Unopposed Bill Committee on the Humber Bridge Bill

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

UNOPPOSED BILL COMMITTEE

on the

HUMBER BRIDGE BILL

WEDNESDAY 17 APRIL 2013

Before:

Dawn Primarolo (Chair)

Mr Adrian Bailey

Gordon Banks

Sir Peter Bottomley

Karl McCartney

MR PAUL THOMPSON appeared as Parliamentary Agent.

MR DARRYL STEPHENSON, Clerk to the Humber Bridge Board, and MR JOHN BUTLER, Treasurer to the Humber Bridge Board, appeared on behalf of the Promoters.

MR PETER BROOKSBANK, Deputy Counsel for Domestic Legislation, was also in attendance.


Ordered at 2.02 pm: that Counsel and Parties be called in.

1. Chair: Good afternoon, ladies and gentleman. First, may I introduce myself? My name is Dawn Primarolo, I am one of the Deputy Speakers and I am pleased to be chairing today’s Unopposed Bill Committee. I would like to introduce my colleagues: Mr Adrian Bailey, Sir Peter Bottomley, Gordon Banks and Karl McCartney.

2. Mr Thompson, I am sorry, I should have said that you could resume your seat. As we are about to commence, I invite you to address the Committee, but, before doing so, perhaps you would like to introduce your colleagues who are with you this afternoon.

3. Paul Thompson: Certainly, madam. I have with me two representatives of the Humber Bridge Board: Mr Darryl Stephenson, closest to you, who is the clerk to the board and also, in a quite separate capacity, the chief executive of Hull city council, which is one of the four constituent authorities that we will talk about. Sitting next to him is Mr John Butler, the treasurer of the Humber Bridge Board; he is responsible for its finance and accounts.

4. Chair: Thank you very much.

5. Sir Peter Bottomley: Before we start, I should put on the record that I think it is material that my wife is the chancellor of the University of Hull and she is in prospect of becoming the sheriff of Hull. And I was, 25 years ago or more, responsible for trying to propose a solution to the Humber bridge finance problem.

6. Karl McCartney: I should declare that I am a Member of the Court of the University of Hull.

7. Chair: Thank you. I do not think that there are any other points that we need to put on the record today, so if you would like to start, Mr Thompson, that would be very agreeable.

8. Paul Thompson: Certainly. The Bill, which is promoted by the Humber Bridge Board, arises as a result of an understanding reached with the Government on how best to modernise the governance, financing and operation of the Humber bridge. Unusually for a private Bill, its promotion had to have positive Government support; section 96 of the original Humber Bridge Act 1959 requires the Humber Bridge Board, if it comes back to Parliament to seek new powers, to obtain ministerial consent. That was received from Norman Baker in a letter dated 14 December 2012, in accordance with the Humber Bridge Act. You may have noted that the Bill received ministerial and all-party support on Second Reading.

9. We have supplied to the Committee a handout, which I will be referring you to on occasion, as we thought you might find it helpful to have some general background information concerning the matters that are the subject of the Bill. I will start by turning to that information and drawing attention to one or two aspects of it.

10. On page 2, we have included some general facts and figures relating to the Humber Bridge Bill and the Humber bridge. It was completed in 1981 and was the largest single-span suspension bridge in the world-no longer, but I am informed today that it is still the largest single-span suspension bridge that people can walk across, so that is something to do the next time that we are up on the Humber. Recently, £150 million of the substantial debt was written down by Government and so has come down from £332 million to £182 million. Part and parcel of that is that the bridge’s tolls were halved for cars on 1 April 2012. Reductions for the other classes were 100% for motorcycles and 67% for two-axle trucks and the other details are given in the particulars. It is a substantial bridge undertaking that took some time to build and still carries significant debt. By common agreement in the area, the bridge is of vital importance to the economy. If you do not use the bridge, it is a very long way around.

11. We also set out in the paper, to which I will be returning, the details of the existing Humber bridge board membership. As we are seeking new borrowing powers, there are some particulars about the borrowing. We set out on page 4 details of the tolls. The current toll is in the final column, but the maximum permitted toll at present, which we would be seeking to do away with in the Bill, is in the middle column. The next page has some history about the tolls. Should it be of interest, we have provided details of the traffic statistics for the bridge.

12. On page 7, we have listed the legislation concerning the bridge, of which there is quite a bit. We have then set out, starting on page 8, the provisions of the Humber Bridge Act 1959 that we are re-enacting with amendments through the schedule to the Bill. We thought that it would be helpful to put them here in a sort of tracked-change mode, so that you can see the actual changes that we are making. The schedule to the Bill has it clean, so that it is quite clear what the powers are, but this gives you the background mechanics to it. At the end of the paper, on page 15, is something that we have circulated to our sponsoring MP, but also to Mr Chope and Mr Davies, indicating the board’s consideration of the points raised on Second Reading, to which we can return. We thought it would be helpful just to set out the board’s view on the matters that were then raised. There are no departmental reports on the Bill. As you know, Chair, it is the convention that Government Departments have the facility to issue reports, but there are none in this case, although, as mentioned, we have support from the Department for Transport, in particular, for the promotion of the Bill.

13. If this is a convenient moment-I can stop at any point for you to ask questions and to invite the representatives of the board to deal with them-I will take you through the clauses of the Bill.

14. Chair: We would like you to present to us, Mr Thompson, and if you have concluded, Mr Butler and Mr Stephenson may add to your presentation. We will then take questions from the panel. I am sure you could direct members of the panel as to whether Mr Butler or Mr Stephenson will answer. Perhaps that would be the best way. You can conclude your remarks.

15. Paul Thompson: In that case, I will say a few words about each of the clauses of the Bill and then invite your questions for Mr Stephenson and Mr Butler to deal with.

16. In the traditional way, we have a citation, commencement and interpretation clause and then the substance of the Bill begins with clause 3. That would modify the constitution of the board by providing in particular for two non-local authority members to be appointed to the board, and for board members to be known as directors rather than members. You will find the existing membership of the board and the shadow members set out on page 3 of the supporting information.

17. I say shadow members. We have Lord Haskins of the Humber Local Enterprise Partnership and Stephen Martin of the Clugston Group Ltd. If the Bill is enacted, it would enable business appointments to be made and for them formally to be part of the board. At present the board is limited to four local authority members, one from each of the constituent authorities in the area.

18. Clause 3 and schedule 1 to the Bill also update the constitutional and governance arrangements for the board. Those are set out in schedule 1 to the Bill. As I pointed out to you in our paper, we have set out the changes. A number of them are just minor ones, substituting "director" for "member". We have also taken the opportunity to deal with certain changes in the law, for example by applying the relevant provisions of the Localism Act 2011 governing disqualification from office. Through clause 3 we are effectively providing a mechanism for two commercial appointments to be made to the board, bringing its number up to six. We are changing the name of board members from members to directors and we are updating the constitutional provisions generally. That is the purpose of clause 3.

19. Clause 4 is a simple indemnity provision to allow the board to buy indemnity insurance for its members. It is a commonplace provision for boards of this sort, and is particularly important to have if we are bringing in external non-local authority members to sit on the board.

20. Clause 5 provides for allowances and expenses. The local authorities are allowed under existing local government law to pay allowances and expenses to their members and to those who are members by virtue of their sitting on bodies such as the Humber Bridge Board. However, the two additional business members we are seeking to have appointed will not fall within that ambit. We are seeking here a general power to pay allowances and expenses. Some concern was expressed about that on Second Reading. In the light of that concern, we are proposing an amendment that you will see on the filled Bill, which is to insert the word "reasonable" into the clause.

21. We took the view that a qualification of reasonableness is probably implicit in any event, but it does not do any harm to spell it out. In practice, the entire rationale of the bridge is to keep expenses down to lower the debt to ensure that tolls are no higher than they have to be. We do not feel that there is any real risk of this provision giving rise to undue expense, but we think it is an appropriate housekeeping provision for a board of this sort. Therefore, we have included that.

22. Clause 6 is a general power of competence. The board, being a creature of statute, can do only exactly what its statutory provisions say. Because those go back to 1959 it does not have a general power to act. You will be aware that the Localism Act 2011 did provide local authorities with a general power of competence. We felt it appropriate to include a similar provision here, albeit a more qualified one, because we have included, at the top of page 4 of the Bill in paragraph 2, a qualification that "the Board must have regard to the desirability of minimising in the longer term the level of tolls to be levied in respect of vehicles passing over or on the bridge". That gives the board a general power to act where it is lawful to do so, but it has to keep in mind that the prime directive is to keep down the tolls.

23. Clause 7, quite a complicated provision, concerns liability for and payment of deficits. It provides for the East Riding of Yorkshire, Kingston upon Hull city council, North Lincolnshire and North East Lincolnshire councils-the four constituent local authorities-to be liable for deficits in equal shares. It enables the board to levy on those local authorities to recover a deficit, but with a facility to defer doing so for a period of up to two financial years. The point about that is that a deficit could occur, but it may be recoverable over a normal business cycle, and therefore they do not want to have the requirement to levy immediately, so we have put in a degree of flexibility. You will see that we are proposing one amendment to the clause in paragraph 2 to insert the word "equally". That is already found in the preamble to the Bill; I am afraid it got left off the clause when we put it to print. However, it should be there, and the understanding always was that the new provision would provide for the four constituent local authorities to have deficits recovered from them equally.

24. The current position is governed by section 74 of the Humber Bridge Act 1959. That requires any deficit to be subject to an immediate levy on the successors to what were Kingston upon Hull City Corporation, the Haltemprice urban district council and Barton-upon-Humber urban district council in proportion to the total rateable value of the hereditaments in the area of each of these constituent authorities. We are sweeping away the outdated references and providing for equality between the four constituent local authorities in the area of the bridge. That has been the subject of discussion and, I understand, agreement with the constituent local authorities. That deals with clause 7.

25. Clause 8 provides a new borrowing power for the board. Currently the board has a range of borrowing powers, which it has exercised over the years, and it can repay money borrowed within 60 years from the date of borrowing. We are seeking to create a new multipurpose modern borrowing power to replace the old provisions. In doing so, we are referring to the Local Government Act 2003, which is the basis for local authority prudential borrowing and the code under that, so we are replacing our existing borrowing powers with a modern local authority borrowing power and the applicable code.

26. On clause 9 and the maintenance fund, we seek to have the facility to move money out of the statutory maintenance fund into the reserve fund and on for general purposes. By a quirk of the legislation, once we have put money into our statutory maintenance fund, we cannot use it for purposes other than maintenance. What has happened, as Mr Butler will be able to explain to you, is that there is a large forward maintenance programme. Some things go into the forward maintenance plan, but then do not happen, but the money is stuck there and cannot be used appropriately, so the purpose of the provision is not to lower maintenance obligations in relation to the bridge; it is simply to sort out the financial arrangements in the different funds that the board holds. Mr Butler can explain that in more detail.

27. Clause 10 is a replacement accounting and audit provision. As you can imagine, there has been quite a degree of change in statutory auditing and accounting arrangements since 1959. We have taken the opportunity to produce an updated provision. As you may know, there is currently, still subject to pre-legislative scrutiny, a draft local audit Bill that will replace in due course existing local authority auditing provisions with a new code. We have sought to produce a provision that will effectively emulate best local authority practice and provide for modern auditing provisions.

28. In clause 11 there is a new power to levy tolls. This seeks to provide the board with a power to set and levy tolls for use of the bridge, and to levy other charges for services provided by it, in place of its existing provisions to do so. Those powers will be found in part V of the Humber Bridge Act 1959, and in sections 10 and 11 of the Humber Bridge Act 1971. In summary, the provision specifies that tolls can continue to be levied at their current levels, rather than the higher levels that are still authorised, and that tolls can be increased by the board, but only-in the case of increases above the retail prices index-after consultation with the Secretary of State and users of the bridge.

29. The existing toll provision has a complex arrangement, in which applications for toll replacements go to the Secretary of State, and are potentially subject to a local inquiry. In practice, there have been a number of toll increases over the years necessitated by increases in costs, and they have simply been ratified, but it is felt that the process has not achieved anything other than increased bureaucracy. The new provision will ease the arrangements.

30. Page 4 of the supporting paper that we have provided sets out the maximum tolls authorised and the current tolls. The tolls, as I mentioned, were effectively halved when the debt was halved a year ago. The Bill will effectively say, "You can’t charge those maximum tolls any more; you can only charge the current tolls. You can have increases in future when they are required, but for increases above RPI, there must be a full process of local consultation." The main safeguard in relation to tolls is the fact that the board is composed at present of members of the four constituent local authorities, and we hope it will soon include the two local commercial interests. It is considered of vital local interest that the tolls are no higher than they have to be, which is why it was such a welcome and great achievement to the area when the tolls were halved last year.

31. That is our proposed toll provision. I should also mention, in the spirit of modernisation-we have sought, while we are here dealing with the legislation, to update things where we can-that we have included in clause 11(5) provision for the registered owner of the vehicle to be liable for tolls relating to it. That prevents the difficulty of somebody saying, "No, it wasn’t me; somebody must have borrowed my car." It is a simple regulatory policing provision that exists in some other toll areas. We thought it was appropriate to include it.

32. Clause 12 is a multi-purpose provision on highway and toll regulation. It provides for the board to be treated as a local authority for the purposes of enabling it to obtain information from the DVLA. At present, the board can ask for information. The board is of a class of body that is entitled to request that information; it cannot reasonably be refused. However, if it were a road traffic authority-which, in effect, it is-it would have that information as of right. We are just moving it into the "as of right" category, so that it can obtain that information from the DVLA.

33. We seek to give the board the power to recover its costs and expenses when recovering tolls, on the basis that it can often cost a lot more to recover the tolls than the tolls were worth in the first place. The provision will render enforcement effective. We are also seeking the power to deem the board to be the traffic authority for the highway on the bridge. At present, it is not; the two riparian local authorities on either side are the traffic authorities. We believe-the Department for Transport agrees-that it makes sense for the bridge undertaking to be responsible for traffic on the bridge.

34. Finally, the clause includes a power requiring owners of vehicles on the bridge that are alleged to have been involved in an offence to identify the driver of the vehicle. That is a standard road traffic policing power, but it is not one that the board has. We feel it is appropriate for the board to have it if it is to control and regulate traffic effectively on the bridge. The next clauses introduce a schedule of amendments that are effectively consequential, and a schedule of appeals and revocations. Again, those are housekeeping clauses to tidy up the legislation.

35. I have described the basis of the Bill rather swiftly and at a high level. Unless there are particular matters that I can help you with in detail-on borrowing, finance or the tolls-I invite the board representatives to answer your questions.

36. Chair: Thank you, Mr Thompson. Please take your seat. Before I turn to members of the panel to see whether they have questions, I ask Mr Butler and Mr Stephenson whether, at this stage, they have anything further they want to add.

37. John Butler indicated dissent.

38. Darryl Stephenson indicated dissent.

39. Chair: Perhaps, then, we can turn to questions.

40. Sir Peter Bottomley: I have two questions. One is the pedant’s query. Clause 6(2) states: "the Board must have regard to the desirability of minimising in the longer term the level of tolls". Does "minimising" include eliminating? If that were the governing power, would you be able to eliminate the toll for motorcycles, for example?

41. Paul Thompson: It is the totality of tolls that we are talking about here.

42. Darryl Stephenson: The bridge board’s policy is still that the bridge should be toll-free, so that is the objective that it works to.

43. Sir Peter Bottomley: So getting to zero would be included in the word "minimising". The second question is on a matter of interest, rather than on the acceptability of the Bill. In April 2012, some tolls were eliminated, some were halved and others were reduced. Can you give an indication of what effect that may have had on traffic?

44. Darryl Stephenson: There was an overall growth of 9% in bridge traffic, which we are very pleased with, because the whole point of doing it was to assist the economy of the area. What we cannot tell you at present is how that compares with traffic on other bridges. If that has gone down, it is a greater figure than 9%, but we understand that that has remained fairly stable, so 9% is a good figure to work from.

45. Mr Bailey: I have several questions. The first is a general one. You have very helpfully given details of the history of the tolls and traffic movements, and made reference to the maintenance fund, the reserve fund and so on; what you have not provided at any stage is any sort of summary of your accounts. Given that the introduction of the Bill could impact on revenue-raising in the future, it would have been helpful to have some idea of the current financial position of the Humber bridge. Will you, in very broad terms, tell us what that is?

46. John Butler: Perhaps I can deal with that. We have copies of our financial forecast, if Members are interested. That takes us through to 2038-39. In summary, taking the current year-that is, 2013-14-as an example, our toll income is £13.7 million and our operating expenditure is £4.2 million, which leaves a net operating surplus of £9.7 million. From that, of course, we have to take out the loan interest, which is £7.5 million, and the loan repayment, which is £2.8 million, so we actually have, in the current year, a small deficit of £600,000, but we have a reserve fund balance of £3.3 million, so that comes off that, and we have £2.6 million in our reserves. That is the general fund reserve, if you like.

47. We have £13.8 million in the maintenance fund, as of the beginning of the current year, but we expect to spend about £8 million during this year, so that will reduce the fund to just under £6 million. As Mr Thompson said, we have an ongoing programme of maintenance, which will come off in the next few years, so that will wind down the balance on the maintenance fund. However, as has been described to you, the way that the current legislation is written means that once the money is put in that fund, it is stuck in there. To give an example, one of the projects that the previous board was looking at was building quite extensive parapets along the bridge, at a cost of £4 million. We built up the money to pay for that, and then the new board came along and decided that that was no longer a priority, and dropped it, so there is effectively £4 million sitting in there. I can get round that by not making a contribution for the next two years, but it will give a bit more flexibility to manage things if I can move money from one fund to another.

48. Chair: Adrian, do you want to follow up on that point?

49. Mr Bailey: Not on that point; it is slightly tangential.

50. Chair: Before we move off the projections, may I ask Gordon or Karl whether you have any questions specifically about the money projection point?

51. Gordon Banks: Not on that particular point.

52. Chair: I will come to you in a moment. Adrian, do you want to ask a question?

53. Mr Bailey: Yes. On the allowances, I think you said somewhere in your notes that they were agreed after a consultative process, and I would like to know the details of that. You inserted "reasonable" in the Bill. What are the current allowances and what do you anticipate would be reasonable?

54. Darryl Stephenson: There are no current allowances; what happens is that local authority members are paid at the standard rate that local authorities pay their members for whatever duties they undertake in respect of the bridge, as if they were doing that for the local authority.

55. Mr Bailey: I accept that it is paid by the local authority, but do you know whether the local authority has a set responsibility allowance, for want of a better word, for that?

56. John Butler: It varies among the four councils, but no one receives a set responsibility allowance for being chairman of the bridge board, deputy chairman of the bridge board or anything like that. The problem that arises is that, with the two private sector directors hopefully coming on board, we have no powers to make them any allowances at all. Similarly, with the insurance provision, whereas the local authority members are covered by the local authorities, private sector board members cannot be covered in the same way. We are trying to provide equality among directors with these provisions.

57. Chair: Perhaps we could stay on the question of allowances, because I know that it is of concern to the panel. Adrian, do you want to ask a question on that before I move on?

58. Mr Bailey: Yes. You referred to a pooled system, and I interpreted that, perhaps incorrectly, to mean that basically you pay the allowances out of the funds for the Humber bridge. Is that correct?

59. Darryl Stephenson: Yes, and we may seek reimbursement from the local authority.

60. Mr Bailey: What sort of consultation have you had on the level of them?

61. Darryl Stephenson: Well, the four local authorities are supporters of the Bill.

62. Mr Bailey: So there has been no public mechanism for that.

63. Darryl Stephenson: There has been public consultation on the Bill; it has been widely publicised through local media and on the bridge board’s website.

64. Mr Bailey: How have you assessed the responses?

65. Darryl Stephenson: There was no response on that issue.

66. Chair: I will come back to you. Karl, you and Gordon have a question. Karl, will you go first specifically on this point of "reasonable" and allowances?

67. Karl McCartney: Certainly. Mr Thompson, you mentioned the concern expressed by some of my colleagues on Second Reading, notably Mr Philip Davies. You say that the need for reasonableness is implicit, but do you think the insertion of "reasonable" adequately deals with the concern that my colleagues had then, and that some of us still have?

68. Paul Thompson: Yes. This was referred back to the board, and that was the conclusion-not my conclusion, but the board’s conclusion. I think the concern expressed on Second Reading was that possibly a power of this sort might result in the board riding roughshod or going wild and operating all sorts of allowances and expenses. The view then expressed on behalf of the board-it is a view that the board still has; Mr Stephenson could be asked to confirm this-was that in practice, given the nature of this public body and the transparency that exists, it cannot be done behind the scenes and will be in the public eye, so there will simply not be a problem. Each of the local authority constituent members is liable to re-election in their role as councillors, and we think it is too extreme to contemplate a scenario in which the board votes itself ridiculous allowances, because that would effectively be signing their death warrant as members. Mr Stephenson, it is your board; was that the view?

69. Darryl Stephenson: No existing member of the board has asked for these allowances. This is being done for the private sector members of the board, to give them some equality and parity, so that their expenses and allowances can be met. Unlike other bodies in the area, such as the fire service, for which the local authorities give a special responsibility allowance, no local authority gives a special responsibility allowance for the Humber Bridge Board, and there is no intention to do so. We can, however, envisage circumstances in which individual board members, particularly private sector board members, might be doing certain amounts of work or travelling, and would therefore be out of pocket; that is not considered to be fair.

70. Gordon Banks: Just to clarify, no local authority member sitting on the board at this point of time has a special responsibility payment from the relevant local authority for sitting on the board.

71. Darryl Stephenson: That is right.

72. Gordon Banks: Mr Stephenson, you said that the delivery of this power was needed so that-as I took it-you could pay expenses and allowances to the private sector.

73. Darryl Stephenson: That is right.

74. Gordon Banks: Do we have your assurance that local authority members sitting on the board would not benefit from any of these expenses, and that these expenses would only be paid to private sector members of the board? Or could the board pay the special responsibility allowance that the local authorities are paying to the private sector members to the public sector members as well?

75. Darryl Stephenson: The board could do that. I cannot say that the board could not do that. It is clear that the provisions are such that the board could do that, but the likelihood of it doing that is very different. If it was likely to do that, it would have done it through special responsibility allowances in the members’ local authorities, as opposed to seeking it through the Humber Bridge Board-the public keep a tight and watchful eye on all bridge board expenditure. I can assure you that none of the local authority members in any way has said that they should receive anything other than what they get now.

76. Gordon Banks: Okay, but if the Bill is approved, you would have the potential for two tiers of directors: some who get payment while some do not.

77. Darryl Stephenson: If we do not do this, yes.

78. Gordon Banks: No; if you do this, you would potentially be paying the private sector, but not paying the public sector.

79. Darryl Stephenson: No. A local authority member, for example, would receive an allowance from their local authority; local authority allowances are now paid in different ways, but the member would be able to claim through their local authority for bridge board business. They can do that now. What we are trying to do is get parity, so that the private sector members can do that as well.

80. Gordon Banks: Will the private sector members only be able to claim parity with, say, the average cost of what the four local authorities pay their members?

81. Darryl Stephenson: No, I think that that is a matter for the bridge board, in all honesty. Given that you have four local authority representatives, their willingness to give someone else allowances above what they are getting is not great, I would have thought.

82. John Butler: If the Bill is enacted, the bridge board will devise its own scheme of allowances for directors. I am sure, as Mr Stephenson says, it will be guided by the schemes that exist in local government.

83. Gordon Banks: I have concerns about the word "reasonable" as well, because one person’s reasonable is another person’s unreasonable. As Members of Parliament, we are only too well versed in that.

84. Darryl Stephenson: What I would say there is that we are subject to public audit. The auditors also have their view of what is reasonable, and that would be made public through the audit report, which goes to the four local authorities and is published on the website.

85. Chair: May I just clarify something? The board will be the six members, of course-four from local authorities and two from the private sector. They will have the ability to decide what is reasonable for expenses.

86. Sir Peter Bottomley: Allowances and expenses.

87. Chair: Allowances and expenses. At the current time, the four local authority representatives are paid directly by the authority. In future, the board will pay those, but then claim them back from the local authority.

88. Darryl Stephenson: The board has yet to determine that. So it may be that they will simply stick with the existing arrangements for local authority members and have a scheme of allowances that reflects the allowances that local authority members will get from the two private sector members. I actually think, in the short term, that is far more likely.

89. Chair: Yes, the point I am trying to get to, Mr Stephenson, is that the local authorities, who ultimately will pay the expenses of their representatives, will have a say-coming back to Mr Banks’s point-on whether they think the expenses and allowances are reasonable for their council tax payers.

90. Darryl Stephenson: Yes, they can do that at any time. All reports and minutes of the board, through provisions in the Bill, are supplied to the local authorities. Nothing is hidden from the local authorities-they will see.

91. Chair: I think we appreciate that. What might be very helpful is if you could summarise in a couple of sentences the role, therefore, of the local authorities-if they are to meet some cost, exactly what it is. I think that would clear up that point.

92. Sir Peter Bottomley: Can I have a try and see if I have got it right? At present, the local authority members have their allowances and expenses paid for by their own authority.

93. Darryl Stephenson: That is right.

94. Sir Peter Bottomley: At present, there is no power for anybody to pay a non-local authority member for being on the board. The Bill makes provision for any director of the board to be paid allowances and expenses in the open. At present-unless people make positive decisions, which would be in the open-the local authority members will go on getting their pay and allowances from the local authorities. The Humber Bridge Board can pay the allowances and expenses to the private members. It would be open to local authorities to say, "We will not go on paying allowances and expenses. We ask the board to do it", and the board could then agree that they would pay all their members, in the same way, allowances and expenses-with presumably, the equivalent-and it would all be open. If anyone wants to challenge that-whether it is an auditor, any of the local authorities, or an outside member of the public-it could be challenged in the open.

95. Darryl Stephenson: Absolutely.

96. Chair: I think the point that Gordon was getting at, Sir Peter, there, was that the six members of the board set the question of reasonable. I was just trying to probe where, if you like, the checks and balances are, given the interaction of four local authorities, who will be very mindful of what they think is reasonable to their council tax payers at any one time, one would hope. Gordon, do you wish to pursue that point?

97. Gordon Banks: Not that point, no. I have another, but I am happy to come back on that later.

98. Chair: Adrian, have you covered everything? We are going to move on, unless you have a question about expenses and allowances.

99. Mr Bailey: The question is about democratic accountability. If the allowances are effectively pooled and paid by the Humber board, and if there is no levy on the local authorities, the democratic accountability is one stage removed. I am not sure whether it is as strong as you seemed to imply in your response to earlier questions.

100. Darryl Stephenson: I can only assure you as to the views of the current board and assure you about what a close eye the public keep on toll levels and the expenditure of the board that may lead to them rising or falling.

101. Mr Bailey: I have a question on toll levels, but does anyone want to come in?

102. Chair: Gordon, have you finished on expenses and allowances?

103. Gordon Banks: Yes, I think so.

104. Chair: Adrian, do you want to continue?

105. Mr Bailey: I was interested in your comments about consultation on increasing tolls over the RPI. I was puzzled as to exactly how you will consult with users, because my instinct is that almost any user will vote against an increase. Basically, how are you going to communicate the business case for doing so to what will be a fairly unresponsive body of users?

106. Darryl Stephenson: I suppose I will start by saying that it is clear from the board’s views that it does not want any rises at all. It is doing a lot to ensure that the tolls stay at their current level. The old system was-you will see from the table of toll history on page 5-that the board never put tolls up above RPI. Tolls went up 11% last time, but that only reflected RPI over the four years since tolls had last gone up. There was only one occasion when the Secretary of State held a public inquiry that permission was not given for toll levels to increase. Even on that occasion, the inspector at the public inquiry said that the tolls should be increased, but the Secretary of State said no. An accommodation was reached about other expenditure at that time, so the toll level did not come into play.

107. Sir Peter Bottomley: Was that the maintenance fiddle, or one of the other ones?

108. Darryl Stephenson: Yes. What happened previously was that the bridge board would look at its finances and see a shortfall and say, "This is our source of income. At present, tolls are the only income source and therefore let’s say that we are not getting enough money in and we need to put the tolls up." They then write to the Secretary of State and say, "We should put the tolls up." The Secretary of State then says, "We will have a public inquiry." Those public inquiries lasted approximately four days at a cost of some £40,000.

109. As I have said, at no public inquiry did the inspector ever refuse that the toll should go up. Those public inquiries were very well attended due to advertisements in the local media and on the bridge board website. We would anticipate doing exactly the same should the circumstances arise where we need to consult the public on an above-RPI toll rise. As I have said, the likelihood of an above-RPI toll rise is not foreseen. If you look at the financial plan, it is clear that that is based on RPI toll rises. That is what has been agreed with the Department for Transport, which has accepted the bridge board’s financial projections. If it was above RPI, we would do exactly the same: advertise and hold an informal-if I can put it like that-inquiry into why people thought the tolls should or should not go up. You are absolutely right that nobody comes and says, "Let’s put the tolls up", but those are the things that are taken in balance when reaching a judgment on whether the tolls should go up.

110. Gordon Banks: On RPI, a lot of people are seeing their income increasing only by CPI from decisions made in this place. What discussions went on about replacing RPI with CPI?

111. John Butler: I think it has always been envisaged as RPI. That is what it has been in the past and there was never any consideration of changing that. That is the position with other similar bridges, such as the Severn bridge, where there are automatic powers in the legislation to increase their tolls by RPI. We are simply replicating that.

112. Gordon Banks: It was also common practice in here, so I was just highlighting the point that things change.

113. John Butler: Yes.

114. Darryl Stephenson: We have discussed RPI with the bridgemaster, and the bridgemaster’s view is that the basket of the bridge’s expenditure is more akin to RPI than CPI.

115. Gordon Banks: So discussions have taken place.

116. Darryl Stephenson: Only internally, with the bridgemaster. Not externally.

117. Sir Peter Bottomley: If I may just ask a rhetorical question, presumably it is in the interest of the local authorities, and therefore of the bridge board, to try to maximise the use of the bridge.

118. Darryl Stephenson: Absolutely.

119. Sir Peter Bottomley: The lower the tolls can be, the more the bridge is used, which is why it was built in the first place. So there is no commercial interest in making a profit from the bridge; it is about trying to say, "How do we fund the bridge and get the greatest possible benefit to users?"

120. Darryl Stephenson: You will see the general powers that Mr Thompson referred to. They will give the board the ability to raise revenue in ways other than tolls. The only reason we want to do that is to keep the tolls down. There is no benefit to the bridge in having money, other than to be able to pay off the debt early to get the interest charges down. All the bridge’s operating profits are swallowed up in getting the debt paid off by 2038. If that can be done earlier, that is the bridge board’s objective.

121. Paul Thompson: In terms of the drafting of this provision, may I add, in case it is helpful, that it is now well established that a statutory duty to consult, which is what we are proposing here, requires full and meaningful consultation, not a sham, or it would be open to legal challenge. In this case, the statutory duty to consult is not just to consult on the proposed increase, but-this is in clause 11, subsection (8)(a)-on whether it is appropriate to do so; that is, whether the increase is appropriate. So the board is under an obligation to have meaningful consultation on whether the proposed increase is appropriate-there is an obligation on the board to explain itself, and then, under subsection (8)(b) to have regard to the views expressed. Again, that is a standard modern provision about consultation. You cannot ignore the results; you must come to a reasonable decision and have proper regard to them, or you have not fulfilled your duty to consult. It has been crafted in that way so that it will be a true and meaningful exercise, not just a cipher.

122. Darryl Stephenson: The bridge board has already adopted the Department for Transport guidance on consultation.

123. Mr Bailey: My last question is on the representation from LEPs. I can totally understand having two private sector directors from the two respective LEPs. I am interested to know whether there is flexibility in the Bill if either or both of those LEPs merge, which is probably pretty unlikely, but it could happen in theory, or if they disappeared, or were abolished or reconfigured.

124. Paul Thompson: We have had that in mind, so if you turn to page 8 of the Bill and look at new section 6(1)(e), it says, "from amongst persons nominated for this purpose by the Humber Local Enterprise Partnership or such body or bodies as the Secretary of State may from time to time substitute as the nominating body." We did that purposefully, because as you will know, among other things, LEPs are not legal entities, and we cannot be sure-it would certainly be beyond the responsibility of the board-whether they will continue in existence for the life of this legislation.

125. Gordon Banks: Mr Thompson made the point that if there is a need for deficit collection, it should be split equally between the four local authorities. I just wanted clarity-does that equal split mean 25%, or is it based on population?

126. John Butler: 25%.

127. Gordon Banks: That’s fine. I just wanted your clarification on that point.

128. John Butler: They have signed up to that.

129. Chair: Can I make sure that the panel do not have any more questions? No? Okay, that seems to be the end of the questions. I thank you very much, Mr Thompson, Mr Butler and Mr Stephenson, for your responses to the issues that were of concern when the Bill was discussed on the Floor of the House. Perhaps I can ask you to leave the Committee room while we come to our decision. I hope that we do not keep you waiting too long. I will then ask you to come back in to hear the results of our deliberation. Thank you very much for your presentation.

The Committee adjourned to deliberate in private from 2.55 pm to 2.58 pm

130. Chair: Thank you very much, Mr Thompson, Mr Butler and Mr Stephenson. On behalf of the Committee, I would like to thank you for the thorough way in which you answered our questions this afternoon. I am pleased to tell you that the Committee is content with what it heard this afternoon, and consequently is happy for the Bill to proceed to consideration stage. Before we conclude proceedings today, perhaps, Mr Stephenson, you would prove the preamble.

MR DARRYL STEPHENSON, Sworn previously

Examined by MR THOMPSON

131. Paul Thompson: I will just take Mr Stephenson through that. Mr Stephenson, are you Darryl Leslie Stephenson?

(Darryl Stephenson): I am.

132. Paul Thompson: Are you the clerk to the Humber Bridge Board?

(Darryl Stephenson): I am.

133. Paul Thompson: Do you hold responsibility for the promotion of the Bill on behalf of the Humber Bridge Board, which is promoting the Bill?

(Darryl Stephenson): I do.

134. Paul Thompson: Have you read the preamble to the Bill?

(Darryl Stephenson): I have.

135. Paul Thompson: Is it true?

(Darryl Stephenson): It is true.

136. Paul Thompson: That completes the proof.

The witness withdrew

137. Chair: Thank you very much for your attendance today. Thank you very much for answering our questions and giving us a fuller picture of the issues that the House itself has raised, and particularly what is involved in the Bill. Naturally, we will be watching progress with interest. I might be in the Chamber, and Sir Peter, who follows these things, might be as well. On behalf of my colleagues, I thank you very much for your attendance.

The Committee adjourned at 3 pm

Prepared 29th April 2013