An independent audit has uncovered a £104.9 million error in the financial modelling of North East mayor Kim McGuinness's bus franchising plans, but the scheme has been deemed affordable. The discrepancy, identified by chartered accountants Grant Thornton, excluded staffing costs over a 30-year period from the assessment of the proposed public control of bus services.
Error Details and Impact
The audit, presented to the North East mayoral authority, revealed that the original financial model did not properly account for multi-million pound staffing bills. Despite this, Grant Thornton concluded that the additional costs do not alter the overall affordability of the plan. The total investment required for the first decade is now estimated at £113 million, rising to £437.8 million over 30 years, due to commitments such as capping fare increases at inflation and maintaining the bus network size for at least 10 years.
Benefits of Franchising
Transport bosses argue that reversing the deregulation of the 1980s would lead to significant improvements. According to their projections, bus fares would be 22% cheaper after 10 years, and an additional 15.7 million journeys would be made annually by 2059 compared to the current private operator model. The overall cost of running the region's buses over 30 years is expected to exceed £12 billion, with income of £11.7 billion.
Official Response
A spokesperson for the mayoral authority described the extra staffing costs as a “small fraction” of the overall budget, stating: “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.”
The mayor's office emphasized that the franchising model, similar to Greater Manchester's Bee Network, is “financially viable, provides better value for money and is the best option for the future of the region's bus network.”
Scrutiny and Next Steps
Newcastle Lib Dem councillor Greg Stone raised concerns about the error, seeking assurance that appropriate scrutiny had been applied. He told the Local Democracy Reporting Service: “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. I have had an initial indication of the circumstances and look forward to the opportunity for this to be further discussed at a forthcoming scrutiny meeting. 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, chair Dave Willis proposed a workshop later this year for detailed scrutiny of the franchising plans. If the mayor's proposal proceeds as planned, the first set of Angel Network buses would begin operating in September 2029, with further rollouts 12 and 24 months later. Mayor McGuinness has argued that the current state of the North East’s buses is “not viable” and criticized operators for running a service “that does not deliver to the people of the region,” while receiving over £120 million in annual public subsidies.
