According to a local government expert, Nottingham’s tram network is above expectations when compared to other transport services, despite losses of £ 50m.
Accounts for various groups behind Tramlink Nottingham show losses of almost £ 50m for the year ending March 2020.
Tramlink Nottingham (Finco), which has financially supported Tramlink Nottingham, posted a loss of nearly £ 27.3m in its most recent financial year and is reliant on the other company to repay loans plus interest in order for it to repay its loans from shareholders.
The £ 27.3million is a significant increase from the £ 10.8million loss in 2019.
Tramlink Nottingham posted a pre-tax loss of almost £ 22.1m in recent accounts, despite sales climbing 0.9 percent to over £ 63.7m, from £ 63.2m in the previous year.
In the previous fiscal year, the company posted a pre-tax loss of nearly £ 22.5 million.
Professor Peter Murphy of Nottingham Business School focuses his research on public policy and in particular on the performance management, governance, control, public safety and value for money of locally delivered public services.
He told Nottinghamshire Live: “The government does not allow large profits because it subsidizes the network and has an obligation not to subsidize anything more than absolutely necessary.”
“It is quite normal for a company of this size to lose £ 50 million.
“I would almost certainly imagine that every bus and tram company is dependent on subsidies. This is how they work with the government.
“For a company this size, despite the decline in passenger journeys and vehicle miles, they actually increased their income to £ 21.3 million.
NET card payment machine on the marketplace
(Image: Nottingham Post / Marie Wilson)
“Passenger revenue actually rose 1.5% in 2019/20 and was only one of two in the country that rose (the other is Midland Metro).
“Tyne and Wear, a giant subway, is down 5.5% year over year.
“In terms of the number of passengers and vehicle miles [NET] look like they’re hitting over their weight. “
Professor Murphy said the network was an “investment” in the city and he did not expect passenger numbers and revenue to increase for years to come.
“You could definitely say that it is an investment.
“A significant part of the traffic is used by concession trips. The largest group is the elderly and retirees.
“There is no doubt that in the next 10 years the number of people over 65 will increase in Nottingham and Nottinghamshire. Demographics show that the number of older people will increase quite sharply and of course they will use the tram.”
“The second thing that stands out in Nottingham, rather than the metropolitan area, is that we have a large proportion of people who do not have access to a private car. For many years around 48% of households in the city do not did. ” Have access to a car
“I would assume that the number of passenger miles and numbers will only increase whether they get a transportation authority or if they get an extension of the lines.”
Since the coronavirus pandemic began, the Department of Transportation has confirmed it paid nearly £ 18.5 million under the Light Rail Revenue Restart Grant in support of Nottingham’s Tramlink.
However, transportation bosses said Tramlink Nottingham’s £ 22m loss “was as expected” and balanced books “in later years”.
Councilor Adele Williams, City Councilor’s Portfolio Owner, said, “Tramlink’s finances are where we would expect them to be at this stage.
“It is one of the most successful tram systems in the country, with passenger numbers and satisfaction increasing over the years. This clearly shows that it is an extremely popular part of our excellent public transport network.
“After Tramlink had invested considerable upfront costs as part of a Private Finance Initiative (PFI) in order to double the size of the tram network, Tramlink always paid interest early, like a household mortgage.
“However, this will drop significantly over the two decades of the contract, and the accounts show what we would expect at this relatively early stage in the repayment program.”