FOLLOW THE MONEY...

As the nights draw in and the autumn days begin to feel colder and drift towards winter, people begin to think about Christmas, paying their extortionate heating  bills. If you live in South Wales (and commute over the Severn Bridges) lurking at the back of your mind is the prospect of yet another Severn Bridge toll increase. Back in June (2013) the Welsh Government was told by a UK Westminster government minister that any changes in the running of the Severn bridges must benefit motorists in both Wales and England.

Merry Christmas from Severn Crossings PLC - not!

The Welsh government had indicated that it would like to take ownership of the two Severn Bridges when they come back into public ownership in 2018.  By then it is expected that Severn River Crossings plc will have milked its cash cow to the tune of about £ 1.029 billion pounds. Just to add insult to injury the old (M48) Severn Bridge is periodically closed at weekends for routine maintenance, which continues to be funded by the Department for Transport, from the public coffers.

At the end of the day, it comes down to money, how much there is? How much there could be? And how much will people have to continue to pay to cross the Severn Bridges? If we are not watching the pennies, then the politicians certainly are. Carwyn Jones has said that any money left over from tolls could go towards upgrading the existing M4 (in Wales) and Westminster Transport Minister Stephen Hammond (no doubt nudged by his civil servants) has said that no decisions (one way or the other) can yet be made over either bridge ownership or the bridge tolls.

The Severn Bridges and the tolls may be out or sight and out of mind to most Westminster ministers (and most MPs) but they loom large in the imagination (and the wallets) of long suffering commuters, businesses and visitors on a daily basis. Part of the problem is that our interests and those of our county are almost entirely peripheral to the Westminster mindset, something that does not help us very much especially the Welsh Government needs parliamentary time at Westminster because of the cobbled together devolutionary settlement.  

This sorry state of affairs has been aggravated because any concept of long term planning has been abandoned to the ‘free market’ as ‘taking the long view’ no longer fits  into the Westminster politicians mindset – this when combined with the current Welsh Governments craven lack of ambition merely makes things worse.

Differences of opinion between Wales and Westminster are not new and will continue as long as the devolutionary fudge continues to exist. Even the Welsh Conservatives have called for control of the Severn Bridges to reside in the hands of the Welsh people. Labour in Wales, has reluctantly said the same thing, although whether or not they would have called for control of the Severn bridges to be passed to Wales if Labour was in power at Westminster is another matter. 

In 2012 a report for the Welsh government suggested that abolishing the tolls would increase traffic by an estimated 12% - equivalent to about 11,000 vehicles a day – and that businesses and commuters forked out around £ 80 million pounds a year crossing the Severn bridges. Studies into the impact of the Severn Bridge Tolls on our economy are nothing new.

Before that back in October 2010, Professor Peter Midmore's independent economic study of the Severn Bridge tolls which has recommended that the revenues should stay in Wales, once the crossings revert to public hands. This study of 122 businesses was commissioned by the Federation of Small Businesses revealed that the tolls had a negative impact on 30% of firms in South Wales, this compared with 18% in the Greater Bristol area.

While noting that the economic impact was not substantial for most, the 2010 study found that transport; construction and tourism-related companies reliant on regular crossings suffered increased costs and reduced competitiveness. The 2010 study found that Welsh businesses were unfairly penalised by the tolls and concluded that the money should be shared with the Assembly Government and used to improve Wales’ roads and public transport. Under the current stitch up, once the cost of the Second Severn Crossing is paid off less on-going maintenance costs (now potentially sometime in 2018 due to a drop in road usage) then a potentially handy revenue stream may revert swiftly to Treasury coffers in Westminster. 

The various studies are useful, but, to be honest are all grist to the mill, as we are still waiting for any decision to be made in regard to the Severn Bridger tolls and the future ownership of the Severn Bridges themselves. None of this will bring a crumb of comfort to the commuters who are already bracing themselves to face yet another bridge toll rise on January 1^st 2013. We have had plenty of talk but little sign of any concrete action or a decision, one way or the other and come January 1^st 2014 . 

THANKS FOR NOTHING...

A report (produced by Arup - engineering consultants) on behalf of the Welsh Government has suggested that ditching the bridge tolls on the Severn Crossings could boost the economy of south Wales by £107 million. The report suggests that the removal of the tools could boost traffic flow by around an extra 11,000 vehicles driving over the two bridges every day. The Arup report says that businesses and consumers pay out around £ 80 million pounds a year to cross the Severn bridges.

The report looked at what would happen if the tolls were halved, increased by 50% or scrapped entirely. The total revenue brought in 2009 was £77.4 million pounds. A reduction in revenue if the toll was cut by around half (46%) could be around £36 million pounds a year (based on 2009 prices). An increase in the toll by around half (41%) would bring in an extra revenue of around another £36 million pounds per year. Either way any projected change in revenue (on paper) comes in is less than proportional to the change in toll because of either higher or lower traffic flows.

The tolls have been used to pay for their construction of the new bridge, and the maintenance and operation of both the old and the new bridge(s) via a concession agreement with Severn Crossings Plc.

The concession agreement currently in place ends at the point that the operator has raked in around £996 million pounds at 1989 prices (so we are talking about probably well over a cool £100 million pounds by 2018). The tolls are due to end in 2018 when the bridges will revert back to the UK Government.

Back in October (29012) the UK transport minister Stephen Hammond revealed that the government has substantial debts on the bridges which would to be repaid so the tolls would not cease to be collected.  Currently both the Severn Bridges are run by a private company, the concession agreement is due to run its course in 2018, at which point the bridges will return to government ownership. It had been suggested that once that concession agreement ran out, the bridge tolls might have dropped to around £1.50.

This, however, now appears not to be the case, the House of Commons Welsh Affairs Select Committee, was told that there would be no drop bridge tolls when the concession ends. Even though the bridges would come back into public ownership there were apparently "substantial government debts that needs to be repaid" from building and maintaining the river crossings amounting to around several hundred million pounds.

The Welsh Affairs Select Committee was told that the government has a deficit of at least £112 million left on the bridges covering items such as maintenance costs and the costs of "professional advice". The Department for Transport has stated that once the concessions ends the government will need to repay its own debts resulting from the building and maintenance of the bridges, and so tolls will continue after 2018.

Meanwhile the Labour in Wales First Minister Carwyn Jones has stated that control of the bridges should be transferred from the UK government to the Welsh government in 2018, he has so far refused to state say what a Welsh Government would do to the tolls. The Severn Crossings which are the main way in and out of South Wales carry an average daily traffic of about 80,000 vehicles. Bridge Tolls have been in place ever since the first Severn Bridge was constructed.

So there appears to be little chance that hard pressed commuters will see and end in sight to the tolls, whether they remain under the control of the Department of Transport (in London) or the Welsh Government (in Cardiff) – no doubt both potential inheritors of the tolls don’t want this cash cow to be put out to pasture.  So whether it looks like it will be one of our governments continuing to fleece us  and continue to the ramp up fat profits at our expense for the foreseeable future (after 2018). Thanks for nothing...

ABSOLUTE CERTAINTIES...

As one year passes and another one beckons there are some certainties in modern life, one of which is the post-Christmas train fare rises. As of January 1st train fares will rise by an average of 5.9%. For what it's worth, in his Autumn Statement last month, the Con Dem Chancellor of the Exchequer, George Osborne capped fare increases at 6%, instead of the expected 8%. Since privatisation, rail fare rises have been linked to inflation, currently 5.2% as measured by the Retail Prices Index.

The Association of train Operating Companies, has said that fare increase would be used to pay for "new trains, faster services and better stations". Verbally at least this makes a pleasant change from simply using the increases in fares to maximise the dividend for shareholders. At the moment, passengers make a contribution of around £6.5 billion to the running of the railways, with taxpayers picking up the remaining £4 billion.

Let's be honest, the sooner our railways are run as not for profit organisations, with the profits being reinvested back into the railways the better. The public have tolerated what has become on occasion an often shoddy minimalist unconnected service. Most reasonably minded people would concede that historically the Department of Transport’s interest in Wales has been peripheral at best.

We need to prioritise investment in our railways and provide a decent affordable and reliable service for the passengers. We should get in a few years time a single rail franchise that directly answers to and works for Wales, rather than boosting company profits. A not for profit railway company that serves Wales could break up the cosy financial relationship that exists between the political establishment and the franchise holders – which would be no bad thing.

A PRIVATISATION TOO FAR

News that the process of privatising the UK's search and rescue helicopters has been suspended after "irregularities" emerged in the bidding process to find a supplier, should not be a surprise. New Labour have twice tried (and failed) to privatise this service, and the Tories and Lib Dems were following them until the news of this leaked information, compromised the privatisation process.

An admission by the preferred supplier, Soteria, admitted it had access to commercially sensitive information, has derailed the privatisation process for the moment. The Department for Transport and Ministry of Defence (MOD) have now stated the preferred supplier would not be used and MoD Police are now investigating how commercially sensitive information came to be in the possession of the bidder.

The real question is not whether to privatise SAR or not (and my answer would be NOT) but what questionable idiot ever considered this option in the first place. Most people view the Search and Rescue services as the fourth emergency service. I have seen them flying round Snowdonia enough times (in fair and foul weather), to recognise their skill, dedication and bravery. The seas around Wales can be treacherous enough at times and there is little doubt that the military-trained helicopter patrols have helped to save many lives and strive to maintain the highest possible rescue standards.

The Conservative (sorry Con Dem) Government's decision to try to sell off (cheaply no doubt) the the Search and Rescue Service now thankfully hangs in the balance. Many people are very concerned that this is a privatisation too far - I would go further, this reckless plan to sell off the Search and Rescue services was dangerous to begin with and should be scrapped.

Our search and rescue service needs the most modern equipment and effective helicopters to carry out operations safely – privatisation of this essential service could lead to corners will be cut in order to make a profit and cost lives. The UK Westminster Government must now abandon its plans to sell off this vital life-saving service or risk selling it off on the cheap in order to make a quick saving, one that may put the lives of our service personnel and civilians at risk, which would be absolutely unacceptable.

NORMAL SERVICE HAS BEEN RESUMED

So much for encouraging people to use the train, the Con Dem Government (much like its predecessor New Labour) has looked the other way as rail fares in Wales go up by an average of 6.2 percent. The rail operating companies have said that price rises will pay for newer trains - don't hold your breath! It's worth asking just how much will be left over from any monies secured for investment in our railways after the shareholders dividend (and the Government) have been paid off? No wonder, that despite the rise in petrol or diesel prices which might be expected to encourage people to find other means of getting to and from work, amongst other things that rail passengers (sorry customers) are somewhat disillusioned by the rail franchise holders latest spin.

How much longer are we going to tolerate a shoddy minimalist unconnected service? We need a single rail franchise that directly answers to and works for Wales, not servicing company shareholder dividends and ultimately the Department of Transport who's interest in Wales could be described as peripheral at best. We need to prioritise investment in our railways and provide a decent affordable and reliable service for the passengers. We need a not for profit railway company that serves Wales and we need to break up the comfy cosy financial relationship that exists between the Westminster establishment and the franchise holders whether they railway or power companies.

TIME TO ASK THE QUESTION?

Last week the Westminster Welsh Affairs Committee heard that most of the £77m tolls (which cost £15m a year to run and maintain, but generate a net revenue of £77m a year at today's prices) raised per year is currently being used to cover debts and that only maintenance and running costs would need to be covered after 2017. A potential big hint to the Committee that Severn Crossing tolls could be much cheaper once the concession to run them ends in 2017.

It was even suggested that tolls could fall to 20 to 30% of current levels. At the moment motorists fork out £5.50 for cars and up to £16.40 for HGVs. Just for the record since the Severn Crossing Plc took over the concession, they have spent £510m (1990 prices) between serving a debt on the existing crossing and building a new one. Over the period of the concession it is expected that the concession holders will raise £1bn in revenue (1989 prices).

The bridge tolls have become in a tax on jobs, a tax on commuters, a tax on growth and a tax on business in the south of Wales. Plaid Cymru's South Wales Central AM Chris Franks (back in June 2010) obtained figures under the Freedom of Information Act, which showed significant difference between the large amounts of money raised by Severn River Crossing plc from the toll, and the relatively small amount spent on treating the damage to the cables on the old crossing (M48).

Since 2006, some £15m has been spent on main cable work on the first Severn Crossing. The Highways Agency suggests that another £5.8m of repairs will take place over the next five years. Some £225,733,000 has been collected in bridge toll revenue since 2006. People may driven to wonder if they are going to get saddled with major work to maintain the bridges after the toll profits have been siphoned off by the concessionary company when the bridges are finally returned to public ownership in 2017.

Sadly just because something could happen does not mean that it will - I cannot for a moment imagine a Westminster Government forgoing this potential tidy little earner. One question that is yet to be answered is come 2017 who actually is going to own the bridge (or bridges)? The situation is potentially complex as the bridge (or bridges) sit on the border - with the toll on the newer bridge being collected in Wales, and the toll on the older bridge being collected in England. Will the bridge and the tolls simply revert back to the Department of transport?

Or does the National Assembly get a look in, by default? If the current tolls were halved then, what could be accomplished by using a percentage to cover maintenance of the bridge and using the remainder of the toll for ring fenced capital projects – such as new integrated transport systems, reopening railway lines, funding tram systems and investing in rail freight? This would be far more beneficial for all of us in Wales than the finance disappearing into the Westminster coffers or to bail out the bankers?

NOW THAT'S AN INTERESTING IDEA...

I for one very warmly welcome Professor Peter Midmore's independent economic study of the Severn Bridge tolls which has recommended that the revenues should stay in Wales, once the crossings revert to public hands. The study for the Welsh Affairs Select Committee at Westminster, which is looking at the impact the tolls on Wales amongst other things.

The Professor's study found that Welsh businesses were unfairly penalised by the tolls and concluded that the money should be shared with the Assembly Government and used to improve Wales’ roads and public transport. Under the current stitch up (sorry set-up), once the cost of the Second Severn Crossing is paid off (by 2014 or 2016) the revenue stream will revert straight to Treasury coffers in Westminster.

The study of 122 businesses commissioned by the Federation of Small Businesses found the tolls had a negative impact on 30% of firms in South Wales, compared with 18% in the Greater Bristol area. While noting that the economic impact was not substantial for most, the study found that transport, construction and tourism-related companies reliant on regular crossings suffered increased costs and reduced competitiveness.

There are also concerns, if not fears that the bridge tolls, which currently range from £5.50 for a car to £16.40 for a heavy goods vehicle (HGV), may stop the development of small-to-medium-sized business in the areas surrounding the bridges.The study 's findings which come only a few weeks after the private company running the bridges blamed growing unemployment and a rise in the cost of fuel on a 20% drop in traffic in the past two years.

Severn River Crossings plc further warned that unless traffic levels pick up, then it could take longer to pay off the cost of the second bridge – delaying the handover of the bridges to public ownership until as late as 2018.

The study, which will be submitted as evidence to the Welsh Affairs Select Committee, which is conducting a cross-party inquiry into the economic impact of the tolls and the future of the bridges. concludes that its “highly unlikely” the tolls will be abolished even when the bridges revert to public ownership.

The private company that runs the Severn Toll Bridges (and we can thank the Tories for that) managed to raise around 226m over the last three years (up to June 2010) yet barely spent £15m on essential maintenance on the original crossing's damaged cables. That the bridge tolls have been used used as little more than a cash cow, to fleece bridge user should come as not much of a surprise to many people.

Plaid Cymru's South Wales Central AM Chris Franks, (in June 2010) used the Freedom of Information Act to show the significant difference between the large amounts of money raised by Severn River Crossing plc from the toll, and the relatively small amount being spent on treating the damage to the cables on the old crossing. His FOI request revealed that (since 2006) some £15m has been spent on main cable work on the first Severn Crossing (the M48 bridge). The Highways Agency suggested that another £5.8m worth of maintenance will take place over the next five years.

This despite the fact that some £225,733,000 has been collected in bridge toll revenue since 2006. People may well begin to wonder if they are going to get saddled with major work to maintain the bridges after the toll profits have been siphoned off by the concessionary company when the bridges are finally returned to public ownership in 2014 or 2016.

The knowledge that Severn River Crossings plc may, due to falls in traffic levels, take even longer to pay off the cost of the second bridge, thus delaying the eventual handover of the bridges to public ownership until as late as 2018, will bring little comfort to bridge users facing yet another annual increase in the Severn bridge tolls in January 2011.

Yet, despite persistent bleating from Westminster sheep over the years along the lines of there is nothing we can do to reduce or stabilise the tolls! It turns that this is or was not quite true as the last New Labour Government actively intervened in October 2009 in relation to the Humber Bridge.

Sadiq Khan, the then New Labour Minister of Transport, announced a grant of £6m to the Humber Bridge company, saying that, “the Government was committed to doing everything it can to protect communities and businesses from economic downturn and help the country to recover. That is why I decided not to accept the Humber Bridge board’s proposed toll increases”. Very nice - but if that's the case in England, then why not in Wales?

Admittedly the Severn Bridges straddle the Welsh English border something that may complicate the issue of ownership with the tolls on the newer bridge being collected in Wales, and the older one being collected in England. Additionally the questionably worded concessionary agreement (and the Act of Parliament) which enables the tolls to go up each January may also have something to do with it.

One key question that no one appears to be asking or answering is what will happen to the tolls once the concession expires or ends. Will the bridge and the tolls simply revert back to the Department of Transport? Or might a portion of the tolls end up filtering down to the National Assembly, by default or as a result of central government indifference. Will the National Assembly act as merely as a local agent for the Department of Transport? Or is total control of the revenue

If it the whole package ended with the National Assembly, then if the current tolls were halved then, what could be accomplished by using a percentage to cover maintenance of the bridge and using the remainder of the toll for ring fenced capital projects – such as new integrated transport systems, reopening railway lines, funding tram systems and investing in rail freight – which would be far more beneficial for all of us in Wales than the finance disappearing into the Westminster coffers or being used to bail out the bankers?

A NICE LITTLE EARNER!

ALMOST £18 million of taxpayers' money has been handed to the operator of the Severn Bridges for repairs to the old Severn Bridge, the Department of Transport (DoT) has admitted. South Wales Central Plaid Assembly Members Chris Franks and Leanne Wood received a letter from the DoT which revealed that taxpayers have footed the bill for treatment to corrosion on the main cable and repairs to the cantilever edges of the M48 bridge.

This is a result of the concession agreement which was signed with bridge operator Severn River Crossing Plc (SRC) in 1992, which stated that the UK Government is liable for latent or pre-existing defects. The corrosion and damaged cantilever edges are seen to fall within these brackets with the cost of treating them £17,871,666 since 2005/06. This is likely to rise to £21 million by next May. This is despite tolls to cross both Severn crossings rising to £5.50 for a car and £16.40 for a truck.

The Plaid Cymru AMs hit out, Leanne Wood saying: "While a private firm reaps the profits from the substantial toll charges to get into Wales, the public is left to pick up the tab for essential repairs associated with pre-existing defects." The Plaid AMs noted that some £225, 733,000 SRC has made in toll revenues from both bridges since 2006. Chris Franks AM called it "astonishing" that tax payers are bearing the cost while Ms Wood called it a "very bad business deal". Leanne said: "The reverberations of this contract clause are being felt some 18 years later."

The Highways Agency, on whose behalf SRC operates the bridge, said: "The risks for defects that existed prior to the concession were not transferred to SRC as this would have resulted in significantly higher tolls." He said when the contract was signed, risks could not be quantified and no latent defects were identified until 2005/06. Further costs of £3.8 million are expected for this financial year to tackle the problems.

A CASE OF MAYBE? OR WHEN?

While I welcome the news that credit and debit cards may finally be used to pay the tolls on the Severn Bridges, I hope that the National Assembly will stay on the ball to ensure that there is a rapid change in the necessary law at Westminster.

What bothers me is that there is a risk that this may become a case of 'may’ rather than ‘when’ because UK legislation, which governs the crossings, needs to be amended to allow the use of credit / debit cards. As yet the Highways Agency has said that confirmation of any amendment is still awaited.

Now obviously with a forthcoming Westminster General election, the legislative programme will be severely curtailed, so how quickly will the change be made?

The Conservatives, who were in power in 1992, when the original Act governing the operations of what would become the Severn Bridges, was passed will obviously have their own agenda to pursue, slashing and burning their way through the public sector and military budget, no doubt. And what with them believing in tolls and private ownership of assets, this will probably not be a priority in their legislative programme, especially if any proposed change ends up not being passed before the Westminster General election.

I have oft wondered, why was the legislation so badly drafted in the first place to include the infamous annual clause that allows the operating company to raise the tolls every year? It is important to place things in context, 1992 was right in the middle of the privatisation era, when if it could be flogged off for a song, which helped make their dodgy mates in the City more than a few pounds, then it would be.

Did someone get a bung, a few quid in a brown envelope, a seat on the board or a nice holiday in the sun - these things went on at the time, although in 1992 the reality of Conservative sleaze, which could in its day give New Labour sleaze and the scandal of MP's expenses a real challenge for wild newspaper headlines, was yet to be revealed.

That aside, lets be honest, as the Severn Bridges are such vital transport links to the economy of South Wales, the real question should be how long can we afford to have our interests looked after by an increasingly distant and increasingly indifferent Whitehall.

HERE WE GO AGAIN!

Once again the Severn Bridge tolls, which are the highest in the UK, are set to rise again on 1st January 2010, upon receipt of an order from the Secretary of State, in line with the Severn Bridges Act 1992. It is worth noting that there is provision in the Act for the Secretary of State to amend the tolls, which would at least be a start in helping reduce the costs that road users in Wales are currently facing.

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The Severn Bridge crossing tolls will rise on January 1st 2010, the new tolls will be:

Cars and Motor Caravans: Currently £5.40 will rise to £5.50

Small Goods Vehicles and Small Buses: Currently £10.90 will stay at £10.90

Heavy Goods Vehicles and Buses: currently £16.30 will rise to £16.40

Source Severn River Crossing Plc Website: http://www.severnbridge.co.uk/TollPrices2010.pdf

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By way of comparison across the bridge so to speak, it is worth noting that in October, Sadiq Khan, the Minister of Transport, announced a grant of £6m to the Humber Bridge company, saying that, “the Government was committed to doing everything it can to protect communities and businesses from economic downturn and help the country to recover. That is why I decided not to accept the Humber Bridge board’s proposed toll increases” if that’s the case in England, then why not in Wales?

Looking beyond the immediate and irritating problem of the tolls, as has been pointed out elsewhere, there is another issue that is worth thinking about – what’s going to happen in 2014, which is not that far away, when it has been estimated that the PFI contract will have been covered by toll receipts. Who actually is going to own the bridge (or bridges) and will they stop collecting the tolls? If not then the bridge (or bridges) sit on the border - but the toll on the newer bridge is collected in Wales, so will the bridge and the tolls simply revert back to the Department of transport?

Or if it comes to the National Assembly, by default, then if the current tolls were halved then, what could be accomplished by using a percentage to cover maintenance of the bridge and using the remainder of the toll for ring fenced capital projects – such as new integrated transport systems, reopening railway lines, funding tram systems and investing in rail freight – which would be far more beneficial for all of us in Wales than the finance disappearing into the Westminster coffers or to bail out the bankers?