Select Committee on Mersey Tunnels Bills Minutes of Evidence

Examination of Witnesses (Questions 540-559)



540. CHAIRMAN: Alright.

541. MR McGOLDRICK: Of the three crossings that you have got, if we can turn to the Severn Crossing which, as you say, is an automatic RPI index which potentially results in an increase each year. Where does the money go?

542. LORD BRADSHAW: The Severn Crossing, the money?

543. MR McGOLDRICK: Where does the increased toll income on the Severn Crossing go to? What is it applied for?

544. LORD BRADSHAW: It goes to the people who built the bridge because it was a PFI scheme

545. CHAIRMAN: To put it in other words, it is to repay the cost and the interest on any monies borrowed for that construction.

546. LORD BRADSHAW: To produce profit some long time in the distant future.

(Mr Bates) And of course to contribute to a return, a profit to the concession company as well.

547. LORD BRADSHAW: Yes, the people who built it.

548. LORD BROOKMAN: The company are there to make money.

549.MR McGOLDRICK: I do not think that is quite correct. Basically the way the Severn Crossing Company operates is it is there to collect the toll income and the toll income goes towards the redemption of the debt on the two crossings.

(Mr Bates) Raised by a concession company who also make money operating the concession.

550. MR GEORGE: And when that period comes to an end, if I could just intervene, one would have exactly the same position as at Dartford.The Government will have to decide what is to happen in the future - are the tolls to come right down simply to maintain the bridge and open up the prospect of having a third Severn Crossing or are they going to do what they did at Dartford which is keep the tolls and stave off that day? That is a decision, though ,that does not have to be taken for a number years because it is a rather expensive bridge built quite recently and therefore the concession runs for quite a long while.

551. CHAIRMAN: I think that is quite a fair comment.

552. MR McGOLDRICK: The concession period at the moment is intended to end in 2016. What happens then, whether there will be no tolls or what I do not know but the concession will end there.

(Mr Bates) I do not know either.

553. The Dartford Crossing that is also an automatic RPI index increase so you would expect fairly frequent increases in the tolls every other year or so?

(Mr Bates) Should be, yes.

554. Can you tell us when the last increase was on the Dartford Crossing?

(Mr Bates) It is slightly complicated here because when the new Order was introduced it was decided that it would only come into effect on 1 April 2003 so in fact the rebasing effect we are discussing now started on 1 April 2003 so there was a short lag in between the old legislation finishing and the new one coming in. So I do not know exactly when it was but I suspect it was a while ago.

555. So in fact it was 1 September 1996 and there has not been an increase in the Dartford toll since then. Do you know when the last increase was in the Mersey Tunnel toll?

(Mr Bates) It is fairly recently, yes.

556. Right, it was November 1999, so despite the fact that the Dartford has an automatic RPI index increase, in fact the Mersey Tunnel has been increased more recently; does that surprise you?

(Mr Bates) No, I think it reflects a similar pattern to the powers that Merseytravel themselves have given which is to discount and not take the full rise if it wants. In that case the Government decided for Dartford not to take the rise. In the same way Merseytravel may well not take the RPI rise when it arises. Historically they have not always taken the rises they are entitled to take anyway. That is correct, yes.

557. Can I very briefly go through exhibit C12 which is the regulated utility industries, although whether they are quite as regulated as they were I am not sure because of course most of the privatised industries were initially regulated, but it is now, is it not, that it is mainly competition that will reduce prices?

(Mr Bates) No, water is still regulated for example by Ofwat who set the prices every five years.

558. Does that apply to gas and electric?

(Mr Bates) Yes, that is Ofgas.

559. LORD BRADSHAW: Ofgem and Ofgas. I think they all have an official regulator.

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