No guarantee tram fares won't rise, say bosses

10:17am Wednesday 2nd July 2008

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The new bosses of Croydon's Tramlink service cannot guarantee fares will not rise after Transport for London (TfL) took over the running of the service.

Seven bosses at Tramtrack, the company that has run the town's tram service for the last 11 years, are to be made redundant following the takeover this week.

The publicly-funded TfL was forced to bail out the service with up to £4m a year to subsidise it, with costs predicted to rise.

TfL claimed it would negate this loss with "efficiency savings" using its own business plans without any immediate fare increases.

But it admitted it was powerless to prevent fare rises when the Mayor's office conducted its annual review of travel prices in the capital in January.

Transport bosses said there would be no job losses on the operational side of Tramlink, but seven out of the eight employees at Tramtrack had accepted a redundancy package.

A Transport for London spokesman said: "We will make significant financial savings through the acquisition of Tramtrack Croydon Limited.

"Tfl simply no longer has to pay the £4m per annum compensation - hence a saving for TfL and value for money for London's tax payers.

"We will also bring economies of scale to the tram operation which were not available to the previous owners. This will allow investment to be directed to increase the number of services, improve their reliability and refurbish the trams which will in turn attract more fare-paying customers to the service."

Transport watchdog London Travelwatch said it welcomed the news but said it raised questions over the original contract.

A spokeswoman added: "It shows the importance of contracts being beneficial for the passengers."

The £98m deal means TfL will retain all revenue generated by Tramlink. It has promised to honour all existing contracts and planned extensions.

London's Mayor Boris Johnson added: "This is marvellous news for tram fans and a fantastic deal for Londoners. It puts an end to the unbelievable scenario of millions of pounds of their taxes being used to pay Tramtrack to keep fares down."