Examination of Witnesses (Questions 540-559)
MR CHARLES GEORGE QC and MISS JOANNA CLAYTON.
BIRCHAM DYSON BELL and MR JOHN McGOLDRICK examined
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,
543. MR McGOLDRICK: Where does the increased
toll income on the Severn Crossing go to? What is it applied
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
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
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
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
(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.