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Second Severn Crossing

Volume 170: debated on Thursday 19 April 1990

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Motion made, and Question proposed, That this House do now adjourn.— [Mr. Fallon.]

10.54 pm

This debate follows the Secretary of State for Transport's announcement on 4 April, in answer to a written question tabled by the hon. Member for Cardiff, North (Mr. Jones), that he intends

"to accept the proposal from the John Laing/GTM Entrepose consortium to design, build, finance and operate the second Severn bridge".—[Official Report, 4 April 1990; Vol. 170, c. 613.]
With great respect to the hon. Member for Cardiff North, I must say that the project will not be constructed in the leafy suburbs of Cardiff. That leads me to my first point. The announcement was vital to Wales. It should have been made on the Floor of the House. The decision and the manner of the announcement are yet another illustration of the contempt in which Wales is held by the Government.

I do not want to bore the House, but my mind is drawn back to my first Adjournment debate on this subject—on 28 October 1983—when I revealed the contents of a previously secret report prepared by an eminent firm of consultant engineers, which said that the existing bridge was in a bad state.

Leaking the report gave impetus to the demand for a second Severn crossing. A few days later, the Welsh Labour group made an urgent request for a meeting with the then Secretary of State for Transport. When we met the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), he told us in his own inimitable way that he would not dig another hole in the ground. Nevertheless, the crucial importance of a second crossing was recognised and the demand for it continued unabated.

Eventually, on 24 July 1986, the Secretary of State for Wales, in a statement to the House, gave the Government go-ahead. If I may be cynical for a moment, with their announcement of 4 April, at least the Government have stuck to the contention of the right hon. Member for Cirencester and Tewkesbury about not digging another hole in the ground. Rather, they have handed over the whole project and the existing bridge to a French-backed consortium. It is a shocking and disgusting decision. The Severn crossing is vital to the Welsh economy. It is our main access point. Much industrial and commercial activity depends on it. This Thatcher Government decision will not be forgotten in Wales for a long time.

Doubts are being expressed about the likely design of the bridge and its visual impact. It must blend into the landscape. What assurances can the Government give in that connection? On the English side, access points seem to have evolved into part three-lane and part two-lane dualling, provision being made to make the latter three-lane if the need arises. This is a mistake that could prove costly. It will mean bringing the contractors back some years hence. In addition, when there are difficulties on the existing bridge—there have been plenty in recent months—they will involve a wholesale diversion of traffic to the new bridge. A two-lane carriageway could not cope with such additional traffic. I urge the Government to think again. There will be difficulties with motorway service areas. The new road schemes will make it impossible for many motorists to use the Aust service station. What plans do the Government have to deal with that?

Then there is the major issue of tolling policy. All the signs are that heavier and heavier tolls will be applied on both crossings. This is an additional tax on Wales, which is still a relatively depressed region. To put it mildly, it is most unfair. Both crossings should be in the public sector and toll-free.

The French-backed consortium will require a higher return on its investment, over a shorter period. That will necessitate higher tolls. That is the prospect for Welsh industry and commerce. Mr. Ian Kelsall of the Welsh CBI has been warned.

Some estimates seem to suggest that the cash flow for the consortium is unlikely to yield a profit until the year 2010. Such estimates are based on initial costs of opening of about £450 million, including the cost of the new crossing, finance charges and debt on the existing bridge. On top of that there could be annual costs of perhaps £80 million, including financing of debt, operating and maintenance costs. Assuming a flow of 25 million vehicles in 1995. the bridge could produce revenue of £40 million. It would seem, therefore, that the financial viability of the project rests on the assumption of a substantial increase in traffic from 1995 onwards.

There are a number of important questions to which answers from the Government are required. First, what assurance is there that tolls will be £1·40 in 1995? Are there to be allowances for increases other than inflation? Secondly, what are the assumptions about future traffic levels, and what is the basis for the Department's claim that tolls would last for only 21 years? Thirdly, are any costs to be carried by the public sector at any stage in the concession period? Is the capital debt on the existing bridge to be written down? Are the loans to be underwritten or supported in any way by central Government? If the Minister cannot provide answers to these questions tonight, I respectfully suggest that he writes to me about them in due course.

I come now to what could be called the jackpot question: what if construction costs escalate? Such increases are known in the industry as cost overruns. The overruns on the Channel tunnel have been considerable. In the event of cost overruns and of the total revenue being insufficient to meet debt and operating costs, what guarantees are there for the long-term future of the crossing?

In France, the Government have effectively had to nationalise toll motorways when the operators have pulled out. If that were to happen with the Severn crossing, the Welsh economy would be in jeopardy. The consortium has no previous experience of constructing a comparable estuarial crossing. What a way for a British Government to treat the economic lifeline of Wales. We are just being treated as an economic guinea pig in another doctrinaire experiment by this utterly discredited Government.

Early-day motion 779 stands in the name of my hon. Friend the Member for Newport, West (Mr. Flynn), and I have given him notice that I shall be raising the matter. It is entitled "Second Severn crossing" and it first appeared on the Order Paper on 22 March. When I read it, I was a bit puzzled, because it gave me the impression that a Government announcement had already been made. I proceeded to make exhaustive inquiries and I discovered that no such announcement had been made. It appears that, at that stage, a last desperate attempt was being made to prevent the French-backed consortium from gaining the contract.

The parliamentary Labour party has a rule that the Chief Whip must be consulted before an early-day motion is put down. I believe that the Conservative party has a similar rule. However, I understand that no such authorisation was sought or granted for early-day motion 779. My hon. Friend the Member for Newport, West is a Front-Bench spokesman on social security matters.

The matter was further complicated because my hon. Friend appears to have been a little confused about where the new bridge is to be situated. He told me that it was to be in the constituency of the hon. Member for Gloucestershire, West (Mr. Marland), and it appears that he gave the same impression to the Chief Whip who spoke to him about the matter. Several representatives of the media told me that he had said the same thing to them. It would seem reasonable to suggest that, before going into such an issue with both feet, it would at least have been wise to be sure of the location of a project, not to mention the propriety of raising a matter that affects another Member's constituency.

I have in my hand a letter dated 11 April from Monmouth borough council, signed by the electoral officer, saying that plans available to him show that the second Severn crossing will be in the Newport, East constituency. I am sure that the Minister can confirm that this evening.

On the other side of the channel, the bridge will be in the constituency of the right hon. Member for Northavon (Mr. Cope). We have already had preliminary discussions about how best we can help our constituents. The fact has to be faced that, when the heavy lorries and equipment move in, there will be a lot of muck and dust, together with a good deal of congestion, and people will be upset.

I remind the House that that will be happening not in Allt-yr-yn or Bassaleg in the constituency of my hon. Friend the Member for Newport, West, but in Caldicot and the surrounding villages in the Newport, East constituency.

I conclude by saying that Opposition Members are looking forward to the early return of a Labour Government. Wales and, I believe, the rest of the country are simply fed up with Thatcherism. That incoming Labour Government will be faced with many problems. It is perfectly understandable that my right hon. Friend the Leader of the Opposition is reluctant to make commitments at this stage, and that is wise. But that incoming Government would do well to concentrate first and foremost on getting the economy right. We need much new investment, particularly in the regions, to generate long-term growth. As we know from what has happened in the Soviet Union and elsewhere in eastern Europe, it is no use redistributing less and less. To take over the two bridges and get rid of tolls would give an immediate shot in the arm to the Welsh economy, as well as providing long-term benefits. We have been promised that the whole issue of tolls on estuarial crossings will be reviewed. I accept that promise, and hope that something useful will emerge from it.

11.10 pm

I hesitate to become involved in a quarrel between the hon. Members for Newport, East (Mr. Hughes) and for Newport, West (Mr. Flynn). Clearly, however, as the hon. Member for Newport, East has raised the matter—I congratulate him on being able to do so—I must answer the points that he made.

So seriously do the Government take the issue that, unusually, the Secretary of State is present, having broken an engagement for that purpose. Also present is my hon. Friend the Minister of State, Welsh Office, who has taken a considerable interest in the matter.

Given the hon. Gentleman's comments, it could be imagined that the Government's proposals for the second Severn crossing represented an iniquitous plot designed solely to impose swingeing taxes on the Welsh economy, and to subject the Principality to the whims of foreign financiers. The reality is wholly different. We are proposing to more than double the road capacity across this vital road link within the next six years. Some increase in the cost to users will be inevitable to cover the massive investment required to finance the new crossing, but we are satisfied that the Government's selected proposal represents the best overall value for money for all concerned.

The case for providing a second road crossing of the Severn estuary is not at issue. The present Severn bridge provided ample capacity for the traffic envisaged at the time of its opening in 1966, but since then the growth in traffic nationally—particularly motorway traffic—has been enormous, as I am sure that everyone is well aware. That, coupled with the successful regeneration of the south Wales economy in recent years—we might not have realised from the remarks of Opposition Members that it had taken place, but my hon. Friend the Minister of State, Welsh Office, who has been largely responsible for the improvement, is only too well aware of it—has meant that traffic using the bridge has tripled since its opening, from fewer than 6 million to over 18 million vehicles a year. In turn, that has begun to lead inexorably to congestion at peak times or during repair and maintenance works. A particular problem for the present bridge, given the exposed nature of the site, is that high winds occasionally require restrictions on high-sided vehicles, or—in extreme cases—complete closure of the crossing.

All that led the Government to conclude, as long ago as 1986, that a second crossing should be provided. Two years later, in 1988, we announced that the private sector would be given the opportunity to participate in the financing and operation of the crossing. That decision followed directly from the innovation of private funding for roads infrastructure that had been so successful in the competition for the third Dartford-Thurrock crossing.

The detailed terms for the second Severn competition were issued almost a year ago to the four selected consortia that had put in the strongest pre-qualifying proposals. The terms for that important competition confirmed the Government's objective of securing directly comparable bids from the tenderers on a privately and publicly financed basis.

The bids were received last October. After an intensive initial evaluation, we were able to reduce the list of contenders to two—the John Laing/GTM Entrepose consortium and one comprising Trafalgar House and Balfour Beatty. Both designs were established to be technically and aesthetically sound and to comply with the Government's strict engineering requirements. The final decision between the two bidders and between the financing options came down essentially to which offered the better overall value for money. The assessment took account of the costs of the scheme to users of the crossing arising from tolls and to taxpayers arising from the residual costs of the scheme to Government, taking account also of the tax receipts generated by the scheme.

As the House knows, my right hon. Friend the Secretary of State for Transport, who, I emphasise, is here tonight to support this important project, announced before Easter our conclusion that the privately funded proposal from Laing/GTM offered the best value. Negotiations are starting on the detailed terms of a comprehensive concession agreement. We shall, of course, keep the House in touch with developments on that front.

Implementation of these proposals will naturally require new statutory powers, and my right hon. Friend hopes to introduce legislation at the earliest opportunity to seek parliamentary approval for the scheme. If all goes well, we hope that construction could start at the beginning of 1992, and that the new bridge could be open to traffic by the end of 1995. It is a great and significant development for south Wales and the western part of England.

It is a most exciting and vital development for the future of south Wales. It reaffirms the Government's commitment to the continuing economic development of this part of the country, by helping to ensure that its communications with the rest of the United Kingdom and with Europe are second to none. The bridge itself will be an international showpiece; at some 5 km long it will be the longest water crossing in the United Kingdom, and it will incorporate the longest cable-stayed span in the United Kingdom. The entire crossing will provide windshield protection for traffic—a world first on such a scale and structure.

Against that background, it is most disappointing—if, sadly, hardly surprising—that we have to record the carping, negative criticism which the proposal has received tonight and on other occasions from the Opposition. It is not untypical that the hon. Gentleman's criticisms, when he was not dealing with the particular problems he had with his neighbour, went over the top. The Welsh people, who rely greatly on my hon. Friend the Minister of State who represents their interests so well, will understand that the hon. Gentleman has taken the matter too far.

The hon. Gentleman made particular reference to tolls. We have heard a great deal of complaint about the level of tolls and, as hon. Members will know, there was a debate about the tolls on the existing Severn bridge. Complaints have been made about the principle of whether tolls should be charged at all. I put on record for all to see and hear that the hard fact is that it has been the policy of successive Governments over very many years—including Labour Governments—that those who derive exceptional benefits from the provision of major estuarial crossings should contribute towards the exceptional costs of putting them there. Indeed, it is worth reminding the House and everyone listening to the debate that a Labour Government were in power in 1965 when the Severn Bridge Tolls Act was enacted. That Act provides for tolls to be levied for a period of up to 40 years to cover the costs of constructing, maintaining, operating and improving the bridge, and it is on that basis that tolls are now charged.

Does the Minister appreciate that all the arrangements for the construction of the bridge had been prepared beforehand and that the Labour Government had only just taken office in 1965?

I do not dispute that, but I repeat that the legislation under which the tolls are now charged was enacted by a Labour Government. It is no good the hon. Gentleman trying to evade responsibility for his party's commitment in that regard.

Under the Government's proposals for the second crossing, the existing bridge will be transferred to the private sector consortium, which will collect tolls on both bridges on a common basis. The promoter's powers to collect tolls will be tightly controlled. The tolls will be specified in the forthcoming legislation and the promoter's tolling period, which will not exceed 30 years, will be tied to a formula based on revenue from traffic. The more traffic which goes over the crossing, the sooner tolls will stop. On current forecasts, tolls will be needed for about only 21 years, barely half the period envisaged for the original bridge.

I accept that some increase in tolls will be needed. The proposals envisage, ultimately, an increase of about 40 per cent. for most users. That increase will be phased in up to 1995 to reduce the initial impact. For goods operators, the increases will be rather higher, but it should be recognised that the present £2 toll for goods vehicles is something of a bargain, given the value to operators of the time saved by using the crossing. On present expectations, the tolls will cease in the year 2013, only seven years after the date on which tolls for the present bridge are due to end. That is quite an achievement. All in all, we regard the proposed tolls as a reasonable price to pay to cover the £270 million capital cost of the new crossing. The overall cost to the community of this scheme will be less than any available alternative, whether it be privately or publicly financed.

Concern has been expressed tonight about the Government's selected proposals on the grounds that the consortium includes a French contracting group and that its backers include a French bank. There has been concern that the consortium's scheme may not use British materials and suppliers to the same extent as the unsuccessful Trafalgar House/Balfour Beatty alternative.

Those concerns are fundamentally misconceived. The Government most emphatically do not discriminate against British suppliers, which will be able, and well placed geographically, to compete for work related to the new crossing, but they will need to compete for that work and that includes competing with suppliers from other Community countries, just as we compete with other European companies on building projects in their countries, and are jolly successful in so doing. It is worth reminding the House that we hope that construction will start in 1992.

There is no question of the crossings being compromised by the transfer to a private sector promoter or by the involvement of overseas companies. The powers of the promoter and the operation of the crossings will be strictly controlled by the proposed legislation, in tandem with the concession agreement. Moreover, I can assure the House that under the proposals my right hon. Friends the Secretaries of State for Transport and for Wales will remain the highway authorities for these roads and that the police will have all the usual powers to deal with traffic.

Our decision to go ahead with the second Severn crossing on the basis of the privately funded Laing/GTM proposal represents the best practical deal for south Wales. It offers the most effective means of securing the new crossing as soon as possible. The House naturally has a close interest in how the crossing will be provided, and there will be a full opportunity to debate the principles and the details of the proposal when we discuss the necessary legislation in due course.

I hope that the House will reject the carping and unnecessary criticism of the hon. Member for Newport, East and his hon. Friends about the importance of the bridge and how it will be constructed and that it will welcome the Government's positive initiative on this most vital scheme.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Eleven o'clock.