No lifelines for under-threat bus routes as £2m pot empty

HOPES of saving under-threat bus services have been dealt a blow after it emerged that a £2 million dividend paid to the city council by Lothian Buses has already been spent.

The cash was paid to city leaders by the bus company in March and put into a central pot for other council services.

However, it has only been in recent weeks that the extent of the problems facing Lothian Buses have become clear.

As revealed in the Evening News yesterday, the council-backed firm is blaming disruption to services by tram roadworks for a five per cent drop in passenger numbers so far this year. Hopes that the council could ease the company's financial pressures by declining some or all of its dividend have now been dashed, after it confirmed today the money had already been spent.

Karen Kelly, the council's head of financial services, said: "The council received a £2m dividend covering 2007 from Lothian Buses in March this year. This money was added to the council budget and has been spent on services.

"As previously stated, we will await the results of the service review and work with Lothian Buses on viable options to help them through the current financial climate."

Lothian Buses yesterday posted results showing profits rose by 20 per cent to £5.9m during 2007.

However, the firm has warned it is now facing the toughest trading conditions for a decade and is looking to axe a number of loss-making services.

The Evening News understands loss-making services are likely to remain under threat for the next three years, while the tram line is completed, unless passenger numbers pick up.

Announcing the results, company chairman Pilmar Smith admitted 2008 was proving to be "particularly challenging".

Passengers made a record 114 million trips on Lothian Buses last year – the ninth in a row that the firm has seen passenger numbers rise. But the rising price of diesel, a wider economic slowdown and tram roadworks have severely dented passenger numbers and profit levels at the bus firm over the past six months.

In March, Lothian Buses revealed it was facing a £4m shortfall because of increases in tax and fuel costs, as well as a Scottish Government freeze on a rebate to transport operators used to cover rises in fuel duty.

The financial problems saw the company raise bus fares by 10p in April, and passengers were warned that there would be more fare hikes in future years.

Despite these problems, councillor Andrew Burns, the former Labour transport leader, said: "The local authority has an annual revenue budget of over £800m, and Lothian Buses an annual turnover of just under £100m. Between them, they should be capable of finding a workable solution to the financial pressures being experienced."

• www.lothianbuses.com