CHESTER City Council made almost £3m profit after selling the corporation bus company, it has emerged.

A Freedom of Information response shows the sale of Chester City Transport to First group last July netted £2.8m to Town Hall coffers even after the city council lost a related court case costing £1.7m.

The majority of the profit came from the sale of the bus company’s Station Road depot to housing developers Watkin Jones for £3.4m.

Critics have claimed the city council mishandled the sale which resulted in a unsuccessful and costly legal attempt to stop rival firm Arriva duplicating some of ChesterBus’s most profitable routes.

But city council managing director Chris Hardy defended the course of action.

He said: “From the city council’s perspective, the sale of the bus company to FirstBus Plc has been a notable success story. The company itself was at the time in dire financial difficulties and its future existence very uncertain.

“Following the sale, the communities of Chester now have a much better bus service, particularly with greater competition on several routes.

“The bus company itself transferred across fairly seamlessly to FirstBus Plc – at one stage there was a real danger the city council would have to wind up Chester City Transport because of the predatory actions of Arriva Plc involving the loss of all employee jobs.

“It was unfortunate the city council did not win the court case against Arriva Plc. However, this course of action was essential to provide the space through the embargo to competition to enable the sale to FirstBus Plc to proceed.”

Profits from the bus company sale have gone into the council’s £11.5m capital programme to fund projects such as the refurbishment of Chester Town Hall and a £537,000 project to maintain the City Walls.

A predicted £1m black hole in the former municipal bus workers’ pension fund did not materialise and the fund did not need topping up from the city council budget.

John Butler, an ex-Tory city councillor and former vice-chairman of Chester City Transport, said: “I don’t believe the sale has led to a better bus service for the travelling public.

“Staff have not benefited because many have chosen to leave and work for other companies and there has been no improvement in the standard of vehicles or the level of services as evidenced by letters in The Chronicle.

“Whatever the council says, I believe the company was sold so they could realise the value of the land to fund these projects for which they had not got the money.”

Mr Butler said he had spoken to a number of councillors of all political persuasions and was “astonished”, given the size of the profit, that only one appeared to know how much had been made and no-one was aware what had happened to the proceeds.