Skye Bridge (Hansard, 4 July 1997)

§ Mr. Dewar

[holding answer 3 July 1997]: We have looked carefully at the full range of options for making the toll regime for the Skye Bridge fairer. In doing so we have had to take account of the fact that we inherited the contractual commitments which the previous Government had entered into with Skye Bridge Limited. Those commitments guarantee Skye Bridge Limited a specific financial return on the bridge. Therefore any action by the Government in relation to toll levels which leads to a reduction in the revenues which would flow to the company renders the Government liable to compensate the company for that reduction in revenue.

This makes affordability a key issue. Simply buying out the contract is estimated to cost around £30 million. We cannot justify that in the face of the many pressing needs for future expenditure within my public expenditure programme. Spending on education and health, for example, has a higher priority in deciding how to deploy any public expenditure which we can free up by reordering priorities or improving the efficiency of programmes.

The idea of removing tolls completely through 100 per cent. shadow tolls is no less expensive than buying out the contract. Nor in public expenditure terms does it have the effect of spreading the cost over a number of years, as people have tended to assume. The full cost of the project would be a public expenditure charge immediately because of the absence of the transfer of risk to the private sector, which is what justifies the phased public expenditure cost for DBFO roads contracts entered into before construction has begun.

We looked at the option of partial shadow tolling. However, we concluded that this was not the fairest means of alleviating the impact of tolls. We consider that the impact of the tolls is most severe on local people and others who use the bridge most frequently. We can halve the car and motorcycle tolls for frequent users for almost the same cost as would be involved in reducing tolls across the board by only 10 per cent., through partial shadow tolling.

We believe that halving the discounted tolls for cars and motorcycles paid by frequent users would be a very significant benefit. Frequent users make 40 per cent. of all car crossings at present and most of them will be inhabitants of Skye or the surrounding area. This change will produce a toll of £1.25 compared to the current discounted ticket cost of £2.51 and the current cost to casual users of £4.40 in the low season and £5.40 in the high season. At the suggestion of Highland Council, I propose that the number of crossings necessary for car and motorcycle owners to qualify for the discounted toll should be increased from 10 to 20.

Highland Council put to me the case for some reduction in tolls for commercial vehicles. I looked very carefully at several options which they put to me and concluded that, since over 70 per cent. of commercial vehicles take advantage of discounted tolls at present, I should focus any reduction on these tolls as I have done for car users. A reduction of 25 per cent. in discounted tolls for large heavy goods vehicles will reduce the cost of each crossing by £6.32, from £25.27 to £18.95, which should produce very substantial cumulative benefits to the businesses 290W concerned. I hope this will benefit the local economy either through the effect on consumer prices or by helping companies retain or increase employment.

Highland Council also made a case for a reduction in the toll for service buses, and I have decided to reduce the discounted toll for these by 25 per cent. from £15.27 to £11.45. This should enable bus operators to reduce fares and will, I hope, encourage the use of public transport.

I wish to assist the health of the local economy. The changes in tolls which I propose to make are likely to cost me a very substantial amount of money over the life of the contract. That will be matched by savings to bridge users, who will be free to spend that money in other ways. Since the benefits will be concentrated on local people, as a result of the approach which I have chosen, the extra spending power is more likely to flow to the local economy.

My officials are now in discussion with Skye Bridge Ltd. to agree the precise details and the arrangements to ensure that the effect of these changes on the Companys revenue is neutral. The timing of these changes will depend partly on the need to promote a variation to the Toll Order, which will have to he approved by Parliament, and on the need to complete the discussions with the Company. They will, however, be implemented as early as practicable.