Severn Bridges (Tolls)

David T C Davies Excerpts

Tuesday 21st July 2015 Westminster Hall

[David T. C. Davies (Monmouth) (Con)]

I congratulate the hon. Member for Newport East (Jessica Morden) on securing the debate. I associate myself with every single comment that she and others made, with the possible exception of the one about whether we should hand control of the bridges over to the Welsh Assembly—I will keep out of that one for now. The Government should realise that Members of all parties from constituencies throughout south Wales agree on this and that we do not consider the existing situation to be fair. We are looking for more than has so far been on offer.

In fairness, the second Severn crossing has been a huge boost to the local economy. The tolling regime was well publicised, so the tolls going up by slightly more than inflation each year should not have come as a surprise to anyone, including the press, because it was all agreed at the time. However, it was also agreed that, once the original cost of building the Severn second crossing and the debt taken on from the first crossing were paid off, the bridges would revert to public ownership. The implication was that the tolls would then end. Now, however, that is not going to happen.

The hon. Lady talked about the impact on the economy. Welsh Assembly Government reports show that the tolls cost the economy of south Wales £107 million a year in lost business, which I can well believe, and there are other impacts. Companies that rely on transport to and from Wales will be put off investing in Wales—I am not in the least bit surprised to hear that anecdote from one of the haulage companies. There is an impact on tourism, which is vital to my constituency, and on people who are on low wages. They have to pay £6.50 a day simply to travel to and from their place of work—although they will all, I hope, receive a pay boost as a result of the Budget. The tolls are a big dent in people’s wage packets.

For the record, I welcome the Government’s announcement that the bridges will come back into public ownership. I do not often call for the nationalisation of industry, but in this case, given that it will lead to a big cut in tolls for constituents, I am all for it—I am a pragmatic man. The Government could do better, however, and I want to go back to the financial issues that the hon. Member for Newport East raised.

The Government say that they received an unexpected cost of £88 million for maintenance of the first crossing, and that is the case. In response, I suggest that all around the country, pieces of infrastructure have had unexpected amounts of money spent on them. I had a quick look on my phone now, and some kind of garden bridge in London will get a £30 million boost from the Treasury as the result of a miscalculation of how much it would cost and how much could be raised from the private sector. That is only one example. I am sure that, if I had the time, I could find dozens from all over the country. For the Treasury, £88 million is not a vast sum of money, but it is a vast sum for the users of the Severn bridges if they are expected to pay it back.

Be that as it may, I want to take the argument a bit further. As the hon. Lady pointed out, when the bridge was built it was assumed that VAT would not be payable. There was then some sort of court case, or the European Parliament was involved, and it was decided that, because the bridges were run by a privately operated company, VAT was payable. As a result, the Government began to charge VAT and received a windfall. We do not have the exact figure, but I have heard various ones, including £120 million, as well as higher figures. In fairness to all users of the bridge, the Minister should first find out exactly how much extra money the Treasury has received as a result of the European decision asking the Government to levy VAT. As the hon. Lady pointed out, it is perfectly reasonable to ask for that information.

With the industrial buildings allowance, again various figures have been floated. I have seen £20 million and £24 million, so presumably the exact figure is of that order. If we take the lower two estimates—only £120 million from VAT and £20 million from industrial buildings—that is still £140 million, which is a lot more than the £88 million that the Government are asking to have back. It is no good the Government’s saying, “Oh well, these things are not hypothecated and it could have gone somewhere else”, because we know all that. The reality is that the Treasury has received a windfall way in excess of the £88 million being asked of the users of the Severn bridge. If my figures are incorrect, I am happy to stand corrected, but I think that we are roughly right.

Furthermore, as the hon. Member for Newport East correctly said, the revenue drawn in is way in excess of the maintenance costs. I know that those costs are significant, because we visited the bridge ourselves. It is an incredible structure. I had not realised that it is constantly moving and that a whole team of people keep the thing safely upright. The managing director told me that it cost more to keep the bridge upright and to maintain it than it does to maintain a large chunk of the motorway network of south-west England—fascinating stuff. Again, total revenue brought in by the tolls is way in excess of the maintenance costs, and we calculated that a toll of about one third of the existing level would be more than enough to pay them. Again, if we as a Committee are incorrect in that calculation, please tell us that we are wrong. I have been using that figure for the past two to three years, and nobody has yet gainsaid it, so I assume that it is roughly right. If that is the case, although we welcome the fact that the Government will bring the bridge back into public ownership and remove the VAT, I speak for many from all parties when I say that that is simply not enough and we would like a much more generous offer from the Government. Wales, the people of south Wales and the users of the bridge in England and Wales have been treated unfairly, all the more so if one compares the situation of the Severn bridge with what is happening to bridges across the rest of the United Kingdom.

With all due respect to the Minister, the questions asked by the hon. Member for Newport East about the revenue that is coming in, the maintenance costs of the bridge, the amount of VAT that the Government received unexpectedly and the level of industrial buildings allowance are perfectly reasonable. If we do not get answers to them, it is unlikely that anyone will accept as fair any future settlement for the Severn bridge.

--- Later in debate ---

[Andrew Jones]

I mentioned earlier that we are already committed by the road investment strategy to work with the Welsh Government, and we are more than happy to continue with all the strategy commitments. As I said, I have already started work with my colleagues in the Wales Office. I am expecting more work to be done over the summer and in the early autumn by my officials in the Department, and will be more than happy to share it more widely as we go forward, but I cannot yet give a specific date. However, it is work in progress, and we are starting that work. It will certainly involve wide co-operation and consultation.

[David T. C. Davies]

Can the Minister supply an answer in this debate to the questions about how much extra money the Government have received in VAT and industrial buildings allowance, and the costs of maintenance? If he cannot give those exact figures today, can he commit his Department to providing them before the autumn? Otherwise, I suspect that hon. Members might decide that they want to apply for another debate, and I will certainly support them if they do.