‘Grave concerns’: Financial risk of £57m Mid Cornwall Metro

The £56.8m project was discussed at a meeting of the council’s economic growth and development overview and scrutiny committee, which heard that it would provide a “once in a lifetime” transport revolution for Cornwall.

The meeting heard today (Tuesday, November 21) that if the council rejected the Government’s £50m Levelling Up funding for the project, the money would be lost to elsewhere in the country and it would be unlikely to be offered to Cornwall again.

The joint venture between Cornwall Council, GWR and Network Rail would see improved rail links between Newquay and Falmouth, with hourly direct train services connecting Newquay, St Austell, Truro, Penryn and Falmouth.

Services from Par to Truro will increase from the current one train every half an hour to a train every 20 minutes. The committee heard the scheme would boost connectivity and the economy in all parts of Cornwall.

The proposal includes £33.64m for signalling upgrades, a passing loop on Goss Moor, an additional platform at Newquay, a footbridge at Par station with lifts, and level crossing closures at Trencreek and Chapel.

Digitalisation for tap-on, tap-off ticketing at 41 stations across Cornwall would cost £2.95m and there would be improvements in Newquay, Penryn, Falmouth, Bugle and Roche to the tune of £15.71m, including ‘healthy streets’, walking and cycling improvements and improved access to bus stops.

'Untapped demand'

Councillors were told the business model is based on “untapped demand” in the Newquay area, which hasn’t seen any rail improvements for years.

Phil Mason, the council’s strategic director for sustainable growth and development, outlined why the council believes the scheme is important for Cornwall. “For me this is about absolutely critical infrastructure that services Cornwall for the future.

"We constantly get criticised about housing developments without infrastructure and we constantly say we try and get the infrastructure in first. In that context, I see this as an absolutely crucial piece of investment in terms of the infrastructure and connectivity through Cornwall.”

He added that the Mid Cornwall Metro will ease travel across Cornwall in the future “as we know our towns and city will not be able to cope with more car journeys”.

Comes with risks

However, he did stress the scheme comes with risks, particularly around costs. The council has instigated a ‘risk pot’ for mitigations and contingencies to the tune of £11m. The Department for Transport (DfT) and HM Treasury approval for delivery of the £50m funding is conditional on securing operational support to cover the first three years of the new rail service.

The calculated scale of the deficit is up to £4.5m, which would pay for leasing trains and extra staffing, and would come out of the Government grant. After three years that cost would be covered by GWR.

Some of the match funding that the council would have put in – £2.7m – will now go towards revenue funding. The council will not know Network Rail’s construction costs until May 2024.

Mr Mason said: “If at that point when the scheme is costed it is beyond the scope of this project then we would be able to take a view not to continue. But money would have been spent by then and those budget costs would have to be repaid if Cabinet agrees not to go forward. We have to be frank about the level of risk especially considering the rise of costs in the construction industry.”

He said there was potential that school buses on routes covered by the Mid Cornwall Metro could be replaced by train travel on the new service, thus making savings to the council budget.

“We know that capital projects have risk and we know particularly over the last few years capital projects have seen significant cost increases. You’ve got to take the view that those risks are acceptable given the prize that we might get from it,” added Mr Mason.

If the scheme and its finances are approved, the hope is that rail ticketing digitalisation will be completed by the end of 2024, with rail works finished by spring 2025 and the Mid Cornwall Metro completed by the end of 2025.

One in a generation opportunity

Bogdan Lupu, of Network Rail, told the meeting: “We see this as a once in a lifetime or generation opportunity for Cornwall.” He said it would improve access to more jobs.

Matt Barnes, of GWR, added: “Mid Cornwall Metro is a once in a generation opportunity to put right the wrongs of the past. It’s very difficult to see when again we’d get the size of money that this funding provides to enhance the Newquay branch line and to put back what British Rail rationalised in 1987 when they took out the platforms at Newquay; they took out the passing loop at St Dennis, which we’re effectively putting back but further up at Goss Moor.”

Steve Double, MP for Newquay and St Austell, addressed the meeting via a link from Westminster: “This isn’t money that can go elsewhere in Cornwall – if we don’t secure it for this project this money is probably going to go elsewhere in the country.

“The major factor for me is improving the life opportunities for those communities along the route, particularly in Clay Country. Many of those communities are ones that lack many of the opportunities that people in the bigger towns enjoy, whether that’s education, training or work as well as the social benefits.

"Providing this connectivity will hugely open up opportunities for young people and impact everyone living in those communities.”

He stressed it would improve connectivity from Cornwall’s biggest port, Falmouth, to the airport at Newquay.

'Cornwall Metro'

Cllr Richard Williams-Pears, portfolio holder for transport, said: “I think 'Mid Cornwall Metro' is a misnomer – this is the Mid Cornwall section of the Cornwall Metro. It is absolutely key to delivering rail improvements across Cornwall both now and in the future.

"This will enhance the lives of the people of Cornwall by revolutionising how we can navigate across the region. It will serve as a catalyst for economic growth and serve as a greener alternative reducing carbon emissions and alleviating traffic congestion.”

While other councillors were cautiously optimistic about the plans, they were also concerned about the financial risks.

Concern over costs

Cllr Peter La Broy said: “I have grave concerns about the levels of risk that this council is being asked to assume. If you Google rail projects, they almost always overrun and when I look at this I see that we as a council have almost no direct control of the contractors. It makes me very, very nervous about what could happen going into the future.

“We could be making a decision that future councillors will be being held accountable for and looking back at the decisions made in this room today, so I want to make sure we think very carefully about this level of risk.”

Mr Lupu responded: “We totally understand the pressure that Cornwall Council is under. There are real mitigation actions in place. We have the same contractor from day one and we’re not concerned at this moment in time. Yes, it’s a capital project, yes prices could go up, but that’s why we have the mitigations in place.”

Cllr Le Broy asked what Cornwall’s Conservative MPs were doing to mitigate the risk.

Mr Double replied: “A great deal of work has gone on across all of the stakeholders. I’ve had numerous meetings with ministers. The reality is we’ve got the DfT to move as far as they’re going to move on this in terms of reducing the contribution from the council to the capital and the flexibility of how some of the funding is used, but there has been an awful lot of work going on behind the scenes to get us to this point.”

Cllr John Conway used the failed Saints Way project as an example of where council funding went wrong. He said: “We’ve got to make sure that if it’s going to go ahead it doesn’t end up costing the Cornish ratepayer more money than has already been agreed in the first place... because we haven’t got the money in the budget. I’m really in favour of rail improvements but we’ve got to have the caveat that it doesn’t overrun.”

Cllr Leigh Frost added: “We’re taking a lot of the risk and we haven’t got much of the responsibility, which I think is fairly dangerous. Holistically and in principle I’m all for rail improvements, but we’re all aware that local government is in dire straits.”

Risk worth taking

Other councillors said the risk was worth taking. Cllr Tamsyn Widdon stressed: “The other side of risk is opportunity. I’m not worried about the risk of the funding. I’m worried about being bold enough and that Cabinet will be too cautious.” Cllr Stephen Rushworth welcomed the project and said it would open up travel for people in North Cornwall too “so let’s just get on with it”.

Cllr Peter Perry added: “Despite the questions and concerns it does appear that we all agree that this is something that you can’t throw away. It’s an opportunity that may never come back.”

The economic scrutiny committee supported the project and recommended to Cabinet that it draws down the Levelling Up fund to start the Mid Cornwall Metro process. An amendment that the overall cost must not exceed the overall budget, and any savings must come from within the project, was voted down, but it was pointed out that such mitigations were part of the original recommendations.