Plans to bring the North East’s bus network under public control will cost more than £100 million extra after auditors uncovered a major error in the financial modelling behind the scheme.
An independent review found that mayor Kim McGuinness’ flagship bus franchising proposals had failed to include staffing costs worth £104.9 million over a 30-year period.
The discrepancy was identified by chartered accountants Grant Thornton, which carried out an assurance review of the plans before a public consultation was launched last week.
Despite the error, auditors concluded that the overall scheme remains affordable.
The mayor’s proposal would see private bus operators lose control over fares, routes and timetables, with the network instead run through a franchising system similar to Greater Manchester’s Bee Network.
Transport bosses believe the reforms would result in bus fares being 22 per cent cheaper after a decade and generate an additional 15.7 million passenger journeys each year by 2059 compared with the current system.
Updated figures now show that £113 million of public investment would be required during the first decade of franchising, rising to £437.8 million over 30 years.
The additional funding is linked to major commitments made by the mayor, including limiting fare increases to inflation and guaranteeing that the size of the bus network will not be reduced for at least 10 years.
A spokesperson for the North East Combined Authority said the additional staffing costs represented only a small part of the overall financial model and insisted the plans remained viable.
They said: “The Independent Assurance Report agrees the total investment needed for franchising remains affordable and within the available funding envelope of the Integrated Settlement, alongside other potential funding options identified in the analysis.
“This includes all additional staffing costs required to deliver franchising, which on their own represent a small fraction of the overall cost of the whole bus service.”
Overall, operating the region’s bus network is expected to cost more than £12 billion over the next 30 years, while generating approximately £11.7 billion in income during the same period. The findings have prompted calls for further scrutiny.
Newcastle Liberal Democrat cllr Greg Stone said he had sought clarification over the modelling error and wanted reassurance that the plans were being properly examined.
He said: “I have sought clarification from the monitoring officer over an apparent miscalculation of the staffing costs associated with the Mayor’s plans for the administration of the franchised bus network identified by an independent assessment of the Mayor’s plans.”
“These plans are significant and it will be important to ensure projected ridership and financial arrangements are suitably scrutinised.”
At a meeting of the mayoral authority’s Audit and Standards Committee this week, chairman Dave Willis suggested a dedicated workshop should be held later this year to allow members to scrutinise the franchising plans in greater detail.
If approved, the first phase of the proposed Angel Network buses would begin operating in September 2029, with further phases following over the next two years.
Mayor Kim McGuinness has repeatedly argued that the current bus system is failing passengers and has criticised operators for delivering services that “do not deliver to the people of the region” while receiving more than £120 million a year in public subsidies.
