Metro facing 'unsustainable budget crisis'

The Tyne and Wear Metro is facing a multimillion-pound budget crisis, latest figures have shown.

Operator Nexus said the cash shortfall for the current year has jumped from £700,000 to £4.1m.

It has been blamed on problems including a slump in fare revenue, inflation and "catastrophic overhead line failures".

Bosses have warned services may have to be cut if no solution to its "unsustainable" finances can be found.

The figures were provided in a report for the North East Joint Transport Committee, the Local Democracy Reporting Service said.

It showed revenue raised from Metro fares dropped by £1.2m and an overhead line failure in May cost £500,000.

A pay rise for staff was £300,000 higher than expected, contract inflation costs were £700,000, and £1.1m was spent developing bids for the government's Transforming Cities Fund.

Other financial pressures included falls in the levy paid to the system by local council, which has been cut eight times since 2010.

Councillor Martin Gannon, the committee's chair and leader of Gateshead Council, warned that it was "unsustainable" for Nexus to rely on diminishing cash reserves and called for a "very high level political discussion" between regional leaders and the Department for Transport to solve the crisis.

John Fenwick, Nexus' director of finance and resources, said surpluses generated in recent years had been funnelled into £16m of available reserves to "accommodate some of the pressures we now see".

The organisation was also negotiating with the government for an increase in grant funding.

But he added: "Reserves are sufficient to protect services in what remains of this year and next year - there is probably a question of how sustainable that is thereafter."

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