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Erskine Bridge Tolls Act 1968: Transport Scotland: Erskine Bridge Accounts 2006-07

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MANAGEMENT COMMENTARY

1. The Erskine Bridge, which opened on 2 July 1971, crosses the River Clyde some 9 miles west of the centre of Glasgow. As a trunk road, it is the responsibility of the Scottish Government.

Tolls

2. The Scottish Government is empowered by the Erskine Bridge Tolls Act 1968 to levy tolls on vehicles using the bridge during a period of 20 years from its opening or as subsequently extended by order. These may be sufficient, but not more than sufficient, to defray the costs of the construction, improvement, maintenance and repair of the bridge, and to make provision for the cost of its administration and for its continued operation after the end of the toll period. All of these are purposes to which the revenue from tolls may be applied in accordance with Section 4(2) and Schedule 2 of the 1968 Act.

3. The toll period was extended by 5 years from 2 July 1991 and by 5 years from 2 July 1996 under the terms of Erskine Bridge Tolls Extension Orders; and by a further 5 years from 2 July 2001 by the Erskine Bridge Tolls Act 2001.

4. Exemptions from payment of tolls extend to fire and police authority vehicles, ambulances, vehicles used for the maintenance or operation of the Erskine Bridge, vehicles displaying badges issued under section 21 of the Chronically Sick and Disabled Persons Act 1970 and vehicles specially adapted for disabled drivers. The Scottish Government may also authorise exemption for up to 5 vehicles at any one time belonging to the Princess Louise Scottish Hospital for Limbless Sailors and Soldiers, Erskine.

5. From the beginning of the 1992-93 accounting period tolls have been levied at a flat rate of 60p on all vehicles, as provided for by the Erskine Bridge Tolls Order 1992 ( SI 1992 No. 433), excepting motorcycles and exempt categories. A discount of 10% is available to those purchasing 50 pre-paid crossing vouchers (or multiples thereof).

6. On 1 March 2006 a Tolls Suspension Order was published by the Department following the Transport Minister's announcement that the tolling regime on Erskine Bridge was to be lifted. Tolls were not levied from 1 April 2006. However there was a statutory requirement to prepare an account from 1 April 2006 to the end of the tolling period 2 July 2006.

Accounts

7. These Accounts are prepared by Transport Scotland under Section 17(1) of the Erskine Bridge Tolls Act 1968 in accordance with the Accounts Direction issued by Scottish Ministers. Prior to April 2006 responsibility for these accounts rested with the former Scottish Executive Enterprise Transport and Lifelong Learning Department.

8. With the expiry of the Tolling Order on 2 July 2006, tolling operations at Erskine Bridge ceased. Consequently these accounts are prepared to report on the final period of the Tolling Operations, and cover the period 1 April 2006 to 2 July 2006.

9. Note 6 to the Accounts gives information in relation to Section 4(2) of the 1968 Act regarding the permitted application of toll income and of the notional Sinking Fund calculation.

10. As in prior years, the audit fee is treated as a notional item. This non-cash fee is offset by a matching notional income figure.

11. Notwithstanding that the Tolls were removed from 31 March 2006, the fundamental service provided, namely the provision of a vehicular crossing point across the River Clyde, continues to be provided by Transport Scotland, an Executive Agency of the Scottish Government. Bridge maintenance and operations are funded from the Agency's Network Management budget.

12. Where appropriate, prior year figures have been restated to disclose notional income figures separately from other income. These disclosures are for transparency only and do not affect any published totals.

Toll Collection

13. Following full and open competition, the contract for the toll collection operation was re-awarded to APCOA Parking ( UK) Ltd with effect from 1 April 2002. The contractor collected tolls and carried out ancillary duties on behalf of the Scottish Government. The contract for toll collection expired on 31 March 2006. Toll pricing and charging policy remained the responsibility of the Scottish Government.

Results for the final operating period 1 April 2006 - 2 July 2006

14. During the period 3,209,293 vehicle crossings of the Erskine Bridge were reported, (a rise of 27.33% on the same period in 2005-2006). This included 28,449 motorcycles.

15. No tolls were physically collected during the period. Pre-paid vouchers were returned, releasing deferred income amounting to £31,000.

16. Operating costs for the period amount to £270,000. Although the non-cyclical nature of this expenditure renders a direct periodic comparison inappropriate, there are several notable reductions over the equivalent period for the previous year. Recurring collection and administration fees are no longer required and there was also a write back of a £256,000 over accrual on the bridge maintenance contract from the previous account.

17. The operating deficit for the operating period amounted to £223,000 compared to a surplus of £2.847m for the full year 2005-06.

Fixed Assets

18. All assets relating to the tolling operation, with the exception of the Land and Buildings at Bishopton and the toll collection booths, were disposed of in the period. No expenditure of a capital nature was incurred. Valuation of the Bridge resulted in an increase in gross value of approximately £1.93m at 2 July 2006 (ref. Note 7.1). The other significant assets are access roads. The gross value of access roads has increased by £0.27m during the period.

Transfer of Assets and Liabilities

19. All assets and liabilities in respect of Erskine Bridge were transferred from SEETLLD to Transport Scotland.

Collision Incident occurring in 1996-97

20. Note 12 to the Accounts provides details of the collision incident which occurred in 1996-97.

Payment of Suppliers

21. The Scottish Government policy requires that all suppliers' invoices not in dispute are paid within the terms of the relevant contract. The Scottish Government aims to pay 100% of invoices, including disputed invoices once the dispute has been settled, on time in these terms. Transport Scotland paid 92.6% of undisputed invoices within the terms of its payment policy. No interest was incurred under the Late Payment of Commercial Debt (Interest) Act 1998.

Auditors

22. The Accounts are audited by Auditors appointed by the Auditor General for Scotland.

Statement on Internal Control

23. A separate statement is not given for the Erskine Bridge Account as it is not the account of a separate entity, but an extract account of Transport Scotland's statutory accounts. The Statement on Internal Control given by me in my role as the Accountable Officer for Transport Scotland covers all of the income and expenditure relating to the Erskine Bridge Account. I have provided assurances to the Accountable Officer of the Scottish Government Consolidated Account on the systems of control within Transport Scotland, including those relating to the Erskine Bridge.

Statement of Accountable Officers' Responsibilities with respect to the Accounts

24. The responsibilities of the Accountable Officer, including responsibility for the propriety and regularity of the public finances for which the Accountable Officer is answerable, for keeping proper records and for safeguarding assets, are set out in the "Accountable Officers' Memorandum", issued by the Scottish Ministers.

Malcolm Reed
Accountable Officer

December 2007

Independent auditor's report to the Accountable Officer, the Auditor General for Scotland and the Scottish Parliament

I have audited the financial statements of the Erskine Bridge for the operating period ended 2 July 2006 under the Erskine Bridge Tolls Act 1968. These comprise the Operating Account, the Balance Sheet, the Cash Flow Statement and the Statement of Total Recognised Gains and Losses and related notes. These financial statements have been prepared under the accounting policies set out within them.

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 123 of the Code of Audit Practice approved by the Auditor General, I do not undertake to have responsibilities to members, in their individual capacities, or to third parties.

Respective responsibilities of the Accountable Officer and auditor

The Accountable Officer is responsible for preparing the financial statements, including the Management Commentary, in accordance with the Erskine Bridge Tolls Act 1968 and directions made thereunder by the Scottish Ministers. The Accountable Officer is also responsible for ensuring the regularity of expenditure and receipts. These responsibilities are set out in the Statement of Accountable Officer's Responsibilities in the Management Commentary.

My responsibility is to audit the financial statements in accordance with the relevant legal and regulatory requirements and with International Standards on Auditing ( UK and Ireland) as required by the Code of Audit Practice approved by the Auditor General for Scotland.

I report my opinion as to whether the financial statements give a true and fair view and whether the financial statements have been properly prepared in accordance with the Erskine Bridge Tolls Act 1968 and directions made thereunder by the Scottish Ministers.

I also report whether in all material respects the expenditure and receipts shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, The Erskine Bridge Tolls Act 1968 and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000.

I report if, in my opinion, the Management Commentary is not consistent with the financial statements, if proper accounting records have not been kept, if I have not received all the information and explanations I require for my audit, or if information specified by relevant authorities regarding remuneration and other transactions is not disclosed.

Basis of audit opinion

I conducted my audit in accordance with the Public Finance and Accountability (Scotland) Act 2000 and International Standards on Auditing ( UK and Ireland) issued by the Auditing Practices Board as required by the Code of Audit Practice approved by the Auditor General for Scotland. An audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of expenditure and receipts included in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Accountable Officer in the preparation of the financial statements, and of whether the accounting policies are appropriate to the circumstances of the Erskine Bridge, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error, and that in all material respects the expenditure and receipts shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

Financial statements

In my opinion

  • the financial statements give a true and fair view, in accordance with the Erskine Bridge Tolls Act 1968 and the directions made thereunder by the Scottish Ministers, of the state of affairs of the Erskine Bridge as at 2 July 2006 and the net cost of operations, recognised gains and losses and cash flows for the period then ended; and
  • the financial statements have been properly prepared in accordance with the Erskine Bridge Tolls Act 1968 and directions made thereunder by the Scottish Ministers.

Regularity

In my opinion, in all material respects, the expenditure and receipts shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, the Erskine Bridge Tolls Act 1968 and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000.

Murdoch McCamley, CA
Senior Audit Manager

Audit Scotland
Osborne House
1/5 Osborne Terrace
Edinburgh EH12 5HG

December 2007

FOR THE OPERATING PERIOD 1 APRIL 2006 TO 2 JULY 2006

Note

Period ended 2 July 2006

Year ended 31 March 2006 (restated)

£'000

£'000

INCOME

Tolls Levied (Release of deferred income)

6

31

5,676

Notional Income

16

17

47

5,693

OPERATING COSTS

Collection

0

645

Maintenance

1.3

(8)

1,285

Depreciation

7

230

783

Administration Costs

48

133

270

2,846

SURPLUS/(DEFICIT) FOR THE YEAR

3

(223)

2,847

Accumulated surplus brought forward

22,512

19,665

ACCUMULATED SURPLUS carried forward

22,289

22,512

STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES

Surplus (Deficit) for Year per Operating Account

(223)2,847
Unrealised Surplus less Backlog Depreciation on revaluation of Assets

9

1,6568,957
TOTAL Recognised Gains & Losses for the year

1,43311,804

The notes below form part of these accounts

BALANCE SHEET AS AT 2 JULY 2006

Note

Period ended 2 July 2006

Year ended 31 March 2006

£'000

£'000

FIXED ASSETS

Tangible Assets

7

138,558

137,133

CURRENT ASSETS

Debtors

45

45

Cash at bank and in hand

260

260

305

305

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Trade Creditors

38

276

Other Creditors

20

48

58

324

NET CURRENT ASSETS/(LIABILITIES)

247

(19)

TOTAL ASSETS LESS CURRENT LIABILITIES

138,805

137,114

CAPITAL AND RESERVES

Revaluation Reserve

9

143,283

141,627

Accumulated Surplus/(Deficiency)

22,289

22,512

Capital Account

8

(26,767)

(27,025)

138,805

137,114

The notes below form part of these accounts.

Malcolm Reed
Accountable Officer

December 2007

CASH FLOW STATEMENT FOR PERIOD ENDING 2 JULY 2006

Reconciliation of operating deficit to net cash inflow/outflow from operating activities

£'000

Period ended 2 July 2006

Year ended 31 March 2006

£'000

£'000

Operating Surplus/(Deficit)

(223)

2,847

Depreciation charges

230

783

(Increase)/Decrease in debtors

0

(45)

Increase/(Decrease) in creditors

(265)

(445)

Net Cash inflow/(outflow) from operating activities

(258)

3,140

CASH FLOW STATEMENT

Net Cash inflow/(outflow) from operating activities

Toll Receipts: Transport Scotland

0

5,572

Payment for salaries & wages, supplies and services, and other expenses

258

2,432

(258)

3,140

Capital Expenditure

Payments to acquire tangible fixed assets: Transport Scotland

0

(4)

(258)

3,136

Financing

Net Cash advanced from/(surrendered to) departments

258

(2,970)

Increase/(decrease) in cash in the period

0

166

The notes below form part of these accounts.

CASH FLOW STATEMENT FOR PERIOD ENDING 2 JULY 2006 (continued)

Reconciliation of net cash flow to movement in net funds

Period ended 2 July 2006

Year ended 31 March 2006

£'000

£'000

Increase (Decrease) in Cash in the period

0

166

Net funds at 1.4.06

Cash at Bank and in Hand

260

94

Net funds at 2.7.06

Cash at Bank and in Hand

260

260

The notes below form part of these accounts.

NOTES TO THE ACCOUNTS

1. ACCOUNTING POLICIES

1.1 Accounting Convention

The Accounts are prepared under the historical cost convention modified by the inclusion of the Erskine Bridge and other related assets at current cost (see Note 7).

Without limiting the information given, the Accounts meet the requirements of the Companies Acts and are prepared in accordance with the Accounts Direction and applicable Accounting Standards.

1.2 Fixed Assets Accounting Policy

The basis of valuation for (i) the Bridge is depreciated replacement cost; (ii) access roads is current replacement cost; (iii) the administration building and associated land is open market value for existing use (ref. Note 7)

1.3 Maintenance Costs

The maintenance costs disclosed in the Operating Account relate primarily to payments to the maintenance contractor for the South West Area of the Scottish Roads Network. The contractor invoices Transport Scotland for activities across the whole of this Area rather than specifically for the Erskine Bridge. The figure brought to account in the Erskine Bridge Operating Account is derived as an apportionment from the total costs invoiced for the whole of the South West Area.

1.4 Depreciation

Depreciation is provided on all tangible fixed assets, other than land, at appropriate rates calculated to write-off the cost or valuation of each asset evenly over its expected useful life, as follows:-

The Erskine Bridge
(excluding non-renewable elements. Ref. Note 7.1)

  • over 120 years

Access Roads

  • Roads element maintained in perpetuity;
  • other elements over 120 years

Administration Building
Furniture, fittings and equipment

  • elements from 5 to 40 years
  • following the abolition of the tolling regime, these assets have been depreciated to their estimated disposal value

2. FORMAT OF ACCOUNTS

The format of the account was changed in 1991-92. Prior to 1991-92, the notional costs required for the purposes of S.4 (2) of the Act were incorporated in the Accounts (i.e. Amortisation; Interest; Sinking Fund).

These notional costs have continued to be calculated for 1991-92 and the years following, but are included only at Note 6 to the Accounts, which shows that the requirements of S.4 (2) are being met.

3. OPERATING SURPLUS

This is stated after charging:

£'000

Previous Year
£'000

Auditor's remuneration (notional)

16

17

Depreciation

230

783

4. STAFF COSTS

There have been no direct employees at the Bridge since APCOA Parking Ltd took over collection etc duties in June 1992.

5. INSURANCE

Insurance is not effected against fire, explosion, third party, theft or similar risks as these risks are carried by the Scottish Consolidated Fund.

6. TOLL REVENUES

Period ended 2 July 2006

Year ended 31 March 2006 (restated)

£'000

£'000

INCOME

Tolls Levied (Release of deferred income)

31

5,676

Section 4 (2) of the 1968 Act requires a statement confirming the statutory limitation that toll charges levied may not exceed the sum required to meet certain defined applications. At 31st March 2006 the accounts confirmed that position by recording that the sums required exceeded toll revenues by over £321 million. For the period to 2 July 2006 the tolls cannot exceed the sums required because the toll income is negligible and the basis of the calculation of the sums required will inevitably result in an increase in that total.

These defined applications comprise of:

  • Operating Costs (excluding Depreciation and allocations to the Sinking Fund)
  • Notional costs:
  • Amortisation
  • Interest
  • Contribution to Sinking Fund

6.1 Amortisation is a notional charge sufficient to repay the capital costs of the bridge (at historic cost) over the toll period.

Interest represents the notional interest charge due to: amortisation of capital expenditure; interest on working capital; deficiency of income to meet applications.

A Sinking Fund is set up notionally to meet replacement of assets and major maintenance over the remaining life of the bridge, and to meet operating costs after the toll period. The fund is reassessed 5-yearly, and was last reassessed in 2001-02.

6.2 The Sinking Fund has not been re-valued as the cost and resource required is not considered to be value for money given that any such revaluation has no reporting value after 3 July 2006.

7. TANGIBLE FIXED ASSETS

Land and
Buildings
Equipment
and
Furniture
Total
£'000£'000£'000

Cost or valuation at 1 April 2006

176,177

484

176,661

Additions

0

0

0

Surplus/(deficit) on revaluation

2,200

0

2,200

Disposals

0

(263)

(263)

At 2 July 2006

178,377

221

178,598

Depreciation at 1 April 2006

39,046

482

39,528

Provided during the year

230

0

230

Surplus/(deficit) on revaluation

544

0

544

Disposals

0

(262)

(262)

At 2 July 2006

39,820

220

40,040

Net book value

At 1 April 2006

137,131

2

137,133

At 2 July 2006

138,557

1

138,558

7.1 The gross valuation of the Bridge is derived from the Roads Assets Valuation System ( RAVS) Database maintained for Transport Scotland. The basis for valuation is depreciated replacement cost by using appropriate indices. The gross valuation of the Bridge at 2 July 2006 is £156.0m (£154.0m at 31 March 2006). Depreciation is provided at rates calculated to write off the valuation (excluding non-renewable elements) by equal instalments over the useful economic life of the Bridge. The non-renewable elements of the Bridge (foundations, etc) excluded from the calculation of depreciation are considered to constitute 20% of the total value of the Bridge. The net book value of the Bridge at 2 July 2006 is £119.3m (2005-06 £118.1m).

7.2 Other assets:

Access Roads In line with RAVS database, as used for the Transport Scotland Account, the relevant roads are included at current replacement cost, adjusted to reflect the current condition of the road component, and the depreciation of structures and communication components. The net book value of access roads at 2 July 2006 is £19.1m (2005-06 £18.8m)

Administration Building (including associated land) is valued at open market value for existing use in line with the Transport Scotland Account. The net book value is £200,000 based on an external valuation provided by GVA Grimley LLP in April 2006 (2005-06 £200,000).

Equipment & Furniture, including Toll Booths and Equipment are accounted for on historic cost basis. However, following the abolition of the tolls in March 2006, all assets in this category have no further economic value and have been written down to the disposal value obtained in August 2006. The remaining net book value at 2 July 2006 is £1,500 (2005-06 £1,500).

7.3 No additions to capital expenditure were made during the year.

8. CAPITAL ACCOUNT

Period ended 2 July 2006

Year ended 31 March 2006

£'000

£'000

Balance at 1 April 2006

(27,025)

(24,055)

Net cash advanced from/(surrendered to)
Scottish Executive Departments in year
(see Cash Flow Statement)

258

(2,970)

Balance at 2 July 2006

(26,767)

(27,025)

9. REVALUATION RESERVE

£'000

Period ended 2 July 2006

Year ended 31 March 2006

£'000

£'000

As at 1 April 2006

141,627

132,670

Surplus/(deficit) on revaluation:
Fixed Assets

2,200

11,424

Backlog Depreciation

(544)

(2,467)

1,656

8,957

Balance at 2 July 2006

143,283

141,627

10. COMMITMENTS

Capital

There are no amounts contracted for but not provided for in the Accounts, and due within one year (none for the previous year). Amounts authorised but not contracted for total nil in 2006-07 (previous year NIL in 2005-06)

11. CONTINGENT LIABILITIES

None at 2 July 2006. There were no contingent liabilities as at the previous period end.

12. COLLISION INCIDENT OCCURRING IN 1996-97

The bridge was closed to traffic as a result of a collision incident on 4 August 1996 when an oil rig which was being towed down the River Clyde collided with the deck of the bridge, causing structural damage. The bridge was closed to all traffic from 4 August, reopening to pedestrians and cyclists on 22 August and to cars and motor cyclists on 30 August 1996. On the completion of structural repairs the bridge was reopened to Heavy Goods Vehicles on 22 December 1996. The incident resulted in the loss of toll revenue in 1996-97.

The Scottish Government commissioned consulting engineers to carry out an independent investigation into the circumstances leading up to the incident. The firm reported, and The Scottish Government is now pursuing those considered to have been responsible for the incident, for the costs associated with the repair and the associated traffic management, and for all loss of toll revenue. An action has been raised for recovery of the cost of damage to the bridge and a Proof hearing will commence on 22 January 2008. Latest estimates of the final quantum of the claim (excluding interest) are of the order of £4.2m, of which £3.6m has been incurred as expenditure in the Accounts to date. A further £0.6m approx. of the overall amount represents toll revenue lost due to the collision.

Royal Arms

ERSKINE BRIDGE TOLLS
DIRECTION BY THE SCOTTISH MINISTERS

1. The Scottish Ministers, in pursuance of Section 17(1) of the Erskine Bridge Tolls Act 1968, hereby give the following direction.

2. The statement of accounts for the financial year ended 31 March 2006, and subsequent years, shall comply with the accounting principles and disclosure requirements of the edition of the Government Financial Reporting Manual ( FReM) which is in force for the year for which the statement of accounts are prepared.

3. The accounts shall be prepared so as to give a true and fair view of the income and expenditure and cash flows for the financial year, and of the state of affairs as at the end of the financial year.

4. Clarification of the application of the Companies Act and any additional disclosure requirements is given in Schedule 1 attached.

5. The income and expenditure account and balance sheet shall be prepared under the historical cost convention modified by the inclusion of:

5.1 The Erskine Bridge at a value based on its depreciated replacement cost. For the purposes of the Accounts, the Bridge shall have a deemed life of 120 years from the date of its coming into operation (taken for convenience to be 1 April 1971).

6. This direction shall be reproduced as an appendix to the statement of accounts. The direction given on 2 July 2004 is hereby revoked.

Signed by the authority of the Scottish Ministers
Dated

SCHEDULE 1
APPLICATION OF THE COMPANIES ACT AND ADDITIONAL DISCLOSURE REQUIREMENTS

1. The formats prescribed in the Companies Act in respect of the profit and loss account shall not apply to the operating account of the Erskine Bridge which shall be in the form outlined in the annex, although minor variations are permitted

2. The notes to the accounts shall include:

2.1 details of the basis on which the Bridge has been valued,

2.2 a statement demonstrating that the requirements of Section 4 (2) of the Erskine Bridge Tolls Act 1968 have been met.

ANNEX

SCOTTISH GOVERNMENT …………….. … DEPARTMENT
ERSKINE BRIDGE TOLLS ACT 1968
OPERATING ACCOUNT FOR THE YEAR ENDED 31 MARCH 20..

INCOME

Tolls levied

x

Other income

x

x

OPERATING COSTS

Collection

x

Maintenance

x

Depreciation

x

Other operating costs

x

x

SURPLUS (DEFICIENCY) FOR THE YEAR

X

Accumulated deficiency brought forward as previously reported

x

Prior year's adjustments

x

As restated

X

ACCUMULATED DEFICIENCY carried forward

x