Supertram running rent-free for years

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STAGECOACH has paid no rent for Supertram since taking over in 1997 and may not do so over the lifetime of its 27-year contract - despite the network now making a profit.

The Star can also reveal the transport giant, which says the formerly loss-making operation is now “financially sound”, has declined to contribute towards the cost of four extra trams, subject of a current application for Government funding.

And no funds are being set aside to pay for the current fleet’s eventual replacement, which will cost up to £125m.

Meanwhile, South Yorkshire Passenger Transport Executive will finish paying outstanding debts for the existing vehicles only next year.

Trams and infrastructure remain in the ownership of South Yorkshire Passenger Transport Executive but are leased rent-free to Stagecoach, which is required to fund only their maintenance and upkeep. The company is not responsible under the contract for funding any expansion.

Sheffield Council leader Coun Paul Scriven called for the contract to be renegotiated so the company is made to pay rent now the trams are profitable.

An SYPTE spokesman said: “Under the agreement made when Stagecoach took over, the company has responsibility for maintaining trams and infrastructure. It is not obliged to make payments to SYPTE unless profits reach a certain level. The deal was made because Supertram was making a loss when Stagecoach took over, and that continued for the first few years of its contract, which the company absorbed.

“Stagecoach is not making enough profit to trigger any payments back to the PTE. It will not have to make payments for the duration of the contract unless network profits exceed the agreed level.”

The spokesman said Stagecoach is not contributing towards the £20m required to build four new trams - and will pay only for their running and upkeep.

Stagecoach’s £1.15m deal to take over the network in 1997 raised eyebrows because it was a fraction of the £240m spent building the lines and buying the trams - but the company said it was guaranteeing the future of a network which had been making a heavy loss, previously borne by the taxpayer.

In 1998 the company said it would “probably” consider providing funding for extra trams and new lines in the future, based on a prediction the network would carry 12 million passengers each year.

It now carries 15 million, but no investment in extra trams and lines has materialised - although Stagecoach spent several million pounds refurbishing the current fleet.

Stagecoach has made cumulative profits of £975,000 so far, and is set to make a profit in the remaining years.

A Stagecoach Supertram spokesman said: “SYPTE carried out a full procurement process in advance of concluding a contract with Stagecoach in 1997 to operate the Supertram system under a 27-year concession.

“Under our management, the network has been transformed from a heavily loss-making operation and drain on taxpayers to a highly-efficient, financially sound business.

“We have achieved this by offering people in Sheffield good value fares and integrating the tram with bus services in the city. Under the contractual agreement signed in 1997, SYPTE has sole responsibility for funding any investment in new rolling stock.

“That position remains the case and at no point has there been any change to that agreement or a commitment by Stagecoach to fund or part-fund new trams. As with any commercial contract, we are happy to have discussions around enhancements to services where there is a proven business case.”