Swansea Tidal Lagoon

Debate between Stephen Kinnock and Jessica Morden

Tuesday 8th March 2016 Westminster Hall

[Stephen Kinnock]

I agree with the hon. Gentleman, and I would add that we have seen a disastrous overrun in the cost and timing in Flamanville and in Finland, so let us give the tidal lagoon a chance, because in the long run it looks like a very good investment.

Over the project’s lifespan, it will deliver cheaper-than-wholesale electricity. The combination of the Swansea and Cardiff tidal lagoon projects, the first two of their kind in the world, would, over the course of their lifetimes, deliver the cheapest form of electrical generation on the UK grid. Thirdly, the project will create thousands of highly skilled, well paid jobs locally, supporting hundreds of local businesses. Indeed, it is already having a positive impact in the local area, as my hon. Friend the Member for Swansea East mentioned, giving rise to plans for many small businesses in the city bay region and feeding into the strategy for the Swansea bay city deal. This is exactly the kind of project that must go ahead if we are to see the rebalancing of the economy that this Government are so keen to talk about, but are apparently not always so keen to act upon. Well, here is the chance: approve the tidal lagoon and create jobs; support small business in the area; help to rebalance the economy and produce green energy.

Finally, as hon. and right hon. Members will be aware, the Welsh steel industry is going through testing times. Nowhere is that more acutely felt than in my constituency, where we are recovering from the devastating news two months ago of 750 job losses at the Tata steelworks in Port Talbot. With the Swansea bay tidal lagoon, there is a real opportunity to support not only the local community, but the local steel industry. The turbines and generator package are worth around £300 million, and Tidal Lagoon Power has committed to sourcing all the major components from the UK.

The company has detailed plans in place for a turbine manufacturing plant in Swansea docks and heavy fabrication in Pembroke, and the generators are to be manufactured in Newport and Rugby. This is all welcome, but I want to see the Government go further when approving the project, and show real leadership by committing to help to source all or as much of the steel for the turbines from the British steel industry. Not only would that help to create jobs across the Swansea bay area, helping some of those highly trained and skilled men and women who were made redundant at Port Talbot in January; it would also help to support local jobs at the Port Talbot steelworks, supporting local jobs and Welsh steel.

[Jessica Morden (Newport East) (Lab)]

I thank my hon. Friend for giving way so near to his closing remarks. I want to reiterate that we in Newport also urge the Government to get on with the Swansea bay lagoon. We can also see the benefits further down the line in terms of procurement—my hon. Friend mentioned the steel industry—and in terms of investment, construction and long-term jobs.

[Stephen Kinnock]

My hon. Friend and I stand shoulder to shoulder on this issue.

A positive decision on the lagoon would put a much needed tick in the Government’s green credentials and deliver a massive boost to the local economy and steel industry. This project needs and deserves rapid advance. The Government need to get off the fence and fast, because each day of delay is costing months or years of progress. The recently announced review cannot be another airport-style case of kicking things into the long grass. While welcoming the review, the chief executive of Tidal Lagoon Power, Mark Shorrock, stated:

“A welcome review should not be a substitute for action.”

He made it clear that unless work starts on the lagoon now, and unless structuring and commercial negotiations are concluded in the next six weeks,

“the opportunity will be lost and the review will be all for nothing.”

That was almost a month ago to the day. That gives the Government just two weeks if the project is to go ahead on schedule. The clock is ticking. If the Government want to know what the time is, it is time to act now.

Severn Bridges (Tolls)

Debate between Stephen Kinnock and Jessica Morden

Tuesday 21st July 2015 Westminster Hall

[Jessica Morden]

I agree wholeheartedly. There is probably now a case for a broader campaign to make such points, encompassing local government, business, chambers of commerce and so on.

Owens logistics, which is based in the constituency of my hon. Friend the Member for Llanelli (Nia Griffith) but has a main depot in Newport, is a haulage company that has long campaigned for a reduction in the tolls, on which it spends half a million pounds a year. That money just comes off the bottom line. It is an extra cost that the business has to pay that it cannot pass on to its customers. Owens has been quite open with me that it is thinking long and hard about its business decisions, because if it transferred parts of its operation across the bridge, it would avoid the tolls. That is the sort of decision that businesses in our area are making, which is precisely why we need clarity from the Government about further toll reductions.

The South Wales chamber of commerce told me about the impact that the tolls have on the tourism sector and the logistics industry. As I said, if logistics companies choose to pass the cost on to the customer, it adds to the cost of goods produced in Wales, making them less competitive, or increases the costs for businesses buying goods from England. The chamber of commerce also said that its colleagues in Business West say that it is picking up the fact that businesses are choosing to locate on the English side of the bridge due to the tolls.

Small businesses are also affected. I received an email this morning from a business that rents out marquees and employs 38 people. The cost of the tolls to the business over the summer is an extra £1,000, making it difficult for it to compete with companies on the English side of the bridges.

[Stephen Kinnock (Aberavon) (Lab)]

I congratulate my hon. Friend on securing the debate. Does she agree that the policy for the bridges and their tolls is a classic example of a false economy? The tolls may well create revenue, but a huge amount of additional economic activity is being lost. This disincentive to cross-border trade and activity deprives the Exchequer of much-needed tax revenues through corporation tax, business rates and additional economic activity. If the tolls were presented as a classic example of a false economy, we may get some more traction with the Government.

[Jessica Morden]

I thank my hon. Friend for his well-made point. The Welsh Government certainly agree that lowering the tolls would help to stimulate the Welsh economy.

Other hon. Members mentioned commuters earlier. In my constituency, many people in Magor, Rogiet, Caldicot, Undy and so on commute over to Bristol for work every day. It is a strong commuter area and the tolls’ effect is keenly felt, particularly by those who are looking for work in Bristol but cannot absorb the toll cost. Over the years, I have met people facing a bill as part of the Child Support Agency process, for example, who have said to me, “I work for this distribution company in Bristol, but once I have absorbed the bridge costs, I am on fairly low pay. How am I going to survive?” People’s employment opportunities are being limited. The only concession available on the Severn bridges is the TAG system, which allows four free journeys out of 22 in a month. Taking bank holidays and annual leave into account, that is not much of a bargain. We could do a lot more on that.

Some 12,500 people commute to England from Newport and Monmouthshire. Many of them use the bridges, which restricts their access to jobs and acts as an extra tax. My plea to the Minister today is for a consultation. We are just two years away from decisions being made, so I ask the Department for Transport to give bridge users, businesses and hon. Members a say in how we move forward and help our constituents by getting the tolls down. There is not long to go, so it is high time that we had that conversation. Successive UK Governments have failed—the Welsh Government have done the same—to undertake studies into the bridges’ economic impacts. It is time that we asked the Department for Transport to collect further evidence so that everyone can have an input.

Moving on to the thorny issue of bridge finances, having lived with the Severn bridges in the capacity of an MP for many years I can say that the finances are as clear as mud. Getting clarity is terribly difficult, so I ask the Minister for some figures today so that we can have an informed debate going forward. The concession was established by the Severn Bridges Act 1992, which, in retrospect, was clearly far too restrictive. It allowed the company to whack up the tolls every year, with no one being able to have a say and the Government arguing that they have little flexibility to step in and reduce tolls without incurring taxpayer liability. However, as I said earlier, they did step in in the case of the Humber tolls.

As we know from previous Welsh Affairs Committee inquiries, the company has done very well over the years. In oral evidence given to the Committee in 2013, we heard that the costs of the bridges for Severn River Crossing plc were some £50 million, including depreciation at £38 million and operational costs of £13 million. That £50 million compares with an annual turnover of £81 million. Will the Minister confirm the latest position and update those figures? Having a clear idea of the company’s operational costs and profits would be helpful.

The Government also do pretty well out of the bridges. They receive significant tax receipts from VAT and from the removal of the industrial buildings allowance, which was a tax relief that Severn River Crossing plc used to benefit from. From the answer to a recent parliamentary question, we found out that Severn River Crossing plc paid £154.2 million in VAT to Her Majesty’s Revenue and Customs between 2003 and 2014. However, we have been unable to get a specific figure from the Government on how much they have benefited from the removal of the IBA. Will the Minister commit today to providing that figure? Will the Government be straight about how much they have benefited?

I also hope that the Government will remedy as early as possible the situation whereby they and the company are protected from financial pain but my constituents and other users of the crossings are not. Users always end up paying, while the company is always protected. When the industrial building allowance was withdrawn, the company was allowed to extend its tolling mandate to compensate for that. The same was true of the VAT increase implemented by the coalition Government. In the spirit of fairness, I wonder whether the Government could reduce the tolling mandate given that the Chancellor has announced further reductions in corporation tax, which will further benefit Severn River Crossing plc. The first corporation tax cut will be in 2017-18, before public ownership. How will we ensure that taxpayers do not lose out when the company gets yet another tax reduction?

The main point on which my constituents would like an answer is about VAT. Given that the Government have benefited from the tax income—VAT of £154 million—why are they still arguing for tolling to continue after 2018 at a level high enough to recoup an £88 million debt? Clearly, the Government have done extremely well out of the bridges, so is it not time to pay people back a little by reducing the toll?

I want to allow others to speak, although hon. Members have already raised a lot of issues to do with the bridges. It would be incredibly helpful to know when the concession will end, because that has been a moveable feast—it was 2016, then 2017 and is now 2018. Will the Minister update us on when the Government expect the concession to end and the bridges to come back into public ownership, and on the maintenance of the bridges? A previous Minister said in reply to a similar debate to this that he would keep an eye on what he was inheriting. Will the Minister tell us a little more about what the Government expect to inherit when the bridges come back into public ownership?

May we have a discussion about free-flow technology? In various oral evidence sessions of the Welsh Affairs Committee, the company used to argue that the technology to differentiate between cars and vans was not available. Given that the Government are moving to reduce the cost for vans, surely implementing such technology will be easier. I want a maintenance-only toll, but I also want the Government to add into the mix a re-examination of what concessions might be given locally.