Press Releases
07 July 2008
Transport Innovation Fund - The Financial Package
Greater Manchester’s Transport Innovation Fund (TIF) package is the single largest transport investment ever undertaken outside London. If it is approved, following consultation, up to £3 billion will be invested into Greater Manchester’s transport network.Investment Overview
The TIF package involves an investment programme of up to £3bn. This comprises Government grants of £1.5bn, £1.2bn of local funding supported by future revenue from a weekday peak time only congestion charge and £0.1bn of third party contributions. The DfT has also confirmed that it will fund extra railway rolling stock for the city-region supporting in excess of 7,000 extra passengers at peak times. Further investment will be made by the private sector bus operators.
Borrowings of £1.2bn will be funded by the revenue generated by the congestion charge and the improved, additional public transport.
Expenditure Detail
The investment will be split across 30 different public transport schemes across the 10 districts of Greater Manchester. At least 80% of the transport improvements will be in operation before the introduction of a congestion charge, in the summer of 2013 at the earliest.
Improvements set to be completed ahead of the summer of 2013 include the Metrolink extensions to Ashton under Lyne, East Didsbury, Manchester Airport, Oldham town centre and Rochdale town centre.
Extra trains will have been introduced at peak times and stations will have been upgraded, the Leigh – Salford - Manchester Rapid Busway will be complete: extra buses will be in operation, bus routes to the town and city centres will be in place; and a fleet of yellow school buses will be up and running resulting in a radically transformed bus network.
Other improvements in place include more park and ride spaces for drivers wishing to access public transport, new state-of-the-art transport interchanges in Altrincham, Bolton, Stockport and Wigan and a smart electronic travel card that can be used on all forms of transport.
The projects which are not scheduled to be completed by summer 2013 will be the new Metrolink line through Trafford Park, the Metrolink second city centre crossing and two regional interchange improvements in the city centre.
Trafford Park’s is recognised as a strong economic hub and the transport improvements needed here are of vital importance. Substantial improvements will be made to the bus network servicing Trafford Park at the earliest stages of the TIF delivery programme. The Metrolink tramline however, can not be completed before 2016. Therefore, a discount has been proposed (50% off the charge for people who live and commute in the area) until the optimum package is in place.
Cost Summary
The TIF capital investment programme funding, can be broken down into specific areas:
Metrolink £1,182m
Bus £368m
Congestion charge £318m
Rail refurbishments £149m
Other schemes (interchanges etc) £526m
In addition to the above capital expenditure the financial plans include an allowance for £220m of supporting non-capital expenditure. The Rail refurbishment capital figure excludes the expenditure on extra carriages that DfT has agreed to fund directly. The bus capital figure excludes any investment from private sector bus operators to deliver extra bus services.
The congestion charge is expected to raise £174m per annum by 2015/2016 when the scheme is introduced in the summer of 2013. The cost per transaction has been forecast at 30p and annual operating costs are expected to be £31m - resulting in a net revenue of £143m. The Greater Manchester proposal uses a different technology to London’s congestion charging scheme therefore, it is much more efficient and a greater proportion of revenue is available for investment in public transport.
Package Assumptions
All the funding is underpinned by a series of prudent assumptions to reduce financial risk and ensure there are sufficient contingencies to support the borrowing requirement should outcomes not be as forecast.
The financial projections are based upon a cautious view of the numbers of vehicles crossing the rings. The financial model assumes a 35% reduction in vehicles crossing the rings, yet transport modelling expects this drop to be 20-30%. Seven percent less charging revenue has been assumed in the financial model than is predicted by the transport model. (about £11m of net revenue by 2016).
The financial projections have been prepared on a prudent basis. They include:
• An allowance of around £600m contingency in case the cost of the capital items rises above the anticipated cost – this is included in the £2.7bn and a significant proportion of any unspent contingency will be available locally for additional investment;
• An interest rate assumption of 6% per annum for borrowing. This compares to the current fixed rate of 4.86% (available at 1st July 2008 for 30 year borrowings from the Public Works Loan Board);
• Prudent economic growth forecasts. The financial model that supports the TIF bid has been developed on the basis of TEMPRO forecasts of economic growth, in line with the standard DfT growth assumptions that are used for transport appraisal purposes. But TEMPRO has tended to underestimate the level of job growth in recent years. Going forward TEMPRO forecasts employment growth of 0.5% per year through to 2021. AGMA’s economic model has growth at 1% per year. It is estimated that, if local forecasts continue to be a more accurate predictor of employment growth than TEMPRO, this would generate an additional £9m per annum of net revenue by 2016 compared to what has been assumed in the financial models;
• A general annual revenue contingency which will be worth some £25m by 2016.
More than two years of detailed financial planning has been involved in the development of this ambitious investment programme. The cost and revenue forecasts which the TIF package is based on have been extensively reviewed by both the Department for Transport (DfT) and financial advisors from Greater Manchester Passenger Transport Executive (GMPTE) to ensure they pass the Association of Greater Manchester Authorities’ (AGMA) tests*.
There are three detailed papers on why we have proposed this package, what is proposed in detail and how it is proposed to be delivered. These will be available to download from the website on Monday morning (9am) at www.gmfuturetransport.com.
ENDS
Notes to editors.
*AGMA Tests:
• There would be no charge before transport systems – Metrolink, rail and bus - are significantly improved.
• Any charging would only apply where there are problems with congestion.
• The measures need to support the city region’s agreed economic and social plans
• The measures must be acceptable both to the public and the business community.
For further information about this release please contact:
Sara Tomkins
T: 0161 817 4200
M: 07950 215 779
E: sara.tomkins@connectpoint.co.uk
Dan McMullan
T: 0161 817 4200
M: 07799 667 416
E: dan.mcmullan@connectpoint.co.uk
