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Posts Tagged ‘tolls’

Toll roads tend to have a bad name in Britain, thanks to the unregulated charges the operators of the M6 relief road are allowed to levy and the ever upward prices seen on the Dartford Crossing (leaving aside the presumption that the tolls would be abolished once the QEII Bridge had been paid for). Then there is the ‘Wales entry tax’ levied on those traveling from England over the Severn Crossing.

But there are other, less well known places, where tolls are charged,. These so-called local statutory tolled undertakings are, according to a new DfT consultation on how charges are decided, mostly run by private companies or individuals but on occasion are in the hands of local authorities:

1. Aldwark Bridge,  Nr Linton –On-Ouse, North Yorkshire

2. Bournemouth-Swanage Motor-Road Ferry,  Entrance of Poole Harbour , Dorset

3. Clifton Suspension Bridge, Leigh Woods, Bristol

4. Dartmouth-Kingswear Floating Bridge, Dartmouth, Devon

5. Dunham Bridge, Dunham-on-Trent, Lincolnshire

6. Rixton & Warburton Bridge, Warburton, Cheshire

7. Shrewsbury (Kingsland) Bridge, Shrewsbury, Shropshire

8. Swinford Bridge, Swinford, Oxfordshire

9. Tamar Bridge & Torpoint Ferry, Saltash, Cornwall

10. Whitchurch Bridge, Whitchurch-on-Thames, Oxfordshire

11. Whitney-on-Wye Bridge, Whitney-on-Wye, Herefordshire

Currently, operators have to apply to the Secretary of State every time they want to raise their charges. But the DfT argues that proposed increases in tolls which are no greater than inflation minus one per cent will be effectively rubber-stamped in a simplified process that reduces the significant costs for operators associated with applying for changes; costs which would be passed on to travellers.

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Only one in 16 people believe government would spend the money raised from a new system of motorway charging on the motorway network itself.

As ministers prepare to publish a consultation document on the reform of funding for the roads, a poll for the RAC Foundation reveals just how far trust between the British public and ministers has broken down when it comes to driving taxation.

As part of the so-called feasibility study ordered by the Prime Minister in March 2012, and being undertaken by the Treasury and the Department for Transport, one measure reportedly considered would see drivers paying an access charge, possibly of £100 per year, to use the motorway network.

In exchange all drivers – whether they used motorways or not – would get a reduction in fuel duty and VED.

The poll, by Ipsos MORI, shows that while 39% of adults believe a scheme based on usage would be fair, just 6% would trust ministers to put the money raised through the charge back into the motorways.

The poll of 2,000 British adults also revealed that only one in eight people (13%) would support the scheme if a private sector firm was involved in running the motorways and deciding how money was spent.

Though there are a thousand ways to word a question, the results of this survey seem crystal clear: however you ask them, the British public do not trust ministers when it comes to motoring taxation.

You can understand why. Currently £33 billion is collected in VED and fuel duty revenue alone yet only a third of this is spent improving our crumbling road network. Why should people believe things will be any different under a new way of charging, whether it is an access charge or something different?

The RAC Foundation believes that one day some sort of pay-as-you-go charging scheme will have to be introduced. However this survey demonstrates just how far there is to go in re-establishing a decent relationship between voters and ministers when it comes to motoring matters. A good way to start would be to spend a larger share of the money already being taken from drivers on the road network.

Note:

Ipsos MORI interviewed a representative sample of 2,017 members of the British public aged 16-75. Interviews were carried out online between 31 May and 4 June 2013. Data are weighted to be representative of the population.

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Two tolled river crossings are in the news this week. On Tuesday the Department for Transport launched a consultation on an additional crossing of the Thames at or close to the existing bridge and tunnel at Dartford.

One of the big question marks, over and beyond the exact location of the new infrastructure, is how it will be funded. The presumption is that it will be through direct charges to users. After all that is what was used to pay for the QEII Bridge built in 1991 to augment the tunnel. The big grumble as regards that project has been, despite what drivers were led to believe, the government’s failure to remove tolls even after though the bridge has long since been built and paid for.

Which leads us on to the Severn Crossings. At first glance the situation is markedly different here.

The first road link between Wales and England was opened in 1966, but as traffic volume increased it became necessary to build a second bridge and that opened in 1996.

Today crossing operations are run by the Severn River Crossing PLC. As it stands this company has the concession to collect charges until it hits a certain amount of revenue, currently in the order of £1 billion, a figure likely to be reached (traffic volume, corporation tax etc. allowing) in around 2018. At the point the bridge reverts to public ownership with an expectation that the regulated tolls (price £6.20 for a car) will be removed.

Except they won’t, certainly not for a couple of years afterwards. Why? Because even though the Severn River Crossing company runs the bridges the government has somehow managed to incur costs of £88m in relation to the links and this money also needs to be recouped through tolls before they are scrapped.

In a letter to David Davies MP, chair of the Welsh Affairs Committee in Parliament, the transport minister Stephen Hammond MP explained how the costs had arisen:

“The concession agreement and Act was structured so that certain risks were borne by Government rather than SRC, for example, costs relating to latent defects on the first Severn Crossing. By bearing these risks the government was able to finance the construction of the second crossing and maintenance of the crossings at a much lower cost. If these risks had been included in the concession arrangement the end date of the concession would have needed to be extended to allow the concessionaire to recover its costs or the tolls would have needed to be set at a higher level. It is also likely that a private company would have required a substantial risk premium in order to take on these risks.”

Of course, there will be the strong suspicion that, against the wishes of road users and public bodies such as the Welsh Affairs Committee, the toll will never be removed, even after the extra £88m has been found, and instead will go up further still. After all, that is what happened at Dartford.

 

 

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By Professor Stephen Glaister, director of the RAC Foundation.

If the Financial Times is to be believed (Wednesday 6th March, p3) the government just lost its resolve on a reform of vital importance to the economic recovery: road infrastructure. Whilst it decides which way to go it should immediately end the delay with getting on with using conventional funding for some crucial schemes such as the improvement of the A14 and A303. And if it looking for other infrastructure improvements that will repay their investment costs many times over there is a long list of other languishing road schemes.

The government has a fixation about achieving economic growth. So would any government at the moment, for the simple reason that the arithmetic dictates that without growth the deficit cannot be eliminated. Vince Cable hinted at such a thing on this morning’s Today programme on Radio 4 just after 8am.

This government has also acknowledged that historic under-spend on capacity and maintenance, growing population and the need to serve economic growth all point towards a need for more resources for infrastructure. The big question is who is going to pay for it?

In March 2012 the Prime Minister outlined this infrastructure problem and specifically mentioned the need for more strategic roads. He pointed out that pension funds and sovereign wealth funds have lots of capital available to invest in long-lived infrastructure like this.  He mentioned the analogy with the water industry, which has achieved a massive investment in order to deliver more and better quality water with no burden on the taxpayer. Why not do the same for strategic roads?

There was a snag: the Prime Minister explicitly said he was not considering introducing charging for using existing roads, only new capacity. But there are few opportunities to build self-funding, distinct new roads in Britain. What is needed is better maintenance and capacity enhancement of the existing network: so where was the money going to come from to repay the investors? Water users pay for all the water they use and it is that which funds the industry’s infrastructure.

This fundamental flaw in the argument was quickly spotted and the Prime Minister commissioned the Treasury and the Department for Transport to carry out a “Feasibility Study” into options for correcting it.  This duly reported by the end of November.

But it seems that nothing offered found favour: the hoped-for announcement was missing from the 2012 Autumn Statement. There was only a promise that something would be announced before the 2013 Budget (20th March). It is rumoured that there was a section in the Coalition Government’s “half term review” document but that was dropped at the last minute.

Now, apparently, nothing will appear until the summer of 2013 at the earliest.

It is all very difficult. If there is going to be significant private investment there has to be a significant new cash flow to service the debt. There has been speculation in the press that this could come from some form of new charge for access to parts of the system, perhaps similar to a scheme proposed in a think piece by Brian Wadsworth and published by the RAC Foundation. Yet the government knows that with 35 million motorists amongst the electorate it cannot risk creating a perception that a significant proportion will be losers. To avoid this it would probably be necessary to sweeten the pill with an offsetting reduction in one or both of the main road taxes: fuel duty and the tax disc (VED).

In a world where “there is no government money” that is going to be difficult to achieve. But maybe the growth imperative will persuade government to do this.

For motorists that could turn out to be an attractive deal: better, less congested roads and less of the money they pay now being siphoned off the pay for other areas of general government expenditure. But judgement on that must await the detail of a firm proposal.

Whilst this hand-wringing is going on nothing much is happening. Although there have been worthwhile investments in solving “pinch-points” some really urgent, growth-critical schemes continue to languish.

The most important of these is the improvement of the inadequate A14. This road serves the east coast ports (Felixtowe and Harwich) and travels west past Cambridge and Huntingdon towards the industrial heart of the country. It is recognised as being of European significance, part of the Trans European Network. A good scheme for rebuilding it was developed over a decade with much effort and expense. There is considerable support amongst local communities, commerce and industry.

Yet, at the last minute, the Coalition Government cancelled the scheme and gave up planning consents in the 2010 Spending Review on the grounds that it was “unaffordable”. Since then the government has been feeling its way towards re-instating a scheme. First there was a consultation, the “A14 Challenge”. Then, before the response to the consultation was fully complete the government announced a new plan involving three-way funding: central government, local communities and tolls.

The new proposal is on much the same line of route as the abandoned one but is physically more complex and seems likely to cost no less. Raising the required funding from a number of local sources, all financially hard-pressed, is going to take a long time to negotiate. The tolling proposal is controversial with the locals.

The RAC Foundation is not opposed to charging road users, if that is part of a coherent, national-scale package including adjustment to road taxes. But the free-standing proposal for the A14, whilst interesting, in practice looks like a recipe for endless further delay—and it conflicts with both the wider national road funding policy and the new lorry charging scheme which is currently in Parliament.

A piecemeal approach also risks the creation of a postcode lottery. Why should users of this economically strategic piece of road pay extra to drive along it when city bankers in their trophy cars can zoom down to the coast along the A3 and through the new Hindhead Tunnel without extra financial hindrance?

It is now two and a half years since the government cancelled this crucial scheme and began wondering what to put in its place. The hybrid funding scheme it is trying to broker will likely cause more delay. Pending a resolution to its confusion about whether and how to reform national road funding as a whole, it should simply stop prevaricating on the A14 and get going using the conventional exchequer funding method.

There is a broader point.  As Vince Cable points out, so long as investments are made in schemes with a good rate of return they will eventually cost less than nothing. Unless the government is confident that it can agree and implement innovative funding mechanisms for roads soon it should stop wasting time and get on with the broader, economically justifiable national roads programme using conventionally funding methods.

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So drivers face tolls on the Blackwall Tunnel. Or are likely to if the proposed Silvertown Tunnel – between Silvertown and the Greenwich Peninsula in East London – is given the go ahead by TfL after the consultation exercise currently being undertaken.

One of the funding mechanisms put out for debate by TfL would see the new link paid for by charges to drivers. The neighbouring, existing, link will also attract charges because if it didn’t, TfL says, there would be a large diversionary effect as drivers would opt for the free option.

The knee-jerk reaction is to groan and say not another unfair tax on motorists and there is an understandable concern that a piecemeal approach to providing new infrastructure makes for a postcode lottery. If you have no choice but to use the Dartford Crossing or Severn Crossing or potentially the Blackwall and Silvertown tunnels then you pay a charge over and above your existing motoring tax.

There are two points to be made about this.

First, what would happen if this new infrastructure was not paid for by the people who use it? The grim reality is that probably nothing would happen. There would be no new tunnel and the congestion we see at Blackwall would worsen.

Already the southern approach is ranked as the second most congested spot on the entire British road network and with big increases projected for traffic, driven primarily by population rises and, in the capital, hundreds of thousands of jobs being created, that situation is not going to improve of its own accord.

Second, the money raised could and should be used to fund further enhancements to the road network specifically and the wider London transport system more generally.

The key is that any toll is transparent in its purpose, its setting and its duration. Something which users of the Dartford tunnel and bridge might have views on.

TfL is honest enough to admit that charges would also spread demand. As they put it:

“As well as helping to fund the new infrastructure, we believe that tolling would be necessary to manage traffic demand. A toll would encourage drivers to consider whether they could use an alternative route or travel at a different time.”

While it is reasonable to ask whether drivers could make their journeys at non-peak times (and hopefully benefit from lower charges) suggesting there might be an alternative route seems rather optimistic.

However, the bottom line is that drivers face a tough choice: continue to have a free route that becomes increasingly impassable (a slight exaggeration perhaps, but not an absurdity) or to have new capacity they must pay for.

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