Tram network ‘punching above its weight’ despite £50m loss, says expert

NUMBER OF PASSENGERS USING SYSTEM ‘IS ONLY GOING TO GO UP’

NOTTINGHAM’S tram network is performing above expectations compared to other transport services – despite recording £50m losses, a local government expert has said.

Accounts for the various groups behind Tramlink Nottingham show losses totalling almost £50 million for the year ending March 2020.

Tramlink Nottingham (Finco), which has financially supported Tramlink Nottingham, posted a loss of almost £27.3m in the most recent financial year, and is dependent on the other company paying back loans, plus interest, so it can in turn repay its loans from shareholders.

The £27.3m represents a significant increase from the £10.8m loss it recorded in 2019.

Tramlink Nottingham, meanwhile, recorded a loss before tax of almost £22.1m in its most recent accounts, though turnover increased by 0.9 percent, to more than £63.7m, up from £63.2m recorded in the financial year before.

It recorded a loss, before tax, of almost £22.5m in the previous financial year.

Professor Peter Murphy, of Nottingham Business School, focuses his research on public policy, and in particular the performance management, governance, scrutiny, public assurance, and value-formoney arrangements of locally delivered public services.

He told the Post: “The Government, because it’s subsidising the network and has a duty not to subsidise anything more than it absolutely has to, doesn’t allow for great profits.

“It’s quite normal to see £50m losses for a company of this size.

“I would imagine almost certainly, every bus company and tram company are all dependent upon subsidies. It’s the way they operate with the Government.

“For a company that size, despite the drop in passenger journeys and vehicle miles, they actually upped their income to £21.3 million.

“Passenger revenue actually went up by 1.5 percent for 2019/20 and was only one of two in the country that went up (the other being Midland Metro). “Tyne and Wear, which is a huge metro, was down 5.5 percent from the year before.

“In terms of number of passengers and vehicle miles [NET] look as though they are punching above their weight.” Professor Murphy said the network was an “investment” in the city and he expected passenger numbers and revenue to only increase in the coming years. “You could say undoubtedly that it’s an investment. A considerable amount on the use of the transport goes on concessionary journeys.

The biggest group is the older popu- lation and pensioners.

“Undoubtedly over the next 10 years the number of over-65s in Not- tingham and Nottinghamshire is going to increase. The demograph- ics show we’re going to get a pretty big increase in elderly population and they of course use the tram.

“The second thing that sticks out in Nottingham city, not the conurba- tion, is that we have a huge propor- tion of people who do not have access to a private car.

“For many years it was around 48 percent of households in the city that did not have access to a car

“I would anticipate that the num- ber of passenger miles and numbers are only going to go up whether or not they get a transport authority or if they get any expansion to the lines.”

Since the start of the pandemic, the Department for Transport confirmed it has paid almost £18.5m as part of the Light Rail Revenue Restart Grant to support Nottingham’s Tramlink, the funding to cover any shortfall in revenue needed to operate the network.

However, transport bosses said the £22m loss, posted by Tramlink Nottingham, was “in line with expectations” with balanced books “coming in later years”.

Councillor Adele Williams, the city council’s portfolio holder for transport, said: “Tramlink’s finances are where we would expect them to be at this stage.

“It is one of the most successful tram systems in the country, which has seen increasing passenger numbers and satisfaction across a number of years.

“This clearly demonstrates that it’s a hugely popular part of our superb public transport network.

“Having invested significant upfront costs to double the size of the tram network through a Private Finance Initiative (PFI), Tramlink were always going to be mostly paying off interest early on, just like a household mortgage.

“Over the two decades of the contract, however, this will come down considerably and so the accounts are showing what we would expect at this relatively early stage in the repayment programme.”

I would imagine almost every bus and tram company are dependent upon subsidies. It’s the way they operate with the Government

Prof Peter Murphy