Misunderstanding
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The Facts
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| 1. Tunnel users were promised that the tolls
would eventually be removed. |
The legislation which led to the opening of the
first Tunnel in 1934 authorised tolling for only forty years
until 1974. In response to the public clamour for a second crossing
in the 1960s it was made absolutely clear that tolls would have
to continue indefinitely to pay for the new Tunnel after it
opened in 1971. |
| 2. The Tunnels debts have been caused by mismanagement.
|
The debt relates to the cost of construction
of the Wallasey Tunnel (£44m) and the use of borrowing
to finance the operating losses which were incurred between
1968 and 1992 (£116m). Deficit funding by borrowing was
authorised by legislation, but continued for a far longer period
and for far greater amounts due to higher costs and lower traffic
than originally anticipated. The losses could only have been
avoided by earlier and higher toll increases, as successive
governments repeatedly refused to provide financial assistance
for the Tunnels. |
| 3. Merseytravel has mismanaged the Tunnels finances. |
Merseytravel inherited the Tunnels in 1986 with
£100m worth of debt and losses of £10m a year, i.e.
annual costs of £20m and annual toll income of £10m.
Despite tolls increasing in 1986 and 1989, total debt climbed
to £140m before Merseytravel raised tolls again in 1992
(from 60p to 100p for cars) and finally secured financial stability
for the Tunnels. |
| 4. The Tunnel tolls are already too high. |
The current toll income of £30.6m a year
is needed to pay for operating costs (£11.0m), debt charges
(£14.0m) and refurbishment costs (£5.6m). The cost
of refurbishment is escalating due to the age of the Tunnels,
and more stringent health and safety requirements, and the need
to undertake more work overnight as a consequence of traffic
growth. |
| 5. Tunnel tolls are a tax on motorists and a
burden on local businesses. |
The first Tunnel was built primarily to replace
the old goods ferries (luggage boats) in order to stimulate
economic development on both sides of the river. The second
Tunnel was built to accommodate the growth in car traffic in
the 1950s and 1960s. Neither Tunnel would have been built but
for tolling, and the economy of Merseyside would not have developed
(and be developing) to the same extent without them. |
| 6. The Tunnels' debts should be refinanced on
a cheaper basis. |
The current outstanding debt of £110m includes
borrowings of £65m which were raised in the 1970s/80s/early
90s at fixed interest rates of about 9.0%. This debt can only
be repaid early by compensating the lenders for the difference
between the original (high) and current (low) levels of interest
rates. The balance of debt of £45m is pooled and being
repaid with interest at variable rates which are gradually reducing,
reflecting the lower cost of replacement borrowings in recent
years. |
| 7. It is scaremongering to suggest that the Tunnels
and their approach roadscould be grid-locked by traffic growth.
|
Tunnel traffic has grown almost uniformly by
40% (from 18m to 25m vehicles) over the last thirty years, despite
tolls being increased on nine occasions over this period. Similar
traffic growth over the next thirty years would add to congestion
at peak periods until the Tunnels reached their capacity limits.
Freezing, reducing or removing tolls will inevitably accelerate
this process. |
| 8. The Tunnel tolls will go up every year under
Merseytravel's proposals. |
Assuming inflation continues at 2% per annum
over the next ten years, the proposed RPI trigger will result
in toll increases for all classes of traffic in 2003, 2006 and
2010. The car toll rises will be 10p on each occasion, an extra
£1 per week for most motorists. |
| 9. The tunnel toll income is already being used
to subsidise public transport. |
The current legislation governing the Tunnels
does not permit toll income to be used for this purpose. Merseytravel
has though a legal duty to use toll income to repay District
Councils for financing the Tunnel losses which occurred between
1988 and 1992. The repayments are being made by reducing Merseytravel's
annual Levy on the District Councils for public transport purposes.
Part of the repayments are reducing the Levy-borne operating
losses on the Mersey Ferries, recognising a previous statutory
obligation to compensate them for patronage lost to the Tunnels. |
| 10. Increases in the Mersey Tunnel tolls will
lead to saturation of the Runcorn Bridge. |
Previous rises in the Mersey Tunnels tolls have
had little impact on Runcorn Bridge traffic, and inflation proofing
tolls is unlikely to change the situation. In any event, consideration
is being given to the construction of a new bridge, to be paid
for by tolling. |
