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What are the costs of Midland Metro expansion?

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At its April 2017 meeting, the board of the West Midlands Combined Authority approved a public consultation on its draft 2026 ‘Delivery Plan for Transport’ running until Friday 9 June 2017.

The consultation invites comments on TfWM’s proposals for spending hundreds of millions of pounds on schemes such as expanding light rail, and very light rail. But what it does not offer are any details on the economic, financial, and environmental effects of the proposals.

In fact, TfWM is refusing to release these details.

TfWM, planned Midland Metro and Very Light Rail lines (April 2017)

TfWM, planned Midland Metro and Very Light Rail lines (April 2017)

On 26 May 2016 BBC News reported that Birmingham's Midland Metro tramway had never made a profit in the 17 years since the line opened

On 26 May 2016 BBC News reported that Birmingham’s existing Midland Metro tramway had never made a profit in the 17 years since it opened.

[BBC, 2016-05-26]

National Express, which runs the Midland Metro, has lost about £34m on the route since 1999.

Actually, the amount National Express has lost on Midland Metro is not clear, because the tramway north of Snow Hill was built and originally operated by a consortium known as Altram, under a 23-year design – build – operate – maintain concession.

‘Profits’ were to have been shared between the consortium members Ansaldo, Laing, and Travel West Midlands (NX), but A and L walked not long after the tramway opened in 1999. It soon became clear that the whole system had been shoddily built and the ridership forecasts were completely wrong. NX threatened to hand back the keys if Centro (now TfWM) did not help it out, but the details of what agreement was struck have never been made public.

On 22 March 2017, the West Midlands Combined Authority announced that it would take ‘direct control’ of the Midland Metro tram service when the National Express concession finishes in October 2018. This means that future losses would have to be met from public funds. Obviously, every pound spent paying for Midland Metro losses is a pound not spent on libraries, social services, or fixing potholes.

[WMCA]

The move will enable TfWM, which is the transport arm of the West Midlands Combined Authority (WMCA), to plough millions of pounds of future profits back into expanding the network.

Existing National Express staff will be transferred over to a new subsidiary company – Midland Metro Ltd – which will be wholly owned by the WMCA.

The combined authority is set to start a number of extensions which will see the network triple in size over the next decade, with passenger numbers forecast to increase from around 6.5 million at present to more than 30 million.

That is expected to generate profits of around £50 million over the first 11 years which the WMCA will be able to channel back into the network for the benefit of passengers and the local economy.

[Councillor] Roger Lawrence, WMCA lead for transport, said: “Metro is a fundamental part of our future plans not only for transport but for the West Midlands economy as a whole.

“It is a proven catalyst for economic growth and is critical to best connect and feed into HS2 so we can reap the maximum economic benefits possible from the high speed rail line.

“The move will enable TfWM, which is the transport arm of the West Midlands Combined Authority (WMCA), to plough millions of pounds of future profits back into expanding the network.”

Given that the existing Metro has lost tens of millions of pounds, and only carries a fraction of the passenger volume originally forecast, what evidence is there to support TfWM claims that it is a ‘catalyst for economic growth‘, and would make profits in the future?

WMCA news story about taking direct control of Midland Metro

WMCA news story about taking direct control of Midland Metro

[TfWM response to FoI request, April 2017]

Q1. Requested data: the year-by-year cost and income forecasts for the Metro network in the future.

Answer: An assessment of the commercial model using benchmark data showing revenue and costs generated from the Metro operations has been carried out, to gain an initial indication of the financial performance of Metro. This information held is commercially confidential.


Q2. Requested data: the reports and analyses showing Metro has been a proven catalyst for economic growth (compared to other corridors not served by Metro).

Answer: This matter is addressed in extension Business cases which will be available on our website as and when they are approved.


Q3. Requested data: what information is held on the outsourcing process and the decision (e.g. who told the WMCA board that if it decided to continue outsourcing tram services it would cost taxpayers several million pounds).

Answer: The information held is commercially confidential and most of the information obtained was benchmarking data on other light rail schemes.


Q4. Requested data: information on the difficulty of defining the scope of services required from the operator.

Answer: The scope of services required will change as the Tram network develops and forecasting requirements at this stage is therefore difficult to predict. This approach provides the opportunity for WMCA to amend the fares which will impact the revenue growth and the business model and to work flexibly with the Midland Metro Alliance to adjust operational service requirements to match the emerging investment programme delivery, without being constrained by a fixed contract specification and performance regime.



Q5. Requested data: the assessment of the risks and advantages of bringing operations in house.

Answer: The information held is commercially confidential and most of the information obtained was benchmarking data on other light rail schemes.

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Written by beleben

April 28, 2017 at 11:14 am

Posted in Birmingham, Centro, Politics

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