The team that has consistently mismanaged and incorrectly predicted the final outcome of the tram project, expects councillors and the public to simply accept its assumption of five million tram passenger journeys – overwhelmingly derived from former bus users – in its first year of operation.
Appendix Three to the report states that this would yield income of £228 million, but operating costs of £177m, a £3m dividend and a sink fund, payable to the council, of £48m to offset maintenance costs would produce a £34m loss over the tram’s first 15 years. The Lothian Buses figures are consistent with previous accounts. Annual journeys totalling 111 million and total predicted revenues of £2.594 billion, correlate to the current bus fare of £1.50.
However, a similar exercise on the trams figures (five million journeys producing £228m of revenue over 15 years) suggests an assumed fare of £3.
First, if there is no parity between tram and bus fares, then there can be no integrated ticketing and, second, there is a ridiculous assumption that bus passengers will be prepared pay double to travel by tram.
Given the significant consequences resulting from previous over-optimistic tram reports, one might have hoped the current document would also contain operating figures for the more likely scenario, where annual tram journeys struggle to exceed two million. That picture is decidedly stark: revenues down to £90m and losses up, over the 15 years, to a staggering £169m.
If one then includes repayment of the council’s total tram construction loan of £276m, borrowed over 30 years at an annual cost of £14m, this would produce a gross loss of £25.3m per year for the next 30 years alone.
John RT Carson