ANSWERS DEMANDED OVER £140M WINDFALL FROM SEVERN CROSSING

ANSWERS have been demanded as to why motorists using the Severn crossings are being required to help pay off an £88m UK Government debt when it has “pocketed” a £140m windfall.

The debt is due to extra operation and maintenance costs and would need to be paid when the privately operated bridges return to public ownership in 2018.

But it is claimed the UK Government has collected much more than that through “unexpected” VAT payments – introduced after an EU ruling – and the phasing out of the industrial buildings allowance.

Now the Welsh Affairs Committee has asked for clarity.

Bridge

Committee chair David Davies challenged Wales Office Minister Alun Cairns during an evidence session last week.

“When that second crossing was put up, there was an expectation that VAT wouldn’t be charged and that changed as the result of a ruling in the European court,” said Mr Davies, Conservative MP for Monmouth.

“So the government did quite well out of this. At the very least, will you write to the committee and tell us how much the government received as a result of VAT being levied on the bridge and how much the government received as a result of changes to the industrial buildings allowance?

“I’ve calculated it myself and I believe it’s around £140m, so it’s significantly more than the money they weren’t expecting to have to pay out.

“We’ve put this to ministers before and not quite got the definitive answer I think we deserve.”

While Mr Cairns agreed to share the available information, he said a debt would remain “whether we like it or not”.

“On that basis we need to respond to that debt. So it has to be repaid,” he added.

Querying the financial models of other tolled estuary crossings in the UK, Mr Davies argued the UK Government had made a “significant profit” on the Severn crossings.

“I am very interested in what I believe happens in other areas where there are estuary crossings because my understanding is that they do not generate profits for the Treasury in anything like the same way the Severn Bridge does,” he said.

“I welcome the fact VAT on the tolls is to be scrapped. It is a good first step but I definitely see this as a starting point, not as a final deal.”

He also pressed Mr Cairns on whether the committee was correct in its assertion that it would be possible to cover ongoing maintenance costs with a toll of roughly one third of the current level.

Mr Cairns said work was in progress to identify the financial modelling that will apply to the Severn crossings post-2017 and he would write to the committee with further information in due course.

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