Walking Away from Funding Agreements
Funding thoughts – walking away from a contract/funding agreement
At first glance the article below, reproduced from Route One magazine, has little to do with VCFSE groups. Route One is an industry leading magazine for Bus and Coach Operators and the article relates to electric buses in Northern Scotland and South Wales.
“Two projects to introduce battery-electric buses have been terminated and the grant funding involved returned to the issuing body.
Orkney Islands Council (OIC) has withdrawn from the Scottish Ultra-Low Emission Bus Scheme (SULEBS). It was awarded £618,325 from the first SULEBS round towards five battery-electric buses and their associated infrastructure.
No reason has been disclosed for the change of heart, with OIC saying that “a live related tendering exercise” precludes it from stating why. It has not submitted a bid to the second round of SULEBS. Transport Scotland was notified in February that OIC did not wish to take up the grant. The money has been reallocated to the second round of SULEBS.
Additionally, Stagecoach South Wales will not take up the £2.84m it was awarded in 2019 through the Ultra-Low Emission Bus Scheme. The money was to go towards 16 battery-electric buses and their associated infrastructure at Caerphilly depot.
A Stagecoach spokesperson says that the decision was made in 2020 not to progress the work in Caerphilly (pictured). They add that the plans were reviewed “due to the ongoing impact of the pandemic and… funding uncertainty.”
The lessons that we can pull out from this article apply to all VCFSE groups in the North West and beyond. There are times when circumstances change and it is not sensible to continue with a plan. It may well cost more than it will generate (every pun intended). Here Stagecoach indicate that the pandemic has changed things and they are reviewing the business in South Wales so may not need the new vehicles – irrespective of then being (and associated infrastructure) subject to a substantial tranche of funding.
In the month that the Llangollen Steam Railway (a volunteer driven body) has filed for receivership – a decision caused by cost over runs on engineering contracts for which they tendered – we all need to look long and hard at what it costs to deliver a contract or commissioned service. If it costs more to deliver than it produces in income the shortfall has to be found from somewhere. Some organisations will have reserves, shop income, a significant donor base or even be part funded by legacies. Others will not be so well funded. If difficult decisions are postponed in order to continue to provide a service there is a danger that, in the medium term, the service can no longer be provided because the organisation does not exist. If the cost hike in a new commission is too great there is a high risk that a new service provider will not be commissioned, on grounds of affordability, with the result that the people you serve will be left high and dry with nothing in terms of current support.
Sometimes we have to be cruel to be kind and learn from the commercial world. If we don’t we cease to operate and that provides support and assistance to no one.
Andrew Rainsford
VSNW
March 2021
