Select Committee on Mersey Tunnels Bills Minutes of Evidence

Examinations of Witnesses (Questions 240-259)


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

240. If the Committee keep one finger in B21 A they will see so far as the operating costs and the debt charges column and the refurbishment costs those remain constant, do they not?

(Mr Wilkinson) They do. They are identical from top to bottom. The first columns on the left­hand side are identical.

241. Moving to the right­hand side of the column, whilst the inflation is constantly the same for both we can see the car tolls are going up approximately every three years in line with inflation. Is that right?

(Mr Wilkinson) That is so. We initially tried at triennial intervals and ultimately at biennial intervals.

242. Then under total traffic we can see the same figures we were looking at a moment ago in B27A where the bottom of the table at 28.3 you are still short of the 30 million figure. Correct?

(Mr Wilkinson) That is correct. It is a repeat scenario of traffic growing to 28.3 million in 25 years' time compared to a frozen toll scenario of traffic growing to 32.1 million.

243. So far as the outstanding debt is concerned that is exactly the same in the two tables, if you have assumed it being paid off it is the same rate in accordance with the contractual provision and the arrangement with the district councils.

(Mr Wilkinson) In a sense there is no alternative to paying it off. These debts are under loan agreements, it is a contractual responsibility, it needs to be discharged, it is discharged, it will continue to be discharged and both tables show that diminishing from a level of £94.6 million at the end of this month down to £11.7 million in 25 years' time. Ultimately if I had extended the table they would show the debt paid off completely.

244. So far as the repairs and renewal funds at page 74, 21A you started with the same plus position of having £4.3 million and by the end of the column the repairs and renewal fund was in deficit whereas at page 84 of 28 A you are in credit in the repairs and renewal fund.

(Mr Wilkinson) What I have done is assume the same level of balance throughout the period. In reality I ought to put inflation on that figure. What was I trying to show in the table on page 84 is that we would have money in the R & R fund to fall back on if refurbishment costs were needed. We would always keep money in reserve for that purpose. In the column alongside it shows the potential cross­subsidy of public transport projects starting at a figure of £1.9 million per annum in the financial year 05/06 and then escalating down, to the end of that column, to £25.2 million per annum.

245. That figure I mentioned in opening I said it was relatively small to start with, it has grown up that is the sum which is potentially available whereas if we look the B21 A on page 74 we saw for most of the period there was a small loss. Looking at the toll coming in from the income it is substantially up and it is that greater income from tolls which means that you have that extra surplus which can be spent on the measures within Merseyside in accordance with the local transport plan if the is Bill approved.

(Mr Wilkinson) That is true. It also assumes that every toll increase justified by the RPI trigger in the Bill would in fact be adopted, I have just assumed that to be case for the purposes of this financial projection.

246. You will remember that in the Bill there is a particular provision that every time you can have your RPI rise first of all the PTA has to say, hold on a moment is it really appropriate applying its statutory criteria to have the full RPI increase or should we have either no increase or a lesser increase? If they decide no increase or a lesser increase then that is what happens, it does not happen so automatically. Do I summarise it correctly?

(Mr Wilkinson) You did, indeed. That is what I would have said if I had been as erudite as Mr George.

247. Then if we turn the page to page 85, is this another way of showing the matter. What is shown right at the top is the amount which if raised, is available for public transport subsidy, you may, of course, decide not to raise it, alternatively it may that you have to spend more on refurbishment and there is less available, there are a whole series of possibilities.

(Mr Wilkinson) Yes, my Lord.

248. If we can just pause there. We are going on to a different matter and approaching the matter as a treasurer any treasurer is going to prefer a position where he has money in hand as opposed to a situation where you are sometimes going cap in hand, whether it be to the Treasury or the Department of Transport or local authorities. I think the Committee might be helped with your general observations on the effects of the Bill so far as the financial matter is concerned?

(Mr Wilkinson) It is difficult to know where to start. Being involved in the financing of the Mersey Tunnels for the last 30 years has shown just how it can go like a yo­yo from a position of mounting debts and large loses to a situation of effectively breaking even over the last 11 years. It is almost as though we have reached the second stage of the history of the first tunnel. I would like to feel it has gone in three stages, the tunnel encountered initial financial difficulty, it then had profitability until the 60s, the profitability was caused because of traffic growth, we got to saturation and we had to build another tunnel, we built another tunnel, the Kingsway Tunnel, we had financial difficulty with that additional facility, we moved to stage two, which was profitability, at least stability as far the finances are concerned, sowing the seeds for the third stage. I do truthfully believe that unless we manage the traffic growth in the Mersey Tunnels we will find ourselves having to build another crossing in a very short space of time. The way that the financing limps along under current legislation if I need to put the tolls up I have to undergo a legal process which can take anything up to two years even though it is in line with inflation, even though it is to try and overcome a deficit position, even though that deficit situation may have to be financed by local district councils, which means council tax payers on Merseyside. I have said more than once if high street chain stores priced their shirts using the same mechanism their business would then fall flat. It is no way, in my view, to run a business. The Bill gives first and foremost absolute financial stability to Mersey Tunnels for all time. Secondly, it has the ability to contribute towards the hypothecation for public transport purposes, those are the two main things. I know of no other way of managing traffic growth through the Mersey Tunnels other than increasing the price through tolls for using the facility.

249. If I were your critic I could say that you had your problems up to the early 1990s but really all that is history and there is no need for present Bill if we leave aside altogether the question of making funds available for public transport. Do you have any observation on that matter, the suggestion that in practice everything is okay?

(Mr Wilkinson) I do not accept that everything is okay. I hope, my Lord, in 21A and B do show just how touch and go the finances of the tunnels could be over the next 25 years. I do not believe that that is a solid foundation to run a business. Any of these factors could be out in any of the years. The number of alternative variations on this are absolutely endless. I have done alternative scenarios with different inflation rates and they show a need for a toll increase in 15 years' time because costs have gone up. It is all hit and miss and it is not a sensible way to move forward in this present day and age, in my view.

250. Let us move to and entirely different matter, noise insulation. Schedule two to the Bill in Clause 109A (2) says that "the Authority may carry out works for insulating any dwelling or other building in the vicinity of approaches to the Kingsway Tunnel against noise caused by the use of that tunnel" Do you recall call that provision? .

(Mr Wilkinson) Yes, I do. The intent is to deal with some 200 properties located adjacent to those approach roads.

251.Could we go to your Exhibit B29, page 86. First of all was I correct in saying the only problematic area was the area in the Wirral at the West End of the Wallasey Tunnel?

(Mr Wilkinson) Yes, you were quite correct. The plan does not show it entirely, there are no residential properties adjacent to the exit road of the Kingsway Tunnel on the Liverpool side of the river. The problem is all on the Wallasey side of the approach road to the Wallasey Tunnel at that point.

252. At page 86 you show various photographs of houses, and one can see that they are, at any rate, quite close to the road. When we were in another place, one of the members of the Committee was very concerned as to whether one could improve the road surface of the approach roads so as to mean that they would be less capable of transmitting noise, but as far as you are aware, are there any other remedies that are open?

(Mr Wilkinson) I know of no other remedies, my Lords. The approach road follows an old railway cutting. What we have done is to provide what are called castellated, which are corrugated, walls to the cutting, which absorb noise, and over the last ten years the carriageways have been resurfaced with what is called "whisper" asphalt. We have also provided wooden sound-baffling perimeter fences on the land adjacent to the gardens of the properties which are affected. That is as far as we can go. No other work is feasible, mainly because we do not have sufficient space on tunnel property for what the engineers, I understand, call soft landscaping, which is the planting of trees, which would otherwise perhaps absorb noise. We have done as much as we can without effectively the powers to insulate the properties which are directly affected.

253. You have shown in red the area for the houses which are likely to benefit, but am I right in saying that there is no intention of using this plan as being definitive in any way? The sole question is: is it a property where the noise limit at the Royal Assent is in excess of 68 decibels and one decibel or more is caused by the traffic on the tunnel approach roads? That will be the way of defining the properties.

(Mr Wilkinson) That is exactly the way we intend, my Lords, to apply this provision if it is granted to us, but the plan is to give an indication of the potentially eligible roads on which properties may stand which are affected by the provisions that Mr George has mentioned.

254. The Petitioners would like there to be a more specific identification of the particular properties. Do you believe that would be helpful?

(Mr Wilkinson) I think, my Lord, that is based on a slight misunderstanding. The use of the word "vicinity" was not intended to limit but to expand these provisions over the widest possible area. We had in mind, for example, on a survey which was done some years ago, that all the properties in a particular terrace could be done except the last one because it was just outside of the decibel limit. We felt that, by putting the wording of the Bill in that way, we would capture the last one in the terrace and give ourselves the widest possible scope for this, rather than to put a limit and to rule someone out.

255. Are you able to give the Committee the budget which you are allowing for these works?

(Mr Wilkinson) We think there are at least 200 properties, and our estimate of the cost is £300,000.

256. If it turns out there are more properties and it costs more, that, again, would be the obligation pursuant to the Bill.

(Mr Wilkinson) That is entirely accurate, my Lords. This is an issue which, funnily enough, surfaced in the local newspapers only two weeks ago, and keeps coming back. It is one that we have tried to resolve and cannot do so without legislation. That is clear. We are anxious to try and do something to help these people.

257. Can we turn now to the use of the tunnel surpluses. We know that there is a provision in the Bill that the first call on them has to be the operational costs and refurbishment.

258. CHAIRMAN: Mr George, before we go on, there is one thing that I have not heard Mr Wilkinson say. We have gone over, again - and I am not happy with that because we had the figure of £300,000 this morning, and I make it clear I do not want to hear repetition of evidence that has already been given. Once we have the evidence, we have it. What we have not heard is on what you intend to spend this £300,000. I do not think any of us intrinsically are against it at all, but what is it going to be spent on? Are you raising the walls? Are you putting double glazing in?

(Mr Wilkinson) No, my Lord. It will be a combination of a number of factors in accordance with the noise insulation regulations. I am not an expert on this but my understanding is that it will pay for double glazing for all the properties affected. It may well pay for additional fencing to help baffle the noise. It may pay for soft landscaping, again to help baffle the noise, on the land which is owned by the property owners.

259. MR GEORGE: If I may interrupt, the matters are dealt with in the noise insulation regulations. They specify the only matters on which money can be spent, and it says they include replacement or conversion to windows, provision and installation of sound-attenuating ventilators, provision of air supply ducts, and the provision in certain circumstances of other flues and a series of matters which are specifically identified, various forms of blinds and so forth. The matters are spelt out, and these are standard in legislation for everyone affected by a highway scheme. I emphasize they are not going to be Mersey-specific; they are a standard package, as laid out in schedule 1 to the noise insulation regulations 1975.

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