| News Special: GOVERNMENT REJECT MERSEYTRAM Posted Sunday 19 June 2005 |
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There was a major shock in Liverpool this week when the government refused to give funding to Mersetram after they claimed costs had spiralled too high. There is now a battle to try and get Merseytram back on track... The future of light rail in the UK has again been thrown into major doubt with the announcement on Monday (13 June) by Alistair Darling, Secretary of State for Transport, that he could not support Merseytram by the award of funding. In a written statement to Parliament Mr Darling said: “I appreciate that Merseytravel has made every effort to keep costs under control. However, it is clear that costs remain significantly higher than those that I approved, and that this scheme is an expensive way of delivering these transport benefits for Merseyside. Whilst I support tram schemes, I cannot do so at any cost. In the light of all the information I have therefore concluded that I cannot approve the proposal for Line 1.” He went on to say: “The £170 million that I committed to Merseytram Line 1 remains available if the scheme can be delivered at that cost. If it cannot, a great deal can still be done for Merseyside through other transport improvements… The funding will be there for the right proposals.” It was looking so positive… This bad news for Liverpool was met with total shock with transport bosses in the city with the local newspapers reporting in the week leading up to the announcement that a positive decision was expected from government shortly. I fact, if there had been a BRITISH TRAMS ONLINE update last weekend it would have had a positive headline saying that a positive decision was imminent. The Liverpool Echo was even reporting that full work on construction of Line One would commence within 3 weeks – planned to start of 1 July so the scheme could be finished by 2008. The Liverpool City Council executive member for regeneration, Councillor Peter Millea was quoted as saying: “We are minded to grant the certificate even though the government has not yet confirmed its funding, because we want to be as supportive of Merseytram as possible. We have a duty to council taxpayers to ensure that additional construction and running costs do not fall on them and we also want to make sure that we have a high-quality design in keeping with a Capital of Culture and World Heritage city. However, this is all dependent on the Department for Transport confirming the funding.” However, as the week progressed and no announcement came from the government the optimism started to evaporate with sources at Merseytravel saying on the morning of the announcement they had heard nothing either way. Shock and Disappointment in the Decision… The major shock of the announcement was the claim from Mr Darling that £170 million was the maximum amount the government were willing to give the scheme. This is despite them saying in the National Audit Commission report of 2004 that they were giving £177 million towards Line One of Merseytram. The capping of the amount that Whitehall are prepared to give means that not even inflation rises can be taken into consideration and when it takes so long for new light rail schemes to be approved because of the complex procedures in place what this means for future lines remains to be seen. Councillor Mark Dowd, Chairman of Merseytravel, said: “The amount we've asked for is £204m and nothing more. Costs have gone up 20% due to inflation, not 40%. If you can build a scheme for X amount two years ago, surely they understood it would be subject to inflation.” He was leading a delegation of transport bosses and Merseyside MPs down to London to meet with Mr Darling and Deputy Prime Minister John Prescott to try and find out what they can do to get Merseytram back on track on Tuesday (14 June). The Chief Executive of Merseytravel, Neil Scales, also spoke of shock at the decision – of which he was only officially informed of at 2pm on Monday 13 June, just one and a half hours before it was announced in Parliament. He said: “We're trying to understand why the Government has gone from lots of indications of support, including giving us £4.2m of advance money, to yesterday's position. They asked us to be bold and innovative and we came up with the leasing deal. They knew about it a year ago but only came out against it yesterday. The letter from the department is so negative we wonder if they have just gone off trams.” Further shock came out of the M-Pact consortium who had been employed to design, construct and then operate Merseytram Line One. A source from the consortium told the Daily Post: “They are at a loss to under-stand how the Secretary of State has reached his total or his conclusions. As far as they're concerned the funding has been, and still is, within the £170m affordability limit set by central government. When that was granted by the DfT it was always understood that this was at 2003 prices and, as is usual in projects of this size, was subject to inflation by an agreed index based on Government figures. This has been confirmed by the Department on many occasions." Leader of the City Council, Councillor Mike Storey said the Council were firmly behind the campaign to get Merseytram back on track. He said: “The issues we had [the numerous arguments between the council and Merseytravel] were right and we found a solution to them and in the end we were very supportive of Merseytravel. I think it's a time to get behind the project, and to carry hearts and minds in terms of the political people involved. It's hugely important for the infrastructure of Merseyside and the resurgence of Liverpool city centre." Local MPs are also angry and shocked at the decision to not give any funding to Merseytram. George Howarth (Labour, Knowsley North and Sefton East) said: “I'm bitterly disappointed, but the deal is already done in the Department for Transport. The only way to save the scheme is to get a political head of steam from higher up. The situation is serious, but I have not given up on it. There is still genuine hope that we can find a way out." Louise Ellman (Labour, Riverside) claimed that the rising costs were not the reason behind the scheme saying: “I wonder if it this decision is more about the Government going cold on trams, because people in the department don't think they are exciting anymore? But this scheme was worked out carefully over a long period of time and I don't believe alternatives to trams will measure up." Peter Kilfoyle (Labour, Walton) added: “This is an issue of grave concern. This decision has left the city of Liverpool in limbo while it waits to see if the tram scheme is able to go ahead or not. I intend to speak to senior Government ministers, including the Prime Minister and the transport minister, to see why this decision was made - until then I cannot say if it is a betrayal or unfair. The money is still on the table, but what use is it to us? Myself and my colleagues will do everything in our power to get them to re-think, but I don't know if we will be successful." Other MPs from the local area (all Labour) also joined in with their disappointment over the decision although some (oddly ministers in the government) said it was not surprising when you saw how much costs have gone up in the two years since the initial award of £170 million. Local Newspapers Support Merseytram… Just like in Manchester when the plug was pulled on Metrolink’s “Big Bang” last year the local newspapers have thrown their weight of support behind the scheme. The Acting Editor of the Daily Post, Rob Irvine, has sent a letter to Ton Blair, asking him to reconsider the decision. In it he says: “To try to cap the Government's contribution at the £170m level originally calculated almost three years ago is cloud cuckoo economics. It is simple common sense. Everything goes up in price, and particularly large scale capital projects like this one.” A full copy of this letter can be found here. Darling explains his reasons… After the initial dust had settled, Alistair Darling was interviewed by the Liverpool Daily Post explaining why he had pulled the plug. He said: “We said the amount they would get is £170m. They accepted that. And the last time I was in Liverpool, Merseytravel said 'Don't worry, it will come in at £170m'. Tram moves a lot of people very efficiently, but it isn't the only solution. Merseytravel have to ask themselves whether this is the best way to spend money, given the rising costs. I was taken aback that what was being asked for had gone up by 40% which, you can see immediately, is a substantial increase. Costs have got to be kept under control. We cannot get ourselves into the position where we can accept a 40% increase in the costs.” He also claimed that the government had not gone cold on light rail schemes saying that they had supported “something like 10 schemes in the last 20 years.” Transport Bosses and Politicians look to rescue… By the middle of the week, Councillor Mark Dowd said he was far more upbeat about the whole saga after a meeting with Merseyside MPs at the House of Commons. He said: “We took the view that just going in to see the minister to demand more money was putting all of our eggs in one basket. If that strategy failed then the scheme would fail. Instead we want to explore ways of meeting the shortfall. The tram project is crucial to the regeneration of Kirkby and Liverpool and there are a number of regeneration budgets that could be utilised. We want the support of Mr Blair and Mr Prescott, as well as full support from everyone on Merseyside. This is the time when we have to stick together." He added: “We need to resolve this very quickly. If we all pull together we may well succeed. I am prepared to raid the Devil's tin to ensure our tram project goes ahead. It is so important for Merseyside." Rescue Package to go to Government next week Following these meetings at the Commons it was announced that a rescue package would be ready to be presented to either Tony Blair or John Prescott next week. George Howarth MP (Labour, Knowsley North an Sefton East) said: “I am hopeful that by Monday next week we will have a viable case to present to the government which will bridge the gap between the £170m public funding still available and the amount that is now needed." Late in the week the rescue package was given a major boost when the city council offered to give land required for Merseytram for free – making a saving of £3 million. Councillor Peter Millea said: “The council has often been depicted as the villain of this piece even though we have supported Mersey-tram all along. Today we have authorised our leader Cllr Mike Storey to offer land needed for the tram to Merseytravel free of charge. It is valued at more than £3m, but we will do anything possible to make the tram work. We hope it will make a contribution to filling the funding gap, although if Merseytram does not go ahead, we would want the land returned to the council." The Facts of what Merseytram Needs? Cost of Line One = £325 million Amount wanted from Government = £204 million Amount already promised by Government = £170 million (plus inflation? – the big dispute!) Gap between what is wanted and what is offered = £34 million Merseytravel have been trying to seek clarification on the government’s figures especially the refusal to allow Merseytravel to take out a leaseback on the building stock and claim tax relief on £30m which it wanted to be paid upfront. A Merseytravel spokesman said: “We're doing exactly what the Docklands Light Railway (DLR) did with the same bank, the Royal Bank of Scotland. The government accepted DLR were allowed to do this but not us, and we are seeking clarification on this as well." Sources: icLiverpool, BBC News Online & Merseytravel |