Agenda item

Financial Performance Report

To consider the report of Merseytravel.



            Sarah Johnston, Assistant Director Finance, presented a report which provided the Members of the Transport Committee with details of Merseytravel’s financial performance for the period April 2021 through to 31 January 2022. The report also provided projections for the outturn position to the end of the financial year.


            The budget setting for 2021/22 had probably been one of the most challenging years due to Covid and it had been set against the backdrop of considerable uncertainty and Members would recall as part of the budget setting report that this risk had been flagged in the report. It could be seen that the budget had been fairly prudent, and it was projected that at the end of the year there would be a small outturn. That had been in part to do with being slightly overly prudent in certain areas around income.


            Table 1 provided a breakdown of expenditure at service level and there was a more granular breakdown of that included at Appendix 1. The impact of the projected outturn position was that the use of Merseytravel reserves would be lower than projected and that was also the same for the application of reserves coming through from the Combined Authority which was due to the fact that rolling stock and tunnels would spend slightly less than anticipated.


            There was a similar position in respect of capital which again had been set against a very challenging backdrop. It was noted in Table 2 that it was projected that around 85% of the capital budget for the year would be spent which was positive news given the position we had been in. Again more detailed information had been included in Appendix 2.


            Taking account of the projected revenue and capital position that meant that less Merseytravel reserves had been used and therefore there was more there at projected year end. There had been a significant amount of risk included within the budget but moving towards the end of the year some of that had started to diminish as there had been more certainty around the outturn position. She highlighted the fact that notwithstanding that there was still a significant level of financial risk that the organisation would face going forward and that had been outlined in respect of the budget for the next financial year at paragraph 3.8.


            Councillor Steve Foulkes stated that the report was clear and transparent and different in some respects as it had tried to move beyond the date that it had been set. Paragraph 3.8 indicated the trends of where the risks were. He asked if there was any further information in respect of the Beatles Story. He suggested that financial reports should come further up the agenda so all your decision making was set as you went through the agenda based on the current financial situation. Financial matters tended to come at the end of the agenda in Wirral and also in the Combined Authority but if the budget situation was clear at the start of the agenda then any following aspirations would fall in line further down the agenda. This might be something which could be taken forward in the new year.


            Councillor Foulkes felt that this was a good report and we had planned very much for the worse situation which had not happened and therefore the position was better than had been anticipated but we still faced a tough challenge. He referred to the fact that Wirral had faced a very significant budget deficit which required lots of difficult decisions to be made. He had recently sat in a meeting with two mainstream parties who had refused to set a legal budget. They had actually voted not to set a budget in tough financial times and if a budget was not set then jobs would not be safe. Councillor Liam Robinson added that Wirral was not the only authority who had not set a budget.


            Gary Evans, Assistant Director for Customer Delivery responded that in terms of the Beatles Story, the trends were positive but figures were certainly nowhere near pre-pandemic levels. The challenge around the Beatles Story was that it relied upon overseas visitors and for the past two years travel restrictions had been in place and confidence had been lost. There had been an increase in local or UK visitor numbers but that had not translated into the total which would usually have been seen from overseas. Visitor numbers had been around 50% and over the February half term period that had reached up to 80%. Bookings were slightly up but not to the levels seen pre-pandemic but definitely a positive trend. The same applied to Mersey Ferries in some ways. This year would see a return to some of the cruises - Manchester Ship Canal and Liverpool Bay cruises which had been suspended over the last two years. Occupancy levels on the Manchester Ship Canal cruise was 80% plus and Liverpool Bay cruises was already 60% plus and this was very early in the season which was unprecedented. In respect of bus and rail the trend was up but the demand was different so it was about learning what that new demand and trend was like before the financial issues we faced could be understood. There were challenges and the report had highlighted those but there was nothing that was a concern.


            The Chair, Councillor Liam Robinson thanked Sarah Johnson and her team for the report as it covered a lot of what had been very detailed and tough work over the last 12 months of the pandemic. The report was very user friendly as it was straight forward for any member of the public to pick up and it gave a true snapshot which was vital for the authority and the public that it served. The report set out the future success of the organisation, and the fact that its budget was inextricably linked to the success of the public transport network and in that respect it would be necessary to ensure that the focus was on the recovery post Covid of how the public transport network would be prioritised as the first choice for people to get around the region. Obviously the brand new trains which would be introduced later in the year would be a key part of that. All the bus reforms that the Combined Authority and the Mayor had been championing were also a key part of that as well. But it was only possible to do those things if the right budget settlement from Government was received because the budget had to set the tone for what it was possible to achieve. It was therefore vital that there were no funding reductions for the rail network and actually in the BSIP submission made to government the authority had been asked to put in place a very ambitious bid to government. An indication of what that settlement would be was still awaited which would need to be delivered upon as soon as possible to make sure that public transport in the long term would be the first choice for local people to get around. That was the most important part of the long term financial success as a region.


            RESOLVED - That the contents of the report be noted.


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