Background Information
'Caveat'
Tyne & Wear
Manchester
Sheffield
Midlands Metro
Croydon
Blackpool
Nottingham
BACKGROUND INFORMATION
Section 56 of the Transport Act 1968
In practice, the award of a 'Section 56' grant is dependent on proof that this will be a 'one-off' payment and no subsequent operating subsidy will be required. The 'user benefits' are to be recovered via the fare box.
The 'non-user benefits' are critical in determining whether a 'Section 56' grant will be awarded. The assumption is that the value of these benefits will offset the cost of the grant; the Government is not giving something for nothing, it is buying environmental and other benefits for an area.
The onus of proof of non-user benefits is on
the applicant. There should be no difficulty whatever in putting
up an excellent case for Bath, which is a World Heritage Site.
Link to Current
Government thinking on tramways
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TYNE & WEAR METRO
Grant under 'Section 56'
No further details
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MANCHESTER METROLINK
Pre-1984 Manchester Passenger Transport Executive set up Rail Study group (presumably financed by Local Government) and initiated the process for applying for County Council Block & Supplementary Grants which, at that time, were the way of financing major schemes. This process was superseded by the grant route via Section 56 of the Transport Act 1968.
|
Nov 1984 |
First Parliamentary Bill deposited | - opposed by 3 property owners and Transport 2000 |
|
Jly 1985 |
Application for Grant under 'Section 56' | |
|
Oct 1985 |
Transport Act changed the 'Section 56' rules | - application annulled |
| Greater Manchester Council abolished | ||
| New Passenger transport Executive formed | ||
|
Nov 1985 |
Second Parliamentary Bill deposited | |
|
1986 |
Both Bills get go-ahead | |
|
Jly 1987 |
Second 'Section 56' application submitted | |
|
Jan 1988 |
'Section 56' grant approved by Ministry of Transport subject to transfer of some risk to private sector. | |
|
Feb 1988 |
Both Bills get Royal Assent and become Acts of Parliament | |
|
June 1990 |
Final contracts signed |
| FINANCIAL SPLIT | |
| PTE borrowing Authorised by Dep of Transport and underwritten by Govt. Repayments covered by adjustment to Standard Spending Assment and Revenue Support Grant, so no local tax increases. |
£ 70m |
| Section 56 Grant | £ 50m |
| Additional contributions
for environmental enhancement Cemtral Manchester Development Corporation and European Regional Development Fund |
£ 10m |
|
TOTAL |
£130m |
SHEFFIELD SUPERTRAM
Actual amount not known
| Approx PERCENTAGE SPLIT | |
| PTE borrowing authorised by HMG | 63% |
| Cash grant - 'Section 56' grant | 30% |
| Cash grant - European | 4% |
| Contribution from developers | 3% |
Repayment of PTE loans from:
Cash from operating profits
Eventual sale of operating company
Govt Revenue Support Grant
Government objectives:
Capture of 'added value' through fare box
Transfer of risk to private sector
Focus of private skills onto project control
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MIDLANDS METRO
| Early 1980s | West Midlands Rapid transit Study |
| Feb 1988 | Birmingham to Wolverhampton route confirmed |
| Nov 1988 | Bill deposited in Parlaiment |
| 1989 | Act of Parliament passed |
| 1990 | 'Centro' (W. Midlands Passenger
Transport Authority) applied for 'Section 56' grant |
| 1995 | Contract to design, build and
operate the system awarded to Altram, a consortium of Ansaldo Trasporti, and John Laing. Later joined by Travel West Midlands, (trading as Travel Midland Metro) as the operator. |
| Nov 1995 | Construction started |
| FINANCIAL SPLIT | |
| 'Section 56' grant | £ 40m |
| Debt | £ 40m |
| European RDF grant | £ 31m |
| Passenger Transport Authority | £ 17.1m |
| Altram | £ 11.4m |
| Local Authorities + Black Country Dev Corporation |
£ 4m |
| Centro | £ 1m |
|
TOTAL |
£144.5m |
(European money has been made available for 'extras' like Wednesbury P+R but this may have already been included in the RDF figure.)
New extensions are now being planned and the financial structure has altered since Line 1 was built.
So far, £35m has been given by 'Chelsfield',
the owners of the Merryhills Shopping Centre, to ensure that the
Brierly Hill extension serves their premises. A further £10m
has been raised for the Birmingham City Centre extension by a
levvy on various developers at the time of granting Planning Permission.
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CROYDON TRAMLINK
London Transport (LT) awarded a 99 year concession under the Private Finance Initiative to Tramtrack Croydon Limited (TCL) which is owned by:
Amey PLC
Sir Robert McAlpine
Bombardier ProRail
CentreWest Limited (a subsidiary of First Group)
Tram Operations Limited (operator)
Royal Bank of Scotland
3i PLC.
Approximate financial split:
| Approx FINANCIAL SPLIT | |
| Private sector finance | £100m |
| 'Section 56' Grant | £ 75m |
| LT's costs, including public utility diversions | £ 25m |
|
TOTAL |
£200m |
Private finance includes bank debt and shareholder's
equity and leasing of track and trams.
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BLACKPOOL
Tracks appear to be owned by Blackpool Corporation and the operating rights leased to the tram company. Blackpool owes it's survival to having ploughed sufficient operating profits back into the infrastructure to avoid the problem of everything wearing out at once.
Currently Blackpool is bidding for a £230m
Government grant to finance a major updating and expansion programme.
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|
CAVEAT This information above is based on earlier schemes but 'Section 56' funding may no longer be available now that it has been superseded by PFI. whereby the promoter has to provide a large amount of the funding and government money is paid in stages over the life of the contract. The Nottingham scheme (below) exemplifies this. Currently government approval is needed before
starting the Transport & Works Act procedure and to get that
approval necessitates an involved process to show that you cannot
achieve your aims |
NOTTINGHAM
The first line will be financed by the private sector consortium 'Arrow'.
Once the system is operating successfully,
they will receive payments to a total value of £167m under
the Government's Private Finance Initiative, over a 27 year concession
period.
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For up-to-date information on current projects, see the websites of:
Nottingham, South Hampshire, Bristol