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Humber Bridge Tolls

Volume 488: debated on Tuesday 24 February 2009

Motion made, and Question proposed, That this House do now adjourn.—(Mr. Blizzard.)

On behalf of the residents on both sides of the River Humber, I thank you, Mr. Speaker, for allowing this debate to take place tonight. The Humber bridge tolls affect constituents across the whole of east Yorkshire and northern Lincolnshire.

I shall begin by explaining a little of the bridge’s history before I move on to its current financial predicament and the impact on local people. In the short term, the Humber bridge board has proposed an increase in the existing toll—already the most expensive toll in the country—of 20p per crossing. Having discussed that, I shall move on to the growing calls from all areas of the local community and all political parties to scrap the debt currently owed on the bridge; it now stands at a remarkable £334 million or more.

Plans for the bridge were originally drawn up in the 1930s, but work on it did not begin until 1972. I am glad to see so many Members from the other side of the bridge in the Chamber tonight. They will remember the infamous Kingston upon Hull, North by-election; it is good to see the hon. Member for Kingston upon Hull, North (Ms Johnson) in her seat today. During that 1966 by-election, in a desperate attempt to save an ailing Labour Government—there may be echoes today—Barbara Castle sanctioned the building of the bridge. At the time, it was estimated that the bridge would cost £28 million to build. However, as a result of Government procurement and mismanagement, for which both sides of the House bear some responsibility, the figure trebled to more than £90 million.

Over the years, in the hands of Governments of both parties, the debt grew in Government books, and it stood at £334.5 million as of April 2006. By 1992, the debt had grown to a whopping £439 million. It was recognised that the bridge board’s financial situation was unsustainable and that action was needed. Without Government assistance, the debt would have risen to more than £650 million by 1997. As a result, the last Conservative Government passed the Humber Bridge (Debts) Act in February 1996. That allowed the Secretary of State to reorganise the bridge’s finances and write off debts payable to the Government by the bridge board.

Consequently, in 1998 a new loan agreement was signed with the Humber bridge board; £64 million of debt was written off and the rest was suspended and rescheduled. The interest owed on the bridge was reduced from about 12 per cent. to 7.75 per cent. with the aim that the debt would be paid off by 2032. Had the 1996 Act not been passed, the total interest charged would have come in at tens of millions of pounds a year, placing an unacceptable burden on local taxpayers. As it was, interest charges were reduced to £10 million, which was paid for from the surplus of income produced by the Humber bridge board.

In 2007, the Department for Transport reduced the interest rate to 4.25 per cent. following the Humber bridge board’s advice that it would simply be unable to service the debt if it remained at more than 7 per cent. It is my constituents, and those of colleagues on the Labour Benches—

I also include the constituents of my right hon. Friend, whom I am glad to see behind me. All those constituents are paying for that colossal debt. Since the 2006 toll increase, it has cost £5.40 for a return journey across the bridge—£2.70 per trip—and more than £18 for a single lorry crossing. Last year, however, the Humber bridge board made an application to the Secretary of State for Transport for the toll to be increased by a further 20p to £2.90 for a single car crossing.

That decision has caused consternation on both sides of the Humber. The Department for Transport received more than 950 objection letters in just a few months, and the planned increase has been criticised by MPs, councillors, community activists, businesses and community groups. The Hull and Humber chamber of commerce has said:

“The tolls are a barrier to trade, recruitment and investment. They effectively split the Humber area into two separate markets. Any increase would make things more difficult for businesses and their employees”.

The four councils in the area all formally objected to the increase. The strength of public opinion has been such that the Department for Transport has been forced to call a public inquiry into the proposals. I myself have sent an objection by way of a written submission, and will give evidence at the inquiry next Tuesday.

The Humber bridge tolls are already the most expensive in the country. For those who travel across the bridge to get to work each day or travel from the south bank to Hull to receive regular treatment at Hull royal infirmary or Castle Hill, where a major and very welcome new cancer hospital is located, £5.40 for a return crossing is a significant financial burden. Increasing the cost of crossing the bridge at a time when unemployment is rising and household budgets are being squeezed would be completely the wrong thing to do and fly in the face of other Government policies that supposedly aim to stimulate the economy. What is the point of making the VAT cut if the Government are going to make the cost of personal travel even more expensive? Many families are struggling to cover the cost of keeping their car on the road and cannot afford such increases at this time.

The main problem is that even if it were decided not to allow the increase in the coming week, there would still be a shortfall in the board’s finances. As it states on its website, as part of the refinancing arrangement agreed with the Government in 1998,

“the Board compiled with the Secretary of State a series of financial projections to show how it would meet debt repayments in the future. In order to meet its obligations in respect of these projections, the Board needs to increase tolls at regular intervals. Current projections necessitate increases every two years.”

It is ridiculous to visit this on our constituents at this time. How much will users of the bridge be paying in 10 or 20 years’ time under these present arrangements?

The abolition of the tolls clearly has all-party support. Is it not a fact that if the tolls were removed, the stimulus to development and growth in the area would generate more taxes for the Treasury than it is currently getting through the tolls?

The hon. Gentleman, as ever, puts his finger on the nub of the issue. I will come to those points later on, but I welcome his contribution.

The only long-term sustainable solution to the problem is the removal or substantial reduction of the tolls. Next week’s inquiry should be a starting point for a much broader inquiry into the whole issue of the bridge debt and the impact that the tolls are having on the local economy. The bridge cost just over £90 million when it was first built, and in the years since more than £300 million has been paid in tolls, yet we are meant to accept that in the Government’s book the board should still owe £330 million. That makes no sense. It is a burden imposed on the local economy, and it makes a mockery of the whole purpose of putting the bridge up in the first place, which was not just to help the predecessor of the hon. Member for Kingston upon Hull, North to get elected but to help the economy of the area.

The Humber bridge board makes two debt repayments to the Exchequer every year. On 31 March 2009, the interest payment alone will be more than £7 million. More than 80 per cent. of the money made from the Humber bridge toll goes towards the interest on the debt. As a result, the total debt outstanding on the bridge has been reduced by just £26 million in the 11 years between 1998 and 2009. This situation cannot continue. The Humber area is the only city region in the country divided by a toll crossing with charges levied at such a rate. The Government have focused on city regions as being the most sensible economic units within which to develop Government policy. To have this bridge dividing our city region rather than bringing it together is madness, as I am sure that the Minister will recognise when he responds.

It has to be said that the Humber area suffers from relatively low incomes and high levels of unemployment. To investigate the economic impact of the tolls, the four local authorities in the region—East Riding of Yorkshire, Kingston upon Hull, North East Lincolnshire and North Lincolnshire—commissioned a report into their impact on businesses and jobs. Many people have said to me, “What is going to be different today when MPs from around the area make the case to the Minister?” I think that that report, entitled “Humber Bridge Tolls Impact Assessment”, makes a great deal of difference. It was published late last year by Colin Buchanan Consultancy—the consultants who developed the methodology that was used to look at the economic impact of Crossrail. The methodology that they used in their report has been accepted by the Department for Transport, so it is not to be lightly dismissed.

The report concluded that the abolition of, or a marked reduction in, the toll would improve the region’s productivity, lead to greater employment opportunities, facilitate better networking between business, and increase local competition. Moreover, the bridge allows movement of employees, goods, knowledge and information, providing a deeper pool of resources from which the city region can draw.

The report showed that with the abolition of the tolls, the total economy would benefit to the tune of £1.1 billion over the next 25 years. Even reducing the toll to £1 would produce a benefit of £580 million over the same period. The study further showed that the benefits of abolishing the tolls would be felt on both sides of the Humber. Hull would see a 3 per cent. increase in retail spend, adding an extra £45 million to the city economy, while the south bank would benefit from an increased labour catchment area making industrial development there much more appealing.

At the moment, as the 2001 census showed, those living on the north bank of the Humber are overwhelmingly choosing to work in either Hull, the East Riding or, in many cases, in the city of York. They are not keen on travelling across the bridge twice a day to work in Grimsby or Cleethorpes, which is depriving the south bank of a huge labour resource. Moreover, in the current recession, unemployment is expected to increase markedly. The report makes it clear that for a significant number of unemployed people, the toll payments, rather than the time or distance, involved in commuting across the Humber are a barrier to seeking work across the Humber, and toll reduction could increase their scope for job search and job opportunities. What more could a Minister in this Government, at this time, in this current economic crisis, want to hear than such unequivocal, categorical advice on how to boost the local economy of that area?

The caravan industry—a key local employer—has been badly hit, and thousands of jobs have been lost in East Yorkshire, not to mention North Lincolnshire, in recent months. Restricting the number of jobs that people can apply for, which the bridge toll essentially does, is not the best way to get them back into work. Business opportunities are also severely limited by the tolls. Businesses competing for contacts across the bridge find that they are sometimes unable to compete because of the cost of tolls and the exchange of ideas and networking are also severely limited.

There is a real desire on both sides of the Humber to take this issue forward. More than 10,000 people recently signed a petition organised by the Hull Daily Mail and Scunthorpe Telegraph calling for the tolls to be axed or reduced to £1 for cars. More than 81,000 people signed a similar petition on the No. 10 website. When tens of thousands of people take the time to use a facility provided through the Prime Minister’s office at No. 10, Ministers need to listen. There is no point in having these channels of communication if the Government are not prepared to listen to the voice of the people concerned.

My hon. Friend is on to the interesting and important point that Ministers should listen. Is he aware that on a previous occasion when we were discussing local transport, in response to an intervention from me on this issue, the Minister agreed to meet an all-party delegation on the subject after the local inquiry had taken place? Does my hon. Friend agree that it is important that the Minister reaffirms his intention to meet an all-party delegation at the appropriate time to discuss the matter in further detail?

My right hon. Friend is absolutely right, and I am sure that the Minister will be happy to do so later.

The Humber Action Against Tolls campaign group, led by Jenny Walton, has been a tremendous influence, as have the region’s MPs, together with local parliamentary candidates Andrew Percy in Brigg and Goole and Martin Vickers in Cleethorpes, and local council leaders. Earlier this month, the Humber bridge board acknowledged the strength of local feeling by announcing that it was considering asking the Government whether it could slash the cost of the tolls to £1 for a 12-month trial period. Under the proposal, the board would ask the Government to suspend or cancel interest payments for 12 months. That would allow it to charge just £1 for cars and two-thirds less for other vehicles to cover maintenance costs only. After the proposed trial year, a study of traffic levels would be carried out to discover the impact of reducing the tolls.

I congratulate the hon. Gentleman on securing the debate. Does he agree that the proposal from the bridge board should be taken very seriously? We have had the Buchanan report, which he has referred to, and we have had previous reports that have not always given a consistent picture. Sometimes they are played off against each other. If we had a trial period, there would no longer be any academic argument or any need for consultants’ reports. We would be able to see the figures, and I think that the case would become completely indisputable.

The hon. Gentleman is absolutely right. He will be aware that in the 1980s, when the bridge board’s staff were involved in industrial action and the toll was suspended, there was a huge increase in the number of people crossing the bridge. I ask the Minister to take that on board. We are confident that a new toll holiday would achieve the same effect. Irrespective of what happens at the public inquiry next week, I urge the Minister to consider that proposal carefully.

The Government cannot have it both ways. On the one hand, they place tremendous emphasis on city regions and their ability to further economic growth, and indeed they have said that they will do “whatever it takes”—I think that that is the right phrase, but the Minister will correct me if I am wrong—to help this country fight the recession. They should not on the other hand continue to restrict economic growth in our city region by continuing to profit from the bridge debt.

I call upon the Government to give two commitments. First, I ask them to commit to working with the Humber bridge board to agree a toll holiday on the bridge, reducing the toll to £1 as I have outlined. The debt is fairly notional, but if money has to be found from general funds to allow that, what better money to use than that which has been set aside to help fight the recession to see whether the idea works and put it to the test?

Is the hon. Gentleman aware that research undertaken on the south bank of the river about the possibility of reducing the toll or abolishing it altogether showed that an overwhelming number of people were in favour of paying a token toll, perhaps of £1? That is by far the quickest way to reduce the tolls, instead of going down a lengthy and protracted legislative route.

I am not sure that I was entirely aware of that fact, and I am glad that the hon. Lady has brought it to the House’s attention. Whether it is outright abolition or a massive reduction of the toll, we desperately need action.

The second thing that I ask the Government to do is establish a formal and broad inquiry into the wider issues of the bridge toll and the bridge debt, to identify ways in which the burden of the debt and the tolls that accompany it can be removed, to the benefit of the people and businesses of East Yorkshire and northern Lincolnshire. I am sure that the Minister will want to do so, and I look forward to his response.

At the outset, I congratulate the hon. Member for Beverley and Holderness (Mr. Stuart) on securing this debate on an important issue. I ought also to take this opportunity to congratulate Members of all parties on their hard work, including the right hon. Member for East Yorkshire (Mr. Knight) and those who are sitting behind me—my hon. Friends the Members for Brigg and Goole (Mr. Cawsey), for Great Grimsby (Mr. Mitchell), for Kingston upon Hull, North (Ms Johnson) and for Cleethorpes (Shona McIsaac) and my right hon. Friend the Member for Scunthorpe (Mr. Morley). I congratulate them on the work that they have been doing on this matter, which is dear to their hearts, on behalf of their constituents.

I shall set out a brief history of the development of the bridge, which is an important link between parts of the city region. Perhaps it can be seen as bringing it together rather than dividing it. The Humber bridge was promoted as a local road by the local authorities of Humberside. Approval for the construction of the suspension bridge was given by the then Transport Minister, Barbara Castle, although it was not until 1973 that work finally began. Right hon. and hon. Members will know that the running of the bridge is undertaken by its board, which is made up of the local authorities that promoted the project—Hull city council, East Riding of Yorkshire council, North Lincolnshire council and Lincolnshire county council. The board is made of up 22 members from those authorities. It financed the construction through loans from the Secretary of State for Transport and the Public Works Loans Board.

As the hon. Member for Beverley and Holderness said, the bridge took longer and cost more to build than was expected. However, the amount of traffic was lower than forecast because the expected population growth on the south side of the Humber never materialised. The original cost was some £28 million, increasing to £98 million throughout the construction period, with price inflation caused especially by the ground conditions that were encountered. The Humber bridge board charges tolls to cover that debt.

By the time the bridge was open to traffic in 1981, loans were charged at a rate of 11.62 per cent. compared with the Bank of England rate of some 15 per cent.; many of us remember those awful times. Every year since opening, the bridge has made an operating profit. However, initially, that was not sufficient to cover the loan charges.

As the hon. Gentleman recognised, the Government have done more to assist with the finances of the Humber bridge. The debt was restructured in 1998, when a reduced interest rate of 7.75 per cent. was set, with interest suspended on part of the total debt. The Humber bridge debt, which then amounted to £421 million—£359 million of which was owed to the Secretary of State, and £62 million to the Public Works Loan Board—was restructured. Indeed, we wrote off the £62 million that was owed to the Public Works Loan Board, and we suspended interest payments on £240 million of the debt that was owed to the Secretary of State. We also reduced the interest rate on the active part of the debt. The suspended debt was added back, beginning in the next financial year, in annual amounts, starting at £11 million and rising by 4 per cent. per annum to reintegrate it all. Those arrangements were set out in the 1998 loan agreement and the Humber Bridge (Debts) Act 1996.

In 2007, we again revised the interest rate on the debt to reflect more closely the rates that prevailed then, and to allow the Humber bridge board to repay the debt in the agreed loan period—until 2038—without recourse to levying a precept on taxpayers. Such recourse would mean that, ultimately, the taxpayers of Humberside would have to pay the debt, as set out in legislation. The interest rate was reduced to 4.25 per cent. until 2011, when the matter will be reviewed.

The money saved through lower interest and the repackaging that we introduced in the latest development in 2007 is available to the Humber bridge board to repay capital and establish a maintenance fund. Under the remit of the agreement, the board is expected to manage the financial position until 2011, without recourse to the Department for Transport. That clearly sets out the steps that the Government have taken and the listening that we have done about the issues that must be faced. We have done that in dialogue with the Humber bridge board and through listening to hon. Members who have made representations about the financial position.

The Secretary of State’s role in relation to the bridge is restricted to approving or rejecting the proposed revision of tolls by the bridge board. As hon. Members know, there is an ongoing application to revise the tolls. That includes increasing toll charges from £2.70 to £2.90 for cars, from £4.90 to £5.30 for goods vehicles under 7.5 tonnes, and from £10.90 to £11.90 for goods vehicles that exceed 7.5 tonnes.

The application is to be considered at a public inquiry. After listening and taking on board the representations made through several channels, including the No. 10 website, calling on the Government to cancel the Humber bridge debt and reduce the tolls, a public inquiry will begin on 3 March at the Willerby Manor hotel in East Yorkshire. Let me put it on record that the location of the inquiry is a matter for the board, which has made its decision, not the Government. The hon. Gentleman’s website suggests that the Government refused to hold a public inquiry on the south side of the river. He knows that it is not a matter for the Government.

The Minister might be feeling combative, but let me share with him the fact that at least the Humber bridge board was listening and has agreed to waive the crossing costs of those who come from the south bank. I congratulate the board on listening to our campaign to make that happen.

Absolutely. Indeed, I noted that the bridge board had listened, which shows not only that are the Government listening, but that the bridge board is listening too. I am pleased that the hon. Gentleman and I can agree on that point. The Secretary of State must await the inspector’s recommendations before deciding whether to approve the proposed increase.

The bridge board itself has proposed a £1 toll, which would certainly cover the maintenance of the bridge. I listened carefully to what my hon. Friend said about what the Government can and cannot do in relation to the inquiry, but the board’s proposal strikes me as a perfectly reasonable suggestion, because it would deal with the argument about whether reducing the tolls would increase the income. The idea sounds to me like an experiment well worth conducting, which would produce results from which the Government could draw conclusions.

I hear what my right hon. Friend is saying. Let me make it clear that the issue before the public inquiry that will start next week is raising the tolls, by the amounts that I have specified. A number of hon. Members have referred to a £1 toll, but the Government have received no specifics about that proposal for us to consider. We have not been approached by the Humber bridge board on the specifics of the £1 proposal—and if we are thinking logically, we know that the public inquiry will look into the specifics of increasing the fees, as the hon. Member for Beverley and Holderness and I have set out.

My hon. Friend has heard from all MPs from the area tonight, but it is important to get an idea of the time scale. The right hon. Member for East Yorkshire (Mr. Knight) mentioned the meeting that has been promised. Obviously we all appreciate that the Minister cannot act until the inquiry has reported and is out of the way, and that the Secretary of State has to make a decision, but when can we expect that decision, so that we can move forward?

Obviously the timing of the report, written by the inspector, is a matter for the inspector, but my hon. Friend is right that we have to await that report, and the Secretary of State will then make a final decision whether to approve the proposed increases.

It has been the policy of all Governments since 1945 that estuarial crossings should be paid for by the user rather than the taxpayer, because of the substantial savings covered. I hear the demands to write off debt and do away with tolls, but there are many competing demands, in terms of transport requirements, trains, bus subsidies and fare subsidies, that have to be met. I therefore urge hon. Members to await the outcome of the public inquiry. I am also willing to reaffirm my previous offer to have a meeting with all interested parties at a convenient time.

Question put and agreed to.

House adjourned.