Parliamentary debate 31/1/17: Future operation of the Severn Bridges

The tolling regime on the M4 Severn crossings has remained pretty much the same since the Severn Bridges Act 1992 enabled the Government to award a concession to Severn River Crossing plc. The company’s remit was to build a second bridge and maintain both bridges for the concession period. The Act authorised Severn River Crossing (SRC) to increase tolls annually in line with inflation but did not permit any variation in the times when tolls apply or the proportional relationship between prices for different classes of vehicle.

Now that the concession’s end is drawing close politicians have the first opportunity in a generation to change the tolling regime.

Financing

Under the terms of the concession agreement SRC took on existing outstanding debt of £122 million in 1992 prices and construction costs of £330 million (excluding VAT). In return SRC is authorised to collect tolls from both Crossings to meet its financial obligations.

The concession agreement is valid until SRC has generated a defined amount of revenue or for a maximum of 30 years (whichever comes sooner). The defined amount of revenue is currently set at £1.029 billion in July 1989 prices, and this figure is expected to be reached in late 2017 or early 2018, at which time the ownership of the bridges will return to the UK Government.

In an October 2015 letter to the chairman of the Welsh Affairs Select Committee, David T C Davies, the Transport Minister said that SRC had paid HMRC £154.2 million in VAT between 2010 and 2014.

Government proposals for change

The National Assembly for Wales last year voted for the Severn tolls to be abolished entirely but the Welsh Government does not have the power to deliver this because the crossings are not devolved.

On 13 January the UK Government began a consultation on the tolls’ future, including price reductions of at least 50% for all users. This would involve replacing the current toll of £6.70, for cars and other category 1 vehicles, with a charge of £3.00 as well applying this reduced category 1 charge to small buses and vans currently within category 2 and subject to a toll of £13.40. The toll for large vehicles under category 3 is proposed to be reduced from £20.00 to £10.00.

Other options under consideration include a free-flow electronic charging system, although the DfT acknowledges that many road users would prefer to continue paying at booths. Charges could be levied in both directions (currently the charges only apply to westbound traffic) and they could be removed altogether at night.

The payment currently required to use the Crossings is a toll which increases annually in line with inflation. The UK Government is proposing to replace this by introducing a Charging Order under section 167 of the Transport Act 2000 which will “change the legal status of the payment…from a toll to a road user charge”. It suggests that this change of status will enable it to “reduce the amount users pay more easily.” According to the Welsh Assembly Research Service Assembly Members have expressed concerns over proposals for road user charging and its legal basis. The Cabinet Secretary for Economy and Infrastructure, Ken States, stated in a debate on 17 January that it is a “very complicated and complex area of legal work” and that the Welsh Government supports abolition of the toll on an economic basis alone.

Lessons from Dartford?

This is previous what happened on the Dartford Crossing. In 2003 the ownership of the Crossing reverted back to the Government and it replaced the toll with a road charge under the 2000 Act. The local councils do not get any money from the toll. A 2009 FOI response from the Department for Transport explained their reasons for this.

In November 2012 the Highways Agency published detailed proposals to introduce post-payment and enforcement measures that would support the introduction of ‘free-flow’ charging at the crossing. To support this change the Department published detailed proposals to provide “fair and effective enforcement of free-flow road user charging”: HA, Introducing post-payment periods and enforcement measures for ‘free-flow’ charging at the Dartford-Thurrock River Crossing: Consultation document, November 2012; and DfT, Road user charging scheme regulations: consultation, November 2012.

Section 5 of the Government’s May 2012 Impact Assessment on the introduction of free flow sets out their estimates of the cost of such a scheme (installation, running costs etc.).

The freight industry had previously welcomed the idea of reducing the tolls. Ian Gallagher, the Freight Transport Association (FTA)’s Head of Policy for the South West and Wales, said: “FTA has been pressing for these tolls to be reduced or scrapped altogether so is success for fairness and a big win for our members … This is a vital connecting route and any reduction in charges will be of huge economic benefit to hauliers who regularly use the bridges”.

The South Wales Argus reported that although the majority of residents in Monmouthshire and South East Wales see the toll reductions as positive, there are some who are worried about the impact the cuts could have. Some councillors said that as well as the potential positive of bringing tourism into Monmouthshire, the cheaper prices could alternately mean people may travel to larger shopping centres in England, such as Bristol’s Cribbs Causeway. Chepstow town councillor Hilary Beach expressed concerns that the reductions could have an effect on house prices: “Even with the bridge toll prices at the moment there are people who are coming across from Bristol to buy houses. We are already short of housing and we need affordable housing here. It could have a huge effect if house prices go up”.

Further reading

• Recent Parliamentary statements, questions and debates can be found via Parliamentary search.
• There is further analysis, including debates about the merits of abolishing the tolls and the view from Wales, in the National Assembly for Wales Research Service’s excellent blog post Proposed toll reductions for the Severn Crossings, 20 January 2017.
• The UK Government’s proposals and the draft charging order can be found via DfT, Severn crossings: proposed toll reductions, 13 January 2017.
• Further background can be found in multi-year work by the Welsh Affairs Select Committee, particularly its detailed 2010 report; oral and written follow up work in 2013-14 and an oral evidence session in July 2016.