A tram sits at a street junction in a Midlands city with traffic queued across the track ahead of it. The signal will change, the cars will clear, and the tram will be ninety seconds down on a headway that only works if nothing takes ninety seconds.
Two streets away a water main is being replaced. The trench is beside the track today and under it next month, and when it goes under the track the section closes.
A tramway is a railway laid in a road. That single fact decides almost everything about how the business behaves, because it means every other party to the street has a say in it: the council that owns the concession, the utilities entitled to dig, and the drivers who turn across the rails.
A railway with everybody else's traffic on it
Building one has never been a matter of simply buying land. The Transport and Works Act 1992 replaced the old route of promoting a private Act of Parliament. Britain's first modern street tramway, in Manchester, had been promoted the older way and opened the same year. Before 1992 the way in was a light railway order under the Light Railways Act 1896. Either way, the permission to build and run comes from an order made by government rather than from a planning application, and it sets out where the line goes and what powers you have over the street it runs in.
What that order does not give you is control of the street. Utilities have statutory rights to open the highway to reach their apparatus, governed by the New Roads and Street Works Act 1991, and a track bed laid in a road tends to have services underneath it. A section closed for street works is not an inconvenience. There is no diversion around a tramway: no alternative route, no way of running round the blockage, nothing to do but put on a bus and watch the passengers decide whether they like it.
The same absence of alternatives applies to faults. A bus network that loses a vehicle loses a journey. A tramway that loses its power supply loses the railway.
What it costs to put steel in a street
Getting in costs between £10,000,000 and £60,000,000, and the fleet is the visible part of that. Trams are expensive, long-lived and specific to the network they were bought for, which makes the second-hand market thin and leaves no way to flex capacity quickly. A depot, a control room and a maintenance capability come with them.
Running costs are more predictable than a road operator's and less controllable. Traction current is a large, exposed line, and the price of that energy is not something a tramway can negotiate its way out of. Drivers cost less than a heavy rail driver, on the order of £40,000, and one member of staff carries a great many passengers, which is the whole argument for light rail.
The year is shaped by the city rather than the weather. Commuting and Saturday shopping carry the network, students matter a great deal on a line serving a campus, and August and Christmas are quiet. What is unusual is that a quiet month does not reduce the cost, because the specification says how often the trams run.
Fare box recovery is the whole conversation
Fare box recovery, the share of operating cost covered by fares, is the figure the entire business turns on. It is the number the authority looks at, the number that sets the size of the subsidy, and the number that decides whether the concession is retendered.
Almost nothing about it is fully in the operator's hands. The fare is usually specified or capped by the authority, and concessionary travel is reimbursed at a rate somebody else sets. The catchment cannot be widened, because the track is where the track is. The operator's contribution is the cost side: cost per tram mile, staff productivity, energy use, and how quickly a failure is recovered.
VAT does at least behave. Passenger transport in a vehicle carrying ten or more passengers is zero rated under the VAT Act 1994, Schedule 8, Group 8, so fares carry no VAT while the VAT on inputs is recoverable. For a business buying traction current, spares and contracted maintenance, that recovery is worth a great deal. Only a very small share of income, essentially advertising and a little retail, is standard rated.
Two bodies can stop you, for different reasons
The Office of Rail and Road is the safety authority for tramways as well as railways. After an incident it can close a section, and a closed section on a tramway means the line is cut in two. The safety case, the risk assessments and the competence of the people running the control room are all live obligations rather than a file in a drawer.
The other body is the one that pays. A combined authority or a council holds the concession, funds the gap between the fare box and the cost, and specifies the service. It can refuse the subsidy, vary the specification, or put the concession out to tender. That is a political decision, taken inside a budget that is also paying for social care and street lighting.
Being regulated on safety and dependent on one customer for a large part of your income is uncomfortable, and normal for this trade. There are only around eight networks in Britain, on fare revenue of a few hundred million pounds a year, which is an order of magnitude rather than a count. The Department for Transport publishes light rail and tram statistics for England.
A long closure is how it ends
The failure is slow and it starts with an interruption. A section closes for months, whether for street works, a structural problem or an incident. Passengers find another way to get where they are going, and a proportion of them do not come back when the trams do. Patronage settles lower than it was. The recovery ratio falls, because the cost of running the line did not fall with it.
Then comes the autumn conversation. The authority is being asked for more money for a service carrying fewer people, and it reaches the conclusion authorities reach: that it could buy the same specification more cheaply from somebody else. The concession goes to tender. The rails stay exactly where they are and the operator does not.
Where this shows up in the game
The tram network in Business Baron is one of the specialist trades, and the monthly decision is the headway: how often the trams run, and whether the late evening service that costs more than it takes goes out at all. Cutting it saves money in the month and costs patronage in the year, which is the kind of decision the trade is made of.
The number on screen is fare box recovery, which is what the subsidy conversation is about. The Office of Rail and Road appears after an incident and can close a section. The authority appears once a year with a budget and a view, and it is the more dangerous of the two, because it can decide to buy the service from somebody else. Failure here is a retender rather than a bailiff. The Tram & Light Rail Network page sets out the orders and the figures behind it.
It stands on top of the full game rather than inside it, as the other specialist trades do. A tramway is worth playing because it breaks the habits the rest of the game teaches. You cannot expand into a better catchment, you cannot raise your price, and you cannot go round the problem.