7 February 2015

Dear Councillor,

At your Budget meetings next week you will be considering the level of Tunnel tolls from April. As this is the first year of the Combined Authority, a month ago we asked some questions on this year's process for setting the tolls. In effect, Merseytravel did not give a proper answer to our questions and it is only now that the reports for the two meeting have been published that the process is clearer.

It seems from the reports that the tolls decision has already been made as the draft budgets assume that the tolls will rise and the tolls report item going as Item 7 to the Liverpool City Region Combined Authority meeting on the 13th also assumes that the Merseytravel Committee on the 12th have decided to increase the tolls. despite that we ask that you do not support any increase in tolls.

Those members who were on the Transport Authority a year ago may recall that the MTUA emailed you just before the February 2013 meeting which approved a toll increase -

http://www.tunnelusers.org.uk/tomitamembers5feb2014.pdf

At the time of the increase, Merseytravel made what we thought were misleading statements and we sent you another document after the February meeting -

http://www.tunnelusers.org.uk/tomitamember11feb2014.pdf

Attached is a new document which reiterates some of the points that we have made in previous years. We apologise for its length and detail but we need to do this to try and counter the claims that are made on behalf of Merseytravel. As before, we invite you to point out to us anything that we say which you believe to be untrue, inaccurate or misleading.

Yours sincerely,

Dave Loudon

Chairman

Mersey Tunnels Users Association

To Councillors on Merseytravel Committee

To Council Leaders who are full members of the Combined Authority

To Merseytravel & LCRCA  from MTUA - Various points on Tunnels Tolls

a) Any Tolling is wrong.

Some of the reasons why we believe this can be seen here -

http://www.notolls.org.uk/#reasons

The Tunnels tolls are particularly unfair because -

 no comparable area has had to suffer tolls for over 80 years,

 they are virtually a 'Wirral' tax, and

 the tolls are far in excess of what might be needed to cover costs

b) There is no legal requirement that the tolls payable must be increased.

Merseytravel members are usually told about the “Section 92C discretion to reduce the tolls” and prior to this year were also usually told that the discretion should only be used “under exceptional circumstances of an economic or social nature”. In fact the law did not refer to “exceptional” circumstances and Merseytravel this year are no longer making that claim, though they still claim that “The intention (our emphasis) of the amended Act is that tolls rise in line with inflation.”

As we have pointed out before, the power to reduce tolls and even set them at zero is not limited in any way. The power has been there for a very long time but after Merseytravel had the law changed, it is now in subsection 1 of Section 92C of the 2004 Act. As re-enacted this says -

(1) The Merseyside Passenger Transport Authority may—

(a) cease to demand, take and recover tolls in respect of traffic

or any class of traffic passing through or into any of the

tunnels;

(b) resume demanding, taking and recovering such tolls; and

(c) allow traffic, or any class of traffic, to use any of the tunnels

without paying tolls or on payment of tolls at a reduced

rate during such hours, on such occasions or in such other

circumstances as it may from time to time determine.

Subsection 2 of section 92C is the one that requires the Authority when making an annual toll order to consider whether to use the subsection 1 powers “having regard to such matters of an economic or social nature within the county of Merseyside as the Authority considers to be relevant”.  The law does not say what these matters might be.

It seems that some years ago Merseytravel decided to in effect claim that subsection 1 only applies in the circumstances set out in subsection 2. In fact the law both before and after the 2004 Act does not limit the subsection 1 powers when it comes to deciding at any time what tolls should be payable.

This power is in fact used by the authority as the only legal basis for various reductions or concessions, which are not otherwise covered in any legislation -

i) The lower toll for “tag” users,

ii) The concessions for disabled drivers,

iii) Certain drivers at certain times apparently not being expected to pay,

iv) Class 2 vehicles only having to pay class 1 tolls between April 2005 and

March 2008; and class 4 vehicles only having to pay class 3 tolls between

April 2005 and March 2006,

v) The tolls that were specified in the “Tunnels (Revision of Tolls and

Traffic Classification) Order 1991”, which is the base level for the current

tolls, not being applied in full till 1999.

In summary - despite the 2004 Act the Authority has the power, at any time, for any reason or none, to freeze, reduce, remove or resume tolls. The only limit on tolling is the inflation ceiling.

c) The Tunnels make a large profit

The documents supplied to Merseytravel members and those available to Council Tax payers for many years implied that the Tunnels tolls only just covered the costs. One of those who seems to have been misled is the Liverpool Mayor as a month ago on City Talk he told Larry Neild that “I’d like to campaign for the Mersey tunnels debt to be paid off by the Government so we can cap tunnel fees at £1.50 to cover maintenance costs." The reality is that the tolls are so high because of Merseytravel's profits not because of debt which could have been paid off many years ago.

Misleading the public was wrong, and we were pleased that in the Budget for 2014/15, Merseytravel at last made it clear that there was a surplus or profit on the Tunnels, though the surplus was understated because part of it was shown as 'Levy repayment'. The so called 'Levy repayment' ends in March 2015, so the 2015/16 budget is the first that shows the true surplus going to Merseytravel's General Fund.

Merseytravel members who for many years apparently believed that the Tunnels only just broke even, can now clearly see that the Tunnels are expected to make a surplus of £16.9 million in the year starting in April. It seems that £1.5 million of this profit is apparently due to the toll increase, so even without a toll increase, Merseytravel would be taking £15.4 million more from users of the Tunnels than is spent on the Tunnels.

We say that this surplus is now clear in the Merseytravel budget, but the surplus and what happen to it is not clear in the Tolls report that is going to the Combined Authority on Friday 13th. The report does not even say what the amount of 'any surplus' is, and at 4.1. it says -

“4.1 Financial Implications

The recommendations contained within this report will generate additional toll revenues of £1.1m in 2015/16.

These revenues will be used by the Liverpool City Region Combined Authority to fund the capital programme and operation grant associated with the Mersey Tunnels for 2015/16.

Any surplus will be held in reserve for long-term asset management commitments relating to the safe operation of the tunnels, and for other strategic transport infrastructure priorities to be determined by the Combined Authority.”

The statement at 4.1 is in our view misleading.

It is not correct that 'Any surplus will be held in reserve for ... the tunnels'. The Tunnels do have a Repair & Renewals Fund to even out expenditure between years, but contributions to or from that reserve form part of the Tunnels budgeted expenditure and in the last financial accounts (2013/14), the Repair & Renewals fund was actually reduced by £1.5 million.

It is also not correct to say that 'Any surplus will be held in reserve ... for other strategic transport infrastructure priorities to be determined by the Combined Authority.” The Tunnels surplus goes into the General Fund of the Authority and is available to be spent in that year. The only part of the Tunnels surplus which has ever been earmarked was payments to the Ferries account.

d) The Tunnels are a cash cow for the authorities

It is not new for the users of the Tunnels to be used as an easy source of revenue. Over the years the money taken from users of the Tunnels has far exceeded the cost of constructing the Tunnels (the Birkenhead Tunnel cost £7 million inc land and fees, the Wallasey Tunnels cost £37 million on the same basis). Since the Birkenhead Tunnel came into use in 1933, over £900 million has been taken in tolls and many hundreds of millions of that have been appropriated by the authorities, e.g. -

a) For many years toll monies were used to subsidise the Ferries. Though it looks from the Ferries budget for 2015/16, as if this subsidy is being stopped from April 2015.

b) Within a few years of the Birkenhead Tunnel opening, the authorities decided that they could offload policing costs on to toll payers. The Mersey Tunnels seems to be the only tolled road or crossing in Britain where this happens, even the privately run M6 Toll does not have to bear policing costs.

c) Concessions to the disabled instead of being paid for out of general taxes as a social service, were financed by toll payers.

d) When Merseyside County Council were in charge between 1974 and 1986, on various occasions they raided (for non Tunnels purposes) the Tunnels reserve funds and other assets. They did this because of their own financial difficulties and ignored the consequences to the Tunnels finances.

e) Merseytravel took over the Tunnels in 1986, despite toll increases the Tunnels had been losing money which was being financed on the never never. The Government had for a long time approved this practice but at last ordered it to stop with effect from October 1988. There was then a period of 3 years 6 months before the doubling of the tolls between 1986 and 1992 stopped the losses. During that time losses of £28 million had under the Tunnels Acts to be charged to the Authority and recovered by precept and later by levy.

In 1994 Merseytravel started taking money from the Tunnels, which they claimed that they were entitled to do because they had covered losses in earlier years. Between 1994 and March 2004 they took about £29 million. Though this might seem fair, it was completely contrary to what the Tunnels Acts said should happen. Then in 2004 Merseytravel got a change in the law that made it legal for them to take tolls money for any purpose. Between April 2004 and March 2014 Merseytravel took a further £80.7 million, and in the year ending March 2015 Merseytravel have budgeted to take another £13.3 million.

f) The Tunnels have always generated large cash balances, because even without any reserve funds at any time their creditors are far greater than their debtors, e.g. at March 2014 there was over £33 million of cash. Before 1974 when the Tunnels were a separate undertaking they automatically got the benefit of this cash. But what Merseytravel do is to ignore all this cash while charging the Tunnels interest on money that they claimed the Tunnels owed them. The interest that Merseytravel charged to the Tunnels was at 9%, while the Tunnels get nothing for Merseytravel's use of Tunnels cash.

g) The system has changed but at one time the authorities were receiving general grants that included an element based on the financing costs of capital expenditure. Those grants were partly based on capital expenditure that was charged to the Tunnels but the Tunnels got none of the grants which all went into General (non Tunnels) funds.

e) Even without the planned increase, the Mersey Tunnels are the third most expensive tolled road crossing for cars in the UK

We have previously drawn to members attention the many bridges and tunnels which are not tolled (including all crossings in Northern Ireland and Scotland). Following a Government announcement at the beginning of December 2014 a new major (estimated cost £2 billion) untolled pair of tunnels is to be built near Stonehenge. Work is already progressing on the new Forth Crossing, which at a cost of about £1.4 billion is due to be completed some time next year and which will not be tolled.

f) Contrary to what Merseytravel claim, Tunnels users do not get a good deal compared with users of passenger transport

Merseytravel say that Tunnel tolls need to rise in line with fare increases on passenger transport and there is a table comparing rises in toll costs with other means of crossing the river (at paragraph 3.3.2 of the tolls increase report). The figures quoted are not really comparable -

The Tunnels user has all the costs associated with their vehicle, whereas rail, bus and ferry passengers only have the cost of the fare. Merseytravel mention this point but there is no attempt made to assess what the overall cost of the journey is for drivers and the table presents the figures as if they really were comparable.

In many cases, passengers will not pay anything at all because they have a concessionary travel pass. (There is no older person's travel pass for users of the Tunnels.)

In the case of the rail and bus passengers, many of them will be making a longer journey on the bus or train than just crossing the river and many of them may be using return tickets or day and other season tickets, so the cost to them of the element of their journey which is crossing the river may be far less than the figures quoted by Merseytravel.

Due to the timing of toll increases from 2008 the relative size of the increase is distorted by having 2009 as the base year.

The comparison also ignores the fact that passengers are subsidised by Merseytravel while Tunnel users are in effect taxed.

In 2013 based on information that was then available from Merseytravel which gave passenger numbers we were able to work out how much these subsidies were -

£2 per passenger for those bus services that are supported,

£2.50 per passenger for local rail journeys, and

£5 per passenger for each use of the Ferries.

(Note that these subsidies do not include the cost of travel concessions for the elderly etc.)

There are just under 25 million vehicles using the Tunnels each year. The forecast profit for Merseytravel is £16.9 million, so each vehicle journey is on average providing a profit to Merseytravel of over 65 pence.

g) There is no concession for 'local' users

Merseytravel is freezing the toll payable by 'Fast Tag' users. It says that this it is doing this “to offer regular and local users protection from the impact of the increase in the cash toll”. We do not dispute that the most frequent users of the Tunnels are the ones that are most likely to pay in advance through the tag system, but it is misleading to claim that this offers benefits to users on the basis that they are 'local'.

The report at para 3.4.3 has a table which says that 61% of 'customers' use Cash and 39% use Tag. We suggest that the real situation is that 39% of journeys are paid by tag, the number of 'customers' who use a tag will be even lower than 39%, so the vast majority of drivers (including almost all visitors to the region) will be affected by the increase in the cash toll..

The report at para 3.4.4 has a map which shows that there is a bigger concentration of tagged drivers in the Wirral than elsewhere, but this may reflect the fact that Wirral makes up a high proportion of Tunnels users, as would be clear if Merseytravel had also shown a map of where cash users lived.

In any case the Tunnels concession for paying in advance and being tagged does not depend on where you live. This is completely different to the situation at the Dartford Crossing where there is a real local concession. Those who live in the local area (Dartford Council and Thurrock Council) can cross for 20 pence (normal prepaid charge for a car is £1.67) or have unlimited journeys for £20 a year.

It is also different from the situation which has been announced for the Halton Council area. The residents there will not have to pay anything to cross at Runcorn when the new bridge opens (charge for a car using the new or existing bridge for non locals is expected to be £2 before any prepayment discount).

h) Liverpool and Wirral are two of the worst places in England for employment, and toll increases will not help.

In a Merseytravel report considered on the 11th December it was said that “improving economic growth is such that a further increase in cash toll is justified”. Whereas in the Merseytravel report for the 12th February, almost all that it says about Merseytravel's' view of the economy is that “it is recommended that it is not appropriate in the current economic climate to increase the toll to the authorised toll level”. It seems that either the economy has deteriorated since December or perhaps that talking up the economy mainly benefits the Government.

Merseytravel have in the past said that the tolls help the local economy and in 2011 had a consultants report to 'prove' their claim. In the view of almost everyone else, tolls are really a drag on the economy. In particular they reduce the positive 'agglomeration' effects that arise when businesses, workers, suppliers and customers are in easy proximity without the financial and psychological barrier of tolls.

One measure of the local economy is the scale of the number of people who are 'employment deprived' according to the English Indices of Deprivation. Unfortunately the last data available is the index for 2010 which was published in 2011 (a new index is due to be published in 2015). We would remind members that on the employment deprived index for 2010, Liverpool was the 2nd worst authority in England and Wirral was the 10th worst of the 326 authorities.

(The Merseyside authorities that are further away from the Tunnels ranked less badly - Sefton 26th, Knowsley 50th, St Helens 55th, and Halton 84th worst.)

i) The reality of the 'Mersey Gateway'

Towards the end of the Combined Authority's inaugural meeting on the 1st April, mention was made of the so called 'Mersey Gateway' project, and the Authority chairman said “Can I add my recognition of what a fantastic project that is and how much of a boost it will be to the city region.”.

Particularly as Halton is now a member of both Merseytravel and the Combined Authority we would like to point out a few facts.

1. Halton has said that it is aiming for a car toll on the old and new bridges that is in line with the Mersey Tunnels, and is anticipating that this will be £2. There seems to be every incentive for Halton to vote for Tunnels toll increases. Last month the Merseytravel chairman was asked about this on Radio Merseyside. He said that Halton would not be allowed to vote on this. We later queried this with Merseytravel and they in effect refused to answer, so we are still unclear whether Halton are entitled to vote on Tunnels tolls or not. Though whether Halton vote or not, the situation is that most of the users of the Tunnels are from Liverpool and the Wirral, but their representatives will be outvoted on the Combined Authority.

2. Long before the Combined Authority was set up it seems that Halton, the 5 Merseyside districts and Merseytravel have been working together. Very little of what has been going on over the last 20 years has been visible to the public, but there are occasional glimpses, such as when in 2001 Halton Council agreed to back Merseytravel's' plan to change the law so that they could more easily increase Tunnels tolls. The minute of a Halton meeting says that without the Bill and a change in the law “there was a possibility of a significant reduction in Mersey Tunnel tolls that would increase the use of the Tunnel crossing and the economic case for a new crossing (at Runcorn) could be seriously jeopardised. The uncertainty could also adversely affect the attractiveness of the New Crossing Project to private investors”.

So it seems that as far back as 2001, building a new private bridge was more important to the Councils than relieving congestion. It also seems that the Councils instead of welcoming the possibility of a significant reduction in Mersey Tunnel tolls, supported a plan for more tolls.

This support was confirmed at the Public Inquiry on the 'Mersey Gateway' in 2009. By that time it was no longer a secret that the plan was for tolled bridges, despite that, various councils including Liverpool and Wirral wrote letters that were used at the Public Inquiry as evidence of support for the tolled bridges plan.

3. This scheme for privatised bridges is only going ahead because of massive support from the Government. In part this is indirect in that the Government has propped up the whole of the private finance system with almost zero interest rates, massive creation of money and low taxes for the rich. But it has also had to give more specific support to the 'Gateway' scheme - £212 million of subsidies and £257 million of debt guarantees.

4. The Councils apparently believe that building a toll bridge and putting a toll on the existing bridge will somehow boost the economy in the region and create thousands of jobs,. As the tolls will act as a barrier this would be difficult for the average person to believe, but it is even more incredible as it is officially forecast that once the two bridges are tolled, the traffic on the two tolled bridges together will initially be 20,000 vehicles a day less than is crossing now with only one untolled bridge.

Those of us on Merseyside may have got used to what the Councils do, but a stranger who knew what was happening might wonder what was the motive that seems to be driving the Councils to create a toll barrier dividing the region along the River Mersey all the way from Liverpool till you reach Warrington.

end of document