Metro budget expected to take further hit in pay and maintenance costs relating to new fleet of trains

Managers at the Tyne and Wear transport service have been hoping the £500 million contract to upgrade its vehicles would lead to savings thanks to improved reliability and increased fare revenue.

But they now face the prospect of a budget gap worth almost £9 million by 2022/23 due to factors including union demands for increased driver pay and higher maintenance charges.

“In the short term, we will see an increase in costs associated with the new maintainer for maintaining the old [Metro] cars,” said John Fenwick, Nexus’s director of finance and resources.

“We’ve provided a specific reserve [for that] that was created back in 2016 and that will cover the initial costs associated with the old Metro cars.

“And in the longer term, any additional costs that we foresee in terms of the new fleet and the maintenance of the new fleet, they will be offset by energy savings, so that’s that’s covered.

“However, there is a significant issue that remains unresolved in relation to drivers’ pay and that’s currently subject to negotiations with the recognised trade unions.”

Mr Fenwick was speaking at yesterday’s (Wednesday, October 23) meeting of the North East Joint Transport Committee.

A report for the panel showed Nexus, which operates the Metro, had seen its cash shortfall for 2019/20 jump by almost 500 per cent, from about £700,000 to £4.1 million.

This predicted the gap to rise to £7.3 million by 2022/23, but taking into account potential issues with the new fleet it is feared this could increase further to £8.8 million.

It added unions were seeking higher salaries due to the introduction of a ‘more technologically advanced vehicle’.

Spanish firm CAF, Swiss manufacturer Stadler and Japanese Hitachi, which operates a factory in Newton Aycliffe, County Durham, are in contention to secure the contract to supply the new Metro fleet.

Earlier this year it was claimed Hitachi was out of the running, but Nexus has insisted its procurement process is still ongoing and a final decision will be announced in the new year.