A proposal to bail out Cardiff Bus, Cardiff’s council-owned and crisis-hit bus company, could cost council tax payers in the city up to £1.15 million a year for the next 15 years.
The Labour-run cabinet will be considering the need to provide a bailout to the beleaguered bus company which suffered significant trading losses in 2017-2018. Those losses triggered a review of the company’s governance arrangements following which it was accepted the council needed to appoint independent expertise to its board, departing from the previous practice of only appointing councillors to oversee the running of the transport company.
The report now going before the council’s cabinet makes clear an investment of funds is required following a review of the bus company’s pension scheme ‘to stave off an immediate risk to financial viability arising from the potential risk of winding up of the pension scheme’. It recommends a release of the funds allocated in February when the council’s budget was agreed. These amount to £7 million for the current financial year, with an indicative allocation having also been made for the following financial year of a further £6.6 million. The report notes this further sum could be included in the council’s budget proposals for 2021-2022.
Commenting on the proposed bailout, finance spokesperson for the council’s Liberal Democrat Group Councillor Rodney Berman said:
“Under Labour’s stewardship since 2012, Cardiff Bus has found itself in increasing financial difficulty which pre-dates the Covid-19 pandemic. Now it seems the only way forward is for Cardiff Council to agree a massive financial bailout to stop the bus company collapsing.
“By agreeing that the council should inject £7 million into the bus company this year, with a possible further £6.6 million next year, we see the extent to which council tax payers in Cardiff will effectively be picking up the tab for Labour’s incompetent running of the company.
“Whilst there may now be no alternative if we are to stop the company from going under, it has to be recognised that the money will have to be paid for through the council undertaking additional borrowing. I have ascertained from council officers that to cover the borrowing costs of the full £13.6 million, the council would have to pay around £1.15 million a year over a 15-year period until the borrowed sum is paid back.
“This is nothing short of scandalous. Yet again, we see that Labour has wasted our money and it’s the city’s council tax payers who will have to pay to sort the mess out.”