. I will be coming back to the other matter the Honourable Member mentions.

134. The second feature is that if the private car does become relatively cheaper than public transport as a mode, and if the tunnel attracts additional traffic, then that residual spare capacity which there is at the present time in the tunnel - and the Committee has seen it is not very large - would be used up more quickly than would otherwise be the case, and of course, as soon as that reserve capacity is used up by there being more cars in the tunnel, then there will be not merely congestion on the entry roads to the two tunnels - and the Committee saw in that video just now how there was congestion in the early 1960s, when one only had the one tunnel, and what extremes of congestion were reached. One will have congestion on the entry roads and one will also have further what is called peak spreading, that is, the conditions of the peak will spread by and hour or two hours either way and will use up the inter-peak, and therefore whereas at present there are times of the day when one can make a comparatively free flow journey through the tunnel in the inter-peak, that will become more like peak time conditions. Of course, as soon as that happens, there will be delays for all users, and it is in particular business users, ie essential users, people who cannot transfer to public transport, who will suffer if the tunnel becomes much more congested than it is at the present time.

135. This argument, what I call the transportation argument for an RPI increase, is not novel for the Mersey Tunnels. It was precisely for that reason that the Government made the decision to maintain tolls at Dartford, even though the tunnel and bridge have now been paid for and under the statutory provisions the tolls would have been coming off the Dartford Crossing. In the words of the Minister last year, on 4 April 2002, "The charges will be held at existing levels" - that means pegged to RPI - "and will help to reduce the growth of congestion at the crossing ensuring smoother and more reliable journeys for users." The Committee will find that statement at A39, page 265. So what has happened at Dartford is exactly the same as what we are proposing: to keep tolls, to have an RPI increase, because in that way one prevents the tunnel or bridge at Dartford and the tunnels at Mersey from clogging up and leading to a congestion problem.

136. This matter was tersely expressed by Liverpool City Council when they were responding to consultation in November 2001. The document is A18, page 25, but I do not invite you to look it up, where they say "Linking toll levels to inflation would provide an easily understood and supportable way of ensuring tolls change as costs, including public transport costs, increase."

137. MR FIELD: You are making a robust comparison of the Mersey Tunnels with Dartford. Can you explain the legislative situation of the Dartford Tunnel. Was it a Private Bill, was there a head set out in the initial legislation for the Dartford Tunnel that ensured there would be a programme of moneys to be used in a similar way to the Mersey Tunnel, or was it a quite separate Bill?

138. MR GEORGE: The regime at Dartford is entirely controlled by the Highways Agency. It is the Highways Agency because it is a trunk road. They have made an order under the Transport Act2000. They have made a charging scheme in respect of the section of the M25 which makes up the Dartford Crossing - technically it is not the M25; it is the A something but that does not matter - they have taken that section and they have applied a charging scheme to it which provides that there shall be tolls - that is the charge - that there shall be the RPI, and, I am going to come to it under a later head, what is done with the proceeds, because there, of course, there is a surplus which frankly makes our surplus look miserable. There is a very large surplus.

139. MR FIELD: The point I am trying to make, Mr George, is that whereas 69 years ago there was a formula set in stone when this Private Bill was first introduced to the House of Commons, it was an entirely different state of affairs for the Dartford Tunnel, because it was a Bill by the Department of Transport, the highways agency, which also envisages surpluses being used in a different way. I appreciate why you are trying to make this comparison but it is not really a direct comparison that can be made.

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