Severn Bridges (Tolling)

Stephen Doughty Excerpts

Wednesday 5th March 2014 Westminster Hall

[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?

--- Later in debate ---

[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.