Council not able to rely on bus cash to pay for trams
● £6m dividend frozen – and may be withheld in coming years
Cash-strapped Edinburgh City Council have admitted they will not be able to rely on a previously expected annual payment of £6 million from Lothian Buses, their annual accounts have revealed.
Due to the impact of Covid-19 on the council-owned bus company, which has experienced plummeting passenger numbers and revenue, the council did not receive the annual dividend in the 201920 year and are planning for it to not be paid next year and potentially beyond.
In the unaudited annual accounts for the local authority, council officials state: “Having not received the budgeted £6m dividend from Lothian Buses in 2019-20, the council expects this position to continue at least for 2020-21 and potentially further years thereafter.”
However, Lothian Buses said their results for 2019-20 were “in line with our forecasted expectations” and the dividend was not paid to shareholders due to “unprecedented” anticipated financial pressure in the coming year.
Despite this, the company found almost £150,000 to pay in compensation their controversial former managing director Richard Hall, who resigned in February, in addition to his salary of more than £170,000. His payment of £323,091 is equal to 5 per cent of the cancelled annual dividend. Liberal Democrat transport spokesman Councillor Kevin Lang said he was worried the city’s entire bus network could be at risk.
He said: “The days of Edinburgh Council using Lothian Buses as a cash cow are over, at least for the foreseeable future.
“The company is now facing one of the biggest challenges in its history. Even if profits are made, that money may need to be used to keep marginal bus routes going. Otherwise, I fear the whole citywide bus network could be at risk.”
The council said the loss of the dividend would not impact the financial viability of the tram extension project due to it not being linked to the main business case.
The leader of the council, the SNP’S Adam Mcvey, said: “We are making every effort to mitigate the impact of Covid-19 on the tram project.
“The project is largely funded through borrowing repaid by future tram revenues, so any impact to the council’s budget now is limited.”