§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heathcoat-Amory.]1.23 am
§ Mr. George Howarth (Knowsley, North)
The financial position of the Mersey tunnels is not merely a Wirral or Liverpool issue. It affects the ratepayers of Merseyside and, indeed, will affect poll tax payers from next year. It is, in basic terms, a desperate position. The estimated income from the tolls for the two tunnels amounts to £12.1 million for 1989–90, and the estimated expenditure for the same period—taking into account operating costs of £6.5 million, asset financing of £4.8 million and debt charges on capitalised deficits of £9.6 million—amount to £20.9 million. That leaves a deficit of £8.8 million to be picked up by Merseyside ratepayers.
The problem has implications for future years as well. In Knowsley, the estimated total cost to ratepayers from 1988 to 2002, if no action is taken to resolve the problems, is £7.7 million.
§ Mr. Terry Fields (Liverpool, Broadgreen)
The Euro-MP for Humberside is seeking, through the Commission, to introduce legislation that would ensure that the tolls on all roads, bridges and tunnels are removed by 1991. The figure for Liverpool as a whole is £23.8 million for the same four-year period. Liverpool ratepayers will have to shoulder that burden. In addition, the tolls amount to £35 million. Liverpool ratepayers, and those in Knowsley and other boroughs in the area, will have to shoulder a total burden of £58.8 million. Does that not reinforce my hon. Friend's argument that tolls should be scrapped and that the Government ought to pay the debts that have been incurred?
§ Mr. Howarth
I am grateful to my hon. Friend. Urgent action needs to be taken. The Humber bridge is an example to which we ought to return. The Liverpool problem is mirrored by that in Knowsley. Only 1 per cent. of Knowsley residents regularly use the tunnel.
§ Mr. Ronnie Fearn (Southport)
Is the hon. Gentleman aware that Sefton ratepayers will have to foot a £14 million bill between 1988 and 2002, as well as a bill of £11.25 million for tolls? Does he think that now is the time to get rid of tolls altogether? The Mersey tunnel has become part of the national road network. That would relieve ratepayers of the debt that has been incurred and of the tolls that they have to pay when they use the tunnel. Ratepayers would then get a square deal. At the moment a precept is being levied that ought not to be forced on them.
§ Mr. Howarth
The hon. Gentleman makes a point on behalf of all the borough of Sefton that applies with equal force to all Merseyside districts.
The origin of the problem goes back to the 1960s when the volume of cross-river traffic in 1982 was estimated to be 130,000 vehicles a day. In reality, however, the actual flow in 1982 turned out to be only 60,000 vehicles. The implications in terms of tolls are clear. No doubt some people will advance the superficial argument that those who use the tunnels should bear the cost. That is very much the argument that the Prime Minister seems to be advancing for the Channel tunnel. However, Merseytravel, which is responsible for the operation of the 161 tunnels, was waiting until today for permission from the Secretary of State for its current proposals, which would increase tolls from 50p to 60p for cars, from 50p to £1.20 for medium-sized goods vehicles and from £1.20 to £1.80 for heavy goods vehicles. Those tolls would be indexed to meet future rises in inflation.
Merseytravel has received a letter today that gives permission for the toll increases. Paragraph 7 of the letter, however, seems to argue against the permission granted by the Secretary of State. It suggests that the toll increases are insufficient and that there has been no substantial settlement of the problem.
Free toll crossings are not just a political issue. The Merseyside chamber of commerce argues thatTolls inflate the overheads of road transport operators in areas where there is a toll crossing and constitutes an expenditure which similar companies in other parts of the country do not have to bear.
§ Mr. Robert N. Wareing (Liverpool, West Derby)
Does my hon. Friend not agree that it is inequitable that Humberside ratepayers are not required to pay the full cost of the Humber crossing, despite the fact that, unlike the Mersey tunnel crossings, two inner-city areas are not linked? The Mersey tunnels are vital because they form part of the national network. They are also part of the regeneration of Merseyside. That can be achieved only if the Government provide for the cost of the tunnels. If they mean what they say about aid for the inner cities, they should be helping with the tunnels.
§ Mr. Howarth
I thank my hon. Friend for that intervention, which supports my argument.
The chamber of commerce said:The money spent by citizens on this part of their rate bills, coupled with toll expenditure itself, effectively removes some funds from the local economy to the disbenefit of all".There is also the argument about fairness as between major conurbations to which my hon. Friends have referred. The comparison can be made between Merseyside and Glasgow, another conurbation divided by a river. In Glasgow all the crossings are free with the exception of the Erskine bridge, which is operated by the Scottish Office, and the Scottish Office is currently seeking to effect a reduction in tolls for the purpose of economic regeneration. Similarly, Greater London—also divided by a river—has many free crossings and only one toll crossing, the Dartford tunnel.
There has been a great deal of talk about this problem for many years but to date the Government have shown little or no interest in any action. The Government are currently urging Merseytravel to provide a reasoned case for a solution, yet all the evidence necessary already exists. As recently as October 1987 the then Mersey passenger transport authority published the document "Merseyside Tunnels—the case for Government assistance", which sets out the situation clearly and comprehensively. In December 1988, in evidence provided to a public local inquiry, William Austin Varney presented a very detailed account of the situation. It is disingenuous of the Government to pretend that they need more information.
I understand that the Department of Transport recently suggested five options. First, it suggested that tolls could be increased. That suggestion has been agreed today. Merseytravel has made the application and the decision has been made, but it smacks of evasion. There was a long delay in reaching the decision, and many of us do not agree that it was the right solution.
162 The Department then suggested that the deficit could be capitalised, but the Government know full well that there is no legislative framework which would enable Merseytravel to do that without specific Government permission.
The Department's third suggestion was an interest holiday, but as all the debt on the Mersey tunnels is outstanding—to the Department of Transport or the public works loan board—that, too, would require specific Government decisions.
Fourthly, the Department suggested writing off some or all of the debt. That avenue should be pursued. There is a precedent in the form of the Humber bridge which has had two thirds of its debt written off.
Finally, the Department has suggested precepting which would take us no further, as the Merseyside ratepayers would be picking up the tab again.
There is no doubt in my mind that Merseysiders are being unfairly treated on this issue. The current state of affairs puts Merseyside at a distinct disadvantage in comparison with Humberside, Glasgow and Greater London. It is high time that the Government stopped evading the issue and agreed a solution that would not place an unfair disadvantage on the ratepayers of Merseyside or on the local economy. Sadly, the latest decision, received today, does not achieve that. The time for talk, reports, studies and inquiries is over and the Government should act to solve the problem now.
§ The Minister for Roads and Traffic (Mr. Peter Bottomley)
I note that a number of hon. Members have participated in the Adjournment debate of the hon. Member for Knowsley, North (Mr. Howarth). The House will wish to acknowledge the presence of my hon. Friend the Member for Wirral, West (Mr. Hunt) who has been assiduous in putting the case to me. It was not my hon. Friend, however, who was asking for a contribution of £4,000 a year from the disabled people who, I note, Merseytravel will now require to pay. We are talking about debts of £114 million, and it does not seem obvious that suddenly to require the 200 disabled people who use the tunnels regularly to contribute is the way forward. The hon. Gentleman did not mention that in his remarks, and I refer him to the press notice from Merseytravel of 7 April this month.
Saturday's edition of the Liverpool Echo, the last piece of journalism before the ghastly tragedy at Hillsborough —I extend my personal sympathy to people in Liverpool and Merseyside as, having been present at the Heysel stadium in 1985, I am aware of the effects that the disaster will have on local people—contains an article entitled, "Tunnel Vision" which describes somethingdespicable, deplorable—and downright shameful".The hon. Member for Knowsley, North has talked about the size of the overall debt. It might be useful to the House if I go through some of the history in the hope that it will be possible to find a way forward which depends on proper discussion.
The Mersey tunnels have been built and operated as tolled crossings under legislation promoted by the local authorities that dates back to 1925. In this respect they are not unique: other major tolled crossings such as the Tyne tunnels, the Dartford tunnels and the Humber bridge were promoted in the same way.
163 In the Government's response in July 1986 to the report of the transport committee on tolled crossings, we emphasised that tolled crossings should be the responsibility of the local authorities which promoted them. Those local authorities accepted tolls as the best means of getting the required crossings without placing an intolerable burden on ratepayers. They financed construction by borrowing, with the intention of servicing, and ultimately repaying, those loans from toll revenue. We pointed out that these obligations were freely incurred by those local authorities.
§ Mr. Fields
Does the Minister accept that at least part of the responsibility for the Mersey tunnels lies with the Department of Transport? The decision to build a second toll tunnel was based on projections of traffic volume which proved to be highly inaccurate. Therefore, the Department is responsible for encouraging the building of the second tunnel and backing it at the time.
§ Mr. Bottomley
If we were to debate responsibilities for everything that has happened in and around Merseyside and in Liverpool itself, we should be having a debate which lasted rather longer than the allocated time for an Adjournment debate.
We do not accept that local authorities should now be relieved of those obligations because toll revenue has not been as high as expected, or because they may be reluctant to increase charges, except for the 200 disabled people.
§ Mr. Bottomley
The hon. Gentleman says, "That is a cheap point," but £4,000 a year compared with £114 millions a year seems to justify some of the comments in the Liverpool Echo.
§ Mr. Bottomley
The hon. Gentleman, from the back row says, "Do not believe the Liverpool Echo." Perhaps I should believe the press notice from Merseytravel on 7 April, but perhaps that was not in the hon. Gentleman's briefing.
We went on to make it clear that the Government could not accept that they should simply write off the debts of tolled crossings. We have said that we accept that there may need to be exceptions to that policy and we are willing to consider reasoned argument for special treatment in particular cases. The Humber bridge is one. We are even now considering the report by the inspector who held a public inquiry into proposals by the Humber bridge board for a toll increase. When that has been decided by the Secretary of State, we shall consider the carefully reasoned case by the Humber bridge board for writing off a proportion of that bridge's debts which cannot be met from tolls, or from other sources available to them under the Humber Bridge Act.
We stand by our statement in the response to the Transport Committee, that if other crossing authorities consider they face similar problems to Humber, albeit on a lesser scale, we would be willing to consider with them 164 their financial projections and proposals for alleviating their problems. We would expect those authorities to have exhausted the possibilities of their enabling legislation.
Those statements of Government policy set the background against which the financial position of the Mersey tunnels has to be judged. What has the Mersey tunnels authority done since the summer of 1986—nearly three years ago—in response to that statement?
There have been a series of meetings between officials of my Department and the Merseyside passenger transport authority about the tunnels' finances. Early in 1987 the authority appeared to accept that, with the approaching end of the power to capitalise deficits, there was a need for urgent action to deal with the tunnels' debts and that a substantial toll increase was likely to be required, as well as some measure of precepting of local ratepayers. It was explained to the PTA that any further use by the Secretary of State of his power to approve capitalisation before the power ends in December 1989 would depend on it preparing a package of measures which would place the tunnel on a sound financial footing.
At a further meeting in June 1987, it was agreed that the PTA would produce a range of options for improving the finances of the tunnels comprising tolls increases and some precepting. At another meeting, in July 1987, the Department's officials stressed the need for detailed proposals so that the need for assistance to meet any residual problem could be assessed. Later that month, officials wrote to the PTA asking for a package of options for the long-term financing of the tunnels, including financial projections to, say, the year 2000. They also asked the authority to make it clear whether it would propose any extension of capitalisation powers, or any other special treatment of the debt. They stressed that the measures should be realistic.
The next we heard from the PTA was in September 1987. It planned to canvass various options of toll increases for various amounts, including toll increases to 60p, 70p, 80p or £1 for cars and equivalent amounts for other vehicles. It envisaged a consultation period up to the end of that year. The PTA said it intended to prepare a case for Government assistance. To assess the effects of higher tolls and higher precepting on the transport system of Merseyside, a cross-river survey would be set in hand.
In October 1987 we received a copy of the PTA's consultation paper and a request for Government assistance. That request did not contain a package of options or long-term financial projections. In December 1987, officials of the Department had another meeting with the PTA, and offered assistance in constructing long-term financial projections.
At the same time, the PTA was informed by letter of the decision of the Secretary of State that the power to capitalise interest charges should be extended for only six months until 30 September 1988. This was intended to give a breathing space for the PTA to come forward with suitable solutions. It was also felt that capitalisation, which is akin to paying a mortgage with a credit card, would not help in providing an answer to the mounting debts.
From early 1988 onwards, the Department was closely involved with the PTA in producing long-term toll projections to help it prepare a case for Government assistance. In February 1988, we learned that the PTA proposed to increase tolls only to the extent that the car 165 toll would be raised from 50p to 60p, with increases also for other classes of traffic. That was hardly a major step towards resolving the debt problem.
The order was published in April 1988 and on 15 June the Department was told that objections had been received. Arrangements were made in early August for a public inquiry, which took place in December. The inspector's report was received on 30 March this year. On 14 April the Department issued the letter setting out the Secretary of State's decision approving the toll increases proposed. I would add that a year is not an exceptional time for processing a toll increase. A decision on the 7 December 1984 tolls order could not be reached until 25 July 1986.
The PTA was meanwhile making little progress in preparing a package of options, although the Department continued to help in the production of long-term projections. We were surprised when the PTA presented its 1989–92 expenditure plan to the Secretary of State in July 1988 to find that it contained a proposal that we should write off £80 million of the tunnels' debts. There was no indication as to how that amount had been derived. It did not arise out of any assessment of the sort of tolls tunnel users could he asked to bear or the charges that local taxpayers could be expected to meet for the sake of the benefit the tunnels provide. It did not arise out of any of the projections which the Department had spent time helping to produce. We found in fact that it was no more than the PTA's pro-rata calculation of the amount it thought the Government would write off on the Humber bridge. The fact that the Government had not, and still have not, reached a decision on the amount of the Humber bridge debts to be written off was deliberately overlooked. That is not what anyone can regard as responsible financial management.
The Department nevertheless persisted in its attempts to find the basis for some agreed options. A further meeting on 23 August 1988 considered the projections that had jointly been produced. The PTA was again asked to consider a range of options for putting the tunnels on to a sound financial footing. It was suggested that these could comprise various elements. The first was further tolls increases, by, say, 1 October 1990, at about the present real value of the 1971 Kingsway first bore operating toll. The second alternative was the financing of deficiencies through the PTA's precept on its constituent authorities. A third option was the extension of powers to capitalise interest not serviced by the operating account as a short-term measure up to December 1989, or in the longer-term, which would require fresh legislation. A fourth option was a possible debt charge holiday on the Department's loan, thus reducing the demands on the tunnels' finances by up to £2.662 million per annum for a specified period, or, fifthly, the write-off of debt, which would be the last resort.
The Department asked to have the PTA's proposals by the end of September 1988, but nothing arrived. We are still waiting. On 26 October, we received a letter from the clerk to the authority reiterating that the authority's package of proposals was the tolls increase that had been proposed, the writing-off of £80 million of debt—which, as I have said, had no reasonable basis and was quite 166 unacceptable—and future tolls increases, perhaps every third year, to keep the proposed 60p toll in line with inflation. The clerk said:any other option does not constitute Authority policy.So that was that, with no suggestion of willingness to proffer other options, and there the matter has had to rest. Because of the Secretary of State's role in determining the recent tolls increase application, we were unable to hold further discussions with the PTA between the closing of the public inquiry in December and the Secretry of State's decision.
The Secretary of State has now reached his decision on the tolls increase, which can be implemented. As the authority well knows, this increase will not put it on the road to reasonably early financial recovery. We have seen the projections put to the inquiry. They include calculations based on options other than the toll increase to 60p, which was put to the inquiry. They are of little use if the authority is unwilling to offer to implement them.
This is a sorry story. A cynical man might divine some procrastination on the authority's part. Why is it that fruitful discussions were possible with the Humber bridge board, which produced a range of options which it was willing to discuss, but not with Mersey authority? Why have nearly three years of talks produced no long-term solution? A parody of the song comes to mindseveral years older, and deeper in debt".This is no laughing matter. The policies of those responsible for the tunnels over the years have been found wanting. If, since the opening of the first of the new Mersey tunnels in 1971, tolls had kept pace with inflation, the car toll would now be 80p, not 60p; the tunnels' debts would now be £80 million not almost £120 million, and the local ratepayer would not be facing the risk of larger precepts to cover the Mersey tunnels' debts. I suspect that we would not have received a press notice from Merseytravel saying that the £4,000 saving is a necessary response to Government inflexibility and comparing it with the £40 million forgone by not keeping tolls in line with inflation since 1971.
There is common agreement among hon. Members for a speedy resolution of this matter. Officials have again arranged to meet the PTA on 28 April to discuss possible financial packages. If it is prepared to put forward a reasoned case based on a sensible assessment of the various options and is prepared to give an undertaking to do so in advance of that meeting, it can proceed. If all that it is prepared to do is to hark back to empty and unsubstantiated claims for the United Kingdom taxpayer to meet debts which it has failed to meet out of tolls or local taxation, there is little point in further discussion.
The distinction between the Humber bridge board and the Mersey authority is that the Humber bridge board has been willing to hold serious and detailed discussions. The Government are willing to assist the PTA with its problems if the need is proven, and if it can show that it has done all that could be reasonably expected to help itself. That condition has not been met so far. It must now be for the PTA to decide whether it wants to put forward proposals and enter serious discussions or to continue to wish upon the people of Merseyside continuing self-imposed financial burdens.
Question put and agreed to.
Adjourned accordingly at twelve minutes to Two o'clock.