Translink has published its attractive annual report for 2007-8. Passenger numbers are rising and over 70% of customers say that they are satisfied with the services offered.
On average more than 220,000 passenger journeys are made every day. So far, so good! Congratulations to the chairman, Veronica Palmer, the group chief executive Catherine Mason (inset) and all the executives!
On a total revenue income of £171m, Translink raised £130m from fare paying customers. Of the fare paying income, nearly £22m was received as payments from Government to reimburse concession fares.
In total, in different forms, Translink received over £140m from the Exchequer.
The scale of funding support is large and has tended to increase in recent years. The justification comes in five main strands:
- capital to maintain the railways is 100% funded: £27m
- capital for new buses is largely Government funded: £52m
- railway operating costs partly offset through a Public Service Obligation: £22m
- bus services revenue support: £18m
- concession fares reimbursed: £22m
Much of the recent capital investment represents an overdue refur
bishment of well worn assets. More recently, a new three-year £182m investment programme has been approved.
If public transport was asked to ‘pay its way’ and fares had to contribute to capital costs fares would be (at least) doubled. Of course, there is now an appreciation that some public passenger transport services must be evaluated against wider criteria.
The performance of Translink should therefore be subject to other tests.
Does Translink operate efficiently, to minimise the need for financial support?
Would some of the passenger services be better provided through a licensing method that tested the ability of other operators to offer improved services?
Is Translink a provider without adequate challenge in a near monopoly position?
A fundamental restructuring of the governance and financing of public passenger services has been on the agenda for some years going back to when Peter Robinson was Minister in the Department of Regional Development. The search is to find methods to give Translink incentives to improve value for money.
Two different options might be considered.
First, can parts of the Translink services be tested by opening the door to competition? Second, can Translink (either as a single organisation or in its three main components) be given explicit rigorous performance targets against an agreed scale of services?
Translink can be expected to argue against a licensing system that allows competitive providers to operate either freely or on defined routes or types of service.
Expressions of interest from rival bus operators on key routes have been met with regulatory obstacles or an argument against cherry picking.
It would mean that cross-subsidies from busy routes to more marginal services would be withdrawn. In turn that could mean closure of some services that would be defended on social grounds.
An alternative is that Translink should be given a formal contract with specific performance targets. A change of this kind is necessary both to set a better operational framework and, co-incidentally, to meet the requirements of a new EU State Aids regulation that comes into force in December 2009.
Competitive tendering principles will apply.
The current arrangements allow Government, without market scrutiny, to oversee the setting of fares and the associated financial arrangements so as to achieve a fairly neutral result in the profit and loss account.
A formal services contract from Government setting out in advance the support funding arrangements and passing financial and operational responsibilities to the successful bidder might seem like a technical change but, in reality, could be an important commercial change.
Translink is generously funded. The capital investment programme is large. These are important economic and social services. The taxpayer can now expect clearer justification based on performance standards.