Select Committee on Mersey Tunnels Bills Minutes of Evidence


Examination of Witnesses (Questions 460-479)

MR CHARLES GEORGE QC and MISS JOANNA CLAYTON.

BIRCHAM DYSON BELL and MR JOHN McGOLDRICK examined

460. If we then turn over the page again to C9, we see what may appear a little bit surprising, that in fact there is not a very close relationship between the RPI and wages and that the RPI falls some way behind.

(Mr Bates) That is correct.

461. It may be a statement of the obvious, but could you tell the Committee first of all what is the consequence of that for Merseytravel in actually operating the tunnels and trying to do so efficiently?

(Mr Bates) As I think Mr Wilkinson already mentioned, a large element of the cost of the tunnels is indeed the staff of the tunnels and, therefore, one would expect inevitably that as wages continue to rise ahead of RPI, again an RPI index in toll revenues will force efficiency of operation simply to maintain the balance between costs and revenues.

462. That is so far as Merseytravel is concerned. Can we now look at it from a different perspective, that of a car user and someone who wants to go through the tunnels and continue doing so even if tolls are pegged to the RPI?

(Mr Bates) Yes, obviously as earnings increase in what we call "real terms" because, by definition, it is above RPI, the element of personal expenditure on the tunnels will in fact go down in real terms because their incomes are rising at a faster rate, although obviously hopefully it will remain relative to other modes of travel.

463. Put simply, how do you think this matter is going to be perceived? To what extent will people notice the RPI increase?

(Mr Bates) They should notice that although the toll is going up, they should have more disposable income left after paying for that toll year on year as earnings continue to grow ahead of that.

464. If we then move over to exhibit C10, we come to a matter which Lord Bradshaw referred yesterday and it shows some of the difficulties that are faced by transport planners in trying to persuade people to go by public transport because the car seems to be so much cheaper in terms of the trends. Any further comments on that particular table?

(Mr Bates) As you can see, since 1992 the price of bus travel has increased very dramatically in real terms by 36 per cent. Rail has stayed about even in real terms. Cars decreased very dramatically in the early 1990s, partly as a consequence of fuel price changes. They have very slightly increased over time, in part as a consequence of the government policy of what is known as the "fuel escalator tax" so that the tax on fuel went up slightly, but you will notice that it is already starting to dip back down again as the fuel escalator was removed following the recent fuel problems. In effect it is likely that motoring costs will remain constant or may even go down over time.

465. What happens if tolls go up at a lower rate than do the costs of bus and train?

(Mr Bates) As we have said before, what we are trying to do is maintain the equilibrium that is established over time so that even if people are becoming more affluent, when they make the choice between, say, a train or a car, the costs appear to be broadly similar, projecting forward. Obviously if a mode becomes cheaper relative to another one, over time people will use it more.

466. BARONESS McINTOSH OF HUDNALL: What other mechanisms is the local authority using to bring the cost of these different modes of transport into balance?For instance, just to take the difference between a toll cost and the cost of a rail fare, I would guess that there is in cash terms a considerable difference between those two amounts. Is the policy on parking, for instance, in the city centre geared towards making sure that if you take a whole costs in the round, they come out more or less equal and is there work to show that?

(Mr Bates) The Local Transport Plan identifies the strategy for the whole conurbation. In principle, the strategy is an attempt to keep costs broadly even, while making the attractiveness of public transport at the moment the positive effects, so rather than creating further excessive penalties on motorists, what we are trying to do is get the costs broadly the same, but then make public transport better and more frequent, faster, more comfortable to use. This is partly of course because Merseyside as a region, as we have described, is an area which is currently going through a process of regeneration and economic enhancement and, therefore, it is felt for the time being that it is best not really to apply the stick, to keep the stick at the same size, for want of a better phrase, and to grow the carrot as best we can.It is all outlined in a lot more detail in the Local Transport Plan.

467. MR GEORGE: If I could just add to what Baroness McIntosh has just asked, in this big document which I held up, which is the Local Plan, there is a particular policy on parking for Liverpool city centre and it reads, "to shift the balance of parking provision from long to short-stay", which you do by charging a higher amount so that it does not pay you to stay the whole day, "and to extend on-street parking control and to improve enforcement", so that there are a series of measures. There will always be a dispute as to whether you are going fast enough, but those are all in the policy.

468. LORD BROOKMAN: Is there anything in the Plan for congestion charges in Liverpool?

469. MR GEORGE: There is no proposal at present. My Lord will probably know that local authorities have rather been watching what happens in London and they were all afraid that it was going to be very unfortunate. One does not know what they will do now and there is some rethinking, but they have a choice. They can either do nothing or they can go for congestion charging or they can go for a parking levy which is the other means under the 2000 Act, but as of present in the Local Transport Plan of July 2000, although there are references to congestion and a risk of congestion in future, there is no specific reference to introducing congestion charging. I am also reminded of course that there is very low car ownership in Merseyside and, therefore, it is a slightly different situation from elsewhere. We can then move on, Mr Bates, from C10 and we then turn on to C11 which turns to the three crossings, and I referred yesterday to the RPIs for Severn and Dartford. As a matter of interest, Mr Bates, how do the numbers compare between the number of vehicles going through the Mersey Crossing and the Severn Crossing?

(Mr Bates) They are almost identical.It is almost the same order of traffic flow.

470. So far as Dartford is concerned, it is common ground that it is more, is it not?

(Mr Bates) Dartford is considerably more.

471. MR GEORGE: I yesterday explained the various changes and I am not going over that matter again.

472. CHAIRMAN: That C11 is, I suggest, inaccurate in one respect, that the Severn is not a one-way toll or, to put it round another way, it is a one-way toll, so you have actually got to mentally divide those figures by two.

(Mr Bates) I have done that.

473. You have done that already?

(Mr Bates) Yes, that is what it was meant to do. It is £4.60.

474. MR GEORGE: If we then turn to C12, there is a common belief that as a result of the regulator, price rises for the utilities are at something less than RPI. I think it is with that in mind that you have produced exhibit C12 because there has been a suggestion that we should also be given an RPI minus as an index.

(Mr Bates) That is correct, yes.

475. What does one see there?

(Mr Bates) I have basically picked the three main utilities, water, electricity and gas. You will see that the pale blue line is RPI. Water prices have risen considerably above RPI, as you can see, electricity for many years actually was running slightly above RPI, but has recently dipped, and then gas has always been below RPI, so in fact there is no golden rule, there is no set thing and it simply reflects the cost of what needs to be done to operate the utility and the business. Indeed a lot of the electricity and gas reductions actually reflect the real reduction in the price of gas because the price of gas has been coming down as the original development costs of the North Sea have come out, so in many ways water is the best comparator in this case because obviously the basic product is free of charge and it simply reflects the costs of operating the infrastructure.

476. Before we leave the RPI, could you just help the Committee about rail services in Merseyside. The Mersey Rail Concession Agreement has been recently negotiated. Does that have provision for RPI in it?

(Mr Bates) I understand it does. I am probably not the best person to answer this question.

477. Do you know anything about the ferries, whether they have the RPI?

(Mr Bates) No, I do not, I am afraid.

478. CHAIRMAN: Can I just pause there for a moment and ask my colleagues whether they have got any questions?. No. Please carry on.

479. MR GEORGE: Let's turn to the local economy, the third section of your evidence and we can take this, I think, by just concentrating on the exhibits. If we start at C13 at page 13 with the distribution of retail spend by area, we can start on the right-hand side with St Helens and we know where that is, and it has very few people going into the city centre for their retail spend and most of it is being spent elsewhere.

(Mr Bates) That is correct.


 
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