Metro and bus services in Tyne and Wear may need to be cut back over the next few years, councillors have been warned.

Joyce McCarty, Newcastle City Council’s deputy leader, said on Wednesday night that it was “very difficult to be reassuring” about the prospect of slashing the region’s public transport services.

Metro operator Nexus is anxiously waiting on news of further government funding to prop up the struggling network, with existing emergency grants due to run out at the end of this month.

The Department for Transport has already given the Metro £39 million in the past year to help it survive the devastating impact of the pandemic crisis, which at one point was causing the Metro to lose almost £1 million a week due to the collapse in passenger numbers during lockdown.

And with the number of people using public transport not expected to recover for some time, there are fears about the sustainability of local services in the North East.

Nexus’ budget for 2021/22 year shows a predicted deficit of £25 million – and even if the government were to commit to keep covering the shortfall at its current rate, the publicly-owned organisation will still need to spend £2.7 million of its own cash reserves to balance the books.

Further deficits of around £22 million are also forecast in each of the following two years that will require the annual use of around £3 million in reserves – and, again, that assumes major Covid grant funding will be extended all the way through to 2024.

Nexus only has a total of £15 million in spendable reserves that can be used to plug short-term gaps in its budget.

But even before Covid hit, there were significant worries about Nexus’ long-term finances that led to warnings in 2019 of potential cuts to secured bus services in areas not covered by commercial operators, the Shields Ferry, and some concession fares such as the Metro under-16 Pop card.

At a council meeting on Wednesday, Newcastle Lib Dem councillor Greg Stone said Nexus’ financial state was “quite grim” and asked what confidence local Labour leaders had in avoiding cuts to services.

Coun McCarty, who represents Newcastle on the North East Joint Transport Committee, replied that it was “very difficult to be reassuring” but councils “will do everything that we can to protect services”.

Cllr Joyce McCarty during a North East Combined Authority meeting at Sunderland Civic Centre

She added: “In relation to the current deficit, Nexus are generally really good at managing budgets. They project how we need to use reserves and over the last two or three years we have not needed to use those because they have found other ways of making up any deficit, whether that is an increase in the income we get from the Metro.

“Of course we are in a pandemic where many of those public transport services are running at a third of their capacity, so we are currently reliant on government grant to prop up both our local bus services and the Metro. We will continue to lobby for that.

“I was hoping I would have been able to give that kind of reassurance, but I am always honest and I will not make a commitment that I might not be able to deliver. We may well have to cross that very, very difficult road in the future to look at what services are available, I am hoping we don’t have to.”

Local authorities are legally obliged to provide free bus passes for pensioners and some disabled people, but the North East also offers a range of other discounted travel options that could be under threat if budgets are slashed — such as the under-16 Pop card, and further Metro and Shields Ferry concessions for the elderly and disabled.

Nexus managing director Tobyn Hughes said last November that bosses “don’t have any intention to reduce Metro services or frequency over the long-term”.

A Nexus spokesperson said: “We remain in positive dialogue with civil servants for further financial support to take effect from 1 April 2021 and if that is received we will be able to balance next year’s budget.

“Public transport has a vital role to play as the country looks to build back over the coming months, a point we have made abundantly clear to Government officials. We have received a huge amount of support from local politicians and the business community in making our case for the continuation of emergency funding, which, if received, will avoid cuts to all of our frontline services next year.”