Edinburgh's Just Eat cycle hire scheme could prove costly to continue

Council chiefs may have to fork out millions to continue the Capital’s cycle hire scheme which was meant to be self-financing.

Tuesday, 18th May 2021, 4:55 am

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The council’s finance committee is being asked to consider the city’s Just Eat cycles as one of the projects to benefit from extra funding received since the budget was agreed,

The bike hire scheme was established three years ago by council-owned Transport for Edinburgh (TfE) and is delivered under contract by Serco with sponsorship from JustEat.

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The cycle hire scheme was launched three years ago

It was designed to be self-financing, with the sponsorship and hire charges intended to cover the costs, therefore not requiring any funding from the council, though it is understood higher-than-expected rates of vandalism has meant extra costs.

The current contract is due to end in September and the council wants to take up the option of a four-year extension, but a report to the committee says Serco is not prepared to extend the contract under the existing terms because they carry all the financial risk. They would, however, be prepared to extend the current contract with a “managed service model”.

The report says: “The maximum total cost of the contract in year one would be £2,329,000 and £1,157,000 in years two to four. This assumes that only ride income of £400,000 is received, with no sponsorship or external grant funding.”

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The scheme was meant to be self-financing

The costs would include security upgrades totalling £1,172,000; purchasing the fleet which is not already owned, amounting to £97,000 per annum for each of the four years of the contract; and management fees averaging £1,460,000 per year in each of the four years, with a reduction of £100,000 possible but not guaranteed.

The report notes TfE expects to get £500,000 income from hires and £500,000 sponsorship income.

And it says: “TfE intend to seek funding to deliver the security upgrade, grant funding and additional sponsorship but these are subject to further negotiation.”

And it concludes the likely funding required might be between £460,000 and £710,000 per year.

The current contract is due to end in September

Backbench Labour councillor Scott Arthur said: “I’m a huge fan of Edinburgh’s bike hire scheme, but the council needs to think carefully before it commits to pumping millions of pounds of subsidy into it over the next few years. We need to understand how it’s being run, who benefits and what lessons can be learnt from other cities. It may be that this money would be better spent on making it safer for children to cycle to school.”

But Green councillor Claire Miller said: “It’s obvious from going round the city, even in the last year more of limited movement, that the bike hire scheme has established itself as part of the city landscape. It’s a crucial part of how we give people more transport choices, especially for spur of the moment uses or giving options to people who otherwise would not have a bike.

“So it is now time to look ahead and invest in the further expansion of the scheme, learning from what we know about what has worked and applying the latest technology to provide the best scheme in the years ahead.”

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