A TRANSPORT operator has warned efforts to conquer passengers’ smaller pockets could be foiled by Government plans.

The Stagecoach Group says its resilience against lower public spending and the weaker economy has pushed annual revenues higher.

However, the business, which oversees routes across the North-East, said ministers’ proposals to hand local authorities greater control through the Bus Services Bill could hit taxpayers and dilute its bottom line.

Bosses issued their caution at the announcement of Stagecoach’s results for the year to April 30, which showed higher revenues of £3.9bn had countered falling pre-tax profits of £104.4m.

Bosses said finances were affected by challenges in its bus division, which covers Teesside, Hartlepool, Sunderland and Newcastle, with fare increases, kept to a minimum to mitigate lower passenger prosperity, and investment in new vehicles and technology, restraining growth.

Explaining its progress, Martin Griffiths, chief executive, said he was content.

However, he highlighted the Bus Services Bill, pointing to how plans to bring Tyne and Wear routes back under public control were rejected last year by The Quality Contract Scheme, despite the North East Combined Authority voting for a programme it said would give a £272m economic boost to the region over the next decade.

Mr Griffiths said: “These are solid results and we are experienced at managing challenges.

“Our locally-managed bus companies have strong partnerships with local authorities, allowing them to deliver tailored transport to communities, and this will continue to offer the best networks in the future, particularly against tight public sector funding.

“We are cautious regarding the Bill and will discourage the Government from introducing measures that would hinder development.

“In the majority of areas served by our buses, there is no major pressure for franchising, but we do recognise any scheme may affect profitability.

“We support the principle of devolution, but it must be about practical improvements and we believe the Bill requires tougher taxpayer safeguards.

“A scheme proposed by the North East Combined Authority failed on numerous counts, which is clear evidence of the need for proper protections.”

Mr Griffiths also reflected on the performance of Stagecoach’s rail division, which includes the Virgin Trains East Coast venture.

Working under the Inter City Railways banner, Stagecoach and Virgin last year took on the route from the publicly-run Directly Operated Railways.

He said it rail arm had been dented by competition from car and air travel, as well as terrorism fears and customer confidence.

However, he said the East Coast endeavour had done well in the year, with revenues growing 5.2 per cent.

Stagecoach and Virgin will use rolling stock made at Hitachi Rail Europe’s factory in Newton Aycliffe, County Durham, from 2018.

Stagecoach last week revealed Phil Medlicott was leaving his role as managing director at Stagecoach North East.

Mr Medlicott, a qualified bus driver, said he is departing to take on new challenges.

The search for his replacement has already started, with Clare Kavanagh, Stagecoach UK Bus’ strategy director, taking over on an interim basis.