Sheffield to Rotherham tram-train is five times over budget, says NAO
The Guardian, 4 July 2017
An experimental tram-train linking Sheffield and Rotherham has cost more than five times the agreed budget and is running almost three years late, with the [UK] government forced to compensate tram operator Stagecoach for the delays with a £2.5m payment.
A damning report from the National Audit Office found that the scheme is now slated to cost at least £75.1m, instead of the £15m budget initially agreed, after Network Rail’s costs soared.
The Department for Transport twice considered scrapping the scheme. Most recently, in 2016, ministers overruled the advice of civil servants to pull the plug as costs spiralled.
A further £2.5m has been paid by the government in compensation to Stagecoach, which has the contract to run the service. News of the payment comes as Stagecoach is seeking more money from the DfT for delayed line upgrades by Network Rail affecting its troubled Virgin Trains East Coast service.
The Sheffield-Rotherham scheme was approved in May 2012 as Network Rail agreed to make efficiencies to cut its £18.7m estimate to £15m, with tram-trains due to run by the end of 2015.
The pilot project aimed to test the viability of tram-trains in the UK, with similar schemes mooted in cities such as Manchester and Cardiff.
By November 2014, Network Rail admitted that costs had rocketed to £44.9m, but the DfT concluded that cancelling the project would cause “reputational damage” and agreed to provide cash funding as Network Rail was no longer able to borrow to cover budget overruns.
In June 2016, Network Rail reported that up to £25m more would be needed as work was more complex than anticipated, and existing infrastructure more dilapidated than expected. The finding had echoes of Network Rail’s disastrous budget estimates on the Great Western main line electrification project, which have undershot the true cost by billions of pounds.
In July 2016, the DfT’s most senior civil servant recommended stopping further work on the tram-train, saving the department £20m. However, the rail minister, Paul Maynard, overruled him. Network Rail agreed to pay for the rest of the project, cancelling other works planned around the country to pay for it.
Critics said the report cast doubt on pledges to deliver bigger schemes such as HS2. The Liberal Democrat leader, Tim Farron, said: “This project has been a total disaster from start to finish. The fact they can’t keep control on a flagship scheme like this shows what a total sham the Northern Powerhouse really is. My worry is that if we cannot deliver schemes like this on budget what hope do we have for HS2?”
A DfT spokesperson said: “There will be uncertainty when developing new innovation and technology, and we are disappointed that the cost of work increased and the scheme was delayed. But this ground-breaking project is now on track and Network Rail has learned important lessons that will help the rollout of similar schemes that will bring all of these benefits to more passengers in the future.”
Network Rail said it was a “complex and challenging” project but would deliver real benefits for thousands of daily commuters. Rob McIntosh, the route managing director, said it had incorporated more engineering work than originally planned. He added: “Significant changes have been made to the management of the project, with a number of construction milestones achieved, new expertise has been added to the project team and a new, more robust schedule of works created.”
The tram-train service is now due to begin in summer 2018.