Examinations of Witnesses (Questions 20-39)
MR CHARLES GEORGE QC and MISS JOANNA CLAYTON, BIRCHAM
DYSON BELL.
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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