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NORTH EAST: Public transport could fall ‘off a cliff’

NORTH EAST: Public transport could fall ‘off a cliff’

Greg Stone, Newcastle Lib Dem opposition transport spokesman. Photo: NCJ Media.

North East transport chiefs have been warned that vital services will fall “over a cliff edge” without a huge shift in how they are paid for, amid a serious cash crisis.

Tyne and Wear Metro operator Nexus is predicting a £20.8m shortfall in 2022/23, a worrying scenario that is set to lead to significant cuts on local bus routes in particular.

The chief cause of the massive deficit is the drop in Metro ticket sales due to Covid, with more than £50m of government bailout money that has kept trains running during the pandemic due to run out in April.

But while the region’s leaders are desperately lobbying the Department for Transport to continue its emergency grants, a councillor warned on Thursday that “putting the begging bowl out” is not a viable way to keep Tyne and Wear’s public transport running for the next decade and beyond.

Newcastle Lib Dem Greg Stone said that “the direction of travel is over a cliff edge” for Metro and bus services unless more reliable funding can be found, urging local councils to step in with more annual cash to support Nexus.

Under budget proposals to be finalised by the North East Joint Transport Committee (JTC) in January, assuming the government does not offer another bailout, the public body says that it must:

  • Cut £7.5m of money used to reimburse private bus companies for carrying passengers with free bus passes, potentially leading them to make cutbacks;
  • Find “efficiency savings” of £2.4m and attract more Metro passengers to increase Nexus’ yearly income by £1.2m;
  • Spend £5.6m of Nexus’ reserves;
  • And ask the five Tyne and Wear councils to increase their payments to Nexus by £4.125m – or cut Metro, Shields Ferry, and Nexus’ bus services to save the same amount.

Newcastle, Gateshead, Sunderland, South Tyneside, and North Tyneside’s levy to Nexus has been reduced from £74m to £59m since 2010, as the authorities have grappled with austerity.

They are yet to say whether they will meet the plea for extra cash this year, though the JTC’s overview and scrutiny panel heard on Thursday that this “might be a case of not wanting to blink first” while still lobbying the government.

But even before Covid hit, Nexus was expecting to have to make spending cuts beyond 2022 to balance its books and is currently planning to burn through a large chunk of its cash reserves this year just to keep going for the next 12 months.

Coun Stone said: “Unless we change our overall strategy on this, we are going to have the same next year and beyond.

“We are looking to spend most of the reserves this year and beyond 2024 I don’t see there being any reserves left.

“We have set a stretch target [for Metro income] and extra efficiency savings which I am sure we are trying our best to meet, but I have major reservations over whether they are viable.

“I may be a lone voice on this, but I am desperately concerned about the situation we are in and if we don’t get a deal back from the government or councils don’t step in with more funding for the transport levy then we are in very dire straits.”

Durham county councillor Craig Martin, also a Liberal Democrat, agreed with the need for a “wholesale review” on how to “fix the mess we are in”.

John Fenwick, Nexus’s head of finance, said that Covid had caused the “vast majority” of the current problems, but admitted that Metro was “highly exposed” to the impact of the pandemic due to a heavy reliance on ticket income to cover around 60% of Nexus’ expenditure.

However, the committee rejected Coun Stone’s proposal to write to JTC asking it to change the budget strategy to a “more sustainable approach”, with chair David Taylor-Gooby casting the deciding vote 5-4 against because he prefers to “send a positive message” – to which Coun Stone responded that this “is not a positive situation”.

North Tyneside Labour councillor Sandra Graham said that securing extra government money was the only solution.

She said: “The only way that we can get a good transport system is to go for a proper devolution deal. That would be the only way to bring funding in, like they have in Manchester recently.

“We can put the begging bowl out for more money going past April and I think we should. “The government  said ‘no, no, no’ last year and then they came up with the goods because they knew things were going to fall apart.”

Mr Fenwick said that talks with the government over a new bailout are continuing and that local representatives were pressing the case that “this is a very serious situation for the future of public transport in the North East”.

North East transport chiefs have been warned that vital services will fall “over a cliff edge” without a huge shift in how they are paid for, amid a serious cash crisis.

Tyne and Wear Metro operator Nexus is predicting a £20.8m shortfall in 2022/23, a worrying scenario that is set to lead to significant cuts on local bus routes in particular.

The chief cause of the massive deficit is the drop in Metro ticket sales due to Covid, with more than £50m of government bailout money that has kept trains running during the pandemic due to run out in April.

But while the region’s leaders are desperately lobbying the Department for Transport to continue its emergency grants, a councillor warned on Thursday that “putting the begging bowl out” is not a viable way to keep Tyne and Wear’s public transport running for the next decade and beyond.

Newcastle Lib Dem Greg Stone said that “the direction of travel is over a cliff edge” for Metro and bus services unless more reliable funding can be found, urging local councils to step in with more annual cash to support Nexus.

Under budget proposals to be finalised by the North East Joint Transport Committee (JTC) in January, assuming the government does not offer another bailout, the public body says that it must:

  • Cut £7.5m of money used to reimburse private bus companies for carrying passengers with free bus passes, potentially leading them to make cutbacks;
  • Find “efficiency savings” of £2.4m and attract more Metro passengers to increase Nexus’ yearly income by £1.2m;
  • Spend £5.6m of Nexus’ reserves;
  • And ask the five Tyne and Wear councils to increase their payments to Nexus by £4.125m – or cut Metro, Shields Ferry, and Nexus’ bus services to save the same amount.

Newcastle, Gateshead, Sunderland, South Tyneside, and North Tyneside’s levy to Nexus has been reduced from £74m to £59m since 2010, as the authorities have grappled with austerity.

They are yet to say whether they will meet the plea for extra cash this year, though the JTC’s overview and scrutiny panel heard on Thursday that this “might be a case of not wanting to blink first” while still lobbying the government.

But even before Covid hit, Nexus was expecting to have to make spending cuts beyond 2022 to balance its books and is currently planning to burn through a large chunk of its cash reserves this year just to keep going for the next 12 months.

Coun Stone said: “Unless we change our overall strategy on this, we are going to have the same next year and beyond.

“We are looking to spend most of the reserves this year and beyond 2024 I don’t see there being any reserves left.

“We have set a stretch target [for Metro income] and extra efficiency savings which I am sure we are trying our best to meet, but I have major reservations over whether they are viable.

“I may be a lone voice on this, but I am desperately concerned about the situation we are in and if we don’t get a deal back from the government or councils don’t step in with more funding for the transport levy then we are in very dire straits.”

Durham county councillor Craig Martin, also a Liberal Democrat, agreed with the need for a “wholesale review” on how to “fix the mess we are in”.

John Fenwick, Nexus’s head of finance, said that Covid had caused the “vast majority” of the current problems, but admitted that Metro was “highly exposed” to the impact of the pandemic due to a heavy reliance on ticket income to cover around 60% of Nexus’ expenditure.

However, the committee rejected Coun Stone’s proposal to write to JTC asking it to change the budget strategy to a “more sustainable approach”, with chair David Taylor-Gooby casting the deciding vote 5-4 against because he prefers to “send a positive message” – to which Coun Stone responded that this “is not a positive situation”.

North Tyneside Labour councillor Sandra Graham said that securing extra government money was the only solution.

She said: “The only way that we can get a good transport system is to go for a proper devolution deal. That would be the only way to bring funding in, like they have in Manchester recently.

“We can put the begging bowl out for more money going past April and I think we should. “The government  said ‘no, no, no’ last year and then they came up with the goods because they knew things were going to fall apart.”

Mr Fenwick said that talks with the government over a new bailout are continuing and that local representatives were pressing the case that “this is a very serious situation for the future of public transport in the North East”.

Words: Daniel Holland, Local Democracy Reporter


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