Tram debacle sees compensation paid for delayed £75m scheme
An investigation into delays and massively inflated costs on the Sheffield to Rotherham tram-train scheme has led to operator Stagecoach receiving £2.5m in compensation from the Government.
The scheme was supposed to be the first transport service in the UK to use both the street tramway and national rail network, modifying the existing national rail infrastructure and tram network and purchasing vehicles capable of operating on both networks. Stagecoach Supertram holds the concession to operate the tram network.
The Department for Transport part-funded the operation with Network Rail overseeing the work, but now Stagecoach has claimed “prolongation costs” and loss of revenue for the two-and-a-half year delay,. Costs for the scheme have spiralled to £75.1m, five times over budget.
The tram-train conversion scheme was initially approved in May 2012, when it was supposed to cost £15m and be completed by December 2015. A budget of £15m was agreed, despite initial estimated costs coming in at £18.7m, as Network Rail thought additional efficiency savings were possible.
Further complications arose in July 2012, the Department announced the national rail line would be electrified after 2019 and asked Network Rail to undertake additional works to adapt the tram-train service.
By December 2016, the cost of these works had quadrupled to £75.1m and Network Rail’s project is now expected to be completed in May 2018.
The investigation by the National Audit Office found that the project had fallen into DfT’s ‘low’ value-for-money category, and that it had conceded that the wider economic benefits of the project were “uncertain”.
It was referred back to DfT twice to assess whether it should continue, but the department deared reputational damamge and “significant stakeholder and media criticism” and it was allowed to continue.
The NAO said that at the start of the project, Network Rail did not have a full understanding of the costs, and revised its forecasts as it identified the technical challenges involved in testing the technology.
It now expects to complete the works in May 2018, allowing the tram-train service to begin in summer 2018. As at June 2017, Network Rail had achieved a number of significant construction milestones, including installing new track, the power supply and a tram-train platform at Rotherham Parkgate.
Stagecoach recently announced it had taken an £84m hit over its operations on the East Coast Main Line which it shares with Virgin, and is attempting to renegotiate its contract with the Government.
