Select Committee on Mersey Tunnels Bills Minutes of Evidence

Examinations of Witnesses (Questions 20-39)


The Petition of David Loudon, John McGoldrick and MR JOHN McGOLDRICK examined

20. In law, the PTA is a local transport authority. Lord Bradshaw in particular will be very familiar with this sort of matter I know. Each of the five Merseyside districts is also local transport authorities. So, one has six local transport authorities here concerned and they coordinate the development of policies for the promotion and encouragement of safe, integrated, efficient and economic transport facilities and services to, from and within the area of Merseyside, and they do that by producing a local transport plan and I hold it just in order that your Lordships can see. This is what a local transport plan is and, throughout the country, either individual authorities are producing a local transport plan or, as in Merseyside, the authorities are grouping together and producing a shared local transport plan running for a period of five years and are subject to annual reviews which come out: they are called annual progress reports and they come out each July. I make this early mention of the local transport plan because the Bill provides at clause 91(3)(e) powers to spend tunnels' surpluses on purposes which facilitate the achievement of policies relating to public transport which are contained in the statutory local transport plan. Your Lordships will see that; it is clause 91(3)(e) and, if your Lordships are looking at it in the bundle, it is in A25, page 106.

21. If I then turn to the existing law and the legislative context, the Bill before your Lordships consists primarily of three schedules, as your Lordships will see, which amend the provisions of the County of Merseyside Act, 1980. That is the current legislation governing the operation of the tunnels. That act I ask your Lordships to turn up at A26, the County of Merseyside Act, 1980. I propose to identify five features of the present Act and then explain how it is proposed they be altered through the Bill. The first feature of the Act is that there is a power to maintain the tunnels and that one finds at page 117 of the bundle and it is section 86(1) which reads, "Subject to the provisions of this Part, the county council may continue and maintain the authorised works …" So, that power has passed to Merseytravel and it is a power to maintain the tunnels. It is not a duty to provide the tunnel, it is a power to do so. The second feature of the Act is that there is a power to take tolls and one finds that at page 120 in section 91(1), "The county council may continue to demand, take and recover the tolls …"

22. The third feature of the Act is that there is a power to apply to revise the tolls, and for the tolls to be revised, and that is in section 92(1) at page 121. Your Lordships will see that the section is headed "Revision of Tolls" and there are four important features about the present provisions for revising the tolls. First, there has to be consultation with the district councils. Your lordships will see that in the second line of section 92(1). Secondly, regard has to be had to three matters which are set out in section 92(3), namely the financial position of the tunnels, other matters of a transportation nature and other matters of a social nature. The third matter, it is the Secretary of State who has to confirm the order for a revision of tolls. That is section 92(2). Fourthly, there is a right for anyone to object to a toll rise, and if they do object, there has to be a public inquiry. That is section 92(8)(d), which appears at the very top of page 123.

23. Those are the first three features of the present legislation. The fourth feature of the present legislation is the limited purposes to which tolls may be applied, and that is at section 99(1), which is page 124. Your Lordships will see listed there under (a) to (e) that you defray costs, costs of policing, other operating costs, and (d) and (e) are various types of loans and interest charges. Those are the only purposes on which the money raised by tolls may be spent at the present time. The fifth feature is that under the existing Act there is a requirement to reduce the tolls simply to a maintenance operational level once the debt has been paid off, and that is section 99(2) on page 124. Once you have paid off the debt, which is (d) and (e), the only toll you can raise will be one which is for the operational matters.

24. Since 1968 there have been ten upward revisions of tolls, and the present toll is now 1 pound 20 pence. It used to be 10 pence but it has gone up to that. The procedure for revising the tolls is very laborious, and it tends to involve both a period of deficit financing while the toll revision is under consideration and an element of slippage also, so that the real value of the increased toll is sometimes less than was envisaged when the toll revision process was begun. On the last five occasions there has been an objection, and as I indicated, just one person is sufficient to trigger a public inquiry. On each occasion at the end of the day the Secretary of State dismissed the objection and confirmed the proposed revision, but each revision took almost two years to go through all its stages, including five months to arrange a public inquiry, and then a further period of five months holding the inquiry, the Inspector to report to the Secretary of State and the Secretary of State then to consider the Inspector's report and in due course to issue the decision.

25. In 1995 the Department of Transport issued a consultation paper dealing with the regulation of tolls and statutory undertakings, because there are a number of other enterprises across the country which have toll procedures which are similar to this. They all vary, they all have their separate features, but they are not dissimilar from this. In that consultation paper in 1995, which your Lordships will find at document A30, page 168, the Department expressed the view that the practical value of the controls was questionable. That is set out at page 171 in paragraph 3.2 of which I have just quoted the first sentence, and they said that the procedures had severe disadvantages for the undertakings, in terms especially of the cost of the procedures and the delays involved. That is set out at paragraph 3.3, and your Lordships will see in heavy print various items which are emphasised: cost, delay and so forth. They said in paragraph 3.4 that the disadvantages operated as a deterrent to long-term investment in these undertakings. The conclusion of the consultation paper was - and it is set out at paragraph 4.1 on page 172 - that the existing procedures and criteria are difficult and disproportionately expensive to administer. Your Lordships may think that, to achieve a toll rise of 10 pence, to have to go through a public inquiry if a single person objects is really rather extraordinary in this day and age, when most of us find our car parking charges put up by much larger sums without any suggestion that there should be a public inquiry into it, much less one triggered by a single person objecting.

26. However, the Department formed the view that it was a complex matter to produce general legislation which provided an appropriate new system which would cover the whole multitude of ferries and bridges and roads which were at present subject to different statutory regimes, and thus nothing has happened since 1995, save that the Government indicated that, when the opportunity arose in the case of individual enterprises, then that would be the opportunity to update the mechanism for that particular enterprise, and that is the sort of matter we are concerned with here today.

27. CHAIRMAN: Mr George, is that conclusion by the Government in the bundle?

28. MR GEORGE: It is in the bundle, and when my witness Mr Wilkinson comes to give evidence, he will deal with that matter. I think it is A33, page 221. It is a publication by the Office of the Deputy Prime Minister on 3 September 2002, which your Lordships have as A33, announcing that there will be a reduction in controls, and if one goes to the very last page of that document, in a schedule at page 224, against an item which is called T19, Altering Tolls and Statutory Undertakings, it is said that ministers were going to retain the existing regime, and then it is two-thirds of the way down the column: "However, where a legislative opportunity is brought forward by an individual undertaking, ministers will consider the case for deregulation on a case by case basis." So far as I am aware, that is the latest general statement. We will come back later to what the Government has said about this particular Bill.

29. My Lords, turning to recent history and trends, I would like to identify briefly six matters. These will be elaborated on in evidence. The first will not surprise any of your Lordships, namely that the traffic passing through the tunnels has grown steadily. Indeed, since this Bill was in another place a year ago, traffic has grown by a remarkable three per cent. The figure to bear in mind for the current year is a figure of just under 27 million vehicles passing through the tunnels, to be compared with about 21 million when the PTA assumed responsibility in 1986, some 18 years ago.

30. Secondly, in the peak hours, the flows are now approaching capacity, with only limited room for future growth. My witnesses estimate that practical capacity is around 30 million vehicles a year, although the key constraint is, of course, the peak hour flow, and the key peak period and direction is the eastbound flow from Wirral into Liverpool in the a.m. peak hour, and we estimate that the peak hour capacity there is 6,800. In any hour you can get through 6,800 vehicles; you cannot squeeze through more vehicles than that. The latest count for the eastbound peak flow was 6,400, so one is approaching capacity in the key peak hour in the principal direction.

31. Thirdly, the existence of tolls suppresses traffic growth through the tunnels. In other words, if you did not have any tolls at all, you would have a much greater number of people wanting to go through the tunnels. My second witness, Mr Bates, calculates that, but for the existing level of toll in the tunnel, and assuming that the tunnels had infinite capacity, then your peak hour flow in the morning peak would be about 7,900, well above, of course, the peak hour capacity. The question of capacity constraint is, we say, critical in considering this Bill, there being no proposal at the present time for a third Mersey Tunnel. Your Lordships will hear later that there is a proposal for a new Runcorn Bridge, but no proposal for a third Mersey Tunnel.

32. Fourthly, in the late 1980s and 1990s, there was an extremely difficult period for funding the tunnel. That was caused by rising costs and debt charges at a time when the tolls fell way behind the Retail Price Index, so that the revenue coming in from tolls simply was not enough to pay for the operational costs, the refurbishment cost and servicing the debt.

33. What happened was that the local authorities had to bail out the passenger transport authority by raising a precept each year to meet the tunnel deficit. That is what happened between 1988 and 1992. It was never part of the intended statutory framework that the ratepayers of Merseyside should fund the tunnels which are used by only some 3 per cent of the inhabitants of Merseyside, and it is very doubtful whether that precept was, in fact, a lawful precept.

34. When the matter was referred to leading counsel (not myself, although I endorse the advice given) in 1994, the advice given to Merseytravel was that they should treat this amount which had come from the authorities as a debt which should be repaid with interest as and when there was sufficient income from the tolls. That is what has been happening since 1994. The money which was precepted from the local authorities in those exceptional years has been and is being repaid, and in my submission - and Mr Wilkinson will deal with this - that was a wholly appropriate course. Indeed, if it had not been followed there might well have been litigation in which the money could have been what is called "traced" - that is followed to what it had gone on and claimed. As it is all the authorities are perfectly content as to what is happening. They, as I say, bailed out the tunnels, they are now getting their money back and they will have their money repaid within a very short period.

35. CHAIRMAN: Mr George, could you advise the Committee what the sum involved was?

36. MR GEORGE: The sum involved was £28 million, my Lord, over four years. Of course, in that interest is being paid, the sum has risen and what is happening is it is being paid off with some interest each year and some of the capital each year, in a way that Mr Wilkinson will explain.

37. Perhaps I should add this: that the local authorities were pretty unhappy at having to pay the tunnels at the time, and they are strongly supporting this present Bill, because if this Bill goes through the chances of ever having that same situation arising again is, I think, a minimal one, whereas if this Bill does not go through it is felt that a similar situation could arise again, with all the difficulties that arise. First of all, is it lawful to do it? If it is not lawful, what on earth is to happen if the tunnels are in debt? Although Merseytravel is under no duty to keep the tunnel open, frankly, unless it keeps the tunnel open it cannot get the toll money in which it needs to pay the debt charges. So it would be pursued through the courts for breach of its debt obligations. Therefore, one of the aims, and it is a significant part of the aims, of this particular legislation is to prevent any possibility of having to go cap-in-hand to the local authorities, as happened between 1988 and 1992.

38. The fifth matter on past trends is to say that in recent years, following a substantial toll rise in 1994 (the toll went up then from 60p to £1 - and that is a single-direction toll) income has increased markedly, so as to cover the operational costs and the debt repayment costs. That is a much improved situation, albeit that the officers of the local authorities and their members are concerned that the present rather rosy picture may not be maintained into the future. The last point to mention to the Committee on recent history and trends is that we are not aware of any evidence that the higher transport costs as a result of the toll have discouraged businesses from establishing in the Wirral. Your Lordships will see where the Wirral is and your Lordships may be wondering "Does this toll work adversely to the Wirral?" This is one of the matters Mr Bates is looking at. We know of no evidence that the higher transport costs have discouraged business in the Wirral. Indeed, in some ways, as Mr Bates will explain, the tunnels seem to operate to the benefit of the Wirral economy by reducing the inclination of the inhabitants to travel to Liverpool City Centre to do their shopping, and instead to stay in greater numbers in the Wirral to do their shopping than would otherwise be the case. That, of course, retention of retail spending in the Wirral is, as it would appear, a result of the existence of the toll. My Lord, there are many other matters I could mention about the background but that will suffice.

39. Can I move, then, to the question of tunnel safety and safety related expenditure. As your Lordships would expect with one tunnel which is decidedly elderly (that is the original Birkenhead Tunnel) and one tunnel which is, at any rate, aging, there is an on-going maintenance and a need to adapt to new safety requirements. There have been two recent developments in this area. First of all, in 2000 and in 2002 there were carried out two independent comparative surveys of European tunnels. They were carried out by a consortium of European motoring organisations. Both reports underline the need for safety improvements, particularly in the older Birkenhead Tunnel, although to a less extent also in the Wallasey Tunnel. These reports led to a reprioritisation of expenditure aimed at reducing risks by the PTA and to additional commitment to measures over and above that which would otherwise have been the case.

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