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Jessica Morden (Newport East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bone, especially in view of your south Wales connections. I am grateful for the opportunity to debate the Severn bridge tolls. The subject has been debated regularly in this place in recent times and has been given keen cross-party scrutiny by the Select Committee on Welsh Affairs, of which I am a member. The level of tolls on the Severn bridges is a thorny issue. It is an ongoing frustration for constituents and businesses. That concerns me, because I have a toll booth on the edge of my constituency, and it concerns other hon. Members who have constituencies in south Wales and England. I am grateful for the turnout today.
Mr Mark Williams (Ceredigion) (LD)
I congratulate the hon. Lady on securing the debate. I emphasise that there are ramifications for a much broader range of people than those who represent the M4 corridor. Those of us in west Wales, haulage industry contractors and the tourist sector have a deep interest as well.
Jessica Morden
The hon. Gentleman makes a valid point. As the Welsh Affairs Committee discovered during our inquiry, the tolls have major ramifications for the rest of south Wales. For that reason, I am glad that other hon. Members are here, and I hope that they get a chance to talk about how they have been affected.
As we approach the end of the concession with Severn River Crossing plc in 2018, we need an openness from the Department for Transport and the Treasury about the plans that are being made for when the bridges return to public ownership. The Welsh Affairs Committee published its report on the Severn crossings in 2010, which urged the Government urgently to set up a future strategy for the crossings and called for tolls to be reduced significantly. Four years later, however, we are no further on. The only progress has been to allow people to pay by debit or credit card on the bridges in time for the Ryder cup, and what a long-drawn-out, tortuous process that was.
The tolls continue to go up every year, regardless of the economic climate and people’s ability to pay, and my constituents need some kind of light at the end of the tunnel. It is generally accepted that tolling was necessary to fund the crossings on the Severn, but what was so unfair about the Severn Bridges Act 1992 was that it introduced a concession so rigid and inflexible that the toll cannot be varied to help in difficult economic times without the taxpayer incurring liability. Any request to modernise the bridges receives the stock response that the Government cannot make any changes without extending the concessionary period even further or charging the taxpayer. The situation is unfair, because Severn River Crossing plc is fully compensated for any change that comes along, and it can whack the tolls up year after year in line with the 1992 Act. The Treasury is happy because it keeps the VAT and other tax income, and it quietly does well out of the bridges, but bridge users are stung time after time, and they have to pay more for longer.
I called the debate because I want to articulate the real frustration that bridge users feel, and to ask the Minister explain openly where we are and what the Government are planning. We have learned over the years that information on the finances of the bridges is hard to come by. Mysterious debts spring up, and dates and figures regularly change. I hope that today offers us a chance to get some clarity. If anybody is in any doubt about the effect that the tolls continue to have on the economy, they need only hear what a business man said to me this week:
“the majority of business visitors comment within the first few minutes of a meeting about the toll, never positively, and people feel that it develops a negative impression of Wales—both from a business perspective, but also for those who may return as a potential tourist.”
If every meeting in the offices and factories of south Wales starts like that, something has to be done. It is time that the Government listened.
Paul Flynn (Newport West) (Lab)
Does my hon. Friend share my bitter disappointment that the hon. Member for Monmouth (David T. C. Davies), who demanded this week that the Severn bridges be nationalised, is not here to deliver his battle cry to build socialism in our time?
Jessica Morden
The hon. Member for Monmouth (David T. C. Davies), who is the Chair of the Welsh Affairs Committee, is away. I know that he would have been here otherwise. We note with interest his conversion to the cause.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I congratulate the hon. Lady on securing this extremely important debate. She mentioned the hidden costs; the UK Government dropped a bombshell on the Welsh Affairs Committee a year or so ago, when they said that there would be an outstanding debt at the end of the concessionary period, when the bridges returned to public ownership. There is no clarity about the sums involved or how long it will take to pay that debt. Does she share my concern that many of our constituents believe that the Treasury is using the bridges as a cash cow? Without clarity on the matter, the people of south Wales will feel that the Treasury is intent on fleecing motorists for the foreseeable future.
Jessica Morden
I strongly agree, and I will say much the same thing in my remarks. The Severn bridge tolls are the most expensive in the UK. It now costs £6.40 for a car to cross the bridge, £12.80 for a van, and £19.20 for a coach or lorry. By comparison, it costs just £1.50 for a car to cross the Humber bridge or £2 to use the Dartford crossing. However, the Dartford crossing is free to use between 10 pm and 6 am, and a scheme was recently launched under which local residents can pay just £20 a year to cross the bridge as often as they like. Those are both examples of the Government stepping in after local campaigns and helping long-suffering road users. If they can help businesses and residents in those areas, why can they not take decisive action to help in the case of the Severn bridges?
The tolls are a cost-of-living issue for my constituents, especially those who commute daily over the bridge, and the cost is a big burden for many businesses that operate out of south Wales. Constituents constantly tell me how hard they find it to absorb the increased tolls each year when pay is frozen, hours are reduced and the cost of living continues to rise. A constituent e-mailed me a few weeks ago to say:
“I’m employed in Yate in Bristol which means I have the daily trip across the bridge. While I had budgeted for the bridge cost, the actual cost of commuting along with the increase in the cost of living is currently causing me great concern. I try to ride an old motorcycle as much as I can”—
a motorcycle can cross for free—
“but I have found the wind protection on both bridges to be unsatisfactory, even in the summer, leading me to balance the cost of taking the car with the danger of taking the motorbike. Therefore, I would really like to take the car every day but the cost is just too high, and as you know the cost has now increased again.”
There is little choice. It costs about £2,400 to commute to Bristol by train using a standard adult ticket. Some of my constituents feel that the yearly toll increases have a knock-on effect on alternative modes of transport, such as the bus or the train, which further restricts their choices. The train service from Severn Tunnel Junction station is frequently full, and commuters are sometimes left standing on the platform at peak times. Those who commute between Bristol and Newport East have a really raw deal, which is a significant barrier to those looking for employment in Bristol. It is one thing to pay the toll once a week or so, but quite another to pay it every day, just to go to work. The local anger and frustration was demonstrated just a few days ago on St David’s day, when 120 local singers re-enacted the Rebecca riots—the men were dressed in traditional women’s clothing, apparently—on the M48 bridge. That shows just how strongly people feel about the matter.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I congratulate my hon. Friend on securing an excellent debate on a crucial issue, and I endorse all the points that she has made so far. She has mentioned individuals, but does she agree that we are also hearing increasingly from businesses? In particular, the Freight Transport Association, which has 700 members across Wales—many of them in my constituency—has talked about the impact that the tolls are having on the small margins in its members’ businesses.
Jessica Morden
I thank my hon. Friend for his intervention. I was going to praise the Freight Transport Association for its campaign, so I am glad that he mentioned it, and I very much agree with him. The Newport business man I mentioned earlier also told me about the negative impression of the toll:
“the toll has a major effect on recruitment and retention of staff in both directions. The northern fringes of Bristol across to Cardiff are all very commutable (M4 allowing) but having to build in excess of the £30 per week in to commuting costs prevents a lot of skills transfer between the areas. As an example, an employee of one of my clients told me that the bridge tolls have risen nearly 50% in her time commuting, whereas her salary has risen less than 15%.”
Businesses, particularly those in the haulage industry—I make special mention of the Freight Transport Association’s campaign—say that the tolls mean they bear a cost that their competitors across the bridge do not have to deal with. They have to add the cost on to their bottom line, which hits their competitiveness. Some companies pay in excess of £250,000 a year.
A Welsh Government study, of which I am sure the Minister is aware, shows that scrapping the tolls altogether could improve the economic output of south Wales by some £107 million. The report also shows that for a car journey—excluding commuters and business travel—the toll represents approximately 19% of the costs of a trip between Cardiff and Bristol. For light goods vehicles the figure is 23%, and for heavy goods vehicles it is 21%. The total cost of crossing the bridge for businesses and consumers, once VAT is taken into account, is in excess of £80 million a year in 2009 prices.
That is the impact of the tolls, which I am sure other Members will also articulate, but what can the Government do to help? Every year, when it is announced that the tolls will go up, bridge users ask for them to be frozen, and the Government say that they cannot be, because of the concession. However, the Government wrote off £150 million of the £330 million debt on the Humber bridge, so where there is a will, there is a way. The Government could step in and compensate the concessionaire; they just choose not to. Will the Minister address that point when he responds?
Last year, the Welsh Affairs Committee asked the previous Minister, the hon. Member for Lewes (Norman Baker), to look at a scheme for business—for example, a toll-free overnight period that would help businesses with their costs, as well as easing congestion. The current Minister has replied that the concession would have to be extended to pay for that. I will say it again: the Government stepped in to help with the Humber bridge; why not do so here? Will he clarify his remarks about the TAG concession being the limit of the concession that the Government can offer under European law? It would be helpful to have that explained in person.
Will the Minister also give us some answers on what the Government are planning, as regards where we go at the end of the concession, when the bridge returns to public ownership? The Treasury has done pretty well out of the Severn bridges in previous years. In 2000, the European Court of Justice ruled that VAT must be charged on private bridges. Between 2003 and 2012, the Government accrued an unexpected windfall of £121 million as a result of that change. Estimates from the Scrutiny Unit suggest that by the end of 2013, the figure is likely to be nearer to £135 million.
The Finance Act 2007 started the abolition of the industrial buildings allowance, meaning that the Government held on to an estimated £21.2 million, in 1989 prices, which they would never have expected. I understand that in today’s prices, that would be nearer to £40 million. Although the Government argue that they must continue tolling to recoup the £88 million in costs from unexpected repairs to the first bridge, they have actually accrued more than £160 million from both changes, which is more than enough to write off the existing debt. Will the Minister please update those figures and confirm how much to date the Government have received from VAT, and how much has been saved as a result of abolishing the industrial buildings allowance? The Department for Transport does not seem keen to answer my latest parliamentary question, even though we have had the figures before.
Will the Minister confirm that we are still looking at mid-2018—the last date we had—for the end of the concession? Previous Ministers have alluded to the fact that they would like to continue tolling for two years after the concession ends in order to recoup the Government debt that we have discussed previously—that was admitted to the Welsh Affairs Committee a couple of years ago. Is that still the case? Will the Government publish an updated full breakdown of the outstanding £88 million of debt and how and when it was incurred?
What is the current thinking on the level of the toll? The Minister has just written to the Select Committee to say that VAT would not be collected on a public bridge after the concession ends; will the tolls therefore reduce by at least that amount? If not, and the Government maintain the level of the toll, the Freight Transport Association has pointed out that businesses will no longer be able to reclaim VAT and so could effectively face a 20% hike in tolls. A specific answer on that possibility would be helpful, because we do not want businesses to end up in a worse position.
What serious work has been done on concessions for people who live locally? As I mentioned earlier, people who live locally can now cross the Dartford crossing an unlimited amount of times for £20 a year; that sounds extremely good to me. I hope that we do not hear, again, the stock answer to all such questions: “We have made no decisions about the tolling and do not know what the level will be. We are not there yet.” At the heart of the issue is a strong suspicion that the Government see the bridges as a cash cow, or even—as was suggested to me—a river of money. The concessionaire is in a win-win situation, as it can increase the tolls every year and be compensated for any changes. Meanwhile, the Government receive more than they expect through VAT and other income, while the poor old user has to pay more for longer.
In its 2010 report, the Welsh Affairs Committee recommended that, come 2018, tolls be reduced to a maintenance-only level, which would be very much supported by my constituents. We called for transparency on the financial arrangements of the bridges, and for discussions on ownership to be considered. We also asked the Government to consider off-peak rates for businesses, and local concession schemes for residents. Four years on, we have very little detail on anything. May we please have some answers today?
Mr Mark Harper (Forest of Dean) (Con)
It is a great pleasure to serve under your chairmanship, Mr Bone, and I am grateful to the hon. Member for Newport East (Jessica Morden) for securing the debate.
Anyone following this debate might wonder why I, as an English Member of Parliament, am here. It is worth reminding the House that the old Severn bridge is entirely in England—indeed, my constituency stretches halfway across the bridge and the constituency of the hon. Member for Thornbury and Yate (Steve Webb) stretches the other way. The new, second Severn crossing is of course half in England. My first plea to the Minister is for him to be clear that, because three quarters of the bridges are located in England, they must remain under the control of the United Kingdom Government so that the interests of both English and Welsh residents can be taken into account and balanced properly.
I know that the hon. Lady did not do so, but many in Wales have advocated that the bridges should be under the control of the Welsh Assembly Government. Given the fact that they are in England, and that my constituents are as affected as the hon. Lady’s, it would be wholly wrong for the bridges to be under the control of a Government over whom my constituents have no democratic influence. I make that plea strongly and hope that the Minister can confirm that that is the case.
Perhaps the shadow Minister could also confirm that that is the Labour party’s policy? I am guessing that it is, on the basis that when it was in power for 13 years it left the bridges under the control of the UK Government’s Department for Transport, but it would be helpful to know whether the UK Labour party’s position is the same as that of the Welsh Labour party. The latter wants to take control of the toll revenue. The First Minister has said that one option should be that the Welsh Government should take full control and play
“a central role in determining future arrangements and in accessing and utilising any future revenue streams for the benefit of the people of Wales.”
As I say, that would be quite wrong. The bridges are three quarters in England and any changes will affect English residents just as much as Welsh. The control and decision making about any future tolling regime, or lack thereof, should be taken by the UK Government.
I agree with the hon. Lady that our constituents, and businesses in our constituencies, would rather there were no tolls. I have had conversations with my constituents and said that in an ideal world it would be lovely to have had estuarial crossings financed wholly out of general taxation with no toll. However, I know the world and the realities of paying for things. I know that the previous Government were not great at balancing the books, but it is better to have the estuarial crossings with a toll than to have no toll but no crossings. Of course, all previous Governments decided that tolling was the way we paid for significant estuarial crossings.
I know that when the bridges return to the control of the United Kingdom Government in 2018—I agree with the hon. Lady that it would be helpful if the Minister could confirm what the latest expectation of the date is—some decisions will need to be made. I would like the Minister to think about a range of things. First, I agree with the hon. Lady that it would helpful to know whether the Government will stop levying VAT once the bridges revert to public ownership, which would mean £1 off the price of the toll.
Secondly, decisions have to be made about the future maintenance of both the second Severn crossing and the old Severn bridge that has the M48 running across it. The old bridge has significant maintenance costs. I think the hon. Lady alluded to—the Minister will be able to confirm this—the costs of maintaining corrosion resistance on the cabling on that bridge, which are significant. However, it is important to keep that bridge functioning and benefiting, particularly, my constituency, which benefits most from that bridge as opposed to the second Severn crossing. I am sure that the Minister will be able to say a little more about that when he responds to the hon. Lady’s question.
Thirdly—this is relevant to the question of future tolling on the Severn crossings—the Highways Agency and the Government will have to think about whether there should be future crossings of the River Severn. In my constituency, as one goes up from the existing tolled crossings, there is a crossing at the Over bridge, after the junction between the A40 and A48. That bridge is a significant traffic bottleneck, causing severe tailbacks to my constituents—both commuters going to and from work and businesses in the area. Some short-term solutions have been proposed for the end of this year and for 2015, but the only long-term solution is a future crossing somewhere south of that bridge and north of the existing tolled crossings.
Neil Carmichael (Stroud) (Con)
I have set up a commission focusing on economic growth on my side of the Severn. One of the options we should consider is a new bridge. Does my hon. Friend agree that any decisions about tolling in the future should take into account the need for a new bridge somewhere along the Severn?
Mr Harper
I agree, for this reason—I will be clear to the Minister—in an ideal world, I would like another crossing over the Severn. I would prefer that to be paid for out of general taxation and not require either tolling on that crossing or continued tolling on the existing crossings. However, I do not want the Minister to rule out, at this stage, considering whether at least some of the future tolling revenue should be used to fund a third crossing. I think the hon. Member for Newport East was tempting him to rule that out; she was tempting him to look forward something like four to four and a half years, to make some decisions about a future tolling regime on the crossings today and then to announce them to the House.
If I am given the choice of a crossing, I will take the crossing. However, if I am told that I cannot have a crossing for 20 years because it is unaffordable, but I could have one in a year or two if we were able to use some toll revenue, that is a debate I want to have with my constituents. I want to see whether that would be a good trade-off that my constituents might want to undertake—whether it can be balanced with the benefits to businesses, jobs, economic activity and relieving congestion. I at least want the Minister not to rule that out.
I have written to the Highways Agency, asking it to look at some options for further crossings and to set out the future useful life of the second Severn crossing and the old Severn bridge, to see how long they are likely to last.
Paul Flynn
Is the hon. Gentleman suggesting that the money from tolls on the bridge that he is suggesting should be tied in with the Severn bridges as they are now, which would guarantee tolls in perpetuity, but provide little service for the people of south Wales?
Mr Harper
All I am suggesting at this stage is that the Minister does not rule out considering that in the future. Of course, the tolls would not be in perpetuity, but I do not want to rule them out. The hon. Gentleman needs to reflect on the fact that the bridges do not affect just Wales. The bridges are three quarters in England; as I said, the old Severn bridge is wholly located in England, and it affects my constituents in England just as much as it affects his constituents in Wales. It is important for the House to remember that the debate about the Severn crossings and the tolling regime is not just a Welsh issue, but an English one too; and that it does not affect just south Wales, but, as the hon. Member for Ceredigion (Mr Williams) mentioned, the rest of Wales. This is a wider question, and we need to look at the economic impact on Wales and on England—in Newport West, Newport East and my constituency—and make a balanced judgment.
I was clear in my remarks: I would prefer another crossing over the River Severn that does not have tolling and that does not require tolling on existing crossings. However, I am realistic enough to know that, given the state of the public finances, caused largely by the Government whom the hon. Member for Newport West (Paul Flynn) supported, difficult decisions have to be made. There is a debate to be had about whether we can have the infrastructure sooner by funding some of it from tolling. That debate is worth having, and I want to put it on the table. I am asking the Minister not to make decisions today for a position four and a half years in the future and rule things out that we may have cause to regret. That is all I am asking him to do. I have asked the Highways Agency to undertake some option appraisals, so that we can have a sensible and balanced debate in the future.
Jessica Morden
It will come as no surprise to the hon. Gentleman that my priority is for the tolls to come down for my constituents and businesses post-2018, when the concession ends. However, does he think that the current level of tolling is acceptable?
Mr Harper
The debate I always have with my constituents is simply to remind them that both Severn crossings had to be constructed and paid for, and that the toll revenue simply repays the cost of providing and operating the crossings. There is a trade-off: if we did not increase the toll each year—of course I understand why that is unpopular; I would prefer it not to go up as well—we would extend the concession period. That is a trade-off the Government have to make. The option would be open to the Government, as it was—I remind the hon. Lady—to the previous Government, whom she supported. For 13 years, they did not make any amendments—by choice—to the tolling regime. They did not do any of the things that she is suggesting, just to put the issue into context.
While it is tempting, we must be honest with our constituents that things have to be paid for, and they can be paid for in only one of two ways, one of which is for the cost to fall on the general taxpayer. Although the public finances have been hugely improved by the difficult decisions taken by the Government, they are in a state because we inherited them from the previous Government. There is no magic money tree to pay for the toll revenue. If we sweep the toll revenue away—I know how tempting that would be—either cuts will have to be made elsewhere, or taxes will have to rise. Politicians owe it to our constituents to be honest and frank with them. There is no magic money tree, and the bills have to be paid.
Jessica Morden
If we are to be honest with our constituents, does the hon. Gentleman accept that we should point out that the Government have now benefited by more than twice the debt on the bridge from unexpected tax income as a result of changes related to the bridges? The Government have actually done well in terms of VAT and other tax changes.
Mr Harper
That is a perfectly reasonable point, which of course has to be balanced—I am sure the Minister will set this out—against some of the costs. I am clear: I want the tolls to come down; they can certainly come down by the level of VAT. I certainly think that they can come down. All I am asking is that at this point the Minister does not suggest that the tolls are swept away, if the cost of removing them would mean that a future crossing over the River Severn either never happened or only happened at some far distant point in the future. I am only asking him not to make that decision today, given that we have not properly considered the arguments.
Mr Harper
Let me just complete my point, and then I may take another intervention from the hon. Gentleman shortly.
I just want to respond to a point that the hon. Lady raised. I am sure that she did not do it deliberately, but she did not set out accurately for the House what the Welsh Affairs Committee said. I think that she said—I will take an intervention from her if I have misquoted her—that the Committee argued that the toll should be reduced to a level of £1.50, which would effectively just pay for maintenance. The Committee did not say that. It said that, if the toll was reduced to that level, that would allow
“the crossings to remain self-financing.”
It also said that
“the Government should seek to reduce the level of the toll at the earliest opportunity.”
However, it did not say that the Government should reduce the level to £1.50, because—this relates to my point about a future crossing—it said:
“We recognise…that at this level no “sinking fund” would be accumulated towards any future replacement of either bridge.”
The Committee also said, and I agree with the hon. Lady about this point:
“The Government must not be tempted to use the crossings as a ‘cash cow’.”
I agree with that, which is why if there is any future tolling over and above the level required for maintenance, the Government must be clear about its purpose. My view is that it must be used for infrastructure, which would benefit the hon. Lady’s constituents, my constituents and the economy of the UK. That would be the only scenario where future tolling, other than that required to pay for maintenance, would be acceptable. I agree with the hon. Lady about that, but I do not want the Minister to close any doors at this point.
Paul Flynn
The question that I asked the hon. Gentleman, which I am afraid he has not answered, was whether he foresees a repetition of what happened with the Severn Bridges Act 1992, which was that when the second Severn crossing was built, the two bridges were treated as one entity for financial purposes. Is he now suggesting that we should have another bridge that goes from one thinly populated part of England to another thinly populated part of England, which then becomes a financial burden on the people in south Wales, because those people will be paying tolls on it to use the main crossing from Wales to England? Can he please make it clear that he is asking for something that is entirely freestanding from one part of his constituency to another?
Mr Harper
At the moment, I have asked the Highways Agency to carry out some option appraisal work, to examine what options there might be for a further crossing over the River Severn, somewhere between the existing crossing at Over and the old Severn bridge. I asked because that detailed option appraisal work has not been done, so I have no idea where there may be sensible routes to cross the river, how much they might cost and what kind of traffic flows might be diverted. It is worth saying to the hon. Gentleman that, of course, there are significant traffic flows through my constituency that use my local roads, as people do not use the Severn crossings they ought to use because of the tolling. We have to look at all these issues in the round and make a proper judgment, which is another reason why the bridges need to stay under the control of the UK Government, so that different issues can be balanced. I accept that the hon. Gentleman and the hon. Lady will be completely focused on south Wales. Of course they will be; that is the part of the country that they represent. That is absolutely right, but I am focused on representing my constituents in England, and I want to ensure that all these judgments are properly weighed up. At this stage, I am not asking the Government to commit to tolling or to building another crossing. All I am asking at this stage is for the Highways Agency to respond to my request to consider the options, and for the Minister not to shut off future debate about what the tolling regime should be.
I have been quite clear—in an ideal world, I would like there to be no tolls on the bridges, or perhaps only those to cover maintenance. However, the fact is that if we want more infrastructure, it has to be paid for, either by general taxation, which is difficult given the difficult financial position that we inherited, or by the users of that infrastructure, or by a combination of the two. I simply want to ensure that we can have an open and frank debate in the future, and that we do not simply shut off any avenues. I think the hon. Lady was simply tempting the Minister to look forward four, four and a half years—or however long he will confirm to us—and make final decisions today that will shut off some of the opportunities for debate and for future infrastructure growth. All I am asking him to do is to keep those options open, so that we can have that debate, properly balance the needs of my constituents and his constituents, and the Government who are elected at the next election can make those sensible judgments. That is all I am asking for, and I hope that the Minister can confirm that that will be his approach.
Paul Murphy (Torfaen) (Lab)
As I am so old, I remember the opening of the first Severn bridge in 1966. What it most certainly was not was a bridge from England to the Forest of Dean. It was a bridge from England to Wales, and it was by pure technical and geographical chance that the engineers decided to put it at the tip of the constituency of the hon. Member for Forest of Dean (Mr Harper). Similarly, when the second Severn bridge crossing was built, I was on the Standing Committee of this House that dealt with it. It was the then Secretary of State for Wales, Peter Walker, who decided that it was the thing to do. The vast majority of the traffic on both bridges is due to people wanting to go between England and Wales, so I do not agree for one second with the hon. Member for Forest of Dean that either a third Severn crossing is necessary, or that tolls would have to be maintained after the concession ends to pay for a third crossing. The original Severn crossing is obviously not used as much as the second crossing, although I use it quite a bit, so heaven only knows how little traffic there would be on a third. There is no agreement whatever among Welsh MPs—or, I would have thought, English ones—that the bridges are anything other than a lifeline between England and Wales.
The crossings have brought great benefits to Wales, as they have to England; there is no question about that. However, there are difficulties, which my hon. Friend the Member for Newport East (Jessica Morden) referred to in her fine speech, because of the haulage industry and tourists. I agree with the hon. Member for Forest of Dean that there are plenty of people who wish to travel to the Wye valley, the Forest of Dean, other parts of south-east Wales, and to the west country on the other side of the bridge, for tourism reasons. They are obviously caught heavily by the high tolls on the bridge, and it is about time those tolls ended.
The question is: when will that happen? In 2010 or something like that—I cannot quite remember—we were told, I think here in Westminster Hall, by the then Minister that 2017 was when the concession was likely to end. We, and the Welsh Affairs Committee, have been told that it is probable that the concession will end in 2018. However, we have been further told—this is a new one—that it could well go on until the 2020s, because the Department for Transport has found that it is apparently owed some £112 million, because it spent public money on, and in debt over, a bridge that was privately owned.
I am a bit sceptical about all that, to be perfectly honest. I think that all these sudden discoveries in the DFT are excuses to extend the franchise and maintain the tolls for as long as possible. I am hugely sceptical, and I fear I have to disagree with the hon. Member for Forest of Dean—for whom I have a great deal of time, although we do not seem to agree on this subject—on the issue of who controls the bridge; it is a bit more complicated than he suggested. Yes indeed, three of the four entrances, as it were, to the bridges are in England, but then two would be anyway—would they not?—because people on one side have to travel to the other side. I have already explained that the first Severn bridge is an aberration, in that it goes into a bit of the Forest of Dean, near Chepstow. Of course, the second Severn crossing completely goes into the terrain of the Welsh Assembly. The Welsh Government’s interest in this matter therefore cannot be easily dismissed. About 25%, if not more, of all traffic that enters Wales from England goes across those bridges.
Jonathan Edwards
The transport spokesperson for the Tories in the Assembly, Mr Byron Davies, said this time last year:
“Devolution of the crossings—and future use of the tolls—has the real potential to help hard-pressed motorists, provide significant investment in Welsh infrastructure and encourage economic growth”.
That is the sort of argument that I made in one of my first speeches in this place in 2010. Does the right hon. Gentleman think that it is imperative that all parties in Wales speak with one voice, rather than the Conservatives saying one thing in Wales and saying something different here in Westminster? Of course, the same applies to the other parties.
Paul Murphy
I agree. That follows a pattern over the past few weeks, with a huge disagreement on taxation, but that is another issue. It would be worth while the hon. Member for Forest of Dean getting in his car one day, going on the M4 to Cardiff Bay, and chatting with the transport spokesperson for his party in Cardiff.
Mr Harper
I do not disagree with the right hon. Gentleman that the Welsh Assembly and Government have an interest in this. I agree with the conclusion of the Welsh Affairs Committee, chaired by my hon. Friend the Member for Monmouth (David T. C. Davies), that the British Government should discuss the matter and have a proper conversation, because it is important. My point was that decisions have to be taken by a Government accountable to people in England and Wales. The problem with decisions about the bridge tolls being wholly under the control of the Welsh Assembly is that my constituents have no democratic input into that Government, who will make decisions solely based on interests in Wales. The United Kingdom Government can consider the interests of the whole UK, and people living in both England and Wales. That is why the decision making should stay there.
Paul Murphy
Perhaps there should be joint decision making, or some arrangement could be made. Yes, of course, the bridge is hugely important to the people of the Forest of Dean and elsewhere in Gloucestershire, but that was not the purpose of building the bridges. I repeat that they were not built to go to the Forest of Dean or Gloucester; they were built to ensure that Wales and England were connected, to avoid the terrible journey through the Forest of Dean, around Gloucestershire and on to the A4.
Stephen Doughty
My right hon. Friend makes a crucial point. Are the bridges not also a crucial European transport road link to the Republic of Ireland? There are benefits from and consequences for that crucial trade link. Access to Cardiff airport is also important and needs to be considered.
Paul Murphy
Indeed. That is why, in a post-devolution world, the Welsh Government have a huge interest in this matter. I hope that the Minister tells the House that he has been in conversation with his colleagues in Cardiff.
Finally, let me mention what happens to tolls after the concession finishes. Yes, of course, VAT means that there will be money available anyway, and what is collected in VAT should at least go to ensuring that the toll is lowered, but there is more to it than that. Lying behind everything in Government is the dead hand of the Treasury. I spent a decade having to deal with the Treasury as a Minister. Anybody who has been a Minister knows that it wants to get as much money as possible—that is its job—but it is the job of Ministers to obstruct it as far as they can, to ensure that the people can occasionally benefit from a concession.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
If I may help the right hon. Gentleman, he gave a figure of £120 million outstanding at the end of the concession. The projection that I have is of £88 million at the end of the concession in 2018. It will take one or two years to recover this money. Under the terms of the Severn Bridges Act 1992, an update will be given to the Welsh Affairs Committee in April on the accounts of the previous year.
Paul Murphy
The Minister will, of course, have greater knowledge than me of the figures from his Department, but whether or not it is £88 million, they would like it to be £112 million, and probably a bit more than that. Ultimately, the money that is there to pay the concessioner, which is going into the pockets of the Severn crossing company, could eventually be made available to reduce the tolls on the bridges and save people who use it from being burdened. My fear is that there is a huge temptation, whether in the Department for Transport or the Treasury, to retain that money and simply put it back into the public coffers. That would be deeply wrong.
The hon. Member for Forest of Dean made a valid point when he said that the money could be used for infrastructure. However, I disagree, because there is no need for a third Severn crossing. There may be a case for infrastructure around the bridges, but that would be a relatively small amount in general terms. No, the people of Wales and England—and the people of other parts of Europe who use our bridges—should be given the opportunity to have lower tolls when the concession ends. Although the Minister cannot commit himself to that today, I hope that he does not dismiss that outright as the aspiration of all of us.
Nia Griffith (Llanelli) (Lab)
I am delighted to have the opportunity to serve under you, Mr Bone, and to speak in this debate. I congratulate my hon. Friend the Member for Newport East (Jessica Morden) on securing this important debate and on continuing to pursue this issue, which we come back to time and again because it is so vital to the south Wales economy—and, indeed, as the hon. Member for Ceredigion (Mr Williams) said, to the wider Welsh economy.
I thank the Minister for the meeting that he accorded members of the Welsh Affairs Committee on 10 February, but significant questions remain. Hon. Members know that in July 2013 we met the Minister’s predecessor, the Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond), as a result of which there was the hint of a possibility of further concessions for freight.
Owens Logistics is a large haulage company in my constituency with some 500 employees. It has a massive bill, in the thousands of pounds, for tolls on the Severn bridge, so this issue is important for it. It worries that it will not be in a position to compete with companies on the other side of the bridge that do not have such costs. First and foremost, it frequently lobbies on fuel and fuel duty. It has depots further east than Llanelli, in Aberavon and in the constituency of my hon. Friend the Member for Newport East, because that can help with the amount of travelling. However, when it is competing for business against firms based in England, obviously the bridge tolls are important. Later, I will mention that company’s wish to plan for the future.
Nick Smith (Blaenau Gwent) (Lab)
I thank my hon. Friend for giving way, not least because Owens comes up to Blaenau Gwent, in the heads of the valleys area. I asked it before this debate exactly how much tolls cost. Just to inform my hon. Friend’s contribution, it spends £250,000 a month on bridge tolls. That is a huge cost for a successful medium to large-sized business in south Wales.
Nia Griffith
Yes, indeed. Of course, many other firms in Wales are affected by the tolls on the bridge, too. Whether it is a small electrical contractor, a plumbing business wanting to serve customers on both sides, or a large haulage firm, those businesses are at a disadvantage compared with competitors who do not have to use the bridges regularly.
Mr Goodwill
To clarify, on discounts for frequent users in heavy goods vehicles, the Eurovignette directive imposes a 13% cap on any discount for HGVs, and the discount for HGVs on the Severn is near the maximum allowed under that directive. I do not need to mention that hauliers reclaim the VAT on these charges.
Nia Griffith
I was about to come on to the issue that the Minister mentions. He kindly sent me a letter containing that information this week. What I would ask is: how close are we to that 13% limit? Is there any wriggle room at all, and would it be possible to open a discussion on further concessions? I think he said in our meeting that that would be likely only if we had a tit for tat, and traded such concessions off against others. If anything like that were to be suggested, the freight companies would need to be closely involved and see the detail, because they would not want to end up paying much more in the daytime to get a night-time concession if their bills ended up being higher. They are still interested, however; they have said that they would be interested in looking at concessions, even if that means that the tolls continue a little longer beyond 2018.
I question the suggestion that EU law means that freight and ordinary car use charges cannot be varied, and whether that is a competition issue. If all freight lorries use the bridge no matter where they come from, it would not be a matter of having more favourable laws for British-based lorries than for Dutch or French-based lorries. It would be helpful to have a little more information on that.
Mr Goodwill
The current 10% discount, which is offered by way of the season TAG, is based on 22 trips a month; that is quite close to the 13% maximum.
Nia Griffith
Perhaps I could ask the Minister to look at that remaining 3% and see if there is any wriggle room at all, because when we are talking about paying the huge amounts mentioned by my hon. Friend the Member for Blaenau Gwent (Nick Smith), even 3% would make a considerable difference.
VAT is a massively important question. The Minister confirmed in his letter to me that VAT comes off the charge when the crossing is managed by a public, rather than private, company. We would be delighted if that meant an automatic 20% decrease. However, if the rates were to be kept the same, that would be a massive penalty for all the business users who currently reclaim the VAT, because effectively they would have to pay 20% more and would have no opportunity for clawback.
My right hon. Friend the Member for Torfaen (Paul Murphy) mentioned the figure of £112 million. Mercifully, the letter from the Minister says that that has reduced to £88 million. Of course, we on the Welsh Affairs Committee would be pleased if the Department for Transport were to revise that figure downward again. There was an issue about how that was calculated in the first place, and we want to ensure that we get up-to-date information about that. Although the Minister previously said that 2018 was a long way away, firms such as Owens are investing long-term, looking eight to 10 years ahead, and they have to make decisions. The more certainty such firms can have, the better.
The Minister may think that we will have another Government in place in 2018—some of us hope that we will—but I am sure that every Department plans ahead and thinks about what it would do. The Department for Transport is in a position to make the necessary assessment and get hold of the statistics, so that we can have more information about the £88 million being paid back, about when there will be an opportunity for the bridge to be debt-free and just have a maintenance charge, and about what would be done with that maintenance charge.
I am a little concerned by the hon. Member for Forest of Dean (Mr Harper) saying that he would like a levy on the existing bridges—in other words, on people coming into Wales—to fund a bridge further up the river. I much prefer his first suggestion, which was that such a bridge should be funded through general taxation spread across the UK, to the suggestion that we penalise one particular group of users. One of the main bones of contention about the bridge all along has been that such charges are unusual in this country; it is not like in some countries on the continent where most of the motorway network is tolled. That is why there is such great resentment of the toll, and the level of it, in the first place.
We certainly want a little more clarification of what will happen in the future. I would be grateful if the Minister gave us any indication of where we are going, and kept the Welsh Affairs Committee fully updated with any further information.
Mr Peter Bone (in the Chair)
Order. It might be useful for Members to know that I intend for the wind-ups to start no later than 3.40 pm.
Paul Flynn (Newport West) (Lab)
When the first bridge opened, Harri Webb wrote a telling poem, recalling the pressure from Wales over many decades to build the bridge. However, he made the observation:
“Two lands at last connected,
Across the Severn wide,
But all the tolls collected,
Upon the English side.”
Things have been corrected since then, but the hon. Member for Forest of Dean (Mr Harper) has released another hare that is running, and the implied threat of tolls in perpetuity will cause a great deal of interest in Wales. I believe he has in mind a repetition of what happened when the second bridge went up: the pooling of finances to build bridges into a great lump, with all the complexities of financing that, and added to the total bill and debt—if that still exists—would be a sum of money for a third crossing from somewhere in Gloucestershire to somewhere else in Gloucestershire. Those are thinly populated areas in which I doubt there is a strong case for putting in another bridge. If that is seen to be a further burden on the main artery out of Wales, that would be deeply resented, so we will be interested to see if that is pursued.
Mr Harper
I have two points. First, many people going into Wales do not use the bridges, but come through my constituency. That is an argument for reducing the tolls, as the bridges are not the only crossing. Secondly, I remind the hon. Gentleman, however, that, as I think the hon. Member for Llanelli (Nia Griffith) touched on, the old Severn bridge goes from England to England and it is used by people from England and Wales, not just people in Wales. Therefore, we need to take a balanced view about the impact. The crossing at Over that the hon. Gentleman referred to suffers from significant congestion. If he thinks that the area is thinly populated, I suggest that he goes there on a Monday morning at about 7 am to sit in a queue of traffic. He will see that it is not as thinly populated as he might think.
Paul Flynn
Like my right hon. Friend the Member for Torfaen (Paul Murphy), I am old enough to remember not only the opening of the Severn bridge, but the terrifying and unforgettable experience of going across on a ferry: there was roughly one inch between the car and the water on one side and about half an inch to the next car on the other side as they packed the cars tightly on to the ferry. To escape that nightmare, many made journeys around Gloucester. As he said, the congestion was pretty bad at that time. The hon. Gentleman has to make that case, but it should be separate from the Severn bridges, which are not only the main roads from Wales to England, but a main European highway. For those travelling from the continent right across to Ireland, that is the recommended route.
Unfortunately, we have had this long period of a perceived barrier in getting into Wales. It is a psychological barrier, but it is powerful. People see the crossing as an obstacle. They would say, “You mustn’t go that far, or we’ll be paying.” That barrier is perceived to be a great deal more than the actual cost. The toll is high enough, but if the total cost of running a car is added up—insurance, petrol and all the rest—it is not a huge percentage of that, except to those who travel across the bridge daily. The feeling that, somehow, this is an obstacle in the way of going into Wales has inhibited development and progress in Wales for many years.
I agree entirely with my right hon. Friend the Member for Torfaen that such costs appear to be created by accountants and it is difficult to argue against those. I can recall one time in the House when a courageous, or foolhardy, Conservative Member for Vale of Glamorgan argued for an increase in tolls. The toll was some £3.75, and he argued that it would speed the traffic through the bridge if the toll went up to £4, but that view was not universally supported.
We feel that this is the Roy Hughes memorial debate, because our late comrade mentioned the Severn crossings on more than one occasion, and probably on more than 1,000 occasions, in this House. He became very strongly identified with the bridges through his persistent, long campaigning. If he were alive today, he would be horrified that we are now faced with a new debt. The users of the bridges should be treated in the same way as users of other parts of the motorway network in the rest of the United Kingdom. They should not have to pay this unjustified toll in perpetuity, as it now seems to be. If the £88 million is paid off, the accountants in the Treasury would probably come up with some other pretext for charging even more and keeping the charges going.
Richard Burden (Birmingham, Northfield) (Lab)
I congratulate my hon. Friend the Member for Newport East (Jessica Morden) on securing this important debate, which will now always be known as the Roy Hughes memorial debate. I also congratulate the no fewer than eight hon. Members who have participated either through interventions or speeches. In the last speech, my hon. Friend the Member for Newport West (Paul Flynn) even treated us to some Harri Webb poetry.
The Severn crossings clearly concern hon. Members on both sides of the House because they are an important transport link between England and Wales that play a vital role for businesses and the economy, that help people to keep in touch with friends and family and that keep our two countries connected. It is therefore unfortunate that the cost and experience of using the crossings have been a source of frustration for so long.
My hon. Friend the Member for Newport East has raised the Severn crossings previously. For many years she has been pressing for reform of what, in her previous debate in 2010, she called an “expensive, inconvenient and inflexible” system. The issues that she has raised today are very much the same.
I will say something about England later in my speech, but the crossings are a key link in the transport and economic infrastructure of Wales, and they are essential to the Welsh economy and its ability to grow. Approximately 25 million vehicles use the crossings each year. Obviously, nobody wants to pay tolls, but the benefits of the crossings are clear and include increased access to markets, suppliers and consumers, and quicker journey times. It is important, however, that the toll price reflects a fair balance between the cost of better infrastructure and the benefits to the people who use it. This debate has made it clear that the cost of the Severn crossings does not appear to be fair, and it has not appeared to be fair for some time. Road users who rely on the crossings have been hit hard by annual increases and, as my hon. Friend said, an inflexible and old-fashioned payment system.
There is an impact on people. First, the tolls are the highest of any crossing on the strategic road network. As we have heard, the current prices are £6.40 for a car, £12.80 for a light goods vehicle and £19.20 for a heavy goods vehicle. On the Humber bridge, the toll for a car is just £1.50 and the toll for an HGV is £12.
Mr Goodwill
The hon. Gentleman must bear in mind that the toll is free in the other direction on the Severn crossings, so the prices are not comparable in that respect.
Richard Burden
If we do the sums, the point is still made. Whether or not the toll is free one way, the price is clearly still higher. Those amounts are not theoretical. We are living through the worst cost-of-living crisis in a generation and they hit people hard. A lot of attention has been paid to energy costs, fuel bills, food bills and so on, but the cost of transport is a large chunk of people’s household budgets. That has been made worse for domestic users of private motor cars because they have also been hit by the VAT increase to 20%, which has hit the price of fuel, too.
It would be lovely to say that the tolls should just be scrapped, but, as we have heard, that is not necessarily practical. There is a strong case, however, for considering whether there is a way to make the tolls fairer. It is possible to consider a cap on annual increases, which is a model we use for other modes of transport. There might be a way to take regular and local users into account, for which there are precedents. From March 2014, local people eligible for the resident discount on the Dartford crossing will be able to make unlimited trips over the crossing for just £20 a year, thereby ensuring that that toll on the strategic road network does not hinder local mobility.
Mr Harper
The hon. Gentleman makes a good point on the local discount, and my constituents have raised the Dartford issue. The Minister might want to address what “local” means. My understanding is that, for the Dartford crossing, it is a very local and tightly drawn boundary. If we had something like that on the Severn crossings, would “local” include my constituents? Would it include some of my constituents and some of the constituents of the hon. Member for Newport East (Jessica Morden)? How widely would the boundary be drawn? My view is that if we are to have such a boundary, the right people to make the decision would be the UK Government, who could take into account both sides of the national boundary, rather than just the Welsh side.
Richard Burden
I will address the UK Government and the Welsh Government in a while, but the substance of the hon. Gentleman’s point is correct. Working out the meaning of “local” is complex. I am simply saying that the Government should not close the door. They should consider it and see what is feasible, and they need to do so relatively quickly because decisions have to be made in the near future. The situation has gone on long enough.
Jessica Morden
That is the point. We do not know whether the Government are even considering the measure. We want clarity.
Richard Burden
My hon. Friend makes her point well.
I have principally referred to the impact on private transport and cars, but the tolls also significantly affect local businesses. We have heard that many believe the cost of the crossings to be a tax either on Wales or on people trading with Wales that restricts economic activity between our two countries. Even if that is only a perception, it is a problem for confidence. As we have all said, the crossings are undoubtedly an essential link between our two economies, so it is fair to welcome the Welsh Assembly’s analysis of tolling, which provides important evidence on the economic impacts of the Severn tolls. The picture is complex, as has just been underlined by the hon. Member for Forest of Dean (Mr Harper), but the research shows that the tolls have a severe impact on small businesses, particularly those operating in the transport and logistics sectors across the border. My hon. Friend puts the figure for some businesses at up to £250,000 a year, which is a major burden on a small business. Indeed, it is a pretty significant burden on a business that is not small, too.
There is also an impact on tourism, particularly on those making short trips. When asked if they would expect to make more trips to Wales by car if the Severn tolls were removed, apparently 22% of people surveyed in south-west England said that, yes, they would visit Wales more often in the next year, which is a significant statistic.
In light of those serious concerns for small businesses, tourism and wider economic growth, we would all appreciate the Minister’s assessment of the social and economic impact of the Severn crossings. Also, we would all appreciate knowing the Government’s response to the evidence produced by the Welsh Assembly, which provides food for thought and, hopefully, food for Government action.
I have mainly referred to Wales, and the Severn tolls are not just an issue for south Wales. They are a whole of Wales issue that affects tourism and businesses across the country. The crossings also affect England, particularly south-west England, and businesses and people travelling from further afield. I am pleased that the hon. Member for Forest of Dean made his point on that today. The issue is important and has been raised with me by Steve Parry-Hearn, who, as the Labour candidate for the Forest of Dean, is after the hon. Gentleman’s job. Mr Parry-Hearn has clearly outlined to me the impact of tolls on people in that area. Small and medium-sized enterprises are hit hard by the cost of the crossing, either directly from the tolls or indirectly from increased traffic as operators attempt to avoid bridge tolls by using other roads. He is campaigning against the level of the charges, which he says are having a
“detrimental impact on the lives of working families, businesses and on tourism across the Forest of Dean.”
My hon. Friend for Newport East referred to a protest on the Severn bridge at the weekend, coinciding with St David’s day, which showed the level of local anger. I must admit that I was not aware until today of the particular attire worn on that protest. I hope the Minister listens to those voices and considers discounts for regular business use or some kind of flexible pricing structure. Off-peak pricing for businesses has been suggested, which could provide an economic boost, cut congestion and mitigate the environmental impacts of heavy traffic at rush hours. These things are complex, but I would appreciate the Minister indicating whether he is prepared to consider such options.
We have heard that it is not only the costs of the crossing that are such a big issue, but the lack of convenience. There is no doubt that the Severn crossing has provided a poor service to users. It is absolutely astonishing that a modern card payment system was not introduced until 2011. I note the efforts of my right hon. Friend the Member for Tooting (Sadiq Khan) in his previous role as Transport Minister in helping to make that finally happen. It was overdue. Even with that, the Severn crossings are still playing catch up. I understand that the system still requires road users to enter their PIN number into a handheld device, which takes time. That means that cash is still encouraged for quicker transit.
The technology exists for easier and more convenient methods. Remote payments are a possibility and free-flow technology is set to be implemented at the Dartford crossing later this year. Will the Minister confirm the Government’s plans for further modernising payment and usage at the Severn crossing? Can some kind of free-flow technology option be considered? Will he consider the recommendations of the recent Driver and Vehicle Licensing Agency review, which called for the agency in Swansea to become a digital centre of excellence? That could be a real opportunity to make online payments and improved digital services a reality on the Severn.
On questions for the future, “What next?” will be important for whichever Government is in power after 2015. I have talked about reforms to price and payment that could bring big benefits for users, but those do not on their own fundamentally address the main point, which is that the concession will soon end. I understand that the estimated end date has slipped again, because of the VAT rise and the costs of introducing card payment. When the date finally does arrive, the crossing will revert to the control of the Secretary of State and into public ownership. The annual cost of maintaining and operating the toll will only be a fraction—20%, I understand—of the current net revenue made from the crossing, which was estimated to be £87 million in 2012-13.
As we have heard, the Government will be left with an estimated debt of some £88 million due to extra operating and maintenance costs. My hon. Friend has asked a perfectly reasonable question. As well as confirmation of that figure of £88 million, it would be useful to have a breakdown of it. That would inform decisions about what is fair for the future. In the fairly near future, a decision must be made about how the debt will be recovered and about future toll charges. That is why it is important that the Government work in partnership with the Welsh Government and the Welsh Assembly to sort these things out. They should also work with Severn Crossings plc, while it is the concessionaire, to prepare for that without losing much more time.
Last week, the Department for Transport launched a consultation to simplify the procedures for toll increases at local statutory tolled bridges, tunnels, lifts and crossings. If the Minister is considering how best to regulate the price of tolls across the UK, will he set out a clear strategy for the future of the Severn tolls at the same time? The consultation creates an opportunity to do that, and I hope he will seize it.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
It is a pleasure, as always, to serve under your chairmanship, Mr Bone. First, I congratulate the hon. Member for Newport East (Jessica Morden) on securing this debate on the Severn crossings. Before I discuss the tolls on the Severn crossings, I make the point that it has been the policy of successive Governments since 1945 that crossings on estuaries should be paid for by the user rather than by the taxpayer. Successive Governments have taken the view that tolls on all such crossings are justified because the user benefits from the exceptional savings in time and money that those expensive facilities make possible.
It might be helpful if I give a brief outline of the history of the Severn crossings, some of which is relevant to the issues that have been raised. The first Severn bridge was opened by the Queen in September 1966, providing a direct link from the M4 motorway into Wales, with a toll in place for use of the bridge to pay for the cost of construction. In 1986, the Government said that a second bridge would be constructed. In July 1988, they announced that the private sector would be given an opportunity to participate in the scheme, and in April 1990 they announced the selection of the bid led by John Laing Ltd with GTM-Entrepose to design, build and finance the second crossing. That consortium was also to take over the maintenance and operation of the existing Severn bridge.
In October of that year, the concession agreement between the Government and Severn River Crossing plc was formally signed. In February 1992, the Severn Bridges Bill received Royal Assent. The concession agreement was enshrined in an Act of Parliament and commenced in April 1992. Severn River Crossing plc then took over both the operation and maintenance of the present bridge and the construction of the new bridge. The concession agreement was structured so that certain risks were borne by the Government, rather than by Severn River Crossing plc, for example, costs relating to latent defects on the first Severn crossing. By bearing those risks, the Government could finance the construction of the second crossing and maintenance of the crossings at a much lower cost. If those risks had been included in the concession arrangement, the tolls would have needed to be higher or the end of the concession would have been longer than under the current arrangement.
Construction of the new bridge started in September 1992, and the new crossing was opened on 5 June 1996 by the Prince of Wales, almost 30 years after the opening of the first bridge. As part of the concession agreement, Severn River Crossing plc is authorised to collect tolls to meet its financial obligations. The tolls repay the construction and financing costs of the second Severn crossing, the remaining debt from the first existing crossing from 1992 and pay for the maintenance and operation of both crossings. It is worth stressing that that is the company’s only source of income. The concession period is limited to a maximum of 30 years. The actual end date will be achieved when the concessionaire has collected a fixed sum of money from tolls, which is £1.029 billion at 1989 prices.
The Severn Bridges Act 1992 applies a clear structure to the tolls to give the concessionaire confidence that it will be able to meet its liabilities and manage the risks that it accepted through the concession agreement. The toll levels were set for three categories of vehicles at the time of tender and are embodied in the 1992 Act. The Act sets out the tolling arrangements and the basis for yearly increases in the toll rates. Toll rates are fixed in real terms. The new rates are introduced on 1 January each year and are increased in line with the retail prices index using a formula, and rounded to the nearest 10 pence.
The shadow Minister, the hon. Member for Birmingham, Northfield (Richard Burden), asked about the possibility of introducing free-flow tolling on the Severn crossing, as is to be introduced on the Dartford crossings, but that depends on decisions on future charging arrangements that are yet to be taken. For example, it would be imprudent to invest in an expensive tolling system that operated for only three or four years, were the Government of the day to decide to discontinue charging. We would need to assess the costs and benefits of free-flow tolling on the Severn crossing as we did on the Dartford. However, as a general principle, the Government support moving towards more efficient ways of collecting tolls, which benefit traffic flow.
Jessica Morden
As the Minister looks toward the end of the concession in 2018, could he address the VAT issue and clarify what was meant in the letter sent to the Welsh Affairs Committee this week? When the VAT charge comes off the bridges, because they return to public ownership, will that mean a reduction in the tolls, or are the Government planning to keep the tolls at the current level?
Mr Goodwill
I thank the hon. Lady for that question. From 2003, when VAT was imposed, to 2012, about £120 million gross has been collected. However, some business users will have reclaimed a fair proportion of the VAT. It is the case that when this Parliament comes to an end, it would be open to the Government of the day to make a decision as to whether they continue to charge the same fee, or reduce it by 20% or whatever the prevailing rate of VAT. No decision has been made, and I suspect it would be above my pay grade to make that particular decision. It is probably slightly early to consider that point.
Jessica Morden
Will the Minister provide us with an update on the money that has been collected to date, since the VAT changes and the changes in the industrial buildings allowance, so that we can have a full update of how much money the Government have collected so far? I am happy for him to write to us.
Mr Goodwill
Yes, by all means. I have given the hon. Lady the latest figure on the VAT. If I may, I will write to her with a more up-to-date figure on the VAT, if we can get hold of it, and also on the buildings tax that she mentioned.
Mr Harper
On the VAT, may I clarify what the Minister said? I think he said that the Department for Transport can account for the gross amount of VAT collected, but it is not able to ascertain how much was reclaimed. It would be helpful, so that people can see the net amount that the Government have collected, at least to break it down into that collected for car users and that collected for freight. It would be a reasonable assumption that most freight users were VAT-registered and would therefore have reclaimed the VAT. It would be unhelpful for people to assume that the gross amount was collected and retained by the Government, and not to take into account the fact that for freight users, a lot of it would have been reclaimed, or would not have been a cost to their businesses.
Mr Goodwill
Yes, it would be reasonable to assume that most business users reclaim the VAT, so when we write to Members participating in this debate, we will estimate that level. When there is talk of the Government using this as a cash cow, it must not be forgotten that every vehicle saves 52 miles by crossing one of the crossings, but on the long journeys going the long way round, they would actually be paying a fair amount of fuel duty. So it is not simply that the Government benefit from the VAT; there is actually a loss in terms of the amount of fuel revenue that otherwise would have been collected.
I want to stress an important point: the Secretary of State does not have the authority to reduce Severn tolls without amending primary legislation and obtaining the concessionaire’s agreement. The concessionaire would not be able to agree to anything that would affect its net revenue without compensation and agreement from its shareholders and lenders, which would result, if such an agreement were forthcoming, in a cost to the taxpayer. Any discounts or exemptions are a matter for the concessionaire to decide, provided that those provisions comply with existing legislation, such as the Eurovignette directive. Where that is not the case, such schemes cannot be introduced without changes to the concession agreement.
Discounts of 10% for vehicles of over 3.5 tonnes, and 20% for other vehicles, are offered by way of a season TAG, based on 22 trips per month. Blue-badge holders and the emergency services are exempt. There are significant discounts for users, including businesses that make multiple trips per day. Tolls are charged in a westbound direction only, from England into Wales. The current toll prices are: £6.40 for cars; £12.80 for vans; and £19.20 for vehicles over 3.5 tonnes.
Once one-way tolling and the distance saved owing to the existence of the crossings are accounted for, Severn tolls compare favourably with toll levels on other crossings. On the points raised by the hon. Member for Newport East, I can give some examples. The toll for a car is £6.40, but, with the free return journey, it is equivalent to £3.20 for a saving of 52 miles; the Dartford toll is £2 for a saving of 22 miles; and the Tyne tunnel has a charge of £1.60 for a saving of only eight miles.
The hon. Member for Birmingham, Northfield mentioned lorries. In the case of the Humber bridge, lorries pay £12.50 for a saving of 45 miles, whereas on the Severn crossing—if we divide by two for the free return—it is £9.60 for 52 miles. Some of the comparisons made with other crossings in the country do not necessarily bear scrutiny, or perhaps Members can pick their example to support their case.
Jessica Morden
Does the Minister also accept that the Government stepped in recently to the tune of £150 million to reduce tolls on the Humber bridge? If they can do that on the Humber, why can they not do it for the Severn bridges?
Mr Goodwill
If the hon. Lady looks into it in more detail, she will find that the Humber bridge review in 2011 found that the Humber bridge had a unique burden of interest in relation to its original cost of construction more than 30 years ago. Although the bridge cost only £98 million to construct, rolled-up unpaid interest meant that the bridge debt had grown to £439 million by 1992. Such unique circumstances justified the Government writing off £150 million of the £332 million owed to them by the Humber bridge board. I hope that provides some context. Some Members might even remember Barbara Castle announcing the construction of the bridge at a by-election in Hull.
At the end of the concession, the Severn crossings will revert to public ownership. The Government will need to continue tolling to recover the costs that they have incurred falling outside the concession agreement. The Department’s latest estimate is that they will be £88 million at the projected end of the concession in 2018, and it will take one to two years to recover that money. Once in public ownership, VAT will no longer be payable on the tolls.
My hon. Friend the Member for Forest of Dean (Mr Harper) raised various issues. I can confirm that the bridges are indeed a UK asset for the benefit of all UK road users and taxpayers. Much has been said about the Treasury or the Government benefiting from this, but I humbly suggest that it is taxpayers who benefit, and the debt that we have inherited from the previous Government can be reduced by the tolls.
My hon. Friend spoke about maintenance of the bridge, which is of paramount importance. I am well aware of the issue with the cable on the old bridge, which I am pleased to say has now been stabilised, but the toll income already pays for maintenance. On his other point about a new bridge upstream, which would avoid a 33-mile round trip via the M48, there are precedents around the country. There is the Merseylink toll, although those bridges are slightly closer together, and many consider that a new lower Thames crossing could incorporate the existing tolls from the Dartford crossing to make it affordable.
Richard Burden
On the £88 million, I am pleased the Minister has clarified that that is the estimated figure. However, might we have a breakdown of how that is made up? What is the debt that is estimated to remain?
Mr Goodwill
I am more than happy to provide the hon. Gentleman with that information.
In conclusion, no decisions have been made regarding the operation and tolling arrangements for the crossings once the current regime ends. However, the Government have been clear that any future arrangements will need to make proper provision for repayment of Government costs and future maintenance, and reflect the needs of road users in England and Wales. I suspect that this is something that various political parties may visit when they write their election manifestos, although there is nothing to stop the hon. Gentleman making an announcement today about what a Labour Government—were we to get such a Government after the election—would do at the end of the concession, or at the end of the period when the tolls are paid off.
The Government are committed to the successful operation of such vital crossings. They have provided a huge benefit to the Welsh and English economies through quicker access to places and markets. As the concession draws to an end, the Department will work with key stakeholders, including the Welsh Government, affected local authorities, business representatives, the Welsh Affairs Committee, and other interested parties.