Covid-19 impact on transport budget will lead to reduced funding for buses and higher bills for councils without Government support, transport leaders warn

Concerned transport leaders are set to consider a transport budget that will see cuts to public transport funding in Tyne and Wear and an increase in costs to Tyne and Wear councils, because of the impact of Covid-19 on public transport usage.

The North East Joint Transport Committee (JTC) previously heard that unless the Government reverses its decision to end Covid-19 funding for public transport in March there will be a major shortfall in Nexus’s budget for next financial year, with cuts to bus funding among the measures proposed to close the gap. 

Despite Metro being one of the fastest-recovering rail systems in the country, demonstrating its importance to the local economy, patronage will not have returned to pre-pandemic levels by the time Government funding is withdrawn. The spread of the Omicron variant and Government advice on working from home has set back Metro’s recovery, as it has for public transport across the country. Nexus therefore forecasts an estimated shortfall in its budget of £21.2 million for the next financial year.

Nexus proposals to close the gap in its budget include:

  • A reduction of £7.5m in the budget used to fund Concessionary bus travel reimbursement in Tyne and Wear. This budget is used to pay bus companies in line with the number of people they carry using free bus passes – these numbers have fallen because of the impact of Covid-19 and the proposed reduction reflects that. The money earned from the number of concessionary journeys they carry represents a major source of income for local bus operators and its reduction will increase pressure on their finances which have already been stretched by the pandemic.
  • Efficiency savings and additional stretched income targets for Nexus of £4m.
  • Use of £5.6m of Nexus’ reserves.

These plans are in addition to a proposed 6.75% year on year increase to the levy paid by Tyne and Wear local authorities (amounting to £4.1m, taking the levy to £65.225m) to avoid further cuts to expenditure. Financial savings through cuts to Metro services are not achievable in the short term, although they remain a longer-term option.

The proposed budget and levy for public passenger transport activity in County Durham is £15.583m for 2022/23, Northumberland is £6.357m for 2022/23.

Cllr Martin Gannon, Chair of the North East Joint Transport Committee, said: “Covid-19 has decimated the economics of public transport and we urgently need the Government’s help to get through it. Without that help there will be devastating cuts to public transport services – the complete opposite of what we want to achieve.

“I spoke to the Government Minister responsible for local transport in December and although she acknowledged the issue, she was not able to commit at that point to the continuation of Covid-19 funding beyond March. The time has now arrived when we must set the budget for next year and in the continued absence of that commitment we now have no option but to plan for both an increase in the amount local authorities pay for public transport, and cuts to bus funding which will undoubtedly have an impact on services.

“Our region has great ambition, as outlined in our Bus Service Improvement Plan, to grow the use of sustainable transport and help our bus services to recover, but we cannot do that without sustained funding to plug the significant gaps caused by the pandemic.

“Local authorities are already facing major pressures on over-stretched budgets, but sadly we have no choice but to propose an increase the transport levy in order to avoid the cuts to public transport being even bigger. 

“Our public transport network is still dealing with the impact of Covid-19 – both the knock-on effect of reduced passengers and revenue but also the impact the current Omicron outbreak is having on day-to-day operations. We are far from being out of the woods, and we will continue to make the case for Government to help us in these uncertain times. The Government need to provide longer term support, reducing over time, so public transport is there to support a greener economic recovery.”

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