£8.6m bailout for Metro 'not enough' to guarantee its future after near £1m a week losses
An emergency £8.6 million government bailout of the Tyne and Wear Metro is “not enough” to protect the vital rail network’s future, ministers have been warned.
Transport secretary Grant Shapps has confirmed that a three-month package worth £715,000 per week, backdated to mid-March, will be offered to cover some of the Metro’s losses caused by the coronavirus crisis.
The Metro is reporting deficits of almost £1 million a week and local transport officials have said they needed £10 million to keep the network operational just until July, with income plummeting as passenger numbers dropped by more than 90% during lockdown.
Despite the government finally pledging some cash, the Metro is still facing an immediate £1.4 million shortfall and is certain to face further mounting costs over the coming months – with journeys on public transport expected to stay well short of normal levels even after lockdown is lifted.
Metro operator Nexus says it will now have to cut costs or divert funding from other sources to make up the gap.
Gateshead Council leader Martin Gannon, chair of the North East Joint Transport Committee, said: “It is not enough. If they want the Metro and bus services to keep on running then they are going to have to give us more.
“We have not got enough money to make up the difference and we are going to keep screaming and shouting and bawling about it because there is not another solution.”
Coun Gannon warned that local councils cannot be left to pick up the rest of the Metro’s bill, as they grapple with huge costs of their own during the pandemic.
He added: “We will restructure some debt and find some cost-cutting and we will keep the Metro operating. But the government is also instructing us to increase the frequency of trains as we get the economy back up and running, and the cost of doing that needs to be covered.
“It cannot come from local councils because we have not got it. In Gateshead we have a £37.5 million deficit, in Newcastle it is £50 million.”
Coun Gannon and other North East leaders have called for a massive restructuring of the entire public transport system and change the “broken” model of bus operators so that they are under local authority control.
Managing Director Transport North East, Tobyn Hughes, said that Metro and Shields Ferry passenger numbers will not return to pre-crisis levels for “many months”, creating a major financial headache.
He added: “The Metro and the Shields Ferry are public services and their importance to the economic and social life of our region cannot be understated. This has been highlighted during the coronavirus crisis when we have been providing a regular service to make sure that key workers can get around. We salute our workers who continue to provide a service all day, every day, despite the challenging environment.
“This has come at a financial cost though; our fare income has all but disappeared during the lockdown period leaving a £10m hole in our budget. The government’s funding of £8.6m goes a long way towards that and is very welcome, but it still leaves a funding gap that we need to close. We also have funding shortfalls on the Shields Ferry and in other areas. We will have to look at our other activities, saving money and redirecting funding where we can.
“We are now focusing on getting ready to support the region’s economy if and when the government starts to lift the lockdown. Both the Metro and Shields Ferry will be there to play their full role when they are needed.
“We do not however expect to return to pre-crisis levels of ridership for many months to come, and this will continue to create a financial challenge long into the future. We look forward to working with the government to ensure that the Metro is put on a long-term financially sustainable footing.”
Mr Shapps said that the Metro “is the undercurrent that keeps people moving” in Tyne and Wear.
He added: “It plays a crucial role in getting NHS staff and emergency services to work - and it is only right that we offer operators support during this time of national crisis.
“This package of support will help ensure light rail services continue to operate at this difficult time.”
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