'Reputational damage' as late £75m tram-train scheme passes red light


Rail minister Paul Maynard rejected the advice of civil servants in continuing to fund the experimental Sheffield to Rotherham tram-train scheme, which is now set to cost five times its original budget.

The National Audit Office (NAO) has published a damning report into the scheme, which is intended to become the first transport service in the UK to use both the street tramway and national rail network. The report focuses specifically on the works to modify the national rail network, which were part-funded by the Department for Transport (DfT) and managed by Network Rail.


The report discloses that when ministers approved the scheme in 2012, Network Rail estimated the project would cost £18.7m but expected to make efficiency savings that would keep it within its £15m budget. By December 2016, the cost had risen to £75.1m.

The scheme, which was initially expected to be finished by December 2015, is now expected to be completed next May.

The NAO also discloses that in July 2016, when costs were forecast to reach £70m, the DfT’s permanent secretary, Philip Rutnam, recommended stopping further work on the project, which was supported by the DfT’s Rail Investment Board. This would release at least £20m from the DfT budget, although the majority of the £25m already spent by Network Rail would be lost.

However, Mr Maynard rejected the recommendation and asked Network Rail to meet the funding shortfall. ‘This decision was based on the need for the lessons learned from the completed pilot to be available for the development of further schemes.’

The report notes that, in his role as the DfT’s ‘Accounting Officer’, Mr Rutnam did not seek a ministerial direction – the process by which ministers can be required to confirm that they are rejecting the advice of officials.

It also discloses that in November 2014, when Network Rail had established that costs had increased to £44.9m – three times the original budget – Mr Rutnam had ‘recognised that cancelling the project would cause reputational damage’ and the DfT agreed to keep funding the project.

The report acknowledges that the scheme was a pilot project aimed to test the viability of operating tram-trains in the UK and that the Government’s approval was based on the wider strategic benefits of rolling out schemes to other cities.

It notes that the DfT and Network Rail ‘have learned lessons from the pilot but it is too early to determine whether the project will realise the wider strategic benefits’.

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.'


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