Select Committee on Mersey Tunnels Bills Minutes of Evidence


Examination of Witnesses (Questions 640-659)

MR CHARLES GEORGE QC and MISS JOANNA CLAYTON.

BIRCHAM DYSON BELL and MR JOHN McGOLDRICK examined

640. At the top of page three we are making the point that as the tunnels are getting closer to the point where they may be able to repay all debt, as we see it, the authorities are moving the goalposts. Point 7 is basically the adverse effects on the local economy, labour mobility, competition, investment and visitors, which would all be inhibited by toll increases whereas toll reductions would tend to improve them.

641. Point 8 is making the point that tunnel users are road users and road users in general are already paying very substantial taxes which are far in excess of the spending on roads. Point 9, we point out that there have in fact been very substantial toll rises already over the period when they were making losses. Between 1971 and 1992 the tolls went up by 1,000 per cent. I made the point this morning that if you take May 1971 as the base, most of toll increases over that period were in fact closely related to the movement in inflation. As I understand it, the authorities at different times responsible for running the tunnels thought that the toll increases that had taken place were the maximum, that if they had increased them any more it would have had a bad effect on the local economy and/or the gross toll income would actually reduce because the number of users would fall substantially. Whether that was a correct assumption, I do not know, but that was what they thought at the time.

642.Point 10 is about the RPI index and basically we are saying that there are different elements of the cost. A very significant element of the cost is the debt. The debt is falling and therefore if there was an index we think there should be a negative factor to it.

643. CHAIRMAN: Are you going to expand on your point 10 later on in your comments?

644. MR McGOLDRICK: I was not intending to, my, Lord.

645. CHAIRMAN: I would just like to probe a little further by exactly how you define 'X' and 'Y' on your point 10. I think we are talking about your point 10, are we not?

646. MR McGOLDRICK: Yes.

647. CHAIRMAN: You are proposing, your Petition says that we should go for RPI minus X and then you actually go a little bit further and say, "What about RPI minus X minus Y?" What are your definitions of 'X' and 'Y'?

648. MR McGOLDRICK: We have not got a definition. What would tend to happen in fact is that X and Y, in our view, would mean that the index was negative and, therefore, it would not actually be anindexed increase at all.

649. CHAIRMAN: Sorry, would you say that again because what I thought you meant was quite different from what I think you said. I thought you were implying that if the increase was to go up by anything like RPI, it should go up by something which was less than RPI, but would nevertheless go up. I think what you have just said is that you would like it to be negative or in fact go down.

650. MR McGOLDRICK: What I am suggesting is that it might in fact be negative and we would not expect it to be negative and, therefore, presumably the index would be nil.What it is illustrating to a certain extent is one of the points this morning when I was asking Mr Wilkinson about his exhibit B21, the financial projections for the next 25 years on the assumption that there is no increase in the tolls either under the existing legislation which allows for an increase in tolls or does not. Basically, as I understood it, what Mr Wilkinson was saying is that over a 25-year period, basically the tunnels broke even, despite the fact that they were spending £380 million over that period on refurbishment. I would suggest that indicates that if you were to apply an index factor, it would be zero or negative depending on how realistic you thought the spend of £380 million on refurbishment was.

651. CHAIRMAN: So would it be correct for the Committee to understand your Petition point 10 to be, and these are my words, not yours, a flat fee, a flat toll with no increase?

652. MR McGOLDRICK: That is correct, my Lord.

653. CHAIRMAN: Please go on. Sorry to have interrupted you.

654. MR McGOLDRICK: Point 11 is in relation to the losses falling on the district councils. Any losses which have fallen on the district councils were in fact for a very limited between October 1988 and March 1992 and, as we have already been through this to some extent, although they initially fell on the ratepayers and then the community charge payers, the authority obtained a legal opinion which we are not able to see which said that they needed to be repaid, so even for that limited period, the authority's view of it in effect reversed the financing by the ratepayers and the community charge payers with the tunnels having to repay those contributions with interest. As you will also know, the authority is seeking power in the Bill for one reason or another to say that whatever they did in relation to that, it should be deemed that it was legal to make the charges that they have been making against the tolls.

655. Point 12, I think to a certain extent we have already been through this. This is the authority saying there is a need for further substantial spending on safety and other works. They say it cannot be financed out of current revenues and yet at the same time they have been accelerating the repayment of external borrowing.

656. Point 13 relates to the capacity of the tunnels and, to a certain extent we have already been through this, the traffic, expressed by Merseytravel this morning, with Mr Wilkinson giving his opinion on it. What we are saying here is two things. In our view, most of the people who go through the tunnels in the peak period, have got very little choice because there are all sorts of things which would tend to mean that the users would not use the tunnels because of various factors and they would be more likely to use public transport and in fact, during the peak periods, a large number of people do. To stifle that demand would require a massive increase in the tolls and your Lordships have already heard that two of the toll increases over the last 30 years or so, one was 50 per cent and another one was 67 per cent, they did reduce demand overall, but there was a relatively small fall. The area where we think there is a stifling of use of the tunnels is in fact in the off-peak periods when people have more choice of where they go to or whether they make the trip at all because it is for some sort of leisure or shopping purposes. There seems to be little purpose in stifling that demand or at least little purpose in relation to controlling congestion because it is off-peak.Your Lordships will have already seen the tables that Merseytravel presented which clearly indicate that most of the time you would expect the tunnels to be well below capacity.

657. Point 14 is the question of fairness which Mr Field has already gone into. There seems to be an argument that the tolls are some form of congestion charge, but it is the equivalent of a road congestion charge which, if it was applied to London, would only apply if you entered the central area by crossing the Thames and if you entered from any other direction, there would be no congestion charge at all.

658. Point 15 relates to the capacity of the tunnels and there are varying figures as to how many vehicles are going through the tunnels at the moment, but it is approximately 25 million going through the eight lanes of the Mersey tunnels. When we had just the Birkenhead Tunnel, there were 20 million vehicles going through. Simple arithmetic would indicate that there should be 40 million vehicles and in fact if we look at the next river crossing upriver from the crossing controlled by Merseytravel, which is the Silver Jubilee Bridge between Runcorn and Widnes, which is controlled by Halton Council and was largely paid for by the Government, but with contributions from Lancashire and Cheshire County Councils and which is free, that has only four lanes, but it seems to carry approximately the same amount of traffic as the eight lanes of the tunnels which obviously raises various questions.

659. Point 16 is again related to the Runcorn Bridge, but because it is only four lanes and because it is carrying as much traffic as the eight-lane Mersey tunnels, it has been agreed locally anyway that there is a need for another bridge. A considerable amount of work has been done on that and a decision was expected last December, but the Government in effect decided to postpone the decision for one reason or another. We have been in touch with Halton Council and with the consultants on the bridge and all of the economic assessments that have been done so far to justify the bridge have been on the assumption that the bridge will not be tolled. That of course does not mean to say that the Government may at some point decide it should be tolled, but that would then raise a question in relation to the existing bridge which will only be about a mile away which is not tolled.The idea, as I understand it from the consultants, is that the new bridge then would carry the bulk of the traffic as compared with the old bridge. Whereas if in fact the new bridge is tolled, and a mile down the river there is an untolled bridge which is currently carrying as much traffic as the Mersey tunnels will be, it seems fairly unlikely that more than, say, 10 per cent of the traffic will choose to pay the toll on the bridge.


 
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