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But no further action will be taken on the £162 million project to run the trams down Leith Walk until councillors have a closer look at the business case and consult Lothian Buses over a proposed “extraordinary” dividend to help fund the line.
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CityCyclingEdinburgh Forum » General Edinburgh
Tram latest
(2182 posts)-
Posted 9 years ago #
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The biggest personal gamble is by transport convener Lesley Hinds. As Labour’s next candidate for Edinburgh North and Leith at the Holyrood elections in May, will her very strong pro-extension stance win or lose her votes? On a straw poll of people I know in Leith, it’s just too close to call.
There is, of course, a nuclear option. Right now Lothian Buses must be worth somewhere north of £300m given its revenues and reserves. Why not sell the company on the proviso that an incoming private sector operator builds the tram extension? In one go, the trams debt goes, with plenty cash left over. But that’s a non-starter, isn’t it?
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Posted 9 years ago # -
If it is viable that an outside company buy LB plus trams on the proviso that they build the trams, then it is viable for LB (Sorry, TfE) to do complete the trams while remaining in public ownership.
Posted 9 years ago # -
Except the private company could raise the fares to a level which would otherwise be politically unacceptable.
That's the reason I'm glad they are currently not private.
Posted 9 years ago # -
Why not sell the company on the proviso that an incoming private sector operator builds the tram extension?
Will that be anything like the proviso that big developers in the city centre would pay the contributions to cover a lot of the cost of the trams yet somehow the council ends up borrowing itself to the hilt and burdening the public finances with huge long-term debts at unfavourable rates?
Posted 9 years ago # -
Completely OT
Posted 9 years ago # -
What does this mean for the proposed Leith Walk improvements?
Posted 9 years ago # -
The Leith Programme continues and becomes in future stages formal enabling works for the tram line.
Posted 9 years ago # -
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Unite deputy Scottish secretary Mary Alexander said: “Our members are clear that Lothian Buses’ profits should not be plundered to pay for the trams but this report has set alarm bells ringing and there is real anger in the depots.
“If enacted, these proposals would effectively signal the cut and gut of investment and jobs at Lothian Buses and our members fear this would also leave the operator more vulnerable to private sector advances in future.”
She said it also seemed “totally inappropriate” to spend so much money – the latest estimate is £162m – on extending the trams when the council was seeking 2000 redundancies to make £141m worth of savings.
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Posted 9 years ago # -
As the 91% shareholder, Edinburgh Council traditionally got the lions share of the dividends paid out by Lothian Buses, typically £1-3m per year. The council also funds Lothian Buses to the tune of £1-2m per year to cover the running costs of bus services deemed otherwise economically unviable (other bus operators get a look in on some of these services too). For years then, the council has been "plundering" the profits of Lothian Buses, while the same time as subsidising to a similar (if slightly lower) amount.
What has changed is that the Council transferred the 91% shareholding of LB to Transport for Edinburgh, which also holds the 100% shareholding of Edinburgh Trams. 91% of Lothian Buses dividend will now be paid instead to Transport for Edinburgh (owned by the council, and with councillors on its board, e.g. Lesley). The current budget assumes that TfE will pay a ~£3.5m dividend to the council, including extra moneys from advertising on the tram.
The council has kept aside a £5m pot from previous years dividends of Lothian Buses. This is no longer Lothian Buses' money, it is the council's money.
What Lothian Buses is being asked (told?) to do is provide up to £20m extra dividends for a 3 year period, or ~£7m per year. This would be a substantial part of its current profit levels (£10-11m p.a.), but would leave the company profitable. As the dominant shareholder, and being in receipt of great increased Dividends, I'm sure the council would be happy for the company to be run this way for a few years and not insist on a "gutting" to cover the costs. A dividend is paid out of profits or reserves, not by liquidating the assets (well... in theory).
To add some context, if LB added 6 pence to the cost of each journey, per year, they would cover the costs of this additional dividend.
I find it a very odd position to take that public transport profits shouldn't be re-invested in... public transport. Or should they be ringfenced only for investment in bus-based public transport?
Posted 9 years ago # -
"Or should they be ringfenced only for investment in bus-based public transport?"
Don't think that's the point.
The buses makes money, the trams don't. Cross subsidies is fine (and the case of CEC paying for unprofitable services circular!)
The issue with the tram line extension is that it certainly won't make money any time soon, so less money for CEC to spend on subsidising bus routes or paying for general services - and (presumably) less money for new buses.
Two key questions -
1) how much extra revenue has the tram added (and how much is consequentially not spent on bus journeys). There is also the question (1a) of how much CEC is paying for Edinburgh pensioners to take trams - money doesn't come back from SG.
2) how much extra the longer tram will generate. Longer journeys don't add cash only new ones and not if they were previously done by bus.
I assume the answer to 2 is in the redacted part of the business case. The answer to 1/a appears to be more closely guarded.
Posted 9 years ago # -
chdot... do you think that buses only could meet emission targets for city?
Electric hybrid buses eg are very heavy which means more street wear. City is most bussed in Europe I reckon but might have to change to improve air quality. (Discuss)I thought that there is a risk that CEC could have to pay out fines on streets run over EU pollution limits. These could wipe out income from buses.
Logically the tram to Leith should take more buses off streets as current route is duplicated by other modes.
Cost per km in Germany is £20 million. Here it is double even with street having been partially 'prepped'.Of course a German council could borrow at much lower rates I believe.
Posted 9 years ago # -
@LaidBack
chdot... do you think that buses only could meet emission targets for city?
I'd be curious to know what % of Edinburgh's vehicle emissions are from buses.
Posted 9 years ago # -
100% of those they have direct control over.
Posted 9 years ago # -
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The project – taking the trams from York Place through Leith to Newhaven – would be part-financed by securing a £20m “extraordinary dividend” from Lothian Buses. But fears have been raised about possible reduced investment, job cuts and fare rises.
The council is to now to ask Lothian Buses what impact the dividend proposal would have.
Labour council leader Andrew Burns told yesterday’s meeting he was “acutely aware” of the damage done to the city’s reputation by the previous problems with the tram project.
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Posted 9 years ago # -
Logically the tram to Leith should take more buses off streets as current route is duplicated by other modes.
Well, it might actually take the first buses off the street if it's extended to Newhaven, AFAIK the current half-route hasn't taken a single bus off Princes St, the Airlink service still runs as does the Ocean Terminal - Gyle alongside the tramroute service 22.
The buses makes money, the trams don't. Cross subsidies is fine
Lothian Buses capital investment costs are largely new buses though, are they not? They don't pay to build new roads, new junctions and they don't have to directly pay for 100% (or any %?) of the maintenance of the roads they run on. You could argue that LB, or any bus operator, is heavily subsidised by being given so much "free" infrastructure to run on.
The tram is in the unfortunate position of requiring very large up-front capital investment in the routes (at least the tram vehicles themselves have already been bought) before it can even begin to generate revenue.
Lothian Buses invests very heavily in its fleet, it's new, and it's well maintained. A new diesel double-decker costs about £200,000, a hybrid c. £300,000 (and costs for these are part subsidised by Scottish Government grants). Say they buy 10 less hybrid buses a year for 3 years, that's the scale of the tram investment required. Lothian Buses has a fleet size of about 650; 30 buses is not even 5% of the fleet. Perhaps they can suck up 3 years of extra dividend payments by reducing investment in the fleet in the short term? After all, in theory the tram should allow the fleet size to be reduced in the medium term and goodness knows we could do with a few less buses on Leith Walk, Princes St. etc.
All this talk of "gutting" the operator to my ears and mind is just hyperbolic scaremongering driven by an anti-tram sentiment.
Posted 9 years ago # -
They should've put up the bus fares, then letting the dust settle before announcing any extraordinary dividend.
Bad PR.
Posted 9 years ago # -
Cost per km in Germany is £20 million. Here it is double even with street having been partially 'prepped'.
This is why it's so important that the trams replace bus services, ideally in totality. Part of the enormous cost of Edinburgh trams is because the track is hugely overbuilt, compared with continental systems, because of the weight and intensity of heavy motor traffic over those routes. Light rail? More like heavy rail.
Posted 9 years ago # -
"and they don't have to directly pay for 100% (or any %?) of the maintenance of the roads they run on"
Pretty sure LB 'gave' CEC £1m for tarmac waves. (Don't know how it was spent...)
But who pays what for the use of roads is a whole other issue!!
"All this talk of "gutting" the operator to my ears and mind is just hyperbolic scaremongering driven by an anti-tram sentiment."
I'm sure there's some truth in that but CEC doesn't help itself by hiding aspects of its projections behind "commercial confidentiality".
It's easy to assume they are 'hiding bad news' - well this is CEC/tram.
More importantly they are hiding the 'reasons for optimism' that pro-tram people would happily highlight.
Posted 9 years ago # -
Arellcat - This is why it's so important that the trams replace bus services, ideally in totality. Part of the enormous cost of Edinburgh trams is because the track is hugely overbuilt, compared with continental systems, because of the weight and intensity of heavy motor traffic over those routes.
Good point. Basically if bus company had to rebuild all streets with concrete underneath then the bus service in Edinburgh might not be viable. In city it's quite normal for buses to dominate. Of course they could get one of these Glasgow bus lanes to make some extra money. One in Glasgow earned over £1million in fines recently. That's one hard working bit of tarmac!
One other factor apart from road surface is that buses themselves don't last that long. LB like to boast that their fleet is most up to date. One reason might be that older buses shake themselves to bits in potholes caused by ... err... buses.Trams on the other hand can last quite long (decades). With TfE's vast collection of trams I expect that they might end up having the oldest tram fleet in UK. Imagine how good that would be... (!?)
Posted 9 years ago # -
Yup. pretty sure a few of the trams on the Manc network are part of the original fleet from '94-ish. Certainly looked like one of them wending its way along market Street in an episode of Cracker I watched the other night.
Posted 9 years ago # -
All of the old Manchester trams are now off the network and they have a standard Bombardier fleet, of vehicles like the early Croydon ones.
Arellcat notes that in UK we build the most expensive tram systems in Europe typically 10 times the cost but for Edinburgh... and you don't find many profitable tram systems where the trams can be photographed travelling through green fields with not a house or commercial building in sight.
Costs are saved by making as much of the network on a reserved wayleave, and minimising embedded rail sections. This is generally achieved by one thing the Edinburgh has got right, putting the trams down the middle of the road.
Track alignments when trams run on street are often compromised to maximise space for queues and traffic lanes....
Posted 9 years ago # -
More tramlines here -
http://www.edinburghnews.scotsman.com/news/five-lost-edinburgh-shops-you-may-remember-1-3951496
Posted 9 years ago # -
Different budget/funding mechanism and all that, but makes it harder for CEC to spend money on anything that might cost money for interest payments or running costs...
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Services cut as Edinburgh seeks £70m saving
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http://www.citycyclingedinburgh.info/bbpress/topic.php?id=15782
Posted 9 years ago # -
@chdot, I thought Binns was the original, as in Binns Clock so there you go. The drooling EEN commentariot get all nostalgic under that article. No actual crazed lunatic remarks until the very bottom of the page.
Nice mention of st cuthberts co-op on bread st (now the point hotel) but I do not remember the vacuum tubes for the cash. Just finally finding the canteen and marvelling at a plate of tomato soup for 17p
Less fondly what every woman wants on south bridge, which was known as WATYs in Edinburgh and a place to pick up fleas in glasgow
Posted 9 years ago # -
"I thought Binns was the original"
Ditto
"and a place to pick up fleas in glasgow"
Is that a euphemism?
Posted 9 years ago # -
No, if you tried on clothes in WATYs in Glasgow you could pick up fleas it was alleged. 'Twas a bit rough
Posted 9 years ago # -
Ah, "alleged".
Posted 9 years ago #
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