Severn Crossings Toll

David T C Davies Excerpts

Thursday 19th May 2011 Westminster Hall

[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—

[Geraint Davies]

West. We have not had the boundary changed yet.

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.