Belfast Telegraph

Monday 24 November 2014

Gauging funding for our public transport

©Press Eye Ltd Northern Ireland -17th September   2012
General views of the bus gate which is now operational in Howard street in Belfast.
 Mandatory Credit - Picture by Stephen Hamilton/Presseye.com©
©Press Eye Ltd Northern Ireland -17th September 2012 General views of the bus gate which is now operational in Howard street in Belfast. Mandatory Credit - Picture by Stephen Hamilton/Presseye.com©

In the year to March 2012, Government support for Translink services cost a record £185.2m. Of this amount, £108.8m was towards capital investment and £76.4m towards operating costs. In the same year, passengers paying fares contributed £120.4m.

Last year the level of Government support was unusually high because £92m was invested in new trains and the related infrastructure.

Metrobus, Ulsterbus, and NI Railways, all benefit from generous capital grants which means that, in their operating accounts, the scale of depreciation charges is well below conventional commercial levels.

Even with the generous capital allowances, the operating profits are modest.

In the year to March 2012, Metrobus had an operating profit of £0.5m (on turnover of £35.6m); Ulsterbus recorded a loss of £0.9m (turnover £93.7m); and NI Railways posted a loss of £1.3m (turnover £56.5m).

Against these tight trading margins, Translink reports that "public funding for both bus and rail is substantially reduced during the Corporate Plan period 2012-13 to 2014-15".

The annual report adds that "both capital and revenue for both bus and rail are reduced - capital and revenue for bus particularly so". It adds that, although the bus and rail operations can remain financially viable in 2012-13, from 2013-14 onwards there are problems where Translink, in discussion with the Department of Regional Development (DRD), must "develop realistic solutions".

Translink offers a warning notice to DRD, its funding department. The board accepts its responsibility but makes its own assumptions that there will be:

  • No significant downturn in projected passenger numbers due to economic conditions or fare increases
  • No change to the quantity of provision of home to school transport by this organisation
  • An ability by the group to match network provision to the funding available, and
  • No external constraints on the board preventing necessary corrective action.

These assumptions point to possible actions and consequences. Fare revenue, as a proportion of costs could be increased; some school transport contracts could go to other providers; the network of services may need to be rationalised; and (freely interpreting) rational business decisions by the board may produce political resistance.

Translink, seeking extra funding, may argue that public transport in Northern Ireland attracts, proportionately, lower public funding than in England and Scotland. That comparator, from the Treasury, may be misleading. The figures are heavily influenced by railway support costs which are disproportionately higher in the London area and across Scotland.

DRD, partly as an answer to that challenge, commissioned an extensive study, by FGS McClure Watters, on possible efficiency savings in comparison with some other public transport operations across GB and Ireland.

Ultimately, the balance between increased fares, rationalised services, greater operational efficiency and Government support, calls for a political judgment by the minister after evidence on the performance of Translink has been evaluated.

The case for selected cost-benefit analysis, taking account of social needs, is compelling.

Translink should consider sharper Key Performance Indicators with an emphasis on financial outcomes. For example, the complete re-equipment of the rail assets, which is attracting extra passenger numbers, might be expected to lead to lower levels of financial support.

Although Translink makes the argument that concession fares should be seen only as a customer incentive, these concessions do earn extra marginal revenue for buses and trains.

For NI Railways, the grant for a Public Service Obligation plus concession fare income, when combined, generated the equivalent of 92% of fare payments in 2008-09: in 2011-12 this had risen to 99%. Presumably DRD, expecting benefits from the new trains, would hope that Translink could reverse this trend.

Over the same four-year period, for Metrobus, Government current support, as a proportion of fares paid, has risen from 48% to 58%, and for Ulsterbus the ratio has risen from 28% to 31%.

There are difficult decisions ahead for Translink and DRD. Should tax payers be funding more of the cost of public transport?

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