HC Deb 10 July 1969 vol 786 cc1713-22

10.7 p.m.

The Minister of State, Scottish Office (Dr. J. Dickson Mabon)

I beg to move, That the Tay Road Bridge (Scheme) Approval Order 1969, a draft of which was laid before this House on 26th June, be approved. The House will recall that the original Tay Road Bridge Order of 1962 authorised capital expenditure on the bridge up to a maximum of £4.5 million. It also provided that any excess expenditure above this should be defrayed by means of a scheme agreed by the Tay Road Bridge Joint Board and its three constituent authorities—namely, Dundee Town Council, Fife County Council and Angus County Council—and approved by the Secretary of State.

Under this provision the maximum capital expenditure was increased in 1966 to £6.5 million, in the light of costs as then estimated, when the works were not quite complete, and the need to allow a margin for the accumulation of interest on loans made towards the cost of the works, so far as the interest could not be paid immediately because of the insufficiency of toll revenue in the early years before traffic builds up.

This Order, which increases the limit on the capital cost to £7.25 million, is required because the margin allowed in 1966 for accumulated interest has been used up by increases in the final cost of the works and a compensation settlement with the Dundee Harbour Trust higher than had been envisaged.

The present cost of the scheme, including compensation and accumulated interest so far is £6.6 million. It is expected that accumulated interest will bring this to £7.038 million in a few years' time, after which the toll revenue will be sufficient to allow repayment to begin. The margin between £7.25 million and £7.038 million will allow for any errors in estimating toll revenue.

The remaining provisions of the Order are consequential. They continue the present arrangements under which advances towards capital expenditure are made by the Secretary of State and the constituent authorities of the Joint Board in the proportion 75:25, and the local authority loans are given preference in repayment over the Government loan.

I assure the House that neither we nor the Joint Board see any difficulty in repaying the loans within the statutory period of 60 years, and on present traffic trends the Joint Board has just decided not to increase the present tolls, a decision which the House will welcome.

10.10 p.m.

Sir John Gilmour (Fife, East)

I fully appreciate what has necessitated the Minister of State seeking this increase, but I am still rather worried that the underlying reason is that about £100,000 extra compensation has to be paid to the Dundee Harbour Trust over and above what was expected. I understand that not only has that extra £100,000 been paid, but the accumulated interest as well. Is that accumulated interest to be paid to everyone concerned, and not just to the Dundee Harbour Trust?

I have received a letter from a constituent, who writes: In a recent copy of the Dundee "Courier" appeared an article in which it said you had asked the Scottish Secretary if all compensation had been paid in connection with the Tay road bridge. I wish to bring to your notice that I have not been paid for garden ground at Taygrove owned by me and taken from me in 1963 by the Joint Tay Bridge Board to build the Fife end of the bridge on. I do not suppose that anyone questions that it was necessary for the Joint Board to acquire ground, but from that letter it appears that there has been great delay in paying compensation. The Minister will know that correspondence has passed between us in this connection. What sticks out, as it were, in respect of this Order is that the main reason for tabling it is the extra £100,000 to be paid to the Dundee Harbour Trust, with accumulated interest on the money from the date when the Joint Board took over ground in order to build the bridge. I want to be certain that all my constituents at the south end of the bridge who had ground taken over to make way for the bridge will be treated in the same way.

When I put down a Question to the Secretary of State on this subject I was told, I suppose quite rightly, that it was a matter not for him but for the Joint Board. I would not like to think that my constituents were being treated differently in regard to accumulated interest from the date on which the Joint Board entered on their ground—

Mr. Speaker

Order. The hon. Member must link what he has to say with seeking by this Order to borrow further money.

Sir J. Gilmour

The Secretary of State is seeking to borrow more money, and as the constituent who wrote to me has still not got his money, although his ground was taken over in 1963, I am rather worried whether the intention is to pay him his money and the interest as well, I do not want the Secretary of State to borrow more than is necessary, but I want to be quite certain that he borrows enough to pay my constituents compensation, and interest on it, from the time when the Joint Board entered on their ground and started to build the bridge. If I can get an assurance that the Secretary of State has enough money to pay the compensation and the back interest, I will be perfectly happy to support the Order because it is the fair way of arriving at a common solution.

It is nice to know that the Tay Road Bridge is carrying more traffic than was expected, and I think that we can look forward to the money spent on it being repaid. The bridge is proving most useful. It is doing a great deal of good, not only to Dundee but to the north-east corner of Fife. We are very happy to know that it is carrying more traffic than was thought likely when it was built. That is a good thing, but let us make certain that enough money is provided under this Order and that all the compensation and back interest is paid. If that happens I shall be happy.

10.16 p.m.

Mr. Alick Buchanan-Smith (North Angus and Mearns)

I am glad to support this Order. I wish to reinforce what my hon. Friend the Member for Fife, East (Sir J. Gilmour) has said. We are glad to know of the service which this bridge is giving to people not only in the Dundee area, but to the whole of Fife and further north. It is a bridge which I used frequently. We know what a power it is in development of the area.

We debate this Order against a background of rising capital costs. Originally, in 1962, the maximum amount authorised was £4.5 million. That rose to £6.5 million in 1966 and now we are asked to authorise £7.2 million. This is an increase from the original Order of just over 60 per cent. and it is a very considerable sum. We do not question that because the bridge is performing a very useful function in that area of Scotland. When we debated the last Order, in 1966, the Minister of State emphasised that the increase in cost at that time was on account of additional work in relation to the land, the approaches, toll equipment and compensation which were not fully taken into account when the original Order was made in 1962. This evening the Minister has said that the increase is largely in relation to capitalisation of interest.

I should like the hon. Gentleman to say what proportion related to additional work which has been carried out is represented by extra costs. The original costs of the bridge have risen from £4.386 million in 1962 to £5.892 million at the time when it was opened in August, 1966 and is now £6.6 million. The increase since the last Order is in the region of £1¼ million. The Minister of State explained why it is necessary to go above the actual capital cost incurred so far from £7.038 million to £7.25 million.

On the question of the extra safety margin we are budgeting for, are there still payments outstanding for capital works and compensation? It is very important to know that proper provision has been made not only for capital costs but what may be due to individuals compensation or whether the extra money needed is largely because of unpaid interest which is still expected to accrue and, therefore, has to be capitalised.

On the question of the capitalisation of interest, what proportion is due to the local authorities concerned, which, as the Minister of State said, have the first call under the Order in relation to the capitalisation of interest charges, and how much is due to the Secretary of State? We should be grateful if the Minister of State would be more forthcoming on this point. When we last debated this subject the Minister of State said this: We do not want to get involved too much in interest on interest and such other matters of capitalisation."—[OFFICIAL REPORT, 4th March, 1966; Vol 725, c. 1659.] That may have been all right then, but since then we have received the Fifth Report from the Public Accounts Committee and the reply contained in the Treasury Minute dated November, 1967. It would not be in order for me to rake over that ground. That is history now. The Public Accounts Committee drew attention to the fact that failure originally to secure the capitalisation of unpaid interest due to the Secretary of State which was secured under the 1966 Order and which is reaffirmed in this Order could amount to an extra loss to the Exchequer of £750,000. The Treasury Minute in reply to the Report of the Public Accounts Committee said that the amount of loss was likely to be considerably less.

I hope that the Minister of State will take the opportunity of enlarging on this matter this evening, because I hope that the amount of loss is less than the £750,000 which was alleged by the Public Accounts Committee. This was done advisedly at the time that the first Order was introduced in 1962 and was designed to get agreement with local authorities concerned. It would be interesting to know to what extent the Treasury Minute is correct and the amount of loss on interest is less than the £750,000 which it was claimed it would be. It would be encouraging to those of us who always believed it was right to build the bridge to know that the loss is rather less.

Finally, looking to the future, it would be helpful if the Minister could tell us when he expects—he was fairly general in his opening remarks—that the revenue from the bridge after meeting the operating and maintenance costs will be adequate to meet interest payments and thereby avoid the capitalisation of interest, thus ceasing to add to the capital cost of the bridge. So I am asking: when will the break-even point be reached? The Dundee Courier and Advertiser of Friday, 4th July, quotes the Treasurer of the Board as saying: It will be five years before the bridge is able to meet its annual charges. I would be grateful if the Minister of State would confirm whether this is correct. We on this side are encouraged by the Minister's assurance that the break-even point will be achieved through the increase in traffic and not through the increase in tolls.

I, for one, am convinced that there is a great danger that, if the tolls on this bridge were increased, we would frighten long-distance traffic away. As was borne out by an article in the Scottish Geographical Magazine, by Messrs. Jones and Pocock, the actual effects of the bridge are limited to a very close area around Dundee and the north-east part of Fife. I am convinced that, if tolls were increased, there would be a great danger that we would frighten traffic away.

We on this side welcome the Minister's assurance this evening that he does not expect the tolls to be increased. The Order, in increasing the amount of capital borrowing that is possible, will carry us forward to the period when the bridge will break even, when the revenue will meet, not only the operating and maintenance costs, but also interest charges.

All of us in the House are encouraged in that traffic on the bridge has been in excess of the original estimates. To this extent we welcome what the Minister of State has said. It would be helpful to all of us interested in this part of Scotland if the Minister could be more specific as to when this break-even point will be reached. The sooner it is reached, the happier we shall all be, because we shall know that the bridge is a thoroughly viable, economic proposition.

The hopes and aspirations of the local authorities and individuals concerned in building the bridge will then be justfied. It is in that spirit that we support the Order tonight.

10.25 p.m.

Mr. Peter Doig (Dundee, West)

I welcome the Order. I must emphasise straight away that the bridge is not purely a local bridge. Even the Department now admits that it is more than the local bridge, as originally intended. I have that in mind when I wonder whether we are borrowing too much. The Government have contributed nothing towards the bridge, but, considering that it is now rapidly becoming part of the main road network south, they ought to consider paying something towards it, towards approach roads, and so on, instead of expecting all the charges to be met by tolls. The Government should have been a little more lenient.

As one of the original members of the board, I assure the House that we did not think that there was a mistake as regards capitalisation of interest, and neither did the present treasurer of the board. We thought that it was the Government's way of giving some sort of subsidy towards the bridge. But it now turns out that they have backed down on that.

I am convinced that the sum is adequate. I know personally the people who are concerned, people very well experienced in this sort of thing and competent to make the calculations. I accept it when they say that this sum will be adequate. If we borrow too much, we shall be paying extra interest unnecessarily, and the tolls may have to go up, or, putting it the other way, there will be delay in the reduction of tolls.

As I say, I am inclined to think that we are borrowing too much rather than not enough, and the Government ought to give something towards this bridge which is of more than local importance.

10.27 p.m.

Mr. James Davidson (Aberdeenshire, West)

I declare an interest from the start. I use this bridge fairly regularly. I can correct any impression that it is a local bridge. After many experiments, I have discovered that the quickest way between Aberdeenshire and Edinburgh is via the two bridges.

Mr. Buchanan-Smith

I did not say that the bridge is not a service to a much wider area. It is. The significant point about the use of the bridge and its real economic influence—I think that the Minister of State will agree—applies to an area roughly from Montrose down into Fife rather than a far wider area. But the real economic benefit has been far greater locally than was ever envisaged in the early days.

Mr. Davidson

I accept that explanation of what the hon. Gentleman meant.

The shortcoming of the route, if there be one at all, is the lack at present of a suitable road between the Tay Bridge and the Forth Bridge. When we have that, we shall have a really swift road between the North-East of Scotland and Edinburgh. Whatever the criticism of the road linking the two bridges however I am sure that we shall all echo the immortal words of William McGonogall: The New Yorkers boast about their Brooklyn Bridge, But in comparison to thee it seems like a midge, Because thou spannest the silvery Tay A mile and more longer I venture to say". I have two questions to put. What happens if revenue will not meet interest and repayment charges? Do we then expect another Order like this in a year or two? Second, if revenue, on the other hand, exceeds expectations and greatly exceeds the charges, what happens to the surplus?

10.30 p.m.

Dr. Dickson Mabon

I think that McGonagall also said: The Tay, the Tay, the silvery Tay Flows from Perth to Dundee in a day and back". He never could scan. But I think that that was a reference to the older bridge, the railway bridge that was involved in the disaster.

I think that my hon. Friend the Member for Dundee, West (Mr. Doig) must concede, as a member of the original committee of agitation as well as of organisation, that the Tay acquired this bridge much in advance of the Erskine Bridge on Clydeside because it made a bargain with the then Government over an arrangement which it must now honour. The Renfrewshire and Dumbartonshire County Councils are in the unfortunate position of seing as fine a bridge as the Tay Bridge built and with tolls charged by the State and with no burden on the ratepayers before theirs. They have lost the advantage of time, which the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) has illustrated by the fact that this bridge proved to be of significance not only locally, but to many parts of Scotland beyond Dundee and the north-east corner of Fife. That is just as well.

My hon. Friends and hon. Gentlemen opposite must recognise, also, that if we start to make an alteration in this bargain it means that we must postpone investment in some other part of Scotland to that value. It is as simple as that.

I have always said that whenever that point is asked of us hon. Members must say to us, where do we postpone this? I am glad to confirm that in the recent White Paper that we discussed this morning in the Scottish Grand Committee we had a reference to the new road between the bridges across Fife—the Fife regional road. We shall be very pleased when the survey of the line of road and the procedures are completed so that we can get on with the building of that road. Perhaps that is a compensation for the complications surrounding the Order inherited from the Tay Road Bridge Joint Board itself.

The need for the Order arises in part because of the recent settlement of a claim of the Dundee Harbour Trust. We are raising the limit on capital expenditure from £6.5 million to £7.25 million. The settlement is £240,000. The accrued interest of £90,000 due since the land was acquired cannot be paid until the draft Order is approved. We also have outstanding claims. I would not dare comment on the one which the hon. Member for Fife, East (Sir J. Gilmour) mentioned, because I cannot recall it precisely, but as far as I am aware there are five claims not fully settled, one of which I hope is the one the hon. Gentleman mentioned. Part payment has been made in the case of three. I believe that one claim has not been admitted by the Joint Board and has not been raised again, and we presume that it is now finished. The five still to be settled are not substantial.

At the same time, it is right that we should have a margin, and the margin we have here is about £200,000. In view of the history of the situation, I do not think that it is unreasonable to have such a margin. It is not extravagant in the circumstances of the Order. I hope that my hon. Friend will agree that we are not going too far in suggesting this.

The hon. Member for North Angus and Mearns asked me about the breakdown in terms of capital cost. The balance of the Logan contract is £20,000. The balance of the cost of properties, we are told, is about £10,000 and the balance of the Tay Ferries debt is £60,000. With regard to compensation, the West Dock claim, on which interest only is outstanding, is £90,000.

The position is adequately covered by the Order. I repeat that the information I have from the clerk to the Joint Board is that it has been decided not to in crease the present tolls because of the present favourable traffic trends. Both we and the Board believe that there should be no difficulty in repaying the loans within the statutory period of 60 years.

Sir J. Gilmour

Can the Minister confirm that interest on whatever compensation is payable is back-dated for everyone to the date of entry?

Dr. Mabon

It is normal, I agree, for interest to be payable from the date of entry to the date of settlement in such cases, and I hope that the increased limit, with the margin I have suggested, will enable us to ensure that sufficient funds are available. But the hon. Gentleman, who is fair minded, will be the first to admit that I cannot specifically comment on a specific case. On the general principle, however, the answer to his question is, "Yes."

Mr. Buchanan-Smith

Can the hon. Gentleman confirm that the break-even point of the finances of the bridge, when it will start repaying interest and not having to capitalise interest, which is one of the purposes of the Order, will be in about five years' time?

Dr. Mabon

Without notice, I would not like to say "Yes" or "No" to that. If the hon. Gentleman would be good enough to put down a Question, I will look into the point. We are not completely free agents in this matter, for we have to take advice from the Board and it must be an estimate that we agree with the Board. I will write to the hon. Gentleman if he likes, but in view of the general interest perhaps he would prefer to put down a Question.

Question put and agreed to.

Resolved, That the Tay Road Bridge (Scheme) Approval Order 1969, a draft of which was laid before this House on 26th June, be approved.

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