Metro chiefs face £4.1million financial black hole as fare slump, inflation and 'catastrophic' line failures take their toll

Metro operator Nexus has seen its budget deficit jump by almost 500% this year.
Metro Metro

According to transport bosses, the cash shortfall for 2019/20 has grown from about £700,000 to £4.1million due to problems including a slump in fare revenue, inflation and ‘catastrophic overhead line failures’.

But despite this regional leaders are unlikely to cough up any more money, with a freeze on the ‘levy’ Tyne and Wear councils pay the service expected to be agreed later this year.

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“It is obvious that the existing Nexus budget is unsustainable and it’s been maintained by reserves which are diminishing,” said Martin Gannon, chairman of the North East Joint Transport Committee (JTC).

“We need to have a very high level political discussion about how we’re going to get the Metro and Nexus on to a more sustainable financial future.

“We need to have a discussion about how we get Nexus and the transport system in the region into a sustainable form, because presently the resources just simply aren’t there to be able to do it.”

Coun Gannon, who is also leader of Gateshead Council, was speaking at today’s meeting of the JTC.

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According to a report for the panel, Nexus has seen revenue raised from Metro fares drop by £1.2million, while overhead line failures in May and crew overtime have hit bosses to the tune of £300,000 and £500,000, respectively, among other financial pressures.

Over the past nine years the ‘levy’ from Tyne and Wear councils has been cut eight times and is expected to see £59 million paid to Nexus next year – about a fifth less than in 2010.

“Revenues are generally stagnating and inflationary pressures are growing,” said John Fenwick, Nexus’s director of finance and resources.

He added: “The delivery of efficiency savings has stood us in good stead because we’ve generated surpluses in the last few years and we’ve managed to invest some of that in transport infrastructure.

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“We’ve also put about a third of the surpluses that we’ve generated into reserves and all the reserves are there clearly to accommodate some of the pressures that we now see.

“But the financial position since the levy was set this January however has deteriorated.”