Written evidence from the Department for Transport (SRC0009)

Questions

1. How well does local and national government work together to plan and deliver river crossing projects?

1.1. Local and national governments have a good relationship in delivering river crossing projects. On the Mersey Gateway scheme both parties have worked closely to ensure that the right scheme is built and that funding is available when required and that both parties’ positions are protected. On the Lower Thames crossing, the Department led a public consultation (in 2013) on three location options (A, B, C and C variant), and worked closely with local authorities to understand residents’ views about the options and planning considerations. The Lower Thames crossing scheme is now at the stage where the Highways Agency are investigating route options, and proactive central government engagement with local authorities remains an important part of the endeavour.

2. What knowledge, resources and experience does the public sector need to deliver large, strategically significant river crossing projects?

2.1. The delivery of such large schemes is not a regular occurrence so it is important that the right make-up of expertise is available from the outset. As regards local authority promoted schemes, the Department has experts on finance who can advise on the complicated financial propositions used. For the Mersey Gateway scheme, Halton B.C., the scheme sponsors, decided from the outset to recruit specific experts to oversee the development of the project and these have remained with the project until final approval thereby ensuring that there was continuity throughout the development phase. HBC also hired specialist consultants in areas such as bridge design as these skills are not those that a local authority will have in-house.

2.2. All estuarial crossings are a major undertaking in terms of building local support, engineering a good solution, determining how the scheme is to be paid for, and following due process for gaining development consent. The Lower Thames crossing team reflects the multi-disciplinary mix required, including experts on scheme design and engineering, stakeholder engagement and communication, as well as financial and legal advisers.

3. What other government priorities, such as new house building, urban regeneration and new business opportunities, can be delivered through additional strategic river crossings?

3.1. The provision of major river crossings can transform a wide area around them given the significant improvement in access they can provide. For example the Government continues to identify the areas known collectively as the Thames Gateway as a focus for major redevelopment and growth. The Chancellor recently signalled Government’s commitment to help deliver this growth by announcing the setting up of a Development Corporation and up to £200 million of public investment for major new development around the high speed rail station in Ebbsfleet in Kent to provide up to 15,000 new homes on existing brownfield land. The Lower Thames crossing project team is working with local government, the South East Local Enterprise Partnership, business and other organisations to ensure proposals for the new crossing and associated road network improvements will serve planned and prospective economic development.

3.2. Another aim of such schemes is to deal with congestion problems at other crossings to help facilitate local and regional growth as is the case with the second Dartford Crossing and more recently the Mersey Gateway Bridge. On the latter the existing Silver Jubilee Bridge is the only road link between the two halves of the borough of Halton and congestion associated with that bridge is a constraint to economic regeneration and growth both locally, within the Borough, and across the wider Liverpool City Region and the North West. The scheme will significantly improve accessibility in the area, providing significant benefits in terms of widening the job market, leading to over 4,500 new jobs. There are also a number of major employment sites such as the Daresbury Enterprise Zone and a major Stobarts logistics site which will benefit from the improved access the bridge will bring which will also improve access to Liverpool John Lennon airport.

4. Do existing cost-benefit analysis methods adequately capture any potential transformative effects of new river crossings?

4.1. The Department for Transport appraisal guidelines provide a rigorous framework for appraising projects. Its assessment of user-benefits is well grounded and important progress has been made in incorporating impacts beyond immediate user-benefits – such as agglomeration and labour markets impacts.

4.2. Assessing these impacts requires a robust evidence base on a case by case basis combined with local and project specific knowledge in order to make judgements about whether such changes are additional (to a particular area and to the country as a whole), whether they displace other activities and how they interact with market imperfections.

4.3. However, the current approach is generally based on assuming that the intervention in itself does not significantly change the system within which it is being assessed. We are developing our understanding of economic growth impacts by undertaking a comprehensive survey of the latest theoretical and empirical evidence for the potential growth impacts of nationally significant infrastructure schemes. Some new river crossings could certainly fall into this category. Results are due to be published later this year.

5. What are the best methods for financing additional river crossings?

5.1. Government policy since the 1980s has been to bring in private sector expertise and finance in the provisions of public infrastructure in order to capture efficiency gains and allow more schemes to go forward than would be possible if funding were restricted to conventional sources. As a consequence, to date, concessions have been let to the private sector to design, build, finance, operate and maintain such large undertakings and in return, the concessionaires are permitted to charge a toll for vehicles using the undertakings for a set number of years. Such river crossings in England are the Second Severn Bridge (part of the Severn River Crossing) and the Queen Elizabeth II Bridge (part of the Dartford-Thurrock River Crossing). At Severn and Dartford, the concession agreements included the taking over of the operation and maintenance of connected existing structures (i.e., the original Severn Bridge and the two Dartford Tunnels).

5.2. It has been Government policy since 1945 that estuarial crossings should be paid for by the user rather than the taxpayer. Successive Governments have taken the view that tolls are justified because the users benefit from the exceptional savings in time and money that these expensive facilities make possible. An exception has been made to this policy in the case of the Mersey Gateway Bridge. Residents of Halton Borough are in an unusual position in that the existing Silver Jubilee Bridge connects the two parts of the Borough on either side of the River Mersey which is the only practicable way of travelling between the two parts of the Borough. In those circumstances the Government was able to make an exceptional additional contribution to secure free crossings for Halton residents, but has no plans to extend this further.

5.3. Having an income from tolls makes it easier to bring in private financing as the repayments can be made using the toll income over an extended period. Using private finance can also ensure that schemes are constructed sooner than they might be if only public funding were available. Using private finance can also ensure that schemes offering long term benefit to users and society are not constrained by the scale of public funding available in the short term.

6. How can the public sector attract greater investment from the private sector for the delivery and maintenance of river crossings?

6.1. The use of tolling can provide the revenue that will attract private investment into the delivery and maintenance of river crossings. Private sector investment in the delivery and maintenance of crossings can take place under a number of delivery models. For example, income from tolls can make a contribution towards availability payments over a long term concession period in return for upfront lending as part of private financing arrangements. Although it is currently more challenging to raise long term commercial bank debt to support major infrastructure projects than before the financial crisis, recent experience has demonstrated that such mechanisms continue to be a viable financing route for projects.

7. Should strategic river crossings be tolled? How should tolling be implemented? How can technology be used to improve strategic river crossings for road users (e.g. better management of traffic flows)? 

7.1. It has been Government policy since 1945 that estuarial crossings should be paid for by the user rather than the taxpayer, and the Department’s recent draft National Policy Statement for roads and rail networks[1] reinforced this by stating that such crossings will normally be funded by tolls or road user charges. Successive Governments have taken the view that tolls are justified because of the users benefit from the exceptional savings in time and money that these expensive facilities make possible. If local authorities can provide the necessary up front funding for such schemes then they can avoid the need for tolls but this is not often possible.

7.2. Government policy is that tolling should now be open with the removal of barriers and toll booths and the use of technology to allow cars to pass through without having to stop. The use of such open-road tolling can increase the benefits of these schemes by removing the dis-benefits of slowing down to pay as well as making the payment system cheaper and more flexible. For example, from October 2014, a remote payment system, ‘Dart Charge’ will be implemented at the Dartford Crossing, which is expected to improve conditions for users.

Background

1. There has been a tradition of privately financed toll roads and bridges for at least 200 years. Many bridges were built by local people, to benefit their community, and long distance roads or turnpikes were run by trusts. They were non-profit making, and tolls were charged to finance construction and maintenance. In the early 20th Century most roads ceased to be tolled except for a handful of small historic bridges.
2. Although, since the early 20th Century most roads have been free of any toll charge and financed out of general taxation the exceptions were the major local authority crossings like the Mersey and Tyne Tunnels and the Humber Bridge.
3. Tolled bridges, tunnels and roads in England fall into the following categories:
1. Non-statutory tolled undertakings: a number of private bridges and roads that charge tolls for the right to cross private land. The owners/operators set their own tolls and are not regulated in any way.
2. Privately owned statutory tolled undertakings: eight small ancient bridges built and tolled under Private Acts of Parliament (some going back to the 18th Century). Although these undertakings are all on the public highway they are either privately owned or operated by a private trust. They can only charge tolls that meet the costs of operating the undertaking (some undertakings are allowed to make a reasonable return upon investment). An application has to be made to the Secretary of State for Transport to revise toll charges at these undertakings, a process that can include an independent public inquiry.
3. Local authority statutory tolled undertakings: five larger local authority crossings of river estuaries promoted since the 1920s (consisting of 3 tunnels and 3 bridges). They can only charge tolls that meet the costs of building and operating the undertaking (although at two of the undertakings - the Mersey and Tyne Tunnels - legislation has recently been enabled allowing for some toll revenue to be used for other transport projects). In the main these undertakings were built with central government loans (three of the undertakings - the Mersey and Tyne Tunnels and the Humber Bridge - still have debts outstanding.) Toll charges at the Humber Bridge and Tamar Bridge - and at the Mersey and Tyne Tunnels for increases above the retail price index - can only be revised by application to the Secretary of State for Transport (again a process that can include an independent public inquiry).
4. Central Government promoted tolled crossing undertakings: currently this covers only the two Severn Bridges (collectively known as the Severn River Crossing). This large undertaking has been designed, built, financed and is being operated by a private consortia under a concession agreement with central government. The legislation and the concession agreements at these undertakings allow for the Concessionaire to charge tolls for a set period of time to refund the aggregate costs of the Concessionaire (in building the undertaking, operating and maintaining the undertaking and the previously existing crossing, and financing original debt, works and ongoing operations). The concession ends when the aggregate costs of the Concessionaire are met or the set concession period expires, at which time ownership of the undertaking will pass fully to central government.
5. The Dartford-Thurrock River Crossing (consisting of two tunnels and the Queen Elizabeth II Bridge) formerly belonged to this group but the power to charge a toll ended on 31 March 2003 with the aggregate costs of the Concessionaire having been met and thus the completion of the concession. A road user charging scheme, under the provisions of the Transport Act 2000, was introduced on 1 April 2003 to manage traffic at the crossing.

September 2014