HOUSE OF LORDS
MERSEY TUNNELS - PETITION AGAINST THE BILL
ON MERITS - PRAYING TO BE HEARD BY COUNSEL ETC.
TO THE RIGHT HONOURABLE THE LORDS SPIRITUAL AND TEMPORAL OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND IN PARLIAMENT ASSEMBLED
THE HUMBLE PETITION OF DAVID LOUDON, JOHN MCGOLDRICK AND THE MERSEY TUNNELS USERS ASSOCIATION
SHEWETH as follows:
- A Bill (hereinafter referred to as "the Bill") has been introduced and is now pending in your Right Honourable House intituled "A Bill to amend provisions of the County of Merseyside Act 1980 relating to the levying, revision and application of tolls for use of the Mersey Tunnels and to amend that Act for other purposes".
- The Bill is promoted by the Merseyside Passenger Transport Authority ("the Authority"), which is known as Merseytravel. The Preamble to the Bill recites that:
(a) The Authority wishes to secure the regular revision of tolls for use of the tunnels with reference to inflation and power to use surplus income from tolls to improve public transport services in Merseyside and it is expedient that the provisions of the 1980 Act relating to the levying, revision and application of tolls should be amended for these and related purposes:
(b) It is expedient that the 1980 Act should be amended for other purposes.
- There are 2 road tunnels under the Mersey linking Liverpool to the Wirral.
A 4 lane tunnel opened in 1934 going from Liverpool to Birkenhead. Users generally refer to it as the "old" tunnel or the "Birkenhead" tunnel. The Authority refers to it as the "Queensway" tunnel.
The other road tunnel is a pair of 2 lane tunnels opened in 1971 going from Liverpool to Wallasey. Users refer to these as the "new" tunnel or "Wallasey" tunnel. The Authority refers to them as the "Kingsway" tunnel.
- The Bill has 3 main clauses and related schedules:-
a) Clause 2 and Schedule 1 of the Bill changes the mechanism for toll increases so that they will be linked to the Retail Price Index. It removes the need for the Authority to justify any increase and the rights of users to object. Together with the repeal of section 99 of the County of Merseyside Act 1980 effected by Schedule 3, it also breaks any link between the costs of the Tunnels and tolls. As the Tunnels debt should gradually be falling, the effect of this is that there would be an increasing surplus on the operation of the Tunnels. Under the provisions of a revised section 91 (3) of the 1980 Act substituted by Schedule 1, Merseytravel may use this surplus, amongst other things, to subsidise the Mersey Ferries, apply it on public transport provision, give it to its General Fund, or use it "for such other purposes, and in such manner, as it thinks fit".
b) Clause 3 and Schedule 2 gives power to spend on noise insulation works and grants in the vicinity of the approaches to the Wallasey tunnel.
c) Clause 4 and Schedule 3 repeals section 99 and 101 of the County of Merseyside Act 1980.
Section 99 (1) authorises how tolls may be applied and Section 99 (2) requires that the tolls should be reduced when all debt has been repaid.
Section 101 no longer has any effect. It was the power to borrow to charge interest payments to capital if the tolls were insufficient. This power could not be exercised after 31 December 1984, or such later date, not later than 31 December 1989, as the Minister might determine.
- Your Petitioners are individual inhabitants of the area that will be affected by the Bill and an association of a number of Tunnels users:- the Mersey Tunnels Users Association ("MTUA"). The MTUA is a group of over 200 users that was formed earlier this year. It was formed with the initial aim of making a formal objection to the Mersey Tunnels Revision of Tolls Order 2004 which was made under Section 92 of the County of Merseyside Act 1980, and has been in correspondence with the Department for Transport. The MTUA aims are:
1) Tunnels money to be solely used for the Tunnels.
2) Tunnels at some time to become part of the normal road network.
3) Tunnels to be run by a new organisation in the interests of Tunnel users.
This Bill, if it is enacted, will initially have the same effect as the Increase Order which the MTUA has objected to.
- The individual petitioners and the members of the MTUA are affected by the Bill as the tolls that they will have to pay for use of the Mersey Tunnels will increase rather than reduce as they would under Section 99 (2) of the County of Merseyside Act 1980 when all debt is repaid. At the time this section was enacted the Tunnels were making losses and that would have appeared to be a distant prospect. The Tunnels are now a lot closer to repaying all debt, but the Authority in the Bill seeks to move the goal posts so that the object will never be reached, as money that could have been used to reduce debt may be applied to non Tunnels uses.
- The petitioners will also be affected, as toll increases will tend to have various adverse effects on the local economy including on labour mobility, competition, inward investment and visitors from outside the area. Whereas toll reductions would tend to stimulate the local economy.
- The petitioners object to this Bill for the reason that the tolls that they will have to pay will be higher than they would otherwise be and because of the effects on the local economy. Tunnels users are already paying Petrol Duty and other road taxes which are many times in excess of spending on roads. Tunnels toll increases are not necessary to cover essential expenditure or to stifle demand. Some part of the tolls that the users will be paying may be used by the Authority for purposes other than the Tunnels such as for example the proposed tram system.
- The Bill seeks to amend the present mechanism for determining tolls. In the petitioners view, the present mechanism for raising tolls has worked well up to now and does not need to be amended. It is fair in that the authority has to justify the increases. Before an Increase Order is confirmed, an individual or a body such as the MTUA can object that an increase is not justified. The Minister will then cause a local inquiry to be held. In this way the Minister is able to hear both sides and not just the Authority. This system has not led to any losses. There were losses between 1971 and 1992 but they were not because of the mechanism for determining tolls. The tolls in fact went up 1000% over the years when the Tunnels were making losses. The Authority says that it takes up to 2 years to increase tolls under the present mechanism but any objections have to be made within 28 days of the notice being published.
- The proposed mechanism in the Bill links increases to the Retail Price Index. Tolls will increase automatically, there is no incentive for the Tunnels to be run economically, efficiently and effectively. Given that they are in the nature of a public utility, then if there were to be an inflation indexed formula then it should be of the RPI minus "x" type. Also a large part of the expenditure of the Tunnels relates to debt, to in effect apply RPI to this ignores the fact that debt is falling, not increasing, so any formula should be in the nature of RPI minus "x" minus "y".
- The Authority say that the Tunnels may make losses which would fall on district councils. But the Tunnels have been in surplus since 1992, despite all expenditure, whether exceptional or not, being financed from tolls rather than from borrowings. It is also despite the requirement for the Tunnels to now make payments in respect of the losses that were initially financed from rates etc between October 1988 and March 1992. As the total debt falls each year, the annual charge for interest and for further loan repayment falls, making it highly unlikely that the Tunnels will make losses.
- The Authority have said that there is a need for further substantial spending on safety and other works. But part of this expenditure may not be essential or cost effective, and if it is then it should not be financed out of current revenues and if it is and these revenues were not sufficient then the Authority can apply for a toll increase under the existing mechanism. In the latest financial year, 2002/03, the Authority decided to repay an extra £3 million of external borrowings rather than transfer it to reserves where it could be used for safety and other works.
- The Authority have said that the Tunnels are near their capacity limit and that if tolls are not kept high then there will be too much demand. But the demand for Tunnels use, particularly in peak periods, is to a large extent inelastic. Toll increases or reductions would have to be massive to have much effect on peak time use. Off peak use is relatively elastic, but the Tunnels should have plenty of capacity off peak, and there is no reason for trying to stifle off peak demand. Oddly the authority say that demand may fall for various reasons, and so they wish to have a reserve power to increase tolls to try and offset reduced demand.
- The authority say that it is appropriate to use tolls as a form of road congestion charging. But it is not fair to charge Tunnel users for any road congestion, when other road users in the area (e.g. from Sefton and Knowsley into Liverpool) are not charged.
- The Tunnels should not be at or near capacity. There are about 25 million vehicle movements a year through the 8 lanes of the Tunnels. But the old Birkenhead tunnel, with its 4 lanes, before the Wallasey tunnels opened had reached nearly 20 million vehicle movements a year. Upriver from the Tunnels is the Silver Jubilee Bridge usually known as the Runcorn bridge. This is a 4 lane bridge, which is toll free and is managed by Halton Council. It seems that the 4 lanes of the bridge carry as much traffic as the 8 lanes of the Tunnels.
- Because the Runcorn Bridge is near full capacity, there is a scheme which is nearing approval to build a bridge about 1 mile upriver from the existing bridge. No decision has been made public as to whether this bridge will be tolled or not. As the existing bridge is not tolled, there will be problems if the new bridge is tolled. Instead of building a new bridge, far greater use could be made of the Tunnels. Even if this were not to be agreed, it is inappropriate to be making changes to the County of Merseyside Act 1980 until a definite decision has been made on the tolling of the new bridge.
- The Authority is the only operator of road tunnels across the Mersey River estuary. It also controls the other crossings of the estuary. It owns the only ferries and controls and funds Merseyrail which includes the under river railway link. Public utilities are generally subject to some form of regulation. Merseytravel's control of all the Mersey Estuary crossings is a complete monopoly. The Bill will remove the only control on the Mersey Tunnels part of that monopoly, i.e. the duty of the Authority to demonstrate the need for any toll increase.
- Unusually for a toll road, the Tunnels are in the centre of an urban area. The Tunnels form an essential link between the two parts of the Merseyside conurbation. Apart from any other factor, this means that the river may have to be frequently crossed for purposes of work, leisure, visiting friends and relations, and use of facilities that are only located on one side of the river. It is a hardship for road users to have to pay an additional charge for such journeys when compared with road users making such journeys in other parts of the country. This disadvantage is increased if the tolls are not related to costs.
- Though the Authority have argued that toll increases are necessary to prevent losses and / or incur essential additional expenditure on safety, they at the same time seek powers to spend surpluses elsewhere, extending as far as "for such other purposes, and in such manner, as it thinks fit". We object to the use of tolls for non Tunnels purposes, as it is not fair that Tunnels users should in effect be taxed to subsidise other services within the Authority's area. Users often have little choice as to whether to use the Tunnels or not. The Tunnels were built to meet the needs of the users and not as a source of income for the Authority. Indeed when the Birkenhead tunnel was built, paragraph 5 of the First Schedule to the Mersey Tunnel Act 1925 as amended by the 1927 and 1933 Mersey Tunnel Acts said that tolls should cease after 40 years at the latest. That was changed in subsequent statutes, but at least tolls would only be applied on the Tunnels.
- The Bill contains a reserve power so that if the Authority considers that tolls using the new mechanism are insufficient, then it can apply for an increase using the old mechanism. Once having got such an increase it then creates a new and higher base for the Retail Price Index increases. As the Authority under the Bill is allowed to take any surpluses away from the Tunnels and as the nature of the expenditure can be irregular, the Authority could apply for a Toll increase when expenditure is high, and then benefit from the increased surpluses when expenditure falls. The Authority says that one reason for the reserve power is that interest rates may rise, but the bulk of the Tunnels debt is at fixed rates.
- As well as the main provision of the Bill, the Authority are also seeking power in Schedule 2 to incur expenditure on noise insulation works and grants. Clause 2 (a) of the Schedule says this will be "in the vicinity of the approaches to the Kingsway Tunnel". Our objection to this part of the Bill is that the definition of the location of the properties is vague and should be made more precise.
YOUR PETITIONERS therefore humbly pray to Your Honourable House that the Bill may not pass into law as it now stands and that they may be heard by themselves, their Counsel, Agents and witnesses against the Preamble of the Bill and if the same do pass against all the clauses and provisions thereof which relate to or affect their property rights and interests and in support of other clauses and provisions for the protection and benefit of your Petitioners and their property rights and interests and they may have such other relief as Your Honourable House may deem meet.
AND YOUR PETITIONERS will ever pray, etc.
HOUSE OF LORDS