The Debate

Where does the money go?

Much debate centres around where the monies collected from tolls go.  Let’s take a look at 2007-8 figures (the accounts are in the official Application Document).

See the pie chart to the right.  It shows where the money went in 2008.  The total tolls for the year was £266,400 and interest from the existing rebuilding fund investment was £83,000.  The chart shows how that was divided up.

Firstly the shareholders dividend was 16%.  The Whitchurch Bridge Company (WBC) often quote “only 2.3%” - but by that they mean the proportion of all capital in the company - including the pot built up to rebuild the bridge.  They take 16% of income.  This is up by 60% from that taken in 2005.

They also take a fair part of the “Admin Costs” that includes directors fees.  The “Admin Costs” rose five times over from 1993 - and they run much the same company.

Collection and Maintenance costs are unavoidable.  No problem there.

The huge slice this year was 36% by Oxfordshire County Council.  They were advising on the rebuilding this year and took this fee.  At first sight that seems OK, except that it went to subsidise the roads in the rest of the county.  So people near the bridge pay 1. council and road tax (to pay for roads and bridge maintenance), 2. tolls to cross the bridge (because the council won’t pay for this one), and 3. a subsidy (through the fee) on all the other bridges and roads in the county.  A three times over whammy.

All that only 2% left to grow the rebuilding fund; even though that is the stated priority of the current toll regime.

The cost of rebuilding the bridge

Well this estimate has gone up and down over the years.  The WBC currently say it has just risen from £1m to £3m - hence the current shortfall.

Well if you go back to 1993 they said that it would cost about £2.5m to rebuild in 2005.  That was a pretty good guess on current figures.

We don’t know how they got the £1m figure - but immediately after the last toll increase in 2005 they told us that it would cost £2.4 to rebuild in 2008.   They now say £3m if rebuilt now and £4m in 2013.  So it has gone up £0.6 - not £2m as claimed.

The estimate of £4m in 2013 assumes that construction inflation continues at the same rate as at the peak of the construction boom in 2001-4.   Looking at the current economic climate that seems a tad of an overestimate.

Finally, the company has had 100 years to plan this rebuilding.  Being surprised that building costs go up seems a little naiive to say the least.  It is the second priority of WBC: to prepare to rebuild the bridge when needed, after looking after the current bridge.  What happened?  Why not a reserve?

The Whitchurch Bridge Act 1988

This special act of parliament set the current law by which WBC operates.  It is short and easy to read (see clause 4).  It clearly states that the bridge company must take care of the bridge and build a fund for rebuilding.  It then says: “any balance remaining” may be taken in dividends.   Has the WBC obeyed the law?

Well, looking at the figures above, it would appear not. Shareholders have taken dividends when the directors must surely have known they would not meet the higher priorties dictated in the Act (i.e. there was no “balance remaining”).  They have even increased their dividends by 60% over the last three years. What do you think?  Do they treat dividend as entitlement rather than earned reward?

Weight limit on Bridge

The current weight limit on the bridge is 7.5 tonnes.  Engineers say that soon it will have to come down to a 3 tonne limit to be safe.  The WBC say that is unacceptable and it must be rebuilt before that happens.  The local parish says - hang on, we might be able to live with that.  That might give another couple of decades to gather the rebuilding costs.   If one-way crossing was introduced then the 7.5 tonne limit might be able to stay.

Similarly, the rebuild design is currently for a new bridge with a 44 tonne weight limit.  But, the local area (railway bridges and narrow roads) will mean the 7.5 tonne legal limit will remain.  So why build a 44 tonne crossing?  Could not money be saved here (even if it has to allow for the odd lorry crossing at night).  It would be no different to now.

A unique company structure

The weight limit (above) illustrates the problem.  The toll bridge is not like any other company.  Most companies maximize income whilst minimizing investment, a standard way to rate a company.  The toll bridge is not like that.  The income (dividends) it gets is linked to the total investment (including all of our inflated tolls) and, crucially, the value of the new bridge.  So the more it costs the more dividend the bridge company will claim.   In essence they are rewarded for failure.  There is a positive feedback loop boosting tolls and rebuilding costs ever higher.

Why is it a toll bridge at all?

This isn’t a Dartford Crossing, Humber Bridge or Channel Tunnel.  They are all major infrastructure projects that are funded by tolls.   They have had recent major investment by their shareholders that deserve a reward.  Even there many tolls have been swept away (Skye Bridge for example).

This toll bridge is a relic of the old turnpikes and toll bridges of the 1700’s.  All those were swept away and incorporated into our national road network.  We pay for all those through our taxes.  Except people near Whitchurch Bridge.  We have to pay tolls too on this bridge too.  Why?  Wouldn’t it be easier to add it to the thousands of other bridges looked after by Highways with very little fuss.

The tolls we pay mostly go to fund the collection, administration and the shareholder.  Very little goes to pay for the bridge itself.

Buying the Bridge

If Oxfordshire County Council suddenly saw the light and wanted to buy the bridge, what would it cost?  The problem in costing it is that the shares in the WBC rarely change hands.  Locals that have asked to buy some have been turned down flat.  Only a favoured few are allowed to buy.  But let’s try to value the WBC.

If the WBC shares were publicly traded they would get something like 15 times earnings. 15 times 2008 earnings is £750,000.  That works out at £17.34 per share.  Apparently those that have been permitted to buy pay £15.00 per share - so that would appear about right by two ways of calculating.

If the WBC would accept a cash offer (a big if), how easy would that be to raise?  OCC could find it pretty easily.  The DfT might even help them; only a few cones out of the national road budget.  What would happen to the current £1.5m fund to rebuild the bridge?  That is only held in trust by the WBC so would, presumambly, go to the new owner.  The owner would also face the (larger) liability for rebuilding too, so that would only be fair.

Reducing Through-Traffic

One reason the toll has survived, in the last few decades at least, is a perception that it helps reduce through-traffic.  Like all rural villages, Whitchurch on Thames is concerned about rising numbers of cars and lorries.  Many in WoT feel the toll bridge cuts this down.   How big is the impact of the toll on the traffic?  Well doubling the toll over the last three years has seen a 2% drop in bridge use over that same period.  Statistically, there are doubts that figure is significant - but even if it is - there seems to be little impact on traffic levels.  What if the toll went altogther?  If the same utility held then you would estimate traffic up a few percent?  The roads around WoT are all very narrow rural lanes that may have a bigger effect than the tolls.  Nobody knows for sure since the toll has been there for 200 years.

Paying for the rebuild

If the state won’t pay then the tolls must.  But which tolls?   In all other toll bridges the money is borrowed, the bridge built, and then paid back out of the tolls.  The people that use a bridge pay for the bridge.  In this case we are paying now for a new bridge in 2013 (or later?)  Some users won’t be alive then.  They are paying for someone else’s benefit.

Until recently the bridge company didn’t want to take out any loan at all.  They now say they will take a 25% loan.  We say they can afford, and should take, an even larger loan.  Why won’t they?  It would cut the value of the total investment and so cut their shareholder dividend.  It is not in their interest to do that. It is in everyone elses interest.

An even better way is for Oxfordshire County Council to take equity instead of fees for the work they are doing on the bridge (see above).  That way they would become part-owners; in time own it all.

Size of bridge

One “laugh” from the toll application is the gem that most other toll bridges charge about 40p - so the WBC want 40p too.  All but one of the bridges they include are far-far bigger bridges.  The cost per metre of crossing for the WBC is already top of the table.

“Only” 40p

Or, to be fair, 20p if you buy a discount card.  That is what the bridge company want us to pay by 2012.  But that means if you do one return-crossing a day then that will be a little under £150 a year.   Some families with work and schools can clock up four returns a day - or £600 a year.  That is a lot, especially with the current economic woes.   Just four years ago the discount rate was 7p - full 10p.  This rise is more than “only”.

Geographic trap

All the shops are on one side of the bridge; the GP’s surgery, railways station, banks, etc are all on that same side (Pangbourne).  The primary school is on the Whitchurch on Thames side.  Many people’s lives involving crossing that bridge regularly.  It is completely different to a bridge that crosses an estuary or island to shore.  It isn’t a convenience it is a part of life.

Disabled Drivers

Until recently, disabled drivers with a blue-badge could cross for free.  The WBC stopped this.  When we protested they said, basically: all must contribute to the rebuilding fund.  Except the shareholders …..  is that fair?

After the rebuilding

So if the WBC rebuild the bridge, then what happens to the tolls?  Problem over - they would go back down to slowly build the fund again over a full 100 years.  So look at the WBC plan to see.  Does it go down? No.  Does their dividend go up? Yes.  What a surprise.

A lot to take in- so call for a FULL public inquiry.

We think so too.  Lots of options.  Lots of people this all effects.  The toll rise application only caters for the interests of the WBC.  We say: let’s have a full public inquiry.  One that looks into all of the above.  Then experts can make real decisions not based on how much money they will make.