Trams are sometimes advocated
as the solution to London's traffic problems. The following articles were
published on the first major new tram system in London - the Croydon Tramlink.
Extension, article published in
At a meeting held at Bromley council on the 31st August, staff from
Transport for London (TfL) presented their proposals for an extension of the
Croydon Tramlink to Crystal Palace. The presentation was given to Councillor
Colin Smith, Environment Portfolio Holder and other councillors with members of
the public also present. Luke Albanese of TfL gave a glowing report on the
existing tram system, with 20% of riders claimed to be former car users (Editor:
that does not seem a very high number to me and I know that most of the rest are
former bus users from past reports). He suggested that it would be
difficult to justify extending the system to Beckenham on economic grounds, and
that bearing in mind the recent scrutiny of tram schemes, which have tended to
be over budget on costs, and under budget on passenger revenue, he considered
that the extension to Crystal Palace alone was a scheme that TfL could justify.
But when a member of the public asked him how much it would cost, he refused to
It also transpired during his presentation that there were going to be a number
of contentious issues on the route of the tram. Some of it would undoubtedly
be alongside a rail track, ie. on existing Network Rail land, but the rest would
involve running on part of Anerley Road, or on part of Crystal Palace Park. The
former is always problematic on roads with heavy traffic, and the latter is not
going to please any lovers of the park. In addition a number of properties would
need to be compulsorarily purchased and demolished.
The proposal is quite modest in some ways, but even so would not be due for
completion until 2013.
TfL and the Freedom of Information Act
At the end of the meeting a member of the public asked if he could have a copy
of the presentation, but it was suggested that this would only be possible in
"due course". After the meeting your editor rang TfL to ask for one but that
was also refused, so I submitted a request under the Freedom of Information Act
(FOI) - it seems astonishing to me that TfL staff can give a public presentation
and then refuse to release the document they have just presented. The file
could of course have been emailed within a matter of seconds as it was readily
available. They seem to have no understanding of the concept of open government
or the principles of the FOI Act. Such behaviour has of course already offended
some of the likely opposition to this scheme, such as the Crystal Palace
Campaign who are not going to be happy with any infringement of the park.
Note that the FOI Act says that information requested should be disclosed
“promptly”, but TfL deliberately delayed releasing the presentation document
although they did finally supply it three weeks later. This decision to ignore
the specific wording of the Act was even backed up by a letter from Commissioner
Peter Hendy. This seems to be typical of the general attitude of TfL to public
consultation and involvement. If they think you may not agree with their
proposals, they seem to obstruct you in every way they can – even down to
ignoring the wording of an Act of Parliament.
And what was the reason for the delay in sending the presentation document?
Simply that TfL apparently wanted to manage the release of the information to a
selected group of people first before it became widely available. Is that a
valid reason for delay under the FOI Act? No.
More Information on the Tramlink Extension
As more information was obtained as a result of the FOI request, it can now be
stated that the capital cost of the proposed extension will be approximately £60
million, with operating costs likely to run at about £1 million per year. TfL
expects to be able to justify those figures by demonstrating that the benefits
of the scheme including “non-financial” and “economic regeneration” benefits
will exceed those costs, but the details are still being worked on. If anyone
requires more information on the route options, then they should contact the
The Economics of Tramlink
The last accounts for Tramtrack Croydon Ltd, who are the Tramlink operator, were
filed for the period ending March 2005. They show a loss of £5.9 million pounds
for the year, on revenue of £19 million. The loss was primarily caused as a
result of the payment of interest of £8.3 million on the outstanding loans of
£120 million used to finance construction (the total cost was about £200 million
but central Government funded the difference).
The revenue figure includes income from TfL to cover fares for “freedom passes”
and other concessionary fares that taxpayers effectively subsidise. In the
2005/2006 financial year, TfL made payments of £6.7 million in total to TfL to
cover such “fares compensation” and for “outstanding construction grant” plus
“competing buses compensation” – yes the last is a special payment agreed with
Tramlink to cover unexpected competition from buses apparently.
The owners of Tramtrack Croydon Ltd are Amey Tramlink Ltd, Sir Robert McAlpine
(Holdings) Ltd, Royal Bank Project Investments Ltd, Bombardier Prorail Ltd,
CentreWest Ltd and 3i Group Ltd – these organisations have also provided the
above mentioned loans.
(Editors Comments: Would you invest in this business? I certainly wouldn’t.
In fact it is technically insolvent with negative shareholders equity of £21.6
million, and how it is ever likely to turn a profit is not at all clear. In
reality the only thing that keeps it afloat is subsidies from TfL. The
justification for maintaining this light rail system is apparently that people
might use their cars instead if it was not there, but in reality most of them
would simply use local buses, as they did before – and the latter would be
enormously cheaper to operate.
Whether it is economically sensible to extend the system I will leave judgement
on until a later date when more information has been published, but at first
glance it does not look promising. To recoup the capital cost requires a very
substantial income to be generated which appears quite unlikely to be achieved).
Croydon Tramlink - Is it
a Success? Article published in
interesting recent report in the Financial Times was headlined “Croydon Trams
Facing Cash Crisis”. This was based on the fact that in the financial statements
recently filed at Companies House, it was stated that “At the time of
preparation of these accounts, the company did not have sufficient funds to
continue trading beyond March 25th 2003”.
Restructuring or further bank funds were clearly necessary.
was built under a PFI scheme and is operated by a joint venture between Amey and
an offshore company. Amey was reported as saying that there was a “shortfall in
revenue” (presumably actual as against budget). The operating company, Tramtrack
Croydon, in fact made a loss of £9.5million on a turnover of £13.4million in the
year to March 2002. That’s ignoring any operating subsidies they received
(probably similar to those of buses). That’s equivalent to a loss of 55p on
every passenger trip.
presumably that calculation ignores the capital funding provided by the
government, which if they had paid an economic interest rate on it would have
increased the annual losses by about £9million so the real loss per trip is
probably more like £1.
oddly enough, the Croydon Tramlink is often mentioned as an example of how
successful a light rail or tram system can be. Ken Livingstone is pushing ahead
with proposals for trams in other areas such as West London (where it would run
down a main road and occupy normal road space for part of the way, much to the
annoyance of local residents and businesses). Trams are seen as quieter and less
polluting than either buses or railways, but the costs are rarely mentioned.
of the impact of the Croydon Tramlink scheme was published last year.
following is an interesting table from the report, based on a survey of Tramlink
Mode previously used
words, the vast majority of previous users were bus passengers, and it even
persuaded some walkers to stop doing so. Of course the above figures don’t tell
you how many current car users stopped using public transport! There are always
going to be some people moving from one mode to another. Although some car users
were clearly persuaded to change to public transport, other information in the
report tells you that car journeys only fell by 4% which is barely perceptible
and could be due to random annual variations.
users of the trams were generally very satisfied, as they might well be bearing
in mind the massive cost subsidy on their fares. But they also thought the trams
were more comfortable and more reliable than buses.
Incidentally there have been 2 fatalities so far associated with these trams so
it would be wrong to assume that they are safer than other transport modes such
Croydon Tramlink operates mainly on old rail lines or new private rights of way,
but part of it also operates on the street and it is seen to contribute to
congestion in South Croydon (tram breakdowns can also cause major traffic
difficulties, and it certainly created many problems during the period of
What did this wonderful system cost? Well here’s a statement
was made to the House of Commons by the Secretary of State: “The total
capital cost was estimated to be £200m of which £125m was provided by Central
Government in recognition of the benefit to other road users and the easing of
(Editors Comments: Effectively 125 million pounds of taxpayers money was spent
to provide minor improvements to the comfort of former bus passengers, and we
will probably have to bale out the business also in due course. There has been
negligible reduction in car use which was the original justification for
government funding, and no obvious benefit to anyone else (nowhere is any
information supplied indicating that some people are travelling who were not
doing so before).
Are the running costs of light rail systems likely to be better than buses? From
other surveys the answer is definitely no, and as you can see this scheme
already has major operating losses. Surely the money invested in the Tramlink
would have been much better spent on improving the existing road, rail and bus
networks. If buses were subsidised to the same level as trams are in this
scheme, and had the same level of capital investment, then they would be a
paragon of comfort and reliability. Buses are also a lot more flexible in
routing and timing to cope with changes in demand. Anyone who advocates the
widespread re-establishment of trams simply has not taken notice of the facts).
Postscript in 2010: The Tramlink Extension to Crystal Palace was subsequently
cancelled as was the plan for a Cross River Tram. In 2008, Transport for London
(TfL) took over ownership of Tramlink - effectively rescuing it from financial
collapse (although needless to say they put a more positive spin on it). This
probably marks the end of major tram projects in London for the foreseeable
future, and simply reflects the growing awareness of how uneconomic they proved
to be, even if their customers liked them.
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