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A NEW WAY FORWARD FOR TOLLS

Summary

1) The Mersey Tunnels Act 2004 allows Merseytravel to increase tolls and spend the money on non-Tunnels purposes. The first increase allowed under the Act would be another 20 pence for cars each way from April 2005.

2) MTUA proposes a dynamic alternative, promoting the use of the tunnels for the benefit of the whole of Merseyside.

3) Peak tolls would remain unchanged while a new category of off-peak toll would carry a 50% discount. This would provide a major stimulus to the local economy e.g. shoppers would be encouraged to stay within Merseyside rather than being encouraged to venture to places like Trafford Park. It would also draw some traffic from the Runcorn Bridge, which carries more traffic than the Tunnels but has less lanes. The proposed new Runcorn Bridge, even if it wins approval, is many years away from completion.

4) It is also proposed that there should be no tolls at any time for buses and that on Sundays all traffic should be free.

5) MTUA proposals are based on estimates of what the current position is and what the effect will be of proposed changes. The actual figures will be different, but we believe that the overall effect of differences would probably not be significant.

Detail

6) Earlier this year Parliament passed the Mersey Tunnels Act 2004 which enables Merseytravel to have automatic toll increases and to use the profits to fund other Merseytravel spending.

7) Merseytravel do not need to have a toll increase to fund Tunnels expenditure as there is a large operating surplus. The MTUA is therefore making radical and far-sighted proposals for what should now happen to the tolls.

8) In 2005/06, at present charges, the Tunnels are likely to have income from tolls etc of 34 million, and operating and administration costs of 14 million, giving an operating surplus of about 20 million a year.

9) 7.6 million is needed for external debt payments, which leaves 12.4 million a year surplus. Currently this is partly being used to make payments of 3.7 million in respect of the losses between October 1988 and March 1992 that had been financed from rates etc. The rest is used to meet capital refurbishment costs, pay off extra debt or add to reserves. Under the 2004 Act it may now also be used for other purposes by Merseytravel.

10) In money terms, the Tunnels have already paid back any losses that fell on the rates etc, and users consider that these payments should stop.

11) Local authorities normally borrow to finance capital refurbishment costs. Indeed the district local authorities may be better off if Tunnels capital spending is covered by loan approvals as they may get additional rate support grant income.

12) We therefore propose the following:-

a) There should be no increase in tolls next April.

b) Off peak tolls should be reduced to half the normal charge.

c) Sundays should be completely free.

d) Buses should not pay tolls.
13) Reducing off peak tolls to half the normal charge will have 2 main effects.
Firstly a small amount of traffic will shift from the peak period.
Secondly some traffic will be stimulated that would otherwise not have used the Tunnels. (In MTUA's view, peak period use is inelastic, and off peak use is elastic. I.e. peak period use is little affected by toll increases, but offpeak use is reduced when tolls increase. Merseytravel should have detailed statistics from previous tolls increases to illustrate this.)

14) The narrower the peak period is defined then the more traffic will avoid it. But if it is defined very narrowly, then the traffic avoiding it will still be in a busy period. So we have assumed that the peak period will be defined as 2 hours at the morning peak and another 2 hours at the evening peak.

15) Using these 2 hour bands we estimate that about 5% of peak period traffic would shift to off peak. This would cost about 300,000 a year but would have the benefit of dissipating peak tunnel and associated road traffic.

16) Halving tolls off peak would, before extra traffic is taken into account, cost about 11.6 million. But this cost could be substantially reduced by more traffic being attracted to the tunnels which are grossly under-used in off-peak periods. Most of this would be vehicles that otherwise would have made a different journey. For instance there would be more incentive for shoppers to visit Liverpool and Birkenhead rather than Trafford Park. In part it would be traffic that would otherwise go over the Runcorn Bridge.

17) The Runcorn Bridge has half the number of lanes of the Mersey Tunnels yet carries more traffic. Anything that switches traffic away from the Runcorn Bridge is a benefit, particularly as the Government has not yet decided whether to build a second bridge. And even if they give the go ahead it is estimated that it will be a further 4 years on before it is open to traffic.

18) We estimate that due to the 50% toll reduction, off peak traffic could increase by 30% (excluding traffic shifting from peak), and this would reduce the cost of halving the off peak tolls, giving a net cost of 8.1 million.

19) There are various ways in which halving the off peak toll could be achieved. One way would be during off peak periods to suspend payment in one direction. This would have the added advantage that the delays at toll booths would be reduced.

20) Making Sundays completely free, we estimate would cost about 3.1 million a year at present level of tolls. But some of this has already been taken into account in calculating the cost of making off peak tolls half price. This would reduce the cost to 2 million, before any cost savings

21) We estimate that making buses free at all times would cost about 300,000 a year. This should come out of the Public Transport budget.
Tunnels users are already in effect bearing the cost of the existing concessions where motor cycles and disabled drivers do not pay tolls, but as buses are public transport it seems reasonable that this further concession comes out of the transport budget.

22) Merseytravel have said that they are thinking of consolidating the rates charged for lorries, which would reduce the tolls in the short term. We do not agree with this as it would have the effect of increasing such traffic in the peak period.

23) The total cost of these proposals (exc the 300,000 for buses) is 10.4 million. This would leave a surplus of 2 million which should be used to either make additional repayments of debt or to finance some of the refurbishment without borrowing.



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