Select Committee on Mersey Tunnels Bills Minutes of Evidence

Examinations of Witnesses (Questions 320-335)


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

320. When did you next apply?

(Mr Wilkinson) I resubmitted my letter of application in December 2002, again I did not get a reply and as a result I then began to lobby the Government Office for the North West. It is quite common if you ask embarrassing questions of civil servants they do not always reply.

321. For some considerable period you have been trying to get permission to borrow more money yet at the same time you were accelerating repayment of the borrowing that you already had, it is very difficult, despite your answer, to understand that?

(Mr Wilkinson) My Lord the answer is in fact in the exhibit in paragraph 4.3 of the exhibit. It is complicated and I apologise. In that paragraph there is reference to a Government yardstick called the Minimum Accounting Provision, it requires local authorities to make a 4% provision in their revenue charge for the redemption of debt irrespective of the obligation under the loan contracts. As it happens the obligations under the loan contracts of Mersey Tunnels do not require a Minimum Revenue Provision to be made. The local authority which is promoting this Bill is seen in the round for the purpose of this government yardstick, so all of the public transport debt and all of the tunnels debt is aggregated together. The net result is that we have to make provision for over and above the contractual debt redemption in the revenues account, that therefore counts in our levy on the local district council. The acceleration of the repayment of the tunnels debt meant that in that year I fulfilled the obligation for Minimum Revenue Provision on public transport projects and as a result, without taking a penny away from Mersey Tunnels, in effect I saved the revenue account of Merseytravel something in the region of £3 million. That £3 million has then gone towards relief of our levy on district councils in the financial year 2004/05.

322. Basically the situation is that the Passenger Transport Authority or Merseytravel has to repay each year a minimum of 4% debt outstanding?

(Mr Wilkinson) No, that is not how the obligation works. We are required to provide in our revenue account 4% of certain tranches of outstanding debt. It does not mean that you pay, you pay that money to the people who lent it to you, you just have to provide a certain minimum provision. This was brought in some years ago in the Local Government Finance Act 1990 because it was argued at the time that certain local authorities were manipulating the way in which they repaid their debt and circumventing Government controls over local authority spending.

323. Whichever way you look at it Merseytravel has to provide in its revenues account an amount equal to 4% of the outstanding debt. Correct?

(Mr Wilkinson) 4% of certain tranches of outstanding debt, it is not all tranches, there are certain tranches of debt, for example from Wirral Borough Council the debt being serviced on behalf of the now defunct Merseyside County Council is outwith that requirement because it was created in a different way under different legislation.

324. 4% provision. Is it correct that the bulk of that is in fact coming from Mersey Tunnels, they are effectively making more than a 4% repayment each year enabling Merseytravel as a whole to spend more money?

(Mr Wilkinson) That is completely untrue.

325. I thought you said a moment ago one of your reasons for accelerated redemption was so that Merseytravel would be able to spend more money on public transport projects.

(Mr Wilkinson) What I said was there is no need to make a minimum provision of 4% in the Mersey Tunnel account because their contractual debt repayment already meets that obligation. By accelerating that debt redemption by £3 million I can score that against the obligation for public transport purposes. In so doing I save a charge to the revenues account for public transport purposes of £3 million. It does not take any money out of Mersey Tunnels, it merely sidesteps a governments restriction or stipulation. That money is then rolled out in Merseytravel's working balance and has gone to the relief of our levy on Merseyside District Council for the financial year 2004/05.

326. Was one of these four tranches of debt MDCs, the Metropolitan District Councils, that debt was not originally in Mersey Tunnel's balance sheet, was it?

(Mr Wilkinson) No, it was not.

327. On the basis of legal opinion it has been subsequently decided the tunnel should be charged with debt charge on that debt and some years subsequent to that debt appeared in the tunnels' balance sheet. Is that correct?

(Mr Wilkinson) That is correct.

328. As you said that was done on the basis of legal opinion, is that legal opinion publicly available when that was discussed by Merseytravel board which is normally open to the public? Were those discussions open to the public and if they were not why were they not open?

(Mr Wilkinson) That counsel's opinion has never been made public, my Lord, because councils' opinion of that nature are specifically exempt from the Access to Information Act requirements.

329. Under what clause are they exempt from the requirement? Perhaps somebody could let us know.

(Mr Wilkinson) I cannot answer that. I do know that councils' opinion on a specific issue is authorised for non­publication for what I must say are fairly obvious reasons.

330. What is that?

(Mr Wilkinson) Because the opinion, my Lord, counsel's opinion is, and I am no expert on this, I would have thought that consideration of the counsel's opinion was a matter of the gravest concern, it could be on a whole variety of matters which may have commercial implications, it could have implications for acts of ultra vires, as it did in the case we were dealing with.

331. Is the counsel's opinion known to anybody other than the tunnel users and Merseytravel?

(Mr Wilkinson) I do not understand.

332. MR MCGOLDRICK: I will leave that point, if I may.

333. CHAIRMAN: Could I suggest perhaps Mr George can help us here on this specific point, why should it not have been disclosed, if indeed it is germane ­ and I am giving very layman's terms ­ there must be some act somewhere, some decree that somebody has produced that says this does not have to be disclosed if it was not disclosed. I think with respect this is outside Mr Wilkinson' province.

334. MR GEORGE: I will take instructions and report back to the committee tomorrow as to the position.

335. CHAIRMAN: I suggest that the committee stands adjourned until 10.30 tomorrow morning. Thank you very much.

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