Forum Topic

You are significantly overestimating the toll charge that would be needed due to a number of factors. The PWLB rates for longer term loans is currently around 5% The statutory requirement for minimum revenue provision is based on the need to be prudential. It would be justifiable to make no provision in the early years of operation in the expectation that toll income would ultimately meet capital repayment costs. Although LBHF (which is presumably what you mean rather than LBH) might like to have their maintenance costs covered, it looks like Labour is going to go down the route of having the maintenance of key bridges handled by central government so this would be funded separately. There is no profit element to cover as there are no shareholders involved in what would be a debt funded project. Operational costs will be insignificant. There is a danger of over complicating this but essentially 8,000 crossings with a basic toll of £2 would generate £16,000 a day easily enough to conver interest on a £100 million loan. This doesn't take into account fine revenue which based on ULEZ would be significant. It also assumes a standard fixed toll per vehicle —  but the charge will be higher for lorries and vans and season passes are likely to be sold. Toll pricing will almost certainly be dynamic with rates varying depending on time of day and over the course of 30 years would be incorporated into a London wide road pricing model. Toll rates can rise over the life of the bond issued but the coupon paid will remain the same. Therefore, Francis is right in saying that the risk in this project is not that tolls won't cover debt and interest repayments. The risk is in outlying events such as a terrorist attack, a Thames Barrier failure, the invention of the flying car. The hard part will be deciding where liability in these sort of catastrophes resides.

 








Andrew OSullivan ● 125d