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.

Croydon Tramlink Extension, article published in October 2006)

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 say. 

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 editor.  

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 April 2003. 

An 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. 

Tramlink 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. 

But 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. 

Now 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. 

A study of the impact of the Croydon Tramlink scheme was published last year. The following is an interesting table from the report, based on a survey of Tramlink passengers:   

In other 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. 

The 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 as buses. 

The 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 construction).

What did this wonderful system cost? Well here’s a statement that 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 congestion.”

(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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