Severn Bridges (Tolls) — [Mr James gray in the Chair]

– in Westminster Hall at 2:30 pm on 21st July 2015.

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Photo of Jessica Morden Jessica Morden Labour, Newport East 2:30 pm, 21st July 2015

I beg to move,

That this House
has considered tolls on the Severn bridges.

It is a pleasure to serve under your chairmanship, Mr Gray. I am grateful for the opportunity to debate probably the No. 1 issue on which constituents approach me. Obviously I am not alone in that, as the monster turnout here on the afternoon of the last day before summer recess shows. We have Members from Llanelli all the way across the M4 corridor to Monmouth, from Northern Ireland, and even Drew Hendry. That shows how keenly the issue is felt across south Wales and in other places. I hope that other Members’ contributions will only strengthen the case for lowering the Severn tolls when the Severn river crossings concession comes to an end.

I should be clear from the outset that we pay the absolute highest tolls in the UK on the Severn bridges. With the concession coming to an end in a few years’ time, there is real strength of feeling about the need to reduce the charge to a maintenance-only toll, as recommended by the Welsh Affairs Committee’s excellent reports in the previous Parliament. There was cross-party agreement on the Committee that we could get down to a maintenance-only toll of around £1.50. I commend the Committee’s work over the years under the chairmanship of David T. C. Davies—we have looked at the issue in much detail and done a lot of work on it.

There is now a real need for clarity from the Government on the profits, operating costs and so on, and on where we are going in future. We urgently require some kind of strategy for the bridges, because we have only just over two years to go until they return to public ownership. We need to know the Government’s intentions for the future of the bridges. We must have clarity about what discussions the Government are having and what the direction of travel is. I hope that this debate will help us to flesh out those issues a little.

The Government have done incredibly well out of the bridges over the years. I will say a bit more about that later, but people really feel that they have been paying through the nose over the past few years. We need to redress the balance for the future. I know the Minister will argue that the Government are doing something to reduce the tolls—they announced in the comprehensive spending review that they were going to take the VAT off the tolls—but they are doing the absolute minimum. They know that they will have to take VAT off the tolls when the bridges come into public ownership; any Government would have had to do that. They are taking some measures on reducing the costs for cars and vans, but any Government would have had to do that as well. I want to see them go much further.

Along with other Members present, I have spoken in many debates on this issue over the 10 years I have been in the House. I think there have been eight Secretaries of State for Transport over that time, and numerous Transport Ministers. At this point, the Government cannot ignore the need to offer some light at the end of the tunnel for my constituents. Part of the reason why I have called for this debate early in the new Parliament is that, with the Government’s plans for English votes for English laws, who knows where Welsh MPs might be and what say we might have in future negotiations?

Three of the four legs of the Severn bridges are in England, with the other falling in my constituency, Newport East. Control of the Severn bridges and tolling rests falls completely within the remit of the Department for Transport. Aside from the assurances given in last week’s debate on English votes for English laws, I hope that the Government can reassure us today that Welsh MPs will have an equal voice on Severn bridge tolls, not least because the tolls are paid going into Wales and the impact is felt most keenly by Welsh commuters and businesses.

As I said, we have the highest tolls in the UK on the Severn bridges—[Interruption.] I think Simon Hart is demolishing the Chamber. Since the second bridge opened in 1996, the tolls have increased 19 times because of the inflexibility of the concession, which I will come to later. We are now paying £6.50 for a car, £13.10 for a van and £19.60 for coaches and lorries. By comparison, the undiscounted price of a single journey for a car at the Dartford crossing is £2.50, and for the Mersey tunnels it is £1.70. The Humber bridge currently has undiscounted tolls of £1.50 for cars, £4 for medium-sized vehicles and £12 for heavy goods vehicles.

Campaign groups, motorists and businesses have called for the Government to step in and help, but their calls have fallen on deaf ears. There is, however, an example of where the Government have listened to local concerns in the past and stepped in to help: the Humber bridge. In 2011, the Government reduced the debt on the bridge by £150 million, which halved the toll for cars to £1.50. On the Government’s own estimates, the accumulated deficit on the Severn bridges will be £88 million in 2018. Why will the Government not step in for a smaller amount?

Photo of Stephen Doughty Stephen Doughty Opposition Whip (Commons)

I wholeheartedly support the case that my hon. Friend is making, as well as the recommendations made by the Welsh Affairs Committee, on which I also sat.

It is not only the disparity in the tolls that is so shocking; there is also the disparity in technologies. We have not seen the introduction of free-flow technology or contactless payment. Those of us who use the tolls regularly know, as do businesses, that a wait in the queue often lasts ages. It is only recently that credit card payments were introduced. Does my hon. Friend agree that the disparities in technologies are also causing problems for businesses and customers in south Wales?

Photo of Jessica Morden Jessica Morden Labour, Newport East

I agree with my hon. Friend wholeheartedly. As I remember, it took a joke on “Gavin & Stacey” and the approach of the Ryder cup for things to get to where they are now. It was like pulling teeth trying to get the decision taken to accept card payments. I will come back to that point, but I agree that we need to consider free-flow technology, which would help the congestion in the run-up to the plazas.

Over the years, various Ministers have argued in their responses to debates like this that the impact of the tolls on the Welsh economy is not clear, but we know from the Welsh Government’s 2011 report that the total cost to businesses and consumers, once VAT is taken into account, is in excess of £80 million a year. Furthermore, they came to the tentative conclusion that removing the tolls could boost the Welsh economy to the tune of around £107 million.

Photo of Mark Williams Mark Williams Liberal Democrat, Ceredigion

I congratulate the hon. Lady on securing this debate, and on talking about the Welsh economy as a whole. When the Federation of Small Businesses undertook a significant inquiry, “The Severn Bridge: Taking its toll on the Economy?”, it did not restrict its work to the economy in south Wales, but looked further west to Swansea, Carmarthenshire, Pembrokeshire and parts of my constituency, Ceredigion. Will the hon. Lady emphasise the effect of the tolls on the whole economy?

Photo of Jessica Morden Jessica Morden Labour, Newport East

The hon. Gentleman is quite right. Although the effects are probably felt most keenly in my constituency and that of the hon. Member for Monmouth, the knock-on effect along the M4 corridor and beyond, and up towards places such as Ceredigion, is immense, particularly for businesses using that route.

Photo of Nick Thomas-Symonds Nick Thomas-Symonds Labour, Torfaen

I congratulate my hon. Friend on securing this important debate. I agree with her point about the effect on businesses, which was also well made by Mr Williams, but there is also an effect on commuters. One issue faced by people in south-east Wales, including in my constituency, is that if they need to commute to work in Bristol, the tolls are effectively a weekly tax that must be taken into account. That can often act as a disincentive to people taking such jobs.

Photo of Jessica Morden Jessica Morden Labour, Newport East

My hon. Friend is quite right. People in many communities in my constituency, particularly those with low and medium incomes, find it difficult to absorb that cost. Access to jobs in Bristol for which people might like to apply is limited by their having to pay what amounts to an extra tax.

The Welsh Government’s report is clear, and, having spoken to small and larger businesses locally, so am I: the tolls have a big impact.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Equality)

In Northern Ireland, we do not have any toll roads or bridges—I thank the Lord for that—but that is because of their potential impact. Has the hon. Lady considered the effect of reducing the tolls on tourism, which is an important issue in Northern Ireland, and obviously for the hon. Lady as well?

Photo of Jessica Morden Jessica Morden Labour, Newport East

I thank the hon. Gentleman for his intervention. Various sectors, particularly transport but also tourism, are impacted by the tolls. Evidence from tourism businesses in the west suggests that the tolls make it more difficult to attract visitors from the south-west of England, for example. The charge also acts as a psychological barrier, as people have to pay to enter Wales.

Photo of Wayne David Wayne David Shadow Minister (Cabinet Office), Shadow Minister (Justice), Shadow Minister (Scotland)

Support for my hon. Friend’s argument is strong and broad and comes not only from the Welsh Government, small and medium-sized businesses and the CBI in Wales, but from Welsh local government. A letter sent to the Prime Minister by the leader of Neath Port Talbot County Borough Council only a few months ago also made the case strongly, which is indicative of the wider view of Welsh local government.

Photo of Jessica Morden Jessica Morden Labour, Newport East

I agree wholeheartedly. There is probably now a case for a broader campaign to make such points, encompassing local government, business, chambers of commerce and so on.

Owens logistics, which is based in the constituency of my hon. Friend Nia Griffith but has a main depot in Newport, is a haulage company that has long campaigned for a reduction in the tolls, on which it spends half a million pounds a year. That money just comes off the bottom line. It is an extra cost that the business has to pay that it cannot pass on to its customers. Owens has been quite open with me that it is thinking long and hard about its business decisions, because if it transferred parts of its operation across the bridge, it would avoid the tolls. That is the sort of decision that businesses in our area are making, which is precisely why we need clarity from the Government about further toll reductions.

The South Wales chamber of commerce told me about the impact that the tolls have on the tourism sector and the logistics industry. As I said, if logistics companies choose to pass the cost on to the customer, it adds to the cost of goods produced in Wales, making them less competitive, or increases the costs for businesses buying goods from England. The chamber of commerce also said that its colleagues in Business West say that it is picking up the fact that businesses are choosing to locate on the English side of the bridge due to the tolls.

Small businesses are also affected. I received an email this morning from a business that rents out marquees and employs 38 people. The cost of the tolls to the business over the summer is an extra £1,000, making it difficult for it to compete with companies on the English side of the bridges.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

I congratulate my hon. Friend on securing the debate. Does she agree that the policy for the bridges and their tolls is a classic example of a false economy? The tolls may well create revenue, but a huge amount of additional economic activity is being lost. This disincentive to cross-border trade and activity deprives the Exchequer of much-needed tax revenues through corporation tax, business rates and additional economic activity. If the tolls were presented as a classic example of a false economy, we may get some more traction with the Government.

Photo of Jessica Morden Jessica Morden Labour, Newport East

I thank my hon. Friend for his well-made point. The Welsh Government certainly agree that lowering the tolls would help to stimulate the Welsh economy.

Other hon. Members mentioned commuters earlier. In my constituency, many people in Magor, Rogiet, Caldicot, Undy and so on commute over to Bristol for work every day. It is a strong commuter area and the tolls’ effect is keenly felt, particularly by those who are looking for work in Bristol but cannot absorb the toll cost. Over the years, I have met people facing a bill as part of the Child Support Agency process, for example, who have said to me, “I work for this distribution company in Bristol, but once I have absorbed the bridge costs, I am on fairly low pay. How am I going to survive?” People’s employment opportunities are being limited. The only concession available on the Severn bridges is the TAG system, which allows four free journeys out of 22 in a month. Taking bank holidays and annual leave into account, that is not much of a bargain. We could do a lot more on that.

Some 12,500 people commute to England from Newport and Monmouthshire. Many of them use the bridges, which restricts their access to jobs and acts as an extra tax. My plea to the Minister today is for a consultation. We are just two years away from decisions being made, so I ask the Department for Transport to give bridge users, businesses and hon. Members a say in how we move forward and help our constituents by getting the tolls down. There is not long to go, so it is high time that we had that conversation. Successive UK Governments have failed—the Welsh Government have done the same—to undertake studies into the bridges’ economic impacts. It is time that we asked the Department for Transport to collect further evidence so that everyone can have an input.

Moving on to the thorny issue of bridge finances, having lived with the Severn bridges in the capacity of an MP for many years I can say that the finances are as clear as mud. Getting clarity is terribly difficult, so I ask the Minister for some figures today so that we can have an informed debate going forward. The concession was established by the Severn Bridges Act 1992, which, in retrospect, was clearly far too restrictive. It allowed the company to whack up the tolls every year, with no one being able to have a say and the Government arguing that they have little flexibility to step in and reduce tolls without incurring taxpayer liability. However, as I said earlier, they did step in in the case of the Humber tolls.

As we know from previous Welsh Affairs Committee inquiries, the company has done very well over the years. In oral evidence given to the Committee in 2013, we heard that the costs of the bridges for Severn River Crossing plc were some £50 million, including depreciation at £38 million and operational costs of £13 million. That £50 million compares with an annual turnover of £81 million. Will the Minister confirm the latest position and update those figures? Having a clear idea of the company’s operational costs and profits would be helpful.

The Government also do pretty well out of the bridges. They receive significant tax receipts from VAT and from the removal of the industrial buildings allowance, which was a tax relief that Severn River Crossing plc used to benefit from. From the answer to a recent parliamentary question, we found out that Severn River Crossing plc paid £154.2 million in VAT to Her Majesty’s Revenue and Customs between 2003 and 2014. However, we have been unable to get a specific figure from the Government on how much they have benefited from the removal of the IBA. Will the Minister commit today to providing that figure? Will the Government be straight about how much they have benefited?

I also hope that the Government will remedy as early as possible the situation whereby they and the company are protected from financial pain but my constituents and other users of the crossings are not. Users always end up paying, while the company is always protected. When the industrial building allowance was withdrawn, the company was allowed to extend its tolling mandate to compensate for that. The same was true of the VAT increase implemented by the coalition Government. In the spirit of fairness, I wonder whether the Government could reduce the tolling mandate given that the Chancellor has announced further reductions in corporation tax, which will further benefit Severn River Crossing plc. The first corporation tax cut will be in 2017-18, before public ownership. How will we ensure that taxpayers do not lose out when the company gets yet another tax reduction?

The main point on which my constituents would like an answer is about VAT. Given that the Government have benefited from the tax income—VAT of £154 million—why are they still arguing for tolling to continue after 2018 at a level high enough to recoup an £88 million debt? Clearly, the Government have done extremely well out of the bridges, so is it not time to pay people back a little by reducing the toll?

I want to allow others to speak, although hon. Members have already raised a lot of issues to do with the bridges. It would be incredibly helpful to know when the concession will end, because that has been a moveable feast—it was 2016, then 2017 and is now 2018. Will the Minister update us on when the Government expect the concession to end and the bridges to come back into public ownership, and on the maintenance of the bridges? A previous Minister said in reply to a similar debate to this that he would keep an eye on what he was inheriting. Will the Minister tell us a little more about what the Government expect to inherit when the bridges come back into public ownership?

May we have a discussion about free-flow technology? In various oral evidence sessions of the Welsh Affairs Committee, the company used to argue that the technology to differentiate between cars and vans was not available. Given that the Government are moving to reduce the cost for vans, surely implementing such technology will be easier. I want a maintenance-only toll, but I also want the Government to add into the mix a re-examination of what concessions might be given locally.

Photo of Wayne David Wayne David Shadow Minister (Cabinet Office), Shadow Minister (Justice), Shadow Minister (Scotland)

Will my hon. Friend express a view on the suggestion that control of the bridges should pass to the Welsh Government in 2018?

Photo of Jessica Morden Jessica Morden Labour, Newport East

My honest answer is that I do not care who runs the Severn bridges, as long as the tolls come down. If the tolls were reduced to a maintenance-only rate, I would not care who was running them.

Among the concessions suggested by business are those for off-peak travel, or free travel for hauliers during off-peak times.

Finally, a more than strong suspicion locally among constituents and businesses, and certainly among hon. Members, is that the Government treat the Severn bridges as a bit of a cash cow. I do not want to see that in two or more years’ time, when the bridges return to public control. Will the Minister promise to engage with hon. Members, businesses, commuters and our constituents, to find practical solutions to all the problems and lower the cost considerably for my constituents?

Photo of David Davies David Davies Chair, Welsh Affairs Committee, Chair, Welsh Affairs Committee 2:53 pm, 21st July 2015

I congratulate 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.

Photo of Nia Griffith Nia Griffith Shadow Minister (Wales) 3:00 pm, 21st July 2015

I add my congratulations to my hon. Friend Jessica Morden on raising such an important subject in a timely manner. The beginning of a new Government and Parliament is the right time to look at what we can expect in the next couple of years.

Owens Transport is based in my constituency, but it has depots in Newport East and Aberavon, as well as in other parts of the country. It competes not only with companies that go to and from Wales, but with England-based companies that go to other parts of England or to the continent, and with companies that come over from the continent and take business in the UK. We are talking about an international, cut-throat business. If companies have to pay an additional cost to come back to their home base in Wales, they are at a distinct disadvantage, and £500,000 a year is no small amount of money.

Following the concession that has been given to vans, companies such as Owens Transport are disappointed that absolutely nothing has been done for hauliers. Several suggestions have been made over the years, such as off-peak concessions, but nothing has been done to help hauliers. The company is anxious to have a timetable for what will happen when the concession finally ends. If the Minister cannot give us this information today, we would like a timescale for when he will be able to tell us. When the concession ends, will he confirm that VAT will definitely come off? Can he confirm exactly what moneys are still “owed” to the Treasury? As David T. C. Davies succinctly said, it is questionable whether anything is owing when the scheme has been a cash cow for the Treasury in past years. How do the Government intend to recoup the moneys? In other words, will there be a timescale during which the money would be paid back? We have heard various suggestions for how that might work, involving dates from 2017 to 2023. When will we be able to move to a maintenance-only tariff? We would like some form of consultation to take place. Now would be a good time for the Minister to try to set out a full timescale for exactly what will happen and when.

Photo of Stephen Doughty Stephen Doughty Opposition Whip (Commons)

I could not agree with my hon. Friend more about the importance of a timescale. Business requires investment certainty and clear timetables. That is true not only for existing businesses but for businesses that we are trying to attract to Wales. Given the news that we have heard during the past week about possible delays in the electrification of the south Wales main line, is it not crucial for the Government to set out a clear timetable for the road network and for electrification, so that businesses have the certainty they need to invest and grow?

Photo of Nia Griffith Nia Griffith Shadow Minister (Wales)

My hon. Friend makes a good point, which I would have made myself, about certainty for businesses, particularly those that have to plan a long way ahead. Many businesses that invest in south Wales involve the transport of heavy materials, so they use haulage companies.

We need as much detail as possible. If the Minister cannot give us that today, I would appreciate it if he told us when he can give us a timetable for all the different parts of the process: the consultation, the ending of the concession, what will happen then, how long it will happen for and what he intends to do about moving to a tariff that reflects only maintenance charges.

We are so determined to move to a maintenance-only charge because it already seems unfair to pay even for the maintenance of the crossings when we do not have a pay-as-you-go system for any other roads, with one or two small exceptions in the UK. To make one road into a pay-as-you-go system when none of the others is seems totally unfair. It would be absolutely monstrous for it to become a cash cow, because that would be a tax raised on one small group of people, which would be totally out of kilter with any other form of taxation.

I would be interested if the Minister gave any indication of whether the Government intend to keep the matter as a UK Government responsibility, or whether he intends to open the discussion about whether it might be devolved. We really want to open a dialogue with the Minister and get as many answers as possible. We want a very clear timetable to be set out so that we all know where we are, and so that our businesses and industry know where they are and can make the necessary investment decisions. That investment would come to Wales much more readily than it will if businesses see no end to the “continual taxation” on the bridges.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention) 3:06 pm, 21st July 2015

It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate Jessica Morden on securing the debate and on her opening remarks. We in Plaid Cymru have long recognised the importance of the Severn crossings to the Welsh economy, particularly to the public and businesses in the south of our country. The crossings affect the bulk of vehicular movements into Wales, and they are located on a key trans-European route. We believe that future decisions on tolls should not be made by the UK Government, and that it is essential that the tolls be put in Welsh hands following the return of the bridges to public ownership.

As always—as we have just witnessed with the delaying of the electrification of the Great Western line all the way to Swansea—the UK Government’s transport plans for Wales are cloaked in ambiguity. Rather than being straight with the people of Wales about what happens after the end of the concessionary period in 2018, the UK Government have said that they will continue to retrieve costs for an indefinite period.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

Does the hon. Gentleman not accept that the old Severn bridge is entirely on English soil, and that quite a lot of businesses on the English side of the border have an economic interest in the matter? To commence his speech by simply saying that control should be devolved to Cardiff is to disregard completely those who have an equally strong economic argument on the other side.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

I am grateful for that intervention from my constituency neighbour, and I will deal with that subject later. It is the policy of the hon. Gentleman’s party in the National Assembly for the Welsh Government to receive ownership of the bridges after the end of the concessionary period. Indeed, his colleague, Byron Davies made that case in 2013 when he was transport spokesperson for the Conservative party in the National Assembly.

The UK Government are entitled to continue to recoup costs, as I understand it, until 2027, which means that Welsh motorists may continue to be a cash cow for the UK Treasury for nine further years after the end of the concessionary period. As has been said many times during the debate, the people of Wales deserve some straight answers for a change from the Minister about the UK Government’s intentions in relation to the bridges.

Research from the Welsh Government set out that the primary impact of the tolls is on the economy of Wales, rather than on any other part of the UK. The research, entitled, “The Impact of the Severn Tolls on the Welsh Economy”, states that the Severn tolls cost the Welsh economy more than £100 million a year. We believe, therefore, that the Government of Wales should have responsibility for future decisions on tolling. The bridges are the gateway to the Welsh economy, and just as Wales is responsible for roads and economic development, so we should be in control of the bridges when they come into public ownership in 2018. The UK Government must move on this issue and commit to devolving it.

A Plaid Cymru-led Government, post 2016, would reduce the tolls to levels that cover maintenance costs. There are other overheads to consider, such as staffing costs, traffic information provision and other externalities. The Welsh Affairs Committee estimated, based on maintenance costs, that tolls could comfortably be reduced to around £2 from 2013. That estimate included the peaks and troughs of maintenance costs, and is not simply based on a flat rate per year. The figure would have to be updated and reviewed in future, but it gives motorists and businesses a close estimate to consider for the time being. Using that estimate, figures from Arup show that a motorist paying the toll once a week could save around £218 a year. It goes without saying that online and smart payments are essential for the future. If they can be introduced for tolling in a city such as London, there is no reason why they cannot be introduced for a single route such as the M4.

The option of abolishing the toll should be kept under review. I recognise that it could help stimulate the economy and tourism. We want it to be a policy choice that can be made in Wales, depending on the financial situation. We need to look at its costs, affordability, and impact on society and the economy. We would also have to bear in mind that abolition will have a more significant effect, in increasing traffic, than reducing the tolls. There would be an effect on the M4 around Newport to deal with; Plaid Cymru has already recognised that that would cost money. There would also be an effect on the amount of haulage using the crossing instead of rail.

People travelling home to see their families, as well as tourists heading to Wales this summer, will be charged £6.50. Smaller businesses with vans will be charged over £13 and businesses with lorries just under £20 a go. The hon. Member for Newport East gave the example of the huge impact the toll has on the business of the haulage firm Owens, a firm that is well known in south Wales. The toll goes against everything the Welsh Government and the UK Government should be doing to improve the Welsh economy.

Representative bodies such as the Federation of Small Businesses are “vehemently opposed”—that is what the FSB said—to any bridge tolls being used to fund Labour’s new M4 plan. As for relieving the part of the M4 that is part of the road infrastructure served by the bridge, Plaid Cymru prefers the blue route option to the expensive black route option favoured by both the Welsh Government and the UK Government. The debacle about that earlier this month shows that the Labour Government in Cardiff may yet be forced to row back on their decision and implement Plaid Cymru’s much more viable plan, which would allow future investment throughout Wales rather than pumping all the money into one project in the south-east corner of the country. With that in mind, I make a plea for the Llandeilo and Ammanford bypass in my constituency, which has been waiting many years for funding to progress.

The hon. Member for Newport East has done the people of Wales a great service in securing this debate. However, I fear that her colleagues in Cardiff Bay have no share in her efforts. During the previous Parliament, Plaid Cymru submitted a freedom of information request to the Department for Transport. Between May 2011 and the end of 2013, the Labour Welsh Government failed to raise the issue of the Severn bridge tolls with the Westminster Government on any occasion—a dereliction of duty if ever there was one. There is precious little use in complaining about the tolls if the Labour Welsh Government are not prepared even to bother making representations.

Labour’s failure in that regard is symptomatic of the wider malaise in Cardiff Bay. The Government there are tired, sclerotic and devoid of vision and ambition when compared with a Plaid Cymru team full of dynamism, ambition and ideas to develop the economy and benefit the people of Wales.

Plaid Cymru recognises that the Severn tolls have been a burden on motorists, businesses and the public. We want to see them taken into Welsh hands and reduced, for the benefit of the economy.

Photo of Chris Evans Chris Evans Labour/Co-operative, Islwyn 3:13 pm, 21st July 2015

It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend Jessica Morden on securing the debate. In the hours she has spent on this issue I am sure she could have walked to the Severn bridge and back. I had to check for a flying pig when David T. C. Davies was speaking; I did not think I would ever hear him advocate nationalisation with a straight face and without coming out in a rash and a cold sweat. I also congratulate Jonathan Edwards on a speech that, once again, raised the ghost of Rebecca—he will know what I mean.

When the Severn bridge was debated in Parliament back in November 1990, it was spoken of as a link between Wales and the south-west of England, laying the foundations for greater growth for both, helping develop both economies to the benefit of all and providing the infrastructure Wales needed for internal and international trade. Today, sadly, the Severn bridge stands as a barrier to business. The tolls on tourists, on trucks transporting goods and on people travelling for work and for leisure are holding Wales back in an ever-increasingly competitive economy.

The Severn bridge is costing Wales a fortune. Tolls do not make sense for the people who have to pay to see relatives and friends or for the companies who lose hundreds of thousands of pounds each year. Put simply, they do not make sense for Wales. One study put the potential growth of the Welsh economy if tolls were abolished at £107 million a year. To put that in context, the bridge costs £15 million a year to run and raises £87 million a year in revenue.

The tolls are not just holding back potential growth; they are actively encouraging companies to base themselves in the Bristol area and the rest of the south-west rather than coming to Wales, where they are needed. That costs us in employment, taxes and, above all, prosperity. Per mile, the Severn bridge remains the most expensive toll road in the world to travel on, a record no one should be proud of. It is significantly more expensive than the Humber bridge and the M6 toll; it is even significantly more expensive than the next closest international example, the Akashi Kaikyo bridge in Japan—I should get a badge for pronouncing that.

The argument against the tolls is clear. I am pleased to note that, thanks to the work of my hon. Friend the Member for Newport East and others, the Chancellor has to some extent bowed to the pressure, as the category 2 tolls were ended in the March Budget. That was the beginning of the process, but it has been a slow one, and so more must now happen. The Government must once again accept what is needed to boost growth across Wales. Will the Minister say today that VAT will be removed from all tolls on the Severn bridge once it enters public ownership? That call comes not just from me, but from both sides of the House—the hon. Member for Monmouth called for it in his speech. It is eminently sensible, and I hope the Government listen to the Chair of the Welsh Affairs Committee. Conservative Members of the Welsh Assembly have also joined their voices to calls for a cut in the toll.

Beyond the political world, business leaders are also crying out for the change. In my constituency and in those of other hon. Members right across Wales, it is what business wants. I struggle to see why the Government will not commit to the change once the bridge enters public ownership. It is what businesses in Wales need.

Photo of Mark Williams Mark Williams Liberal Democrat, Ceredigion

Will the hon. Gentleman take the opportunity to reiterate the importance of the tourism sector? There has traditionally been a flow of people between the south-west of England and all of Wales—not just the south, but mid and north Wales. A speedy removal of VAT or, better still, scrapping the tolls would give a direct and immediate boost to the tourist sector in Wales.

Photo of Chris Evans Chris Evans Labour/Co-operative, Islwyn

I agree entirely with the hon. Gentleman. He does great work as chair of the all-party group on the tourism and hospitality industry in Wales. Jim Shannon mentioned that in Northern Ireland there are no tolls. The Irish have been very good at selling their culture, and telling people to come to Ireland to see the fantastic beaches. How can we do that in Wales if we have a tax on friends and relatives coming to see how great Wales is? When we think of business, we tend to think of heavy industry and rarely think of tourism. I represent a valleys constituency and have always believed that we do not talk up enough the beautiful valleys in Wales. The hon. Member for Carmarthen East and Dinefwr also represents a beautiful part of the country. How can we ask people to come to our constituencies if they are faced with what is clearly a tax when they get to the Severn bridge?

It is time to end the tax on entering Wales that the Severn bridge toll has become. The Conservative party often talks about its desire to rebalance the economy away from London and the south of England, to spread prosperity to all regions. There is merit in that idea, and I agree with it. The Minister today has a chance to put those words into action.

There are not many issues in our politics that unite the Labour party, Plaid Cymru, business, tourists and the Conservative party—the hon. Member for Monmouth sometimes stands alone in the Conservative party—and even rarer are issues that unite north and south Wales, but this is one. The bridge stands as a barrier to trade and growth. I do not often quote or paraphrase Ronald Reagan. He said:

“Mr Gorbachev, tear down this wall.”

I say, Minister, tear down this toll.

Photo of Drew Hendry Drew Hendry Shadow SNP Westminster Group Leader (Transport) 3:19 pm, 21st July 2015

I too congratulate Jessica Morden on securing the debate. As a former user of the bridge and as the Member for Loch Ness—with reference to our earlier monster turnout—I am delighted to take part.

As the Minister will know, transport and infrastructure are devolved matters in Scotland, and that fact has allowed the Scottish Government to abolish tolls. That has been vital for the local economy and has kept money in people’s pockets at a crucial time. The Scottish National party said in its 2007 election manifesto that it would abolish the tolls, and within nine months as a minority Government it achieved that. Incidentally, the Abolition of Bridge Tolls (Scotland) Act 2008 was the first primary legislation of the new Government and was passed on 20 December 2007.

Abolishing the tolls means that day-to-day running costs and the costs of long-term capital works are met by the Scottish Government. The Scottish Government also provided a one-off grant of £14.8 million to allow the Tay Road Bridge Joint Board to repay all its outstanding loans. The average commuter, working five days a week and with six weeks’ holiday a year, saves a total of £230 a year using the Forth crossing or £184 a year on the Tay crossing. That was widely welcomed by the travelling public and local businesses on grounds of fairness for all.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

Will my hon. Friend explain why the Scottish Government decided to abolish tolls entirely, rather than to move to a maintenance cost level? Was it because tolls were at that level already, or were they set higher than the maintenance level?

Photo of Drew Hendry Drew Hendry Shadow SNP Westminster Group Leader (Transport)

The tolls were of varying costs across the piece. There were some very high ones. The Skye bridge toll, for example, was punishing—even more so than the Severn bridge tolls—but it was about £1 on the Forth bridge. The issue was fairness and the economy across Scotland, and it was about making sure that there was not inequality. That was why we decided to abolish all tolls regardless of the costs involved. There was no good reason for requiring people to pay out of their own pocket to cross over a bridge to work, or for shopping or leisure, just by virtue of where they happened to live.

The benefits have been clear. Abolishing tolls has helped the local economy and tourism, as people can access attractions, leisure activities, social events, shops and so on without being deterred by tolls. By doing that, as well as through measures such as freezing council tax, the SNP has ensured that money stays in people’s pockets. We ask not for whom the bridge tolls; the bridge tolls are free.

Because the matter is devolved, the Scottish Government were able to make the decision that most suited the local economy. The position of our sister party Plaid Cymru on the Severn bridges is to transfer them to Welsh Government ownership. Given the bridges’ position as the gateway to the south Wales economy, it makes sense for Wales to be in control of that strategic piece of infrastructure and to decide on appropriate levels of charging. It has the best understanding of the local economy and its needs. The Severn bridges have the highest bridge tolls in the country, and I believe that Plaid Cymru would like them to be cut to an estimated £1.50 to £2 per vehicle, to cover maintenance costs only. The hon. Member for Newport East has also proposed that.

Decisions about reviewing the price of tolls, what to do with the money raised from them—for instance, investing the surplus in public transport—or indeed whether to have tolls at all may best be made at local level. That has certainly proven to be the case for Scotland.

Photo of Richard Burden Richard Burden Shadow Minister (Transport) 3:24 pm, 21st July 2015

I add my congratulations to those that have been given to my hon. Friend Jessica Morden on securing this important debate and on her years of tireless campaigning on the issue. The same is true of other hon. Members, some of whom we have heard from today, including the Chair of the Welsh Affairs Committee, David T. C. Davies, who made an important contribution. Jonathan Edwards praised himself and his colleagues for their dynamism, and my hon. Friend Chris Evans managed to achieve what I would have thought the impossible feat of getting Ronald Reagan into the debate. Finally, Drew Hendry managed to work in Robert Graves, so that was great creativity.

This is clearly a cross-party issue. It is clear that the crossings are an important transport link between England and Wales, playing a vital role for businesses and the economy as well as keeping friends and families in our two countries connected. So it is unfortunate that the cost and experience of using the crossings has been a source of such frustration for so long. I had a sense of déjà vu when I heard about this debate; then I recalled that it was almost exactly a year ago when my hon. Friend the Member for Newport East last obtained a debate on the issue. Something that has come across clearly today—I hope that the Minister has heard it—is the frustration shared by many hon. Members about the fact that the debate seems hardly to have moved on in a year. Today’s debate is my hon. Friend’s third

Westminster Hall debate on the issue in five years, and the issues that have been raised show that there is still a lot more to do.

The Severn crossings provide an important link in Wales’s transport and economic infrastructure, and they are essential to the Welsh economy. As we have heard, 80,000 vehicles use the crossings every day. It is important that the toll price should provide a fair balance between the cost of better infrastructure and the benefits to the people using the bridge. It has been made clear in this debate that the costs of the Severn crossing tolls seem unfair. Road users relying on the crossings have been hit hard by an inflexible system and an old-fashioned payment system with annual rises until 2018. The charges are the highest of any crossing on the strategic road network. As my hon. Friend said, the current prices are £6.50 for a car, £13.10 for a light goods vehicle and £19.60 for an HGV. On the Humber bridge, a car now pays just £1.50 and an HGV £12. That is a huge issue for people who are already struggling. Transport is a major part of household budgets—a point that my hon. Friend made powerfully.

The Government may point out their commitment to scrapping VAT on tolls and removing the second tier that penalises vans after 2018. However, that does not solve the problem for private drivers or businesses. Private drivers will still have to fork out thousands before VAT is scrapped in 2018. Even then the toll price will still be significantly higher, as far as we can tell, than comparable tolls in the UK.

There are precedents for things that the Government could do. Since 2014 local people eligible for the resident discount scheme at the Dartford crossing have been able to make unlimited trips across for just £20 a year, ensuring that a toll on the strategic road network does not hinder local mobility. In the debate in 2014, I and other hon. Members recognised that there would be a challenge in defining “local” in relation to the Severn bridge and deciding where any discount would start and end, but that challenge underlines why the UK Government must develop the right kind of dialogue and forum with the Welsh Government and local authorities, so that they can look ahead and find a solution to the issue.

As my hon. Friend the Member for Newport East made clear, such practical issues need to be addressed, and they are certainly not addressed by coming out with a lot of rhetoric about English votes for English laws. The situation is a practical example of the necessity of co-operation. The Welsh Affairs Committee also emphasised that in 2011. Will the Minister set out what assessment his Department is undertaking of introducing a local residents’ scheme or some other flexible payment system for the Severn crossings, and what involvement other authorities have had in the matter so far?

Obviously, the tolls not only affect commuters and private drivers but have a significant impact on local businesses and the local economy. Many hon. Members have made that point, including my hon. Friend Nia Griffith. For local businesses, the excessive tolls are a cost that competitors elsewhere simply do not have to pay. We have heard claims that they can add up to £200,000 to a business’s bottom line. Sadly, the benefit of scrapping VAT will be minimal, particularly for HGVs and the freight industry, as they already claim VAT back on the toll. There will be savings only in processing the claims.

Again, the Dartford crossing is a good example of how we could develop best practice, in that it operates an off-peak concession for drivers at night, which benefits HGVs. Surely we can look at some kind of off-peak concession in the case of the Severn bridges. I therefore ask the Government what assessment they are making of waiving tolls for night-time crossings or devising an off-peak concession. I remember that in the debate in March of last year, the Minister’s predecessor, Mr Goodwill, said that the Eurovignette directive currently imposes a 13% cap on discounts for HGVs, but that the discount currently stood only at 10%. I would be grateful if the Minister could update the House on whether those rates are still the same.

A number of hon. Members, including my hon. Friends the Members for Aberavon (Stephen Kinnock) and for Islwyn, my hon. Friend Wayne David, who mentioned local government, and Jim Shannon, who brings experience from Northern Ireland, have said that tolls can have a big impact on economic growth. The Welsh Assembly has estimated an economic loss just for Wales of about £80 million a year. With the debt expected to be about £88 million in 2018, has the Minister received any representations about offsetting any of the debt with the toll rate in order to boost the local economy?

I have referred a lot to south Wales, but of course this is not simply about south Wales. The tolls have knock-on effects in England, such as congestion in places such as the Forest of Dean, which limit the whole region’s economy—something that the Government say they are trying to act on. Will the Minister therefore consider carrying out an economic impact study like the Welsh Assembly’s but including south-west England as well as Wales? Does he agree that when the necessary long-term strategy is being developed, it will be important to reach out to local enterprise partnerships and chambers of commerce as well as local authorities?

Next I want to consider the failure to modernise—a point made powerfully by my hon. Friend Stephen Doughty. We have heard today and in previous debates that the issue is not simply the cost of the crossing but the lack of convenience in how the tolls must be paid. More than a year later, road users without cash still have to enter their PIN into a handheld device, which takes time and slows transit. During last year’s debate, the Minister’s predecessor refused to consider technology enhancements that could speed up queues because, he said, the long-term future of the charging arrangements was not clear. That, I respectfully put to him, is the point that we have been making in this debate and previous debates—that is what needs to be sorted out. It is obvious that some form of toll charge will be in place after 2018 to cover maintenance costs, but I hope that the Minister will commit today to taking account of technological developments in considering how the tolls will be paid and in the long-term strategy.

Simpler solutions could be adopted. I have mentioned the Dartford crossing, and although I do not want to diverge too much from the subject of the debate, Mr Gray, I will just ask the Minister as an aside whether he has any news about the problems there, not with free flow itself but with unpaid notices. What discussions has he had with Highways England and Severn River Crossing plc on introducing contactless payment on the Severn bridge?

The questions that I have for the future are as follows. We have talked about reforms to pricing and payment that could benefit users, but they do not fundamentally address the main issue—that the concession will soon end. I reflected on the debt standing at £88 million. Can the Minister clarify that that is still the case? Can he also offer a more transparent breakdown of the debt, as well as the maintenance costs of both bridges?

The end date for the concession, as we know, is 2018. At that stage the crossing will revert to public ownership, and a decision about how the debt will be recovered and about future toll charges must therefore be made. When will the Government make those decisions? How, in practice, will they work in partnership with the Welsh Assembly and Severn River Crossing plc to prepare for that? The longer we wait, the longer users will have to endure the high charges and inconvenience that they have been enduring for too long.

I hope that the Minister will leave the debate having given us some reassurance on the important questions that my hon. Friends and other hon. Members have asked, and having given a commitment that there will be regular updates on what the Government are considering, whom they are talking to, what ideas are being developed and how the technology will be improved. We do not want to end up in yet another debate, at this time next year, asking the same questions but without any further information about what the Government will do in practice. The crossings are vital for the Welsh economy, the English economy and the co-operation that is so important between our two countries, so I hope that this time the Minister will give the House rather firmer information about how we will go forward than has been the case in the previous four debates.

Photo of Andrew Jones Andrew Jones Parliamentary Under-Secretary (Department for Transport) 3:36 pm, 21st July 2015

It is a pleasure to serve under your chairmanship again, Mr Gray. I congratulate Jessica Mordenon securing this debate about tolls on the Severn crossings. It has become extremely clear, from contributions from hon. Members on both sides of the Chamber, just how important the crossings are to the economy of Wales and to the whole of the west of England. The argument has been made very strongly, particularly with reference to the high volumes of people crossing for tourism or for the manufacturing industry, reflecting key strengths of the Welsh economy.

I am pleased to respond to this Adjournment debate on a subject of great importance to the hon. Lady and her constituents. I know that she has campaigned on the matter for a considerable time. I was quite surprised, but very pleased to find the interest from right across the UK. Lessons from different parts of the UK can always be considered. I was also delighted to hear colleagues argue for less cost on business as a driver of economic growth. That is music to Conservative ears. I also recognise how it links firmly with the Government’s plans to drive infrastructure investment as a key lever of economic growth. I will just say a little, if I may, about how that will work.

The Government have announced increased funding to deliver improvements on our road infrastructure network targeted entirely at delivering economic growth. Our commitment to deliver a step change in our transport infrastructure was made clear by my right hon. Friend the Chancellor of the Exchequer in his statement on 26 June 2013, when he announced the conclusions of the spending review of that year. I am sure that everyone will be aware of the Government’s announcement on 1 December 2014 of the road investment strategy. As part of that strategy, the investment plan outlines how we will invest in the strategic road network between now and 2021 to make the improvements that will put us on the path to delivering all our long-term economic goals. In total, the Government are investing £15.2 billion in more than 100 major schemes, which will enhance, renew and transform the network.

Of course, the strategic road network is solely in England and roads are a devolved responsibility in Wales, but the Government have also provided the Welsh Government with the borrowing powers to fund the new M4 relief road, which I hope will address the congestion that has long plagued that section of the M4. I am highlighting that, because it shows one way of working together—the principle of partnership that I consider to be very positive and that will be most important as we take forward the Severn crossings and their future.

More than 220 million Severn crossings have been paid for since 1992, and traffic has increased by more than 50% over that period. More than 13 million crossings were paid for last year, which is a significant increase of 3.7% on the previous year. We should also note that those figures cover only crossings into Wales—people pay a return toll—and not journeys in the opposite direction. It is reasonable to surmise that the total traffic figures are double the recorded tolls, which highlights the importance of the crossings to the economies of both countries and the role the crossings play in strengthening the bonds that already exist between the two nations, which is of course a key objective of many parties in this House.

The hon. Member for Newport East has raised several issues regarding the Severn crossings, including the tolls that are charged for using them. As she knows, for decades successive Governments of all persuasions have held the view that crossings on estuaries should be paid for by the user, rather than by the taxpayer. They have taken that approach because of the outstanding savings in both time and money that such expensive infrastructure projects make possible. It is important to make that point at this stage, and it should be remembered.

I hesitate to provide a historical context, because I know that the hon. Lady is acutely aware of all the history, but it is relevant. The first Severn bridge was tolled when it opened in 1966 to pay for its construction, and it enabled a direct link from the English motorway network into Wales. However, it was not long before the first crossing operated significantly above its designed traffic capacity, and it became clear that further capacity would be required. In order to fund a second crossing, a concession agreement was signed with Severn River Crossing Ltd, which took on the operation and maintenance of the first bridge and the construction of the new bridge. The second bridge subsequently opened in 1996.

As is the norm with concession agreements, Severn River Crossing Ltd is authorised to collect tolls to meet its financial obligations. Those tolls are in place to repay the construction and financing costs of the second Severn crossing, to repay the remaining debt from the first river crossing and to maintain and operate both crossings, and the tolls form the company’s only source of income. The concession agreement was structured so that certain risks, such as costs relating to latent defects on the first crossing, were borne by the Government, rather than by Severn River Crossing Ltd. By taking on those risks, the Government were able to finance the construction of the second crossing and the maintenance of both crossings at much lower cost than they could otherwise have achieved. If those risks had been included in the concession arrangements, the tolls that users have paid for many years would necessarily have been considerably higher, which would have pushed back the concession further than the current projected end date of 2018.

Members have asked when the concession will finish. That will happen when it has achieved total income of £1.029 billion at 1989 prices, so it is not possible to give an exact date for when it will finish. We are able to project ahead based on current usage but, as I mentioned earlier, usage is going up, so the date may come forward.

Photo of Jessica Morden Jessica Morden Labour, Newport East

Will the corporation tax cut have an impact? Does the Minister anticipate that that will bring forward the date when the concession ends?

Photo of Andrew Jones Andrew Jones Parliamentary Under-Secretary (Department for Transport)

The corporation tax cut should be viewed as part of a broader economic package to drive growth. The more economic activity we have, the greater the use of the crossings will be. The corporation tax rates paid by individual companies are not part of this process, but the overall activity that the Government are seeking to create through a vast focus on economic growth will certainly bring things forward, as more economic growth means more crossings, and more crossings mean more revenue, which means that the target will be reached earlier.

The Severn Bridges Act 1992 sets out the tolling arrangements and the basis for yearly increases in the toll rates. New toll rates are introduced on 1 January each year and are increased in line with the retail prices index using a formula that is then rounded up to the nearest 10p. I stress that the Secretary of State for Transport does not have the authority to reduce Severn tolls without amending primary legislation and obtaining the concessionaire’s agreement. The concessionaire is extremely unlikely to agree to anything that would affect its net revenue without compensation and agreement from its shareholders and lenders. That is a key point, because we are talking about what happens after the concession ends.

At the end of the concession, as everyone has noted, the crossings will revert to public ownership. As the Chancellor stated in his March Budget, once the crossings are in public ownership, VAT will no longer be payable on the tolls, which will be reflected in the toll prices. Members have asked for clarity on that, and I am happy to confirm that VAT on the tolls is going.

Photo of Jessica Morden Jessica Morden Labour, Newport East

The Minister will know that, as the tolls go up automatically in 2016 and 2017, by the time the toll increases are applied in 2018, taking off the VAT will return the tolls to about £5.60, according to my back-of-an-envelope calculation, which means that about 90p will come off in two and a half years’ time. Does he appreciate that that is no great shakes?

Photo of Andrew Jones Andrew Jones Parliamentary Under-Secretary (Department for Transport)

Removing VAT will result in a significant cost reduction. Of course, like all Members, I would like cost reductions in all sorts of areas of our economy, but to say that VAT reductions are matters of great insignificance is simply wrong. It should be remembered that further reductions in tolls for some vehicle classes once the crossings return to public ownership were also announced in the March Budget. The Chancellor announced that, when the concession to toll the crossings ends, the higher toll rate for vans will be reduced to the same rate as for cars, which will be a significant benefit to smaller businesses on both sides of the crossings. So we are considering some toll reductions, which is significant.

Our intention is to continue tolling after the projected end of the concession in 2018 simply to recover the costs that have been incurred in relation to the crossings that fall outside the agreement. The current projection of those costs stands at £88 million. We have not made any decisions about the operation and tolling arrangements for the crossings once the current regime ends. The road investment strategy contains the Government’s commitment to working with the Welsh Government and others to determine the long-term future of the Severn crossings. The Under-Secretary of State for Wales, my hon. Friend Alun Cairns, who is sitting next to me, has done excellent work in highlighting the economic impact that the toll reduction for vans and the VAT reduction will have on the area and in explaining the importance of the crossings overall. We have already met to discuss that subject, and I anticipate that we will meet again shortly.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

The Minister says that the Government have not yet made a decision, and 2018 is not that far away. As hon. Members said earlier, business abhors a vacuum. Business needs certainty, and it needs to know where its costs will be. Can we please have clarity on when the decision will be made and why it cannot be made within a defined period of time?

Photo of Andrew Jones Andrew Jones Parliamentary Under-Secretary (Department for Transport)

Although 2018 is not that far, it is still three years away. Work on what happens next is under way. We are looking at a potential end date for the concession of around 2018. It is a financial target, rather than a fixed date, which means that we have a requirement to plan appropriately, and I will address that next.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

As I said in reply to an intervention during my contribution, the Minister’s party in Wales is campaigning for the Assembly elections, which are less than a year away, on the basis that the Welsh Government will have control of the Severn bridges and that, under his party’s control, the costs will be reduced. He has clearly not made up his mind on the ownership of the bridges following the end of the concessionary period. Is it not the case, therefore, that the pledges his party is making in Wales are not worth the paper they are written on?

Photo of Andrew Jones Andrew Jones Parliamentary Under-Secretary (Department for Transport)

One aspect of devolved government, which is what we have now in the UK, is that the same party will hold different views in different areas, reflecting local circumstances. That happens throughout the UK, and I think that it is a positive rather than a negative that people are arguing, lobbying and making the case for their area. It happens, and we should get used to it, because it is here to stay while we have a United Kingdom with devolved Assemblies and Parliaments.

I mentioned that we have not yet made any decisions about the arrangements after the concession finishes, but the Government have been clear that we will need to make proper provision for the repayment of debt and for future maintenance.

Photo of Nia Griffith Nia Griffith Shadow Minister (Wales)

I appreciate that we cannot expect to have all the answers today, and that there are difficult decisions to make and things to work out. However, can the Minister set a timetable in the very near future for when all those things will be done, so that come September, we will know what is likely to happen and when we are likely to get certainty? That is what we really want to know.

Photo of Andrew Jones Andrew Jones Parliamentary Under-Secretary (Department for Transport)

I cannot give the hon. Lady a final date, but I can tell her that that work has started and is taking place in the Department, with colleagues in the Wales Office. Let me leave hon. Members in no doubt that the Government are committed to the successful operation of the crossings. They are vital, and the economies on both sides have benefited greatly from their presence.

Photo of Richard Burden Richard Burden Shadow Minister (Transport)

I think that the Minister may inadvertently have misunderstood my hon. Friend’s question. She was not asking him when the Government will make their final decision; we understand that that will take some time. She was asking for a timetable or road map of the process whereby decisions will be made. Who will be talked to at which stage? Which agenda items will be discussed at which stage—the debt, toll levels, the technology, off-peak reductions? In the autumn, can the Minister give some kind of timetable for when those things will be considered?

Photo of Andrew Jones Andrew Jones Parliamentary Under-Secretary (Department for Transport)

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.

Photo of David Davies David Davies Chair, Welsh Affairs Committee, Chair, Welsh Affairs Committee

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.

Photo of Andrew Jones Andrew Jones Parliamentary Under-Secretary (Department for Transport)

The annual accounts for the Severn river crossings will be published shortly, and I will consider what other information can be made available. However, we must be a little cautious about hypothecating the amount of VAT raised, but on general principles of transparency, I am more than happy to supply that figure. I cannot stand here and give my hon. Friend large amounts of data this afternoon, but we will approach all investment issues on principles of transparency and collaboration, including data transparency.

Numerous questions were asked; I will answer some of them now. It was asked whether the Severn crossings could be handed over to the Welsh Government. I have absolutely no plan whatever to change ownership, but I have every intention of working together on future operation of the crossings. We will take that forward in partnership and consultation. The publication shortly of the annual accounts was mentioned. Many requests about consultation have been made. I am happy to commit to all that and to hear from all parties, including from local councils in the area and any local enterprise partnerships. The key point is that nothing has been decided. All policies are still under consideration.

Several colleagues mentioned technology. The opportunities presented by technology are significant, and it can make an enormous difference. I have started to consider whether we can take lessons from other free-flow schemes in our country, notably the DART tag scheme, which has made a significant time saving for commuters on the Dartford crossing. We are considering whether that could be used on the Severn. I am also considering whether it could be made collectable both ways; technology frees up opportunity, and I think that it would prove popular.

When the concession ends, we have a significant opportunity. I am extremely keen to ensure that we take it, because the whole project matters. We know full well, as has been made clear in this debate by colleagues from across the House, just how important the crossings are to the local economy and nationally. The people of the area have been paying to cross the Severn, but I remind colleagues that we are in a period of significant infrastructure investment. This Government are delivering the most ambitious road investment scheme since the 1970s. I view the Severn crossings as an integral part of our transport infrastructure, which is why we are taking forward work in my Department. We have three years to ensure that we get it right and to improve the situation for the area. This is a fantastic opportunity, and I look forward to working with colleagues here and locally to ensure that we get it right.

Photo of Jessica Morden Jessica Morden Labour, Newport East 3:56 pm, 21st July 2015

I am grateful to the Minister for that response, although I suspect that hon. Members and Friends will have more questions to ask him. I thank colleagues for coming today; I counted about 15 in the Chamber, which shows the high level of interest in the topic.

In thanking the Minister for his response, I reiterate to him the list of points raised in this debate, and I suggest that he writes to all Members here to outline the answers to some of the questions asked, not least to spare him from having to come back yet again for another 90-minute debate on the Severn bridge tolls. To reiterate, the wish list from this debate includes financial information about the Severn bridge tabled for hon. Members to scrutinise—I am sure that the Select Committee on Welsh Affairs will return to that in its work—and a clear timetable about where we will be in future, as mentioned by my hon. Friend the Member for Llanelli. Perhaps the Minister will also commit to meeting groups of us to give us regular updates, not least to spare himself another debate.

Photo of Jessica Morden Jessica Morden Labour, Newport East

I thank the Minister for that. To reiterate what the hon. Member for Monmouth and I said earlier, this Government have done extremely well out of the bridges; they have been a cash cow. The Government’s assertion that they might keep on tolling rather than reduce the high tolls after the concession ends—we know that although the debt will be £88 million, the Government have already recouped £154 million in VAT response—will not go down well. I would appreciate it if the Government reconsidered reducing the tolls further.

Question put and agreed to.


That this House has considered tolls on the Severn bridges.