Two years ago the prospects for urban light rail schemes looked bleak. Deputy Prime Minister John Prescott's transport White Paper heralded a new dawn for integrated transport, but played down the role of high cost light rail schemes.
'The capital cost of light rail systems is ... high - particularly in comparison to bus priority measures and more modest guided bus schemes which may offer a more cost effective alternative,' says the White Paper.
Since then, Prescott has had a change of heart, seeming to accept that light rail will have an important role to play. 'The Metrolink in Manchester shows just how successful light rail can be. Sheffield Supertram is beginning to work, through integrating with the buses... We need light rail networks which stand comparison with the best overseas,' he said recently.
Light rail's backers are also taking heart from hints that cash may be available from above inflation increases in fuel duty for transport improvements. Money from congestion charging is also expected to underpin payments to private light rail operators.
Local authorities testify to the 'clearer messages' they are receiving from central government about light rail. Their only grumble at the moment is that it takes too long to secure Transport & Works Act powers to push ahead with their schemes.
Chairman of West Midlands Passenger Transport Executive Rob Donald recently told the Commons transport sub committee: 'We are much happier about the clearer messages we are getting, but the amount of time and effort necessary to obtain powers has not reduced appreciably. It would be helpful if some way of speeding up the process could be found and greater certainty brought to the duration of the decision making process.'
The latest light rail scheme to get started is expected to be in Nottingham. The prospect for an increase in the number of light rail systems across the UK over the next 10 years could hinge on the banks signing up to a landmark contract. Three investment banks are putting up £180M, to be repaid over the 27 year concession period.
The deal is the latest in a series of public private partnerships in light rail. Previous PPP schemes include Croydon tramlink, due to open shortly, and the Manchester Metrolink extension, also nearing completion.
Like its privately financed predecessors, the Nottingham deal has generated an enormously complex set of contractural documents, 140 in all. Banks putting money into the project have insisted on clarifying responsibility for different scenarios of the scheme going wrong so that they are clear on their exposure to risk.
Payments to the operator will be directly linked to the availability of the service to be built and operated by the Arrow consortium of Adtranz, Carillion, Nottingham City Transport and TransDev. Operating payments will come from a joint venture between Nottingham City Council and Nottinghamshire County Council, which is getting a £170M revenue support grant from central Government spread over the concession period.
Future schemes are not expected to need revenue support grant. Instead operators are expected to be paid out of revenue from congestion charging and workplace parking charges.
Bristol City Council is confident that revenue from the congestion charging in the city from 2004 will fund its entire scheme.
Bristol's Citylink Consortium of Pell Frischmann, First Group, Railtrack, AEA Technology and Norwest Holst has already secured 60% of funding for the city's proposed £105M to £115M scheme. The city council has said that the remaining 40% of the finance will have to come from the private company it will appoint to run its congestion charging scheme.
'The companies we have spoken to are falling over themselves to pilot road user charging in Bristol and are well aware of what they would be asked to do,' says a Bristol City Council spokesman.
Evidence in Bristol's recent Local Transport Plan of widespread local support for congestion charging is likely to accelerate Government approval for a light rail scheme under the Transport & Works Act. In its response to the Bristol LTP the Government made its strongest hint yet of imminent approval for the 18km line.
Leeds City Council is less positive, claiming it cannot fund all of its proposed Supertram scheme through congestion charging alone, even though it has firm plans to introduce congestion charging by 2004/5. The city council has had TWA approval for its first line in the south of the city since 1993 but has waited in vain for a Government grant. Now it is looking to fund the scheme from congestion charging but does not think this will generate enough cash.
It is not yet clear whether the Leeds Eurotram consortium of Vevey Technologies, Taylor Woodrow, Morrison, Christiani & Neilsen and Arriva will build and operate the scheme under a privately financed deal. But Steve Hemingway of the South Yorkshire Passenger Transport Authority remains upbeat.
'We were running parallel with Nottingham up to a year ago but they secured the credits because they have what is regarded as a model PFI scheme. We haven't made a firm decision on which way we will go in the light of recent developments, but Eurotram are still with us and are comfortable in the PFI arena.'
This means the Leeds scheme could slip down the pecking order again, as established operators like Manchester Metrolink and the Midland Metro are bidding for extra lines.
Representatives of schemes in Manchester, Sheffield and the West Midlands recently put the case for extension plans to the Government's transport select committee, citing light rail's spectacular success in generating economic growth along its routes and encouraging motorists onto public transport.
Sheffield Supertram claims to have shifted 22% of the city's motorists out of their cars as well as successfully generating economic growth along the route. For these reasons the scheme is claimed to be more cost effective than a guided bus scheme despite an average cost of £5M to £10M/km.
The full Manchester Metrolink network is predicted to increase the GDP in the city by £169M a year and create 5,000 permanent jobs. Proposed extensions have a cost/benefit ratio of 1:2.