Tag Archives: Severn Bridge Toll

SEVERN CROSSINGS BUDGET ANNOUNCEMENT ‘FANTASTIC NEWS’ FOR SOUTH WALES ECONOMY

COMMENTING on Chancellor George Osborne’s announcement in today’s Budget that toll charges on the Severn crossings will be halved in 2018, Monmouth MP and chair of the Welsh Affairs Committee David Davies said:

“This is fantastic news for the south Wales economy and I am absolutely delighted.

“Halving the tolls is not as much as some were hoping for but it is certainly a welcome step forward.

“There has been a lot of lobbying from all members of the Welsh Affairs Committee to bring this about and I have worked closely with cross-party colleagues, especially Jessica Morden in Newport East, for many years.

“I think it goes to show that when MPs get together to raise their voices loudly and for long enough, change can actually be achieved.

“I am very glad the government has gone much further than was originally being suggested and my main priority now is to ensure a proper handover plan is in place when the bridges revert to public ownership.

“I will also be concentrating on getting an electronic pre-pay system installed, similar to the one used for the London congestion charge, as reducing the tolls is likely to increase traffic levels and could lead to big queues on the toll plaza.

“This would take time and require government involvement. I’m not entirely satisfied that enough has been done yet.”

DAVID DAVIES MP: SEVERN CROSSINGS COULD REVERT TO PUBLIC OWNERSHIP BY AUTUMN 2017

THE Severn crossings could revert to public ownership as early as autumn 2017 and preparations need to be made, the chairman of the Welsh Affairs Committee has said.

David Davies has written to Transport Secretary Patrick McLoughlin urging the UK Government to set out a detailed handover plan.

The M48 Severn Bridge and M4 Second Severn Crossing are due to come back into public ownership in April 2018 once the accumulated debt from construction costs has been paid to Severn River Crossing (SRC) Plc.

But Monmouth MP Mr Davies, who led a parliamentary inquiry into the economic impact of the Severn tolls in 2010, believes the handover could be reached several months earlier.

Severn Bridge

“Changes to corporation tax and an increase in traffic due to low fuel prices mean that the sum promised to SRC will inevitably be paid months earlier than expected,” he said.

“I believe it could happen as soon as October or November 2017, so we have less than two years to put a proper plan in place.”

Government ownership should see an “immediate removal” of the 20 per cent VAT applied to the Severn Bridge tolls, Mr Davies added, as under EU rules it would not be chargeable on a government-owned piece of infrastructure.

Furthermore, recent figures obtained by Mr Davies from the Department for Transport show SRC collected a net revenue of £91.4m in 2014 – of which just £13.16m was operational expenditure (including maintenance). £17m was paid in VAT.

“These figures prove there is scope for a huge cut in tolls,” he said.

“However, reducing the tolls would increase traffic levels and could lead to big queues on the toll plaza unless SRC introduces an electronic pre-pay system similar to the one used for the London congestion charge.

“This would take time and require government involvement. As far as I am aware, nothing has been done yet.

“A lot of local people work as toll collectors and I know some of them are getting concerned at the lack of information about what the future holds post-concession.”

The Welsh Affairs Committee is likely to “want to look further into this” and will be pressing the government for the latest estimate of the handover date, Mr Davies confirmed.

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.