Tolls (Severn Bridges)

Lord Murphy of Torfaen Excerpts

Wednesday 23rd June 2010 Westminster Hall

[Jessica Morden]

I thank the hon. Gentleman for his intervention and agree that this is an issue for the whole of Wales. In particular, first-time visitors to Wales are an example of that. The issue does have that impact. I receive a bulging postbag on the issue from constituents and businesses and I want to highlight some of the points that they raise with me.

First, will the Minister examine the cost of the tolls? Every year on 1 January, the tolls go up in accordance with the Severn Bridges Act 1992. Under the agreement with Severn River Crossing plc, the company is permitted to collect tolls from both bridges for a concessions period until the project’s target real revenue level is reached or the time limit is up. I understand that at that point, the bridges revert to the Secretary of State’s control.

We are going through tough economic times. Commuters’ hours are being cut and there are pay freezes and high petrol prices, yet the tolls still go up. Severn bridge tolls are among the most expensive in the UK for cars, costing £5.50. My first request to the Minister is that he should examine the issue of toll rises, step in and recommend a freeze in this year’s tolls, particularly in the light of yesterday’s VAT rise. While he is at it, will he also examine whether we could implement a reduction in tolls for those who live locally? That could be worked out by postcode area, for example. Such a scheme has been introduced on the Dartford crossing. It is easier to do on the Humber and the Dartford crossing as there is no concessionaire, but why can we not have a look at doing it in Wales?

The second issue is the payment method for tolls. Currently, people can pay to go over the bridges only by cash, including euros, or by cheque. Those who are unfortunate enough to approach the bridge thinking that they can pay by such new-fangled methods as credit and debit cards are frustrated. Many constituents have regaled me with stories of getting to the tolls, not having the right money, being escorted over the bridge and then being told to go back over the bridge and to go to Gordano services, which is a round trip of about 20 miles. That is hardly a welcome to Wales for first-time visitors and it is not much fun for the long-suffering staff collecting the tolls, who have to put up with frustrated motorists.

[Paul Murphy (Torfaen) (Lab)]

My hon. Friend may not recall that I was a member of the 1992 Bill Committee that dealt with this issue. That was a very long time ago. Is it not right that after 18 years, the whole business of the Severn bridge and its tolls should be brought up to date?

[Jessica Morden]

I thank my right hon. Friend for his intervention. I agree with him. Progress was made on the method of payment of tolls by the previous Minister and it would be helpful if this Minister could confirm exactly when debit and credit card payments will begin and that the card-handling charge will not be passed on to the traveller. I would not expect Tesco to charge me more for paying by card, and I do not see why the bridges should be any different.

That brings me to the impact of the tolls on business in south Wales. The Severn crossing tolls, which are felt by many people to be a tax on entering Wales, are the highest in the UK for all but the largest vehicles. Light goods vehicles pay £10.90, compared with £2.00 for the Dartford crossing and £4.90 on the Humber. The Skye and Forth bridges are free. Heavy goods vehicles must pay £16.30, but on the Humber the charge is £10.90 or £14.60, depending on size. The Dartford crossing charges just £3.70 per heavy goods vehicle, and the Forth and Skye bridges are free.

An example in my constituency of the burden of the tolls is given by Owens Road Services, a long-standing Welsh company with a base in Newport that represents 1% of the total heavy goods vehicle traffic on the crossing. Owens pays £16,000 a month by standing order account and over £200,000 a year. The annual toll increases just come off the company’s bottom line; they are not passed on to customers because contracts have to be renegotiated and times are hard. The crossing represents a charge on the Welsh logistics industry that is not paid by competitors in England.

--- Later in debate ---

[Norman Baker]

I do not want to commit to that here, but I will happily receive information that is supplied to me, and I will bear in mind that request as and when it comes in.

The Severn Bridges Act 1992 seeks to apply 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 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 price index using a formula, and rounded to the nearest 10p.

I want to stress an important point: the Secretary of State does not have the authority to set the annual tolls below the level of RPI increase without the concessionaire's agreement. The concessionaire would not be able to agree to anything that would affect their net revenue without compensation and agreement from their shareholders and lenders, which would result, if such an agreement were forthcoming, in a cost to the taxpayer.

Tolls are charged in a westbound direction only from England into Wales. The current toll prices are: £5.50 for cars, £10.90 for vans and £16.40 for vehicles over 3.5 tonnes. I do understand hon. Members’ concerns that those are higher than apply in other crossings.

[Paul Murphy (Torfaen) (Lab)]

The Minister made reference to the fact that it is an estuarial crossing, but it is unique in the United Kingdom because it goes into a part of our country that now has a devolved Government. When I served as Secretary of State, some of my conversations with the then First Minister were about how we deal with a situation where tolls are charged to come into Wales but not to go out. The impact on the Welsh economy is very severe, particularly in times such as this. The Minister ought to think a little more about the importance of having a dialogue with his counterpart in Cardiff, because of the importance of this to the Welsh economy in these difficult times.

[Norman Baker]

I am very happy to have dialogue with my counterpart or anyone else in the Welsh Assembly if they wish to do so. The issue has just been raised for the first time with the new Government—this is the first Adjournment debate on it. I am perfectly open to suggestions of dialogue with people from Wales or elsewhere on issues for which my Department is responsible.

I want to talk about VAT, which was raised by the hon. Member for Newport East. When VAT was first applied to the crossings in 2003, following a European Court ruling, there was no increase in the toll to the motorist. Following the Chancellor's statement yesterday, the Highways Agency will discuss adjustments within the concession to accommodate the new 20% VAT rate with Severn River Crossing plc. We do not expect the VAT increase to be passed on through an increase in the tolls, but the concessionaire expects to receive a certain amount of money, and the way in which that can be accommodated without increasing tolls is a matter for negotiation.

I know that the hon. Member for Newport East has an interest in local discount schemes, to which she referred in her opening remarks. Any discounts or exemptions are a matter for the concessionaire to decide, provided that they comply with existing legislation. Where that is not the case, such schemes cannot be introduced without changes to primary legislation and the concession agreement. They would have a financial impact on the concession and the period required for repayment, which would impact all road users. Discounts of around 20% for regular and frequent users are offered by way of a season TAG, whereas blue badge holders and the emergency services are exempt.

I now turn to the matter of card payments, which I know the hon. Lady pursued before the election and, with some justification, can claim to have had some success on in her campaign. In March this year, an amendment was made to the Severn Bridges Regulations 1996 to allow card payments at the tollbooths. She will recognise that there are associated costs with the introduction of card payments, mainly bank transaction charges, which are estimated to be between £7 million and £10 million to the end of the concession, or approximately £1 million per year depending on usage. Implementation is expected to cost around £1.2 million, and the way in which the additional costs will be funded has yet to be agreed. Discussions with the concessionaire to resolve the financial issues regarding the introduction of credit card payments are ongoing, but work to amend the tolling software to allow for the processing of credit and debit cards has started.

One of the drivers—no pun intended—that the hon. Lady will be aware of is the Ryder cup, one of the highest profile sporting events in the world. It is due to be held in Newport between 27 September and 3 October this year, with about 50,000 visitors a day, the majority of whom will come from overseas and will not be flush with money in their pockets to pay the tolls. We want to make progress on the matter, and I hope to have it resolved before the Ryder cup begins. My officials assure me that that will be the case, and I will look into the matter to ensure that that is so.

An hon. Member also raised the issue of motorists being sent back after driving some way and finding that they could not pay by card. I understand that signs are in place close to the bridge, before the last junction, advising motorists of the current arrangements, which is that they can pay only in cash. However, if they arrive at the tolls, I have been assured that they do not necessarily have to make a U-turn; they can be issued with an invoice with an added administration fee of £5. The problem with turning motorists back has been recognised, and that is being dealt with in the way I described as an interim measure. If that was new information to Members present, I hope that that was helpful.

Regarding maintenance, the concessionaire is required to maintain both Severn crossings in accordance with the concession agreement. A rigorous schedule of inspections is carried out and regular review meetings are held between the concessionaire and the Highways Agency.

A programme of cable inspections on the first Severn bridge began in April 2006 after corrosion was found in the suspension cables of bridges of a similar age and construction in other parts of the world. Unfortunately, significant levels of corrosion were found and a programme of works to tackle the corrosion followed. A full dehumidification system has been installed to address the corrosion. The system, which pumps dry air into the cables to reduce humidity, has been operational since December 2008. Reports show that humidity levels within the main cable are below the target level of 40% relative humidity. In addition, an acoustic monitoring system has been installed to track the rate and location of any further deterioration. A second round of inspections is currently under way to gain a detailed understanding of the level of corrosion and to verify the success of the dehumidification process so far. That work is due for completion later this year.

The corrosion of the main cables is a defect that existed before the letting of the concession and unfortunately—from my point of view—is not covered by the concession agreement. Costs associated with this work will therefore be met by the Government. The programme of mitigation and inspection work carried out so far has cost the Government £15 million, with the second round of inspections costing us a further £4 million.

Reports in the local media—and a letter from a Member of the National Assembly for Wales—suggest that the concessionaire will hand back the crossings in a state of disrepair. The suggestion was made earlier that, once the concession ends, the taxpayer will have to foot the bill. Let me make it clear, the concessionaire is bound by the legal terms of the concession, which it signed, to maintain the crossings to an acceptable standard. When the concession ends, the concessionaire is required to carry out any necessary maintenance and repair works on the crossings prior to handover. That is a legally binding commitment and is what I expect them to do.