South Yorkshire taxpayers to chip in £6m to cover Supertram losses

South Yorkshire councils will have to chip in to operate Supertram after it gets brought under public control from March this year.
Losses for Stagecoach's rail department, which runs the Sheffield Supertram, rose from £0.5 million to £1.5 million.Losses for Stagecoach's rail department, which runs the Sheffield Supertram, rose from £0.5 million to £1.5 million.
Losses for Stagecoach's rail department, which runs the Sheffield Supertram, rose from £0.5 million to £1.5 million.

The Supertram network will transfer to public ownership as an arm’s length wholly owned subsidiary of the South Yorkshire Mayoral Combined Authority (SYMCA) in March 2024.

The authority will be responsible for the system’s operations, management, and finances, with four routes running from Sheffield city centre to Middlewood, Malin Bridge, Meadowhall, Rotherham, Herdings Park and Halfway.

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The new business will be incorporated as South Yorkshire Future Trams Limited (SYFTL), known as South Yorkshire Supertram (Supertram).

A draft report published ahead of tomorrow’s (January 9) Mayoral Combined Authority Board stated that SYFT was expected to operate at a loss.

The report said the loss would be circa £6.3million in 2024/25 as SYFTL is budgeting to spend in the region of £23.6m while the projected income streams (such as ticket sales) was projected to be £17.3m.

As this wouldn’t be enough to cover the tram system’s day-to-day running costs, South Yorkshire councils will have to contribute via the South Yorkshire Transport Levy.

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SYMCA also said it would pay an operating subsidy to SYFTL which would allow the company to meet all its financial obligations.

The report said: “SYMCA will also meet any costs necessarily incurred by SYFTL to deliver the asset renewal programme. In its own medium-term financial plan, SYMCA has set aside sufficient resources (£5-7m per annum) from the South Yorkshire Transport Levy (paid by each of the four local authorities in proportion to their population) to cover the cost of the operating subsidy.”

The long-term goal, it was stated, is to decrease its (SYFTL) “dependence on the public purse”.

The report added Covid-19 and the restrictions followed had had a massive impact on patronage – there was a point in 2020 when demand for tram services fell to 20 per cent.

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This has now jumped back to 78 per cent in 2023 – compared with pre-Covid.

The report said: “Prior to 2020, several factors contributed to a decline in tram patronage.

“Service closures occurred during and after periods of engineering work which led to frustration among passengers. Ageing vehicles also contributed to more frequent failures and impacted reliability.

“Post-2020, the Covid-19 pandemic led to lockdowns and travel restrictions implemented by the government, causing demand for tram services to fall to 20 per cent of previous levels before slowly recovering to around 78 per cent in mid-2023.

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“Hybrid working since the pandemic has led to a decrease in footfall into the city centre and has also impacted demand on tram, bus, and rail services.

“With energy traction accounting for nearly 20 per cent of the core operating costs we will work with public sector suppliers to manage risk andreduce exposure to energy price fluctuations.

“Tram still remains the low carbon travel solution for the region and more will be done over the medium term to harness other natural energy solutions or traction ‘by-products’ to power our depot and infrastructure.”

The Supertram network has been run by Stagecoach since 1994.