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
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
652. MR McGOLDRICK: That is correct, my
653. CHAIRMAN: Please go on. Sorry to have
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
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
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.