Examinations of Witnesses (Questions 320-335)
MR CHARLES GEORGE QC and MISS JOANNA CLAYTON, BIRCHAM
The Petition of David Loudon, John McGoldrick and
MR JOHN McGOLDRICK examined
320. When did you next apply?
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
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
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?
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?
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?
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.
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?
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?
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?
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.
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?
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?
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