Examination of Witnesses(Question 120-139)|
Mrs Charles George and Miss Joanna Clayton
Thursday 30 January 2003
120. MR GEORGE: Under this Act it could not be transferred.
Of course, Parliament has a power to pass further legislation.
It merely records at present that a resolution has been passed
that the tunnels remain under the ownership and implicitly that
also means under the control of the Authority and the Executive
as it has been since 1986. It does not amount to a contractual
or other form of commitment for the future but it is a very clear
statement as to what was the democratically arrived at position
as at the autumn of 2002.
121. MR CUNNINGHAM: Can I follow that up. Would it
preclude, for example, if the owners decided that it was in the
best interests of the public hypothetically that they should,
for example, contract the management of the tunnel out to a private
organisation? That has happened in the past, you retain the same
owners but farm it out.
122. MR GEORGE: There are two matters. First of all,
whatever is in the preamble makes no difference to what are the
actual legal powers to do anything. Secondly, as a matter of ordinary
statutory law, as the hon. Member points out, there are a variety
of powers which enable all authorities to contract out certain
matters. What they may not do is to contract out a power to raise
a toll and that is why that would require specific legislation.
Already, of course, when it comes to painting the tunnel or doing
various things like that, Merseytravel are perfectly empowered
to employ a private firm of contractors to do the painting or
alternatively they may use their own workforce but there is nothing
unlawful in them going out. Similarly there are various other
activities of theirs which they could perfectly lawfully contract
out and they are in no sense committed not to do so by the resolution
they have passed to retain ownership of the tunnel. This is very
much looking at the whole question of a franchise for the tolls.
123. MR JENKINS: That is clarified.
124. MR GEORGE: If I can then turn on to the Bill's
purposes, the Committee will have seen that in the Explanatory
Memorandum four heads are referred to and it may be of assistance
if I take them in turn and just work through them.
125. The first of the Bill's purposes is to amend
the statutory provisions, and I am quoting from the Explanatory
Memorandum, "relating to the levying and revision of tolls
for use of the tolls, particularly so that in future tolls are
annually revised with reference to inflation". So that the
Committee can see exactly how this works in the new legislation,
if I could ask the Committee in the Filled-up Bill, therefore
in the document we were just looking at, A30, to turn to page
142, there is a new section 91(7). It was a five but it has become
a seven. That section (7) and at the top of the next page, 143,
the new (8), (9) and (10), are statutory provisions which incorporate
a provision for an annual review of tolls in the light of the
movement of the RPI.
126. As I explained this morning, there is an outstanding
debt of just under £100 million, the trend of the debt is
downwards, and I explained to the Committee this morning that
there will be an important moment in 2014/15 when one lot will
be paid off, another lot of the debt will be paid off in 2025/26,
but the debt will remain until 2049 when the outstanding Public
Works Loan Board debt will be paid off. Meanwhile, operating costs
and refurbishment costs can be expected to rise broadly in line
with inflation although, of course, as I said this morning, there
is a possibility that there will be a requirement for major additional
safety and other works. There may be emergency requirements. There
is always the possibility that tunnel usage will fall off because
none of us knows what may happen to oil prices and what may be
the future trends in terms of car numbers and, therefore, toll
127. The present funding system, as I explained this
morning, led to the crisis of the late 1980s and the intention
now is to have a system which prevents those unsatisfactory features
by linking tolls automatically to RPI.
128. I mentioned the matter of the Dartford and the
Severn Tunnels. If I could just pause for them. The language which
I have just drawn Members' attention to in those provisions in
the Bill looks very complicated but it is, in fact, lifted word
for word from two other statutory provisions.
129. The first of those is section 9(3) of the Severn
Bridges Act. The Committee will be able to look that up. It is
in the bundle at A35, page 223. So this formula, although, as
I say, when one first reads it, it looks very complicated, it
is a tested formula, which has worked in the case of the Severn
Bridges, and it has worked there for 10 years. That where it originates
from. In the case of Dartford, a similar wording has been used
for the A282 trunk road, Dartford-Thurrock Crossing Charges Scheme
Order 2002, and one will find that in the bundle at A39 page 262.
So this formula and this way of approaching it has appeared in
previous legislation, and that legislation, I am reminded, was,
of course, central government legislation, in the first instance.
The previous administration of course brought forward the Severn
legislation, and then it has been borrowed and used by the draftsman
for the Dartford Order, which is a very recent Order, because
it is only going to come into effect on 1 April 2003. It has worked
for the Severn all these years, and it is now to be introduced
for the Dartford Crossing, and it appears to us to be an appropriate
mechanism also to be used in Merseyside.
130. Those are the financial arguments for index
linking, but can I mention that there is also a transportation
argument which I need to mention. I am told that in Dartford in
fact they have had index linking since 1988; it has simply been
revised in the new Order, which makes various changes, but the
basic RPI system has been there for some while. The transportation
argument is this. Public transport costs, that is, the cost of
going on a bus or on a train, themselves rise broadly in line
with RPI, and unless the tunnel tolls rise in a similar way, the
result is that year by year private car travel via the tunnel
will become cheaper than comparable public transport modes. If
that happens, there will be an inevitable consequence that people
will gradually make what is called a modal shift, that is, they
will cease to use public transport, and they will move to the
private car if that becomes a cheaper method of crossing the Mersey.
131. That is plainly undesirable, for two reasons.
First, it runs diametrically contrary to the policies being pursued
locally and nationally of increasing the public transport modal
share, but I do emphasize that the RPI linking will not have the
effect of making private transport relatively more expensive vis-a-vis
public transport. The aim is merely to maintain the existing equilibrium.
Both will continue to rise with the RPI. There is no proposal
in this Bill to raise tolls above the rate of inflation and no
proposal to effect a form of penalisation of the private car.
The aim is to keep the balance between cars and public transport
at the same level, both rising with RPI, instead of having a situation
where public transport rises at RPI but tolls rise below.
132. MR FIELD: I have a point to leave with you,
Mr George. One of the proposals by the Promoter on whose behalf
you are speaking is to ensure that any surplus funds are in fact
put towards the generality of public transport schemes. I want
to leave that with you as a thought. Clearly, that would have
some impact on the relative expensiveness of public transport,
and therefore the point you make in terms of RPI is not necessarily
one that is entirely on all fours with that point, because if
there is a relative imbalance in terms of public transport, there
is clearly an argument that suggests that increasing it in line
with RPI will in fact disturb that equilibrium. I was not looking
for an answer at this juncture. It is a point I wanted to make.
Presumably you will be addressing the issue of the other plans
of the Promoters in due course.
133. MR GEORGE: I am going to come back to the question
of usage of the surplus, which is, as you point out, a separate
point. I believe that there is now a fairly general acceptance
of the principle of the RPI. The question, as I say, of what to
do with any surplus is a separate matter. So far I have simply
been dealing with the question of trying to maintain the costs
of the passenger who is travelling in a private car and the cost
of a member of the public going by bus to try to make sure that
they both continue to rise at the same rate, basically the RPI
rate. I will be coming back to the other matter the Honourable
134. The second feature is that if the private car
does become relatively cheaper than public transport as a mode,
and if the tunnel attracts additional traffic, then that residual
spare capacity which there is at the present time in the tunnel
- and the Committee has seen it is not very large - would be used
up more quickly than would otherwise be the case, and of course,
as soon as that reserve capacity is used up by there being more
cars in the tunnel, then there will be not merely congestion on
the entry roads to the two tunnels - and the Committee saw in
that video just now how there was congestion in the early 1960s,
when one only had the one tunnel, and what extremes of congestion
were reached. One will have congestion on the entry roads and
one will also have further what is called peak spreading, that
is, the conditions of the peak will spread by and hour or two
hours either way and will use up the inter-peak, and therefore
whereas at present there are times of the day when one can make
a comparatively free flow journey through the tunnel in the inter-peak,
that will become more like peak time conditions. Of course, as
soon as that happens, there will be delays for all users, and
it is in particular business users, ie essential users, people
who cannot transfer to public transport, who will suffer if the
tunnel becomes much more congested than it is at the present time.
135. This argument, what I call the transportation
argument for an RPI increase, is not novel for the Mersey Tunnels.
It was precisely for that reason that the Government made the
decision to maintain tolls at Dartford, even though the tunnel
and bridge have now been paid for and under the statutory provisions
the tolls would have been coming off the Dartford Crossing. In
the words of the Minister last year, on 4 April 2002, "The
charges will be held at existing levels" - that means pegged
to RPI - "and will help to reduce the growth of congestion
at the crossing ensuring smoother and more reliable journeys for
users." The Committee will find that statement at A39, page
265. So what has happened at Dartford is exactly the same as what
we are proposing: to keep tolls, to have an RPI increase, because
in that way one prevents the tunnel or bridge at Dartford and
the tunnels at Mersey from clogging up and leading to a congestion
136. This matter was tersely expressed by Liverpool
City Council when they were responding to consultation in November
2001. The document is A18, page 25, but I do not invite you to
look it up, where they say "Linking toll levels to inflation
would provide an easily understood and supportable way of ensuring
tolls change as costs, including public transport costs, increase."
137. MR FIELD: You are making a robust comparison
of the Mersey Tunnels with Dartford. Can you explain the legislative
situation of the Dartford Tunnel. Was it a Private Bill, was there
a head set out in the initial legislation for the Dartford Tunnel
that ensured there would be a programme of moneys to be used in
a similar way to the Mersey Tunnel, or was it a quite separate
138. MR GEORGE: The regime at Dartford is entirely
controlled by the Highways Agency. It is the Highways Agency because
it is a trunk road. They have made an order under the Transport
Act2000. They have made a charging scheme in respect of the section
of the M25 which makes up the Dartford Crossing - technically
it is not the M25; it is the A something but that does not matter
- they have taken that section and they have applied a charging
scheme to it which provides that there shall be tolls - that is
the charge - that there shall be the RPI, and, I am going to come
to it under a later head, what is done with the proceeds, because
there, of course, there is a surplus which frankly makes our surplus
look miserable. There is a very large surplus.
139. MR FIELD: The point I am trying to make, Mr
George, is that whereas 69 years ago there was a formula set in
stone when this Private Bill was first introduced to the House
of Commons, it was an entirely different state of affairs for
the Dartford Tunnel, because it was a Bill by the Department of
Transport, the highways agency, which also envisages surpluses
being used in a different way. I appreciate why you are trying
to make this comparison but it is not really a direct comparison
that can be made.