A new look for Midland Metro trams and an ‘excellent’ case for Government funding are to be presented to local councillors.

A report to next week’s meeting (see footnote) sets out how expanding the tram network on-street through Birmingham city centre and from Wednesbury to Dudley and Brierley Hill would provide at least a 150 per cent return on the investment by Government, local councils and businesses.

The latest figures provide some welcome comfort for public transport bosses in the West Midlands, following problems encountered by Liverpool, Leeds and other cities in securing Government funding for light rail projects.

Even allowing for cost increases through inflation over the 12 year life of the project and design upgrades, the Midland Metro expansion is expected to show a benefit-cost ratio of between 1.5 and 2.0 when the business case is submitted to the Department for Transport early next year, councillors are told.

“That means the West Midlands would benefit by considerably more for every £1 invested,” says Cllr Gary Clarke, chairman of the policy-setting West Midlands Passenger Transport Authority.  “And what is particularly excellent news for us is that, when you add in developer and local contributions, the Government would be getting a minimum double return on its investment: £1.50 of benefit for every 75p it invests.”

“With those sort of figures, it becomes pretty difficult to argue that Midland Metro expansion does not represent good value for money,” he adds.

The remaining 25p in the pound, which the Government requires to be found from local contributions, has already been earmarked according to the scheme’s promoter Centro.  The lion’s share will be funded by the developers of major sites that will be served by the 14.2 km (9 miles) routes.  The Leaders of West Midlands city and borough councils have agreed for the remaining balance to be financed from prudential borrowing.

A report to next week’s meeting of the Passenger Transport Authority outlines steps taken in the West Midlands to keep project costs under tight control.  They include bringing forward advance works to minimise risk and splitting the contracts between designing, building and operating the system.  This revised format has already led to positive approaches from major construction companies who might tender for the scheme.

At the same time, councillors are being asked to approve the replacement of existing Midland Metro trams to provide a new, higher-capacity fleet for the expanded network. Bigger trams are already needed as the current vehicles running into Birmingham Snow Hill are struggling to cope with rush-hour demand.  Calculations show that replacing all the trams would save money when compared against waiting for the mid-life refurbishment of the existing vehicles due in 2010.

Both the Birmingham city centre and Black Country routes have cleared public inquiries and have been given the green light by the Government.  The Secretary of State approved provisional funding for the extensions, which totalled £212m at the time of the public inquiries.  This has now increased to £281m, with construction inflation likely to take the final bill to around £370m by the time the first trams are running in 2011.

“There is no major construction scheme in the UK that does not increase in price year on year,” comments Centro director general Rob Donald.  “The business case we submit early next year will clearly show how the benefits far outweigh the cost of construction and that we are confident this will satisfy Government criteria.”

“Midland Metro is an important part of the integrated public transport system contained in the West Midlands Local Transport Plan and a key to the continued economic growth of the region,” he says.

Centro says its new procurement approach has already received a warm welcome from Whitehall officials.  They confirmed that the West Midlands is in line with the views of Transport Secretary Alistair Darling, who said there was a need to “look urgently at how light rail could be made affordable, including the best approach for procurement”.

Councillors are reminded in the report that the West Midlands still has to draw on the £1bn for transport projects promised by Alistair Darling in 2003 and the prospect of new funding coming to the region through the Government’s Transport Innovation Fund.

Footnote - Monday 5 December.
The report mentioned above was approved by the meeting of the PTA