Examination of Witnesses(Question 40-59)|
Mrs Charles George and Miss Joanna Clayton
Thursday 30 January 2003
40. There have, of course, been numerous toll revisions
over the years to cover the costs of servicing the very substantial
debt and the charges of the tunnel. The debt charges are largely
the product of the great cost of constructing the tunnels, and
in particular the twin bore Kingsway Tunnel which turned out at
a cost of £43 million to be almost twice the estimated cost
when the project began, although I think with hindsight everyone
agrees that the decision to proceed despite the growing cost was
41. Since and including 1968 there have been ten
upward revisions. If I could take the Committee to B7, and I just
pause so the Committee can find where tab B is and then invite
you to exhibit B7, there is a column, and it is on the right-hand
side underneath the words "Memorandum", entitled "Car
Tolls" and from that the Committee will see that there have
been a number of upward revisions of the car tolls taking the
toll from ten pence to £1.20 at the very bottom of the page.
Indeed, very shortly an application will be made for a further
increase to £1.30 which is unlikely to take effect until
42. The statutory procedure for revising tolls at
the present time is laborious. It tends to involve both a period
of deficit financing whilst the toll revision is under consideration
and an element of slippage so that the amount of toll revision
tends, at the end, to bring in a smaller amount than was originally
anticipated because of the rate of inflation.
43. On the last five occasions when a toll revision
has been proposed there has been an objection and, therefore,
there has been a public inquiry and, therefore, there have been
all the inherent delays. On each occasion the Secretary of State
has dismissed the objection after inquiry and confirmed the proposed
revision. Each revision has taken nearly two years to work through
the process, including an average of about five months for arranging
a public inquiry and a further five months between the start of
the inquiry and the eventual Secretary of State's decision following
receipt of an inspector's report.
44. If I could just ask the Committee now to turn
to exhibit B15, the Committee will see the timetable for the current
toll increase. It began with consultation with the district councils
that lasted between October and December 2002. We are now at the
stage of the consideration of objections. The Order cannot be
submitted until April 2003. It seems inevitable that someone will
object and the earliest date at which it is going to be possible
to implement the toll increase will be April 2004. Therefore,
that shows the sort of delays which are inherent in the present
45. For a long time everyone has appreciated that
the existing system for toll revisions is unsatisfactory. As long
ago as 1995 the Department of Transport put out a consultation
paper on the regulation of tolls and statutory undertakings and
at your leisure, I do not suppose Members have any leisure but
if the Committee were to find a moment to glance at A36, page
226, you would find a very interesting consultation document in
which the Department put forward the problems which arise in connection
with the present form of statutory procedures, not just for the
Mersey Tunnels but throughout the country. At that stage the Department
expressed the view, which was somewhat of an understatement, that
"the practical value of the controls is questionable".
That you will find in the bundle at page 229, paragraph 3.2. They
also said that the procedures "had severe disadvantages for
the undertakings in terms of the costs of procedures and the delay".
That is at page 229, paragraph 3.3. They said that the disadvantages
"operated as a deterrent to long-term investment". That
is paragraph 3.4 at page 230 of the bundle. That consultation
concluded with the following words: "The existing procedures
and criteria are difficult and disproportionately expensive to
administer". That was page 230, paragraph 4.1.
46. The complexities of achieving a single statutory
proposal which would meet the circumstances of the many different
toll regimes throughout the country has meant that central government
has fought shy of general legislation. After all, it is not an
area which is exactly a headline catcher compared with other government
Bills which have to fight for their place in the parliamentary
timetable. So there has been no general legislation although there
has been consultation and general agreement that the existing
system should be changed.
47. Having set the scene I turn to history and fortunately
there is available a video made to mark the sixtieth anniversary
of the opening of the Queensway Tunnel which in an edited and
abbreviated form I am going to invite the Committee to watch in
a few moments.
48. Before we get to that I would like to
just say a few words about recent history and trends because these
are matters that the Committee may wish to bear in mind when you
see the short video.
49. The first matter is that traffic passing through
the tunnels has steadily grown. If I could take the Committee
to exhibit B5, the Committee will see a graph and they will see
the figures for the Queensway in blue and added on the figures
for the Kingsway Tunnel and the general increase in traffic to
the existing position. Now one has got some 24.6 million vehicles
passing through the tunnel carrying approximately 34.1 million
people. How that compares with the usage of the other modes crossing
the Mersey is shown in C4. I just ask the Committee to turn that
50. This is looking at ways in which people cross
the River Mersey and 78 per cent of the total are crossing through
the tunnels in cars or commercial vehicles or heavy goods vehicles
and 9.6 million are going by the other modes, that is by rail
or by bus or by ferry. Two-thirds of the trips have an origin
or a destination within Merseyside. If the Committee would just
turn on a few pages to exhibit C8 there is what I think is called
a pie chart and one can see there that the large wedge, which
is some two-thirds, have an origin and a destination within Merseyside.
51. The second matter to mention to the Committee
is that in the peak hours flows are now approaching capacity although
there is still some room for further growth. This is a matter
which is going to be important later on and requires me to take
the Committee to B12 and B13.
52. Looking at B12 the Committee will be able to
see that there is a column headed "Eastbound" and the
capacity total for the morning there is 6,800, that is five lines
down the column, the eastbound column. The present flow is about
half way down the page, that is the 6,250, so one is nearing the
point of capacity but still with a little room for further growth.
The same is true of the other direction also.
53. CHAIRMAN: Mr George, you tempt me since you say
this is an important matter that we will return to, the capacity.
Going back to your exhibit B5 that you mentioned about six or
so exhibits ago, I was interested there to see that the Queensway
Tunnel had traffic flows in 1968 approaching 20 million and that
today is at just over half that level. Has the Queensway capacity
been structurally and permanently reduced or does it still have
that capacity for traffic that it passed in 1968?
54. MR GEORGE: I think the answer to that is that
there have been some reductions and I think that is because of
side passageways and other safety measures. I will make sure that
the Committee is given a specific answer and an analysis of its
capacity. There is certainly not a massive reserve there waiting
to be used up and, indeed, the decision has been taken, for instance,
that heavy goods vehicles should not use the Queensway Tunnel
for safety reasons.
55. CHAIRMAN: There is no need to go to any trouble
unless we find later that we need that analysis. Please do not
worry. Thank you for that explanation.
56. MR GEORGE: The third matter on trends and recent
history is that it is apparent that the existence of tolls, as
the Committee would probably expect, does have some effect in
suppressing traffic levels and traffic growth through the tunnels.
In shorthand, if you did not have tolls you would have more vehicles
passing through. Mr Bates, who is the transportation consultant
who is going to give evidence, calculates that but for the existing
level of toll in the tunnel, and assuming that they had infinite
capacity, which of course they do not have, then the peak flow
would be something in the region of 7,600 compared with the present
figure of just over 6,000 which is well above the existing peak
hour capacity of the 6,800. Therefore, the existence of tolls
is operating as some sort of control on traffic numbers.
57. Fourthly, so far as financing, and I suspect
this is a matter the Committee are aware of because of the Second
Reading debate, in the late 1980s and early 1990s there was a
very difficult period for the financing of the tunnel caused by
rising costs and debt charges at a time when tolls fell way behind
the RPI. This is apparent if one looks at exhibit B7 and goes
to the centre column called "Operating Losses" where
you can see a gradual build up of the operating losses. In the
late 1980s they were reaching a figure of ten million in one year
and for a number of years continuing at around eight million,
then there was a 7.9 and a 7.8. That was the period of crisis
for the financing of the Mersey Tunnel. That deficit was made
good by the five Merseyside authorities. They had to precept for
the deficit and their ratepayers produced that money, initially
both their commercial ratepayers and their domestic ratepayers
and then eventually when the government altered the system for
commercial rate paying to a national basis it fell entirely to
be paid by the residents of all of the five districts.
58. I mentioned that tolls were lagging behind the
RPI and if I could just ask the Committee to turn on to exhibit
B14, you can see the toll levels and the RPI line and you can
see the sag in the 1980s at a time when tolls were falling behind
RPI whereas they have now caught up.
59. The fifth feature to mention is that in recent
years, following a massive toll hike in 1992 and you can see that
hike very clearly on B14, income has increased so that it now
covers operational and refurbishment costs and debt repayment
and that is apparent if we go back a few pages to B7 and we have
already looked at the operating loss column, there is no longer
an operating loss and if you look at the column "Tolls Income"
the Committee will see a growing income just as there is a growing
traffic and it has been possible to balance the income with the
expenditure and to pay for an amount of refurbishment. The Committee
will see the fourth column along is headed "Refurbishment".
Whereas in the past there had not been any money over to do refurbishment,
the Committee will see that money is available to spend on refurbishment.
Therefore, it has not been necessary since the early 1990s to
turn to the five Merseyside districts and seek their assistance
with funding the deficit, but there remains a concern in the districts,
and that concern has been expressed also on the floor of the House,
that the tunnels could fall into deficit again and if that were
to happen inevitably it would mean the PTA returning to the districts
and seeking funding assistance. That concern appears in, for instance,
the report of the officers of Knowsley Council in respect of this
Bill. If the Committee would turn for a moment in the bundle to
A18, page 24, this is a report which began on page 23 by the Director
of Finance and various other departments to the Knowsley Council,
and at paragraph 5.3, dealing with the issues which arose from
this Bill, the view of Officers was that the existing legislation
leaves Merseytravel vulnerable to deficits simply because they
cannot react quickly enough to inflationary pressures. It is the
last sentence I was drawing the Committee's attention to, "This
in turn creates a risk for the Merseyside District Councils, including
Knowsley, of pressure on the Merseytravel levy, to cover any deficit
that might arise."