£45m accidental windfall for Merseytravel


The Department for Transport (DfT) has admitted overpaying Merseytravel by more than £45m in grants over 10 years.

Central government provides an annual Special Rail Grant to The Merseyside Passenger Transport Executive (Merseytravel) in support of local transport in the Liverpool City Region.

According to the DfT’s Annual Report and Accounts 2020–21, in 2019, the department’s internal assurance processes identified 'overstated RPI-inflationary assumptions in the algorithm used to calculate the Department’s grant subsidy towards regulatory Track Access Charges' in the period from 2009 to 2019.

A Merseyrail train, operated on behalf of Merseytravel

Track access charges are the money paid to Network Rail for use of its network.

This error resulted in commitments above the minimum baseline amount being set out in grant letters provided and paid to Merseytravel for the period, with total cumulative payments to Merseytravel of an estimated £45,460,000 ‘above the minimum baseline amount as per the Department’s stated methodology’.

A DfT spokesperson said: 'We are satisfied that these grant payments were properly used by Merseytravel under the terms of its agreement.'

Merseytravel is classified to the Local Government sector by the Office for National Statistics. The DfT said that as it is satisfied that the payments were properly used by Merseytravel it does not consider these payments are a loss within the definition of Managing Public Money.

Amounts paid since 2019 have been corrected prospectively for the issue identified.

A Merseytravel spokesperson said: 'We are aware of the DfT's Annual Reports and Accounts and note the DfT's conclusion that the grant payments were properly used by Merseytravel under the terms of its agreement.'

Hat tip Alistair Baldwin (@ae_baldwin): If you are not following him on Twitter, you are missing out.

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