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David T. C. Davies (Monmouth) (Con)
Everyone seems to be leaving the Chamber, which is sad because very few issues cause more rows in pubs and constituency surgeries in south Wales than the Severn bridge. You might expect me to declare an interest at this point, Mr Davies, but one of the bits of pub trivia that came out of our inquiry is that I do not need to do so, because neither of the Severn bridges starts or ends in my constituency. One ends in the constituency of Newport East, and the old Severn bridge starts and ends entirely in England before joining the Wye bridge. It would, therefore, be difficult for some of the Members who have left the Chamber to demand that the old Severn bridge be partly administered by the Welsh Assembly Government in Wales, because it does not actually come into Wales at all.
The issue for all of us is the price. It has confounded us in constituency surgeries throughout south Wales and the M4 corridor. It is worth setting out some of the background. The second Severn crossing was built by a consortium of four companies, which became Severn River Crossing. Not only did they build the second Severn crossing, but they took on the debt of the old bridge, which amounted to about £450 million. The deal was that they could collect just under £1 billion, which was linked to inflation, and that, once that money had been collected, the bridge would revert to public ownership. At present, that is expected to happen in around 2017.
It became clear to us during the course of our inquiry that, no matter how angry we might get over the level of the tolls and no matter what impact we might think it has on the economy, there is very little that any of us, including the Minister, can do about it. This is a matter not of the Minister deciding what he wants to set the toll at for any given year, but of straightforward contract law that would be backed up by the courts. The deal was struck in 1992 between the then Government and private companies, and there is no flexibility in it whatsoever.
Jessica Morden (Newport East) (Lab)
Was the hon. Gentleman as surprised as I was to see the Welsh Conservatives pledge during the Assembly elections to freeze the tolls immediately?
David T. C. Davies
I must admit that that was a surprise to me. It would, of course, have been feasible to do it, but a Conservative Government in the Welsh Assembly—which was, sadly, not to be—would have had to pay back all the money to Severn River Crossing. That would have been a significant amount of money. I am not sure whether the policy applied to heavy goods vehicles—I believe that it applied just to cars—but it would still have been significant. The point is that SRC could not simply have been told to freeze the tolls without compensation being paid, because its shareholders would have had every right to take the Welsh Assembly Government to court. There would have been some practical difficulties in implementing that policy, because I presume that it would have been up to the Welsh Assembly Government to negotiate the rate directly with SRC. I am not sure how far down the line the negotiations went. It would have been feasible, but it would have been a challenging proposition. Sadly, it will not come to pass, because of the efforts of the hon. Lady’s party.
Geraint Davies (Swansea West) (Lab/Co-op)
The point is that the Welsh Assembly Government had no locus or power to set anything. These things are set by the UK Parliament, which cannot be changed now. Surely the Government can announce, however, not that we can change the toll now, but that in 2017 the toll will go down to £1. If they did that, it would trigger inward investment now, not then, because people would plan for the future. They could establish their business now in south Wales, so that after 2017 their costs would go down. That is what the Government should do.
David T. C. Davies
Once again, the hon. Gentleman has anticipated some of my comments.
Before I turn to 2017, we should have a quick discussion about the impact on the economy. There is, as the hon. Gentleman will recall, mixed evidence about this. There is no hard evidence that the current level of the tolls is having a detrimental impact on the economy. Let me quickly add, however, that there is plenty of anecdotal evidence, which most of us would accept, particularly in relation to areas such as haulage and tourism. I worked extensively in the haulage industry and the situation is not all bad, because a haulage company in Wales competing for business that is local to south Wales has an advantage over an English company in Avonmouth, which would find it harder to compete. Similarly, shopkeepers in towns such as Chepstow might be concerned that, if we got rid of the Severn bridge tolls, it would lead to even more people crossing over and going to Cribbs Causeway, when the current numbers are already causing a problem.
Having said all that, I think that there is an impact on the economy. I do not think that it is as bad as some people have suggested, but there is a negative impact. To give some evidence for that, I remind Members that the previous Government froze the Humber crossing tolls because they felt that the level of those tolls would have made the impact of the economic downturn worse. It is sad that, having decided to do that on the Humber, the previous Government did not feel that they could make the same commitment to the River Severn. If any Opposition Members want to tell me why Wales was discriminated against in that fashion, I would be more than happy to hear their comments.
What we need is hard evidence so that we can put a proposal for 2017 to the Government. I welcome the fact that the Welsh Assembly Government, who do wonderful things on occasions—they are not all bad; like all things, they have advantages as well as disadvantages—are conducting an in-depth assessment of the impact of the current level of tolls on the economy. They will hope to get evidence from the Department for Transport. It was our strong recommendation that the DFT work with the Welsh Assembly Government on this and offer them every assistance and co-operation, and I very much hope that it does.
Paul Murphy (Torfaen) (Lab)
The hon. Gentleman has said that the Labour Government did not act on these issues. He might not remember this—it was a long time ago—but 20 years ago I served in the Committee that considered the Severn Bridges Act 1992. The Welsh Affairs Committee report says that the deal that was struck in 1991 was a poor one. One of the reasons why was that it could not easily be changed. That, as much as anything else, is the real reason why we are in the situation we are in today.
David T. C. Davies
The right hon. Gentleman has far more knowledge of what happened in 1991 than I do. However, if we had asked for a more advantageous and flexible Bill from our point of view, I presume that SRC would have asked for more than £1 billion. I was not party to the negotiations, but I imagine that it would not have simply rolled over and given way that easily—I do not know. What I know is that it is all up for grabs after 2017 or thereabouts. It is important, first of all, that we have hard evidence about the impact on the local area.
The hon. Member for Swansea East—
David T. C. Davies
I apologise. The hon. Member for Swansea West (Geraint Davies) made a point about the potential level of the toll after 2017. I think that he will agree that it was a back-of-the-envelope calculation, and I am sure that it can be corrected. I shall address the figures to which he has alluded. The current annual revenue from all the tolls is about £76 million a year. The current cost of maintaining the bridge is £15 million. I estimate, therefore—this is purely a back-of-the-envelope calculation—that it would be feasible to levy the toll at about £1.50 and still be able to maintain both bridges. Obviously, there may be other factors that the Welsh Affairs Committee has not been made aware of.
The Parliamentary Under-Secretary of State for Transport (Mike Penning)
Will my hon. Friend give way?
David T. C. Davies
I suspect that the Minister is going to make me aware of a few of those factors. I accept that we may want to put money aside for a future bridge or for future major works to be carried out on one of the bridges. I invite the Minister to confirm, however, that it would be possible to set the toll at a significantly lower level than its current one and still be able to maintain both bridges in good working order.
Mike Penning
I do not want to pre-empt in anyway my later comments, but my hon. Friend may notice that I am not a Treasury Minister. Treasury Ministers do not do things on the back of a fag packet. Whatever we do must be evidence based and correctly calculated all the way through. We are not going to rule anything out or anything in. It will be very much a Treasury matter, as well as one for the Department for Transport.
David T. C. Davies
I appreciate that clarification. However, we are about five or six years away at most from the estimated date of handover. By that time, I would expect people in the Minister’s Department or the Treasury to be thinking about what we will do next. I understand that the current plan for the next five years after 2017 is that the tolls will continue at the current level in real terms and that the money will be set aside for a sinking fund.
To date, no one has even talked to SRC about who is going to man the toll booths or do the maintenance. It surprises us that more work has not taken place and that there is not greater clarity about what is going to happen. Certainly, at some point, the bridge will be in public ownership, both bridges will be paid for and a large profit will be being made by someone. However, it is not being made at the moment and, in fact, the evidence suggests that SRC will not make that big a profit. SRC’s shareholders are not a load of people in top hats somewhere in the City of London; they are anyone who happens to have a private sector pension. We often forget that when we talk disparagingly about shareholders.
At some point in the next 10 years, a large sum of money will be being made from what is basically a tax on the people of south Wales and the west country of England, which is not acceptable. We have a right to know what is going to happen and to absolute transparency, so that when the bridge becomes the Government’s property, we can open the books and see how much is being used to maintain both bridges and how much is simply going back into Government coffers. We could then put aside some money for future works.
I want to squash a couple of myths that are prevalent in the pubs of Monmouthshire and possibly elsewhere. The first myth is that the whole thing is owned by the French Government and that the money will all go back to France. I do not know where that came from, but it is obviously completely incorrect. The second myth that has persistently dogged us over the past few years in Monmouthshire is that the old Severn crossing is falling down and at some point will be closed. We have found absolutely no evidence for that either, and we are assured that that is not the case.
We look forward to finding out a little more about what will happen on the happy day when the bridge goes back into public ownership and ceases to be paid for. We also look forward to a day when the tolls can perhaps be set at a level that is fair, that enables the taxpayer not to lose out because the bridges will be maintained and that is beneficial to all of us who live and work in south Wales.
Jessica Morden (Newport East) (Lab)
It is good to see the Minister here to respond to the debate. I thought that his evidence to the Welsh Affairs Committee was frank and that he seemed very engaged in the matter. As someone who has been talking about the Severn bridges for some time, I appreciate that.
Like the hon. Member for Monmouth (David T. C. Davies), I obviously have a strong constituency interest in sorting out the issues surrounding the Severn bridges. I commend the hon. Gentleman for the way in which he chairs the Welsh Affairs Committee and for deciding that this should be one of the first inquiries following the election. The evidence that the Committee has received backs up what I have heard from my constituents for many years, which is that the crossings are too expensive, inflexible and inconvenient.
As I said in a Westminster Hall debate last year, until very recently people could not pay by credit or debit card, and they cannot pay online or travel off peak. There are no concessions for people who live locally. Yet the tolls continue to rise year on year, even though the service is outdated. I do not apologise for raising the matter again because, although Severn River Crossing has a responsibility to its shareholders—as has been mentioned—I feel a responsibility to my constituents, who are the customers. I would like Severn River Crossing to pay a little more attention to the customers.
Nick Smith (Blaenau Gwent) (Lab)
I, too, congratulate the Chair of the Committee, the hon. Member for Monmouth (David T. C. Davies), on covering the topic, which is certainly important to my constituents. I want to take up my hon. Friend’s point about a permanent system not yet being in place for credit card payments. It seems mad that, in 2011, there is not yet a permanent system in place for people to pay their toll with a credit card. That is absolutely bonkers. If someone goes to the bridge on a Friday evening, there are massive queues. Often people arrive there and they do not have enough cash. That has happened to me on my way home. I have not had enough cash and I had to get off at the service station beforehand to get some. Getting cash in that way can cost money, as people might have to use one of those machines that charge. Would it not be much easier if commuters, hauliers and others could use a credit card easily to cross the Severn bridge?
Jessica Morden
I thank my hon. Friend for his intervention. There is no permanent solution to that at the moment. I travelled over the bridge last Thursday night, and although I believe that a temporary measure is in place, there is still no permanent fixture. I am sure the Minister will correct me later if I am wrong on that. I will move on to that issue later.
The Committee heard anecdotal evidence about the economic impact of the tolls on businesses and commuters, and it welcomed the Welsh Assembly’s commissioning an assessment of the economic impact of the bridge’s operation. The Government response refers to new business investment in Wales. I want to add my own anecdotal evidence. Haulage companies in my constituency, and I suspect in the constituency of my hon. Friend the Member for Blaenau Gwent (Nick Smith), are being severely impacted by the tolls, as the charge is not borne by companies just over the bridge. For example, Owens Road Services is a long-standing Welsh company with a base in Newport. It represents 1% of the total heavy goods vehicle traffic on the crossing and pays £200,000 a year. Toll increases keep coming off its bottom line. The Welsh logistics industry is paying a charge that is not paid by competitors in England. I speak weekly to commuters—for example, teachers—who travel to Bristol. They are suffering every day at a time when hours are being cut, wages frozen and fuel prices are high.
As the hon. Member for Monmouth has said, what came out loud and clear from the Committee’s inquiry is that the contract negotiated with Severn River Crossing is very restrictive and that the Secretary of State’s powers are constrained by that. However, where there’s a will, there’s a way. I still want the Government to pursue the issue of a toll freeze. I took the Minister at his word when he said it is difficult, although as we referred to earlier, there are people in his party who see the matter slightly differently.
On 6 April, which was just a few weeks after the Minister gave evidence to us, during the Assembly elections, the Welsh Conservatives pledged that
“a Conservative Assembly Government will freeze Severn Bridge Tolls cars at their current level. The freeze will be brought in immediately.”
As an aside, there was no mention of business vehicles, which has not gone down particularly well. I am genuinely bemused by that. Has the Minister committed to doing that or do the Welsh Conservatives just not know that the bridges are not devolved and that there are contract limitations? I would be grateful for an answer on that later.
David T. C. Davies
Presumably, if the hon. Lady and I were fortunate enough to win the lottery, we could ask Jim Clune if we could pay for everyone to have a toll freeze. Although the matter is not devolved, there would have been nothing to stop the Welsh Conservatives doing that had they formed a Government. Sadly, they did not, but maybe next time.
Jessica Morden
I thank the hon. Gentleman for his intervention. Apparently the Assembly would have had to pay £29 million to Severn River Crossing. I am loth to take him up on his offer to commit to paying that if we win the lottery, just in case.
I would like the tolls to be frozen and greatly reduced when the bridges come back into public ownership in 2017. I fully support the Committee’s assertion that the toll could be reduced to a fifth of its current level to approximately £1.50, while allowing the crossings to remain self-financing. We recommend that the Government should seek to reduce the level of the toll at the earliest opportunity.
In the meantime, I want the Minister to address some of my parochial concerns. On car sharing, commuters who share a car cannot share the TAG. I was under the impression that that issue had been sorted out some years ago and dealt with by Severn River Crossing. However, it appears that it has not. Will the Minister please pursue that with the company in the interests of cutting congestion? We are urging people to car share, so we ought to be making it easier.
On off-peak tariffs for business, one issue that businesses have always raised with me, which is an extremely good point, is more flexible pricing. Effectively, off-peak travel for business would offer incentives to travel at certain times of the day and night. That would reduce congestion, save emissions and help companies at a time when they are struggling.
May I also ask the Government at some stage to examine the issue of a reduction in tolls for people who live locally? As someone said earlier, maybe that could be done on a postcode basis. Such a scheme has been introduced on the Dartford crossing. I believe that it is easier to do that on the Humber and Dartford crossings, as they have no concession. I am sure that the Minister will put me right on that if I am wrong, but in the longer term, could we look at doing that in Wales?
On the thorny issue of modern technology, I believe that one of the witnesses, who gave evidence to the Committee referred to not being able to pay by modern methods as a “mild national embarrassment”. That the issue was shown on “Gavin & Stacey” has been well-reported. I am glad that the temporary system is in place, although I believe that the permanent machines have not been installed yet. The company pledged to the Committee to do that within the first quarter of this year, so I would be most grateful for an update on progress.
Given the long, painful years it has taken to get to the stage of being able to pay by credit and debit cards, which appeared to be a fairly simply issue, may I urge the Minister to get to grips with the future of the bridge post-2017, as the hon. Member for Monmouth has mentioned? The Government response to the Committee’s report states:
“it is too early to be setting a future strategy for the Severn Crossings at this stage, including future toll prices and concessions.”
With the current Parliament due to expire in 2015, this is not an issue that can be left until another election, because businesses and commuters in my constituency need certainty.
I welcome the Department’s commitment in the Government response to provide regular updates to everybody on future strategy. I also thank members of the Committee, as one of the local MPs, for the time that they have spent on this issue. It has been a valuable exercise in providing fresh impetus to sorting out the future of the bridges.
Karen Lumley (Redditch) (Con)
It is a pleasure to serve under your chairmanship today, Mr Davies. I want to say just a few words about the importance of the Severn toll crossing. At this point, I should probably declare an interest. I seem to have used the Severn bridge crossing more in the past year in order to visit my daughter in Cardiff than I ever did in the 18 years I lived in Wales.
We have seen inward investment to Wales decrease massively in the past 20 years. In the late ’70s and early ’80s, 20% of the UK’s foreign investment was in Wales. That figure is now just 6%, which makes it crucial that we make Wales a competitive place to do business. We all recognise that the only way that the second toll crossing was ever going to be built was with private finance, and that the company running it needed to make a profit for its shareholders. We will, however, in the not too distant future, as my hon. Friend the Member for Monmouth (David T. C. Davies) said, see it return to Government hands. We will then have an opportunity to help businesses out.
I hope that the Minister is listening and will take note of some of the points raised in the debate, and in the report from the Select Committee, of which I am a member. We all understand the dire financial situation that this country is in, but to enable Wales to attract its fair share of investment we have to ensure it is on a level playing field with the rest of the country. I know there are discounts to be had from the south and London, but the only realistic way into Cardiff in a car is to pay the £5.70. Otherwise one has to go miles out of one’s way, incurring extra fuel charges, and we all know how costly that is. Not only are our visitors paying more, but they are less likely to visit some parts of the country than others. We must make sure that money coming into Wales is as evenly distributed as possible.
Also important, of course, is the part that tourism plays in attracting people into Wales. As hon. Members have mentioned, many of us remember watching the television programme “Gavin & Stacey” when Smithy is trying get across the Severn toll crossing and cannot find the right money. That programme has, of course, made Barry Island famous. I have to confess that on my last visit to Cardiff I ventured down to have a look around and have a go on the slot machines. Seriously though, we need to do all we can to boost tourism and attract more visitors to stimulate the economy wherever we can.
As the Prime Minister said at Question Time on Wednesday, we are part of a United Kingdom and every part of it matters. I also urge Severn River Crossing to look again at fitting the toll with the latest technology to enable it to collect the money. Near my constituency of Redditch, the M42 is fitted with that technology, which is so much easier and more efficient. In conclusion, I suggest that the Minister continues his good work and pushes for a deal that will benefit both business and tourism alike, and for a fairer Severn toll crossing.
Geraint Davies (Swansea West) (Lab/Co-op)
I would like to make a few quick comments before my voice breaks again. The importance of the report, as I have already suggested, concerns inward investment and prosperity for Wales. The simple fact is that if we want to attract inward investment into Wales, multinational companies in particular need to be able to assess, years in advance, the likely costs they will face in networking European markets. I urge the Government to make their intentions clear, so that that can be done.
I share the view of the Welsh Affairs Committee Chair, the hon. Member for Monmouth (David T. C. Davies). We should aim to minimise the toll, subject to operational and maintenance costs, and look again at off-peak fares in terms of traffic management and the balance between car and van traffic and larger trucks—the balance between inward investment and trade versus tourism. That is not easy, but we should make a general statement of intent now. We want to see a substantial reduction in a tax on trade and inward investment into Wales. I respect the point made by the Minister from a sedentary position asking why Labour did not do that. If that was a mistake, then that is a reason not to repeat it.
As we approach 2017, it becomes more and more important that we make those signals—generally at first, and then specifically down the road. The Welsh Affairs Committee is focusing strongly on the various parts of inward investment—visiting Germany and so on. The crossing is a crucial artery for investment into Wales. The electrification of the railways is also crucial. People will know that I have stood up for the electrification of the railways from Cardiff to Swansea, as well as to Cardiff. The railway line and the road are the two main axes for getting trade into Wales.
The point was made that there is some uncertainty about the economic impact. The Welsh Assembly is supposed to be doing an assessment of that. The fundamental economic analysis is obviously that this is clearly a tax on trade and inward investment. Taking on board what the Chair of the Committee said, it works both ways. The fact is, however, that it is not worth it for people in Newport to pop over to Bristol to do some building work there, because of the toll. The toll impedes the development of ambitious small businesses. A company opening its headquarters will look at the marketplace. Clearly, more people live on the English side of the River Severn than on the other side. In terms of cost-management, they are better off locating on the English side. That stands to economic reason, so there is a dramatic impact.
I was disappointed by the evidence we heard from Ieuan Wyn Jones. He was meant to be in charge of economic development for Wales, but happily he is not any more. He seemed to have the idea that some of the reduction in price, which should go to motorists, inward investors, and the traffic of people and products, should be taxed away and spent on other pet projects in Aberystwyth, or wherever. That misses the point that the fundamental driver of the Welsh economy is trade.
As it happens, my father used to be in charge of economic development in the Wales Office some time ago. There was an analysis at the time to show that Wales is not just one great economy. Essentially, it is two economies—south Wales with the south-west, and north Wales with Liverpool. A moment’s thought would lead us to that conclusion. The study made clear the interdependence of the south-west and south Wales. Therefore, having a brake or a tax on that relationship harms both economies. We know from the first principles of economics that trade is beneficial, so it is not a good idea to say, “Separate these two and they won’t have to compete with each other.” Trade is mutually beneficial. Again, I urge the Minister to encourage the Treasury to signal the direction of travel and to give us greater clarity.
In places such as Swansea, which I represent, we have the enormous growth of the university as a research and development, technologically driven entity with global reach and attraction. Companies such as Tata Steel, Rolls-Royce and now Boots the Chemist have moved their research and development to Swansea, and they are looking to develop products with a global reach. Part of that is being able to link to European networks and beyond, and part is the cost of moving products and people between Wales and England and beyond.
The issue is not a minor one, with people who happen to live in Cardiff getting annoyed; it is about our strategic position on inward investment and the development of the Welsh economy, which is so important for all of us. I look forward to the Minister’s response.
Paul Murphy (Torfaen) (Lab)
Thank you, Mr Davies—I have just realised that one third of the Members in the Chamber are called Davies.
The hon. Member for Monmouth (David T. C. Davies) and I ought to form a Gwent national party because I agreed entirely with everything he said when opening the debate. Again, the Select Committee is to be commended on its work. Interestingly, in our earlier debate, the Under-Secretary of State for Wales said that it is quite rare for Members from Wales to get together and agree on everything but, within minutes, we have an example of doing precisely that. We agreed on the importance of the bridge—we welcomed the building of the second Severn crossing in the early ’90s—and on what is likely to happen in 2017, when the concession runs out and the Government take over the running of the two bridges.
I remember the first bridge being opened and I also, as I said in an intervention, led jointly for the Opposition on the Severn Bridges Bill in 1991—so long ago, in fact, that half the membership of the Bill Committee is dead and the other half, except for me, is in the House of Lords. It was interesting reading the debate because, although we agreed with the building of the second Severn crossing, which was absolutely necessary, there were concerns about the nature of the deal and of the concession. I am glad that the Select Committee referred to that in its report:
“Our inquiry demonstrates the inflexibility contained in the Severn Bridges Act 1992 and the concession agreement between the Government and Severn River Crossing Plc. This has made it difficult for the Government to respond to the current economic climate and freeze the toll”—
whether the Government of which I was a member or the present Government, because both would find it difficult to change the intricate concession and deal agreed 20-odd years ago, and we must look to the future on that.
I agreed very much with my hon. Friends the Members for Blaenau Gwent (Nick Smith) and for Newport East (Jessica Morden) on how new technology has not been introduced on the bridge that I will cross in five hours’ time. All of us who travel to Europe, France in particular, and to other countries have seen the most sophisticated technology—number plate recognition or using credit cards and so on—but none of that has happened on our bridges into Wales. Frankly, that is a matter of public scandal. All Governments are to blame for not putting pressure on the company to ensure that.
The other issue that was raised in 1991 was that there ought, we believed, to be local inquiries every time the tolls were to be increased substantially. That proposal was defeated in Committee; it would have been a good idea, but it did not happen.
I read with great interest the Select Committee’s questioning of the top officials of Severn River Crossing plc. I entirely understood the questions posed by the Committee, especially those of my hon. Friend the Member for Pontypridd (Owen Smith), but I failed to understand the answers—perhaps that was my fault—and the finances surrounding the end of the concession are as murky as the Severn itself. I do not know who, if anyone, will make a great deal of money in a few years’ time, but I do know that when we look at the figures, the running costs are £15 million a year and the income is £72 million a year. The debt is almost paid off and no new technology has been put in, so one wonders a little why those figures do not quite add up.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The right hon. Gentleman makes an interesting point. Does he agree that it was very strange that, during those deliberations, the company was unable to provide us with its likely profit at the end of the concessionary period?
Paul Murphy
It was amazing. I hope that this debate and any consequent Government policy might lead to discussions with Severn River Crossing plc so that we can get to the bottom of what, frankly, I could not understand.
An impact assessment has been started by the Welsh Assembly Government. There is now a new Executive in Cardiff—I believe that the Minister is Huw Lewis, but I might be wrong—and I hope that the Under-Secretary of State for Transport, the hon. Member for Hemel Hempstead (Mike Penning), when he winds up our debate, agrees on the great need for collaboration between the Welsh Assembly Government, the Department for Transport and, if we can persuade it, Her Majesty’s Treasury. In a few years’ time, there will be a huge change in how the bridges are operated and financed, and we must start preparing now.
Owen Smith (Pontypridd) (Lab)
This, again, has been an interesting and worthwhile debate—certainly worth while from my perspective, not least because it gives me the opportunity to say that I, too, find it utterly inexplicable that my right hon. Friend the Member for Torfaen (Paul Murphy), the former Secretary of State for Wales, for Northern Ireland and for Wales again, is not in the other place. However, it is a delight for us to be able to enjoy his wisdom for a few more years in this House.
The Severn bridges are a hugely strategic part of the infrastructure of Wales. The Select Committee report was extremely timely because it addressed, as we have not seen addressed in the House, that question of their strategic importance. Furthermore, important post-2017 decisions, to which hon. Members referred earlier, beckon whichever Government are in power when the bridge comes into public ownership.
I hope that the Government learn from some of the things revealed by the report, which affords us an opportunity to be taught about how important infrastructural developments, such as the second Severn bridge, might be financed in future. That development came at the outset of the debate on private finance initiatives—very different PFI structures are put in place for infrastructure these days—but, clearly, lessons can be learned, in particular about the contractual nature of the agreement made between the Government and whoever is developing things.
The report gave us the opportunity to explore, although not really get to the bottom of, the economic impact of the bridge tolls on Wales. My hon. Friend the Member for Swansea West (Geraint Davies) talked at length about the inevitable economic consequence of what I think we all agree is a high toll, obliging people looking to trade and travel across the bridge to commit extra resources. That must, at some level, be an impediment to developing trade between Wales and England and to developing the Welsh economy.
Jonathan Edwards
The policy of the previous Welsh Government was to seek responsibility for the bridges at the end of the concessionary period. Can the hon. Gentleman inform the people of Wales what the policy of the new Welsh Government is? If the rhetoric of standing up for Wales is to be believed, surely gaining control over the main supply route into Wales would be a main objective.
Owen Smith
That is a question to be addressed to Carwyn Jones, the Welsh Labour First Minister in Cardiff. I am delighted that he will be in charge, because I shared some of the misgivings of my hon. Friend the Member for Swansea West about the evidence that we heard from the man who was hitherto responsible for economic development—the leader of Plaid Cymru.
Having said that, I think it is important that we look to the Government—had the Labour Administration remained in power, we would also have done this—to forge a better understanding of and a joint interest in how the bridge is managed post-2017. I am sure that the Minister will reassure us that the Government will consider carefully how to ensure that the Assembly has a full role to play in that, because its interest is clearly considerable. On another matter, I hope to hear positive noises from the Minister that the Department for Transport will carefully consider the economic analysis that the Assembly is undertaking, so that we may better understand the impact that the bridge tolls have on trade, tourism and transport in Wales.
The report shed some light on some of the issues—particularly the murky economics of the bridge—but not as much as we would have liked, although it provided greater insight into how it was paid for initially, what the financial structures were, and how the company proposes to make money. It will hand the bridge back when it has taken £1 billion in revenue. The report did not give us total satisfaction in explaining the volume of profit that the company will make at the end of the day, and I agree that the opacity was deplorable. I hope that one of the lessons we learn is that future financial deals leading to the building of important pieces of infrastructure should be more transparent. Given the Minister’s candour when addressing the Committee, I am sure that he will agree.
We had a bit more clarity about ownership of the bridge. I am not sure whether the hon. Member for Monmouth (David T. C. Davies) was correct in saying that the French have no interest in it, because I think they have a bit. More importantly, the Americans have a big interest, because the banks that ultimately sit at the back of ownership are, by and large, American. We have a bit more understanding about the concession agreement and its shortcomings. Lastly, we had significant insight into the reason for the prehistoric technology on the bridge, the principal reason being the concession agreement; into the lack of incentive for the company to invest—it would trim its profit; and into the Government’s inability to mandate the company to invest to move the technology into the 21st century.
I want to ask the Minister some questions about that. In his forthright evidence to the Committee, he referred to the technology, rather colourfully, as having to
“queue up in some kind of Soviet system”.
I agree entirely. He also, interestingly, hinted that he proposed to reopen negotiations with Severn River Crossing to explore how investment might take place in the period before the bridge becomes publicly owned, so that taxpayers are not entirely saddled with that bill. However, he acknowledged that if the company invested, the Government, under the terms of the contract, would have to compensate it up front for making the investment and incurring the loss.
I would like an update from the Minister, today if possible, on where those negotiations are and whether the Welsh people may expect changes and further improvements in the technology before 2017—or whether, as I fear, the public purse will end up bearing the cost of taking the bridge into the 21st century and thereafter. I encourage the Minister to be as robust with Severn River Crossing as he normally is in his exchanges in the House.
The Minister may be able to help us with the issue raised by my hon. Friend the Member for Newport East (Jessica Morden) and the pledge that the Conservative party made at the election—to offset the cost of freezing the toll to the tune of £29 million in the unlikely event that they won the election in Wales. Thankfully, they did not, but many of us were surprised at the time that such a promise could be made. It prompts the question whether there were conversations between the Conservative-led Administration at Westminster and the Conservatives in Wales that allowed them to make that statement or whether, as he implied from a sedentary position earlier, the Minister knew nothing about it. Perhaps he will clarify that.
I suspect that the Minister did not know much about it. If he did, will he confirm that, irrespective of who won the election, the Assembly could not unilaterally have agreed to pay Severn River Crossing the money to make up the shortfall if it had broken the current contract to fix the toll increase annually, predicated on the retail prices index? Surely renegotiation would have been necessary between the Government at Westminster, who are one part of the contract, and Severn Severn Crossing. Perhaps the Minister will clarify how it would work if the current Assembly Administration wanted to pursue a similar policy. Would that be possible? Would the Government be open to that, or is it off the table?
As the Minister is here, I have a final and slightly cheeky point. I thank him on behalf of the people of Wales for the announcement of the U-turn on the coastguards. He is the Minister responsible for that, and it is welcome. I urge him to think again about the Driving Standards Agency and the Driver and Vehicle Licensing Agency. Perhaps we could have some U-turns on those.
The Parliamentary Under-Secretary of State for Transport (Mike Penning)
It is a pleasure to serve under your chairmanship, Mr Davies, in this ground-breaking debate. I wish I had been the first ground-breaker this afternoon, but the Under-Secretary of State for Wales got in first. It is a pleasure to be here, and to respond to the Select Committee’s genuinely excellent report. I had the honour and privilege to give evidence to it early in my time as a Minister.
When I looked at the history of Ministers in my Department, I wondered whether I would be here today. The average life expectancy of a Transport Minister is eight months, and I have been in the post for a year and a day. I am either doing something very wrong, or the Prime Minister has forgotten about me.
To be honest, I was pleased with the report in many ways, not least because it removed some of the myths to which my hon. Friend the Member for Monmouth (David T. C. Davies), the Committee Chairman, alluded. I will try as best I can to respond to the debate, instead of reading out a speech that was written for me, and I will do that as a Minister for the United Kingdom.
The two bridges are national assets, and owned by no one, except that the second one is temporarily owned by the company that was set up to facilitate it. The freehold land that it sits on is the responsibility of the Secretary of State for Transport, and the toll booths in Wales are also his responsibility. The analogy is interesting. I have a map that shows the boundary between England and Wales. The original bridge is solely in England, and the new bridge, as it is still called, is predominantly on English soil and water.
That is unimportant, because the bridges are national assets, and I fully respect the concern of the Welsh community, particularly in south Wales, about the importance of the bridge and its efficient working. I also respect the concern about the contract that was entered into when I was still a fireman; most of us here, although not me, were very young in the early days of the private finance initiative, to which my hon. Friend the Member for Monmouth alluded. With hindsight, would we be in such a position today? Of course we would not, whether or not the previous Government were still in place.
As colleagues who know me are aware, I am not hugely party political. Nevertheless, I could not help thinking that we had 13 years of a Labour Government and although 2015 is approaching, we are only one year along from when the previous Administration were in place; the hon. Member for Swansea West (Geraint Davies) alluded to that point from a sedentary position. What work did the previous Administration do to bring in some of the technology that I will talk about in a moment, and what is going to happen at a later date, possibly in 2017? I will touch on some of those points in a moment, but the issue depends on the funding that the users put into the bridge as we go forward.
The Chair of the Welsh Affairs Committee is a good friend of mine, but he alluded to a tax on Wales. In reality, it is a tax on anybody who uses the bridge. There is an extensive haulier community in my constituency, and I am the Minister responsible for roads, freight and so on. Hauliers from England, Scotland and Ireland, and those from continental Europe, who also pay the tolls, might take issue—although perhaps only fractionally —with the comments made by the Chair of the Welsh Affairs Committee. I understand, however, how emotive the subject is.
Let me touch on some of the points raised. I will not repeat the brilliant history lesson provided by my hon. Friend the Member for Monmouth—again, I am praising the Chair of the Welsh Affairs Committee—because there is no point going over it again. We all know where we are, and many hon. Members know the situation better than I, despite what I have learned over the past year since taking this position. I, too, sat in queues at the tolls for many years when Wembley stadium was being rebuilt and the wonderful Cardiff stadium was used. I sat in that stadium on many occasions, supporting the England rugby team. I will leave the results for others to comment on.
For me the key questions are where we are now, what we can do in the short term and what is the long-term proposal for the bridge. I listened to earlier comments about technology. It is ludicrous that in the 21st century, technology is only just arriving at the toll booths on the crossing. However, some of the comments made during the debate about what can and cannot be used at the tolls were not factually correct; if my officials are wrong, I apologise. The hon. Member for Newport East (Jessica Morden)—I apologise if I pronounce some of the constituency names wrongly; my Welsh is not brilliant and as a cockney lad I was not taught it at school. I mean no offence. [Interruption.] I admit that I picked the easy name first.
A debit or credit can be used at a manned toll booth. It can be used at any time, but it depends on whether the booth is manned. The Chamber will be pleased to know that according to information that I received today, it will be possible in July to use non-PIN card technology at the booths. That is crucial because the use of PIN technology creates delays. I will come on to further technology later in the debate, but my information suggests that that will happen in July—I was told it would happen in the summer, and “July” is written in brackets after that.
The company has an agreement with the banks, but we have had to assist with that to obtain that sort of technology. As hon. Members will imagine, banks prefer PIN technology because of the risk of fraud. We have resolved that issue, however, although there was some surprise about that, not least because we had to get through European legislation. Nevertheless, we succeeded in doing so and in July people will be able to cross using non-PIN card technology, which will help enormously—I am sure hon. Members will hold me to that, and I will hold the company to account should it not happen.
The removal of the 30 seconds that would be added to a transaction through the use of a PIN will help speed through the just under 4,000 vehicles per hour the booths are capable of dealing with. Interestingly, the capacity of the M4 is greater than that when everything goes correctly. I hope that in five hours’ time when the right hon. Member for Torfaen (Paul Murphy) makes that journey, the severe tailbacks that were reported to me earlier will have gone—I am joking; as I understand it, the road is clear although information comes in regularly.
The other day, I was pleased to announce a huge investment of £100 million in the M4/M5 managed motorway network. That money comes from the central fund, and will dramatically change the traffic situation on that side of the bridge. As hon. Members know, my background is in the fire service, and I was very sceptical about managed motorways when I first looked at the technology; to me, hard shoulders are dangerous areas that were designed for a reason.
Nevertheless, when the managed motorways system was piloted on the M42 under the previous Administration, it was massively over-engineered at the time, but it worked. We have since moved the engineering down, and rolled the system out around the country. A £100 million investment is being provided in difficult times to the M4 and M5 around the Bristol area. Colleagues will know how difficult the bottleneck on those two major arteries can be, and that will be alleviated once the roadworks are finished. That is always a problem—it is no pain, no gain when it comes to roadworks.
While we are talking about pain, most colleagues will receive a letter from me tomorrow stating that we intend to start work on the road surface of the new bridge. Work will start—I can give the exact date—on 9 June and run until 14 July on the eastbound carriageways, and between 6 September and 11 October on the westbound carriageways. That is due mostly to the fact that the inside lane in both directions is severely worn and will have to be completely replaced.
We looked carefully at how to manage the obvious disruption that will take place. Options included a contraflow system and shutting the bridge while work is carried out. The option that we went for will extend the work—overall it will take about five weeks to put a new waterproof membrane on the bridge and surface the road—but it will leave at least one lane open each way. We made the decision not to shut the bridge or use a contraflow system that would have caused more expense and extensive delays. There will be delays, for which I apologise, but investment must be put into the bridge because of its age, and that will be done. It is a reflection of the amount of traffic that the bridge carries.
The only party political point that I will make during my speech will be to touch on the recent elections and my Welsh colleagues’ proposals to fund the costs of the toll increases through the Welsh Assembly. It is entirely up to the Welsh Assembly whether or not it wishes to use its funds in that way. If the Conservative party had been elected, it would have been its decision how to run the economy in Wales, just as today’s Administration make those decisions. If the Conservative party—or any other party as the hon. Member for Pontypridd (Owen Smith) said earlier—decided that it wanted to fund the cost of the difference between the toll today and the proposed increases under the contract agreement, that could be negotiated with the United Kingdom Government. My door is open to the Welsh Assembly, under the respect agenda to say the least. I wrote to my counterpart in that Assembly—I must now write again because the holder of that position has changed—and offered my assistance.
I am speaking on behalf of the Department rather than the Treasury, but if that money were used to offset the difference, the contract would not be affected and would remain in place. The only difference would be that money would be recouped from the Welsh Assembly rather than directly from the tolls. It is a complicated legal issue. It sounds simple, but it is quite complicated. Did I know about this? I have to be perfectly honest: the answer is no. However, that does not mean that we would not get into negotiations or provide every assistance for that to happen.
All the discussions that we have had to date, including in the Select Committee, have been based on whether there could be a reduction in the toll at night or a reduction in the toll for local residents. I must admit that the position is much more complicated in this case than it is in the case of the two other major bridges that are often cited. Could there be no increases whatever? Everything comes down to the fact that a contract is in place that says that the company is allowed, after costs, to recoup X amount of money before the bridge is handed back into the full ownership of the Secretary of State.
If I were the company, would I want to negotiate any changes to the present contract? Probably not. So what we are talking about is an increase in the time that the tolls would be there. At every stage when I talk about the tolls and the bridge and we have these discussions, it is a question of a balance between the length of time that the bridge is out of our ownership, based on the contractual agreement that we have, and when it could come back into our ownership and decisions could be made.
It would be wrong of me to say that we are not thinking about what will happen at the end of the concession agreement. Of course, we are thinking about what will happen. However, as I have said, this is a national piece of infrastructure and a cross-departmental matter. It is a national asset. I am sure that the Welsh Assembly and the Welsh people will understand that we will have to consider what happens to the bridge in the context of the investment going into our networks. However, no decision has been made.
Geraint Davies
Naturally, the debate focused on whether we could reduce the toll to £1 up to 2017, but I infer from what the Minister has said that if the money was forthcoming—for example, from the Welsh Assembly or from anywhere else—to pay down the debt now, the bridge would move into public ownership earlier than 2017, in which case we could have lower tolls now, although perhaps not a toll of £1. Can the Westminster Government now pay down that debt from their own money, with a strategy of recovering the money that they pay it down with by reducing the toll now to somewhere between where it is now and £1, so that we could have a lower toll sooner, albeit not as low as £1?
Mike Penning
This is where I wish that I had not joined the Army at 16 but had gone to university and become a corporate lawyer. We can discuss the legalities in quite simple terms. Nothing at all can be done without the agreement of the concessionaire, so should the company decide that it does not want to do what has been suggested, that will be a fact. We are trapped in a contract; everyone knows that and the Committee examined the matter in detail.
I can see the logic of where the hon. Member for Swansea West is coming from, but the Welsh Assembly subsidising what would be the increase this year would not cause the contract to be terminated earlier, because all that would happen is that the same money would be recouped from the Assembly or whoever wanted to pay it as would be recouped from tolls. Thus the length of time would be exactly the same. I will write to the hon. Gentleman—the lawyers are probably panicking as they listen to the debate—to clarify exactly what the legal position is. However, I am certain—this is what all the advice says—that if the company that was formed specifically for this purpose does not want to play ball, there is nothing that we can do.
Jessica Morden
While the Minister is on the issue of the contract, does what has been said equally apply to car sharing? Would it be equally difficult to resolve the issue of being able to swap between different cars in car-sharing schemes?
Mike Penning
I have asked for a note, but it has not arrived. It might do—hint, hint—in the time left. I cannot understand the difference, I must admit. Clearly, car sharing is going on. It happens on the routes that go from where I used to live in Essex into London. We commend car sharing. We want people to share cars, because it reduces emissions and makes travel much more cost-effective for people. I do not understand how the concession agreement would be affected in that respect, but I am sure that the lawyers will tell me why I am wrong—as always, I am being as honest as I can.
The hon. Member for Newport East made a couple of other points earlier. I have already touched on how price freezing and tolling would work. In the Select Committee evidence session, I talked about whether there is more technology that we can use to make things much easier for the communities on both sides of the border and for industry and at the same time to sweat the asset more, as we are doing with managed motorways. In other words, are we getting the best out of the bridge? Clearly, the toll process is causing delays.
We are committed to free-flow tolling at the Dartford river crossing. We made an announcement about that in the spending round, and I made an announcement about it to the Select Committee. There are real technical issues about using automatic number plate recognition, which is what we intend to use. It is similar to what the congestion charge scheme in London uses. There is an enforcement issue, particularly in relation to overseas vehicles. We intend to get that right at Dartford before we introduce the system. However, I can see no logical reason why it could not be introduced at the Severn river crossing.
The problem, of course, is the cost and who bears it. That is what the hon. Member for Pontypridd was alluding to. Let us be honest: why would the company set up in the context of the concession agreement to make this profit say to me, “Okay, Minister, we’ll spend X million pounds doing this for you,” rather than saying, “Will you pay for it?” or “We’ll use our rights to go further in the concessionary period.”
The truth is that by the time we fully implement ANPR and free-flow technology at Dartford, we will be into 2013, not least because of the construction work that needs to be done. Doing free-flow tolling sounds simple, but it is not. Otherwise, people would be hurtling through and we would have speed issues and so on. We will not be that far away from the conclusions about what will happen post the concession. I think that the negotiations will have to include what we would expect a modern tolling system to involve in the 21st century. The issue will arise once we have rolled out the system and done everything that we need to do at Dartford. The last thing that the Select Committee would want me to do is to say yes, we’ll definitely be able to roll it out in 2015 or ’16—in the latter part of this Parliament—if we have not got it running right. I am confident that we can do that, because the technology is there.
I think that we were all sceptical when the congestion charge was introduced in London. The issue was not the rights and wrongs of it, but whether it would work. It does work. The main issue is enforcement in relation to foreign-registered vehicles. I was with representatives of Transport for London only today, working out how we can deal with that.
Owen Smith
I want to clarify what the Minister has just said, because it was very interesting. Is he suggesting that some negotiations have taken place already between the Department for Transport and the company and that, subject to the technology being made failsafe at Dartford, an agreement might be struck whereby the Government would be prepared to compensate the company for introducing free-flow technology on the bridge before 2017? Is that what he was implying?
Mike Penning
No. That would be a spending commitment, and I do not have the authority in my lowly position to dream of ever giving one. I know that the hon. Gentleman would not want to put words into my mouth, but the answer is no. The only way of funding that before 2017 would be through the concessionaire, and the discussion would be about whether it is willing to fund it under the existing contract—I doubt whether it would be. If we did not allow the company to increase the toll, it would look for an extension or—this is within the contract, and it would have every right to do so—to seek compensation from the Treasury. That, too, is unlikely.
By a miracle, a document has appeared before me. It says that SRC is prepared to negotiate extending the TAG scheme for car sharing. Naturally, however, it will not want to be financially worse off. That may not fully answer the question asked by the hon. Member for Newport East, but it is the best that I can do. I want to be as open as I can about this. I shall write to SRC saying what I was told during the debate and asking the company to clarify its position. I shall share that information with colleagues. It is only right and proper to do so.
I realise that I still have plenty of time, but I have no intention of filibustering—not least because Members wish to disappear. However, I have a speaking engagement in London this evening, so I am more than happy to continue.
In conclusion, I welcome the Committee’s report, and I shall work closely with the Welsh Assembly Government in analysing the economic effect of tolling. As my hon. Friend the Member for Monmouth rightly pointed out, there is little hard evidence that the bridges have had an economic effect. I do not say that they have not, but the Committee made extensive efforts to find evidence and did not, despite Chinese whispers among local communities. As I have said, the Welsh Assembly has publicised the fact that some 700 companies have located in the region over the past 40 years, long before the Welsh Assembly was formed, so something must be right. I believe that that evidence is shown on the Assembly website.
I realise that the crossing is a vital piece of national infrastructure. I am proud that my portfolio predominantly covers the whole of this great nation of ours. It is for me to work with and alongside the various devolved Assemblies and Parliaments. At the same time, however, I must ensure that they understand that it is a Department for Transport piece of infrastructure—a Westminster one—despite knowing how emotive it is to the local communities in Wales and those on the other side of the bridge in England.
I have listened carefully to the hauliers. I listen to them nearly every day, and they are an amazing group of people. Perhaps I think that because I hold an HGV licence and used to drive lorries when a fireman—like most firemen, I used to drive part-time when off duty.
The key is fairness. If tolls continue beyond the existing agreement, and if free-flow tolling comes in, it would be wrong in my opinion that the tolls should remain one-way. That unfairness would have to be addressed if we had free-flow tolling and if the toll was increased. A number of truck drivers have told me that they go into Wales one way and come out the other because of the toll. Not only is the Treasury losing income, but it is another unfairness that needs to be addressed, although it is difficult to deal with it now, because of the way it is set up.
I hope that I have not delayed anyone’s journey home. Indeed, we will finish a fraction early. I hope that I have answered most questions, at least in general terms. I have been as honest as I can, as I was when giving evidence to the Select Committee. I pay tribute to the Committee on its conclusions, even if we do not fully agree on certain aspects. I was interested to note that all who are here today are Welsh MPs, yet the subject has a significant effect on the UK as a whole.
Geraint Davies
I wonder whether the Minister could signal in the most general terms whether he anticipates the direction of travel for the toll post-2017 to be significantly downwards. It would be interesting information for inward investors.
Mike Penning
As I have said, I do not intend delaying the Chamber. The answer is no. I cannot give an indication, and the hon. Gentleman can probably understand why.
On that point, I hand over to the Committee Chair. I hope that I have paid the report due credit.
David T. C. Davies
I am grateful to the Minister, a fellow holder of an HGV licence, for giving me another 15 minutes to speak. As some of us wish to make fact-finding visits to the Severn bridge later today, I shall not use it all.
A bridge with a toll is better than no bridge. That is accepted. A bridge with a cashless payment system would be better still, and not one that takes only credit cards; the sort pioneered by companies such as Ringo—I have no connection with the company, but it gave evidence to the Committee—would be better still. A bridge with a reduced toll after 2017 would be excellent, and we look forward to improvements.
The Gwent national party, led by the right hon. Member for Torfaen (Paul Murphy), and I see eye to eye on many things, and we would have no difficulty in finding agreement on the Severn bridge, on the importance of the Union and on the importance of the first-past-the-post voting system—and, I suspect, on whether we hand further powers to the Welsh Assembly. That, however, is an argument for another day. We look forward to improvements after 2017.
Question put and agreed to.