Tyne and Wear Metro in a 'precarious' position thanks to soaring energy bills - but bosses hope to avoid timetable cuts for now
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Transport chiefs have agreed plans to plug a gap of more than £10 million in Metro operator Nexus’s finances next year without needing to slash train services.
But there remain worries about the future funding of the network, with its electricity costs having shot up dramatically amid the global energy crisis and expected to remain high for years to come.
Nexus is predicting a £10.6 million budget shortfall in 2023/24, which will be covered by increased payments from local councils in Tyne and Wear and by spending £8 million of its cash reserves.
But with critical energy bill relief from the Government due to expire soon and major pressures as a result high inflation levels continuing, councillors were told on Tuesday (January 17) that using Nexus’s limited reserves to solve the crisis was “not a sustainable position”.
Gateshead Council leader Martin Gannon warned before Christmas that the Metro would be at risk of being mothballed if bosses were forced to cut services and reported to colleagues this week that it remains in a “precarious” state.
Cllr Gannon told the North East Joint Transport Committee (JTC): “The income situation is improving and energy costs are beginning to decrease, nowhere near back to what we anticipated but certainly falling from that peak.
“That [budget deficit] position is beginning to narrow, probably to manageable proportions.
"Therefore the Metro is not under immediate threat. But it is a precarious situation and very subject to increases in energy costs or any unanticipated spikes. It is heavily reliant on the use of reserves of £8 million.
“I am happy and content that we have a stable situation, but it is something we need to be aware of and monitor into the future.”
The cost of the high voltage power used to run the Metro has spiralled this year from an estimated £8 million to more than £21 million – and a report to the JTC states that the electricity bills are expected to stay at far higher rates than had been predicted this year until 2026.
Almost £16 million of funding support from the Government, including £6.2 million in energy relief, has meant that Nexus has been able to avoid dipping into its cash reserves in the current financial year.
But Cllr Gannon reported on Tuesday that the Metro had been deemed ineligible for continuing help with its energy bills and therefore expects to have to spend reserve money in the coming years.
The transport levy that the five local Tyne and Wear councils contribute to Nexus is also being increased by 4% – from £65.2 million to £67.8 million.
Cllr Gannon added: “Local authorities are already battling overstretched budgets however once again, we have little choice here but to step up to increase the money we put forward to fund our transport system.
"We are committed to delivering an excellent transport network for our communities however reduced budgets and inflationary pressures are alarming, and more clarity is needed from Government on a longer-term solution.”