Council backs tram line from Airport to St Andrew Square, now get it built

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THE troubled tram project will be completed from Edinburgh Airport to St Andrew Square – if city chiefs can address a funding gap of up to £228 million within two months.

The decision to build a 13.4 kilometre line to St Andrew Square – passed by only one vote after a marathon five-hour debate that lasted long into the night – leaves the city council having to find up to 228m more than the original cost for the full line out to Newhaven.

The Evening News understands council chiefs may aim to combine a range of funding options, including borrowing against future business rates income and seeking to draw future capital grants early.

Council chief executive Sue Bruce today admitted there is "no possibility whatsoever" of the Scottish Government stepping in with more money.

Officials will have to provide details to councillors before the end of August on how they will fill the funding gap and any additional risks that could lead to the gap growing before entering into a final agreement to build the line to St Andrew Square.

Fears were raised by opposition councillors that council debts will have to rise significantly to pay for the project – and that other Capital projects in Edinburgh could miss out.

Mrs Bruce said: "We will be exploring every single (funding] possibility and seek to keep dialogue going.

"I do not think there is any possibility whatsoever that the Scottish Government will grant us any more capital funding but with some of the other options there is more hope."

She said one option being considered is attempting to persuade the government to allow Edinburgh to keep more of the business rates it generates. Last year, 97m of the 286m raised in Edinburgh was diverted away to the rest of the country.

Mrs Bruce also agreed with comments by Labour councillors that the "delinquent contractor approach" of TIE had damaged the project. She said: "TIE did take an aggressive approach to the contractor and the contractor responded accordingly.

"While TIE took responsibility for the project, the council was bearing all of the risk and what is happening now is the council is taking much greater control of the project."

Plans are already in place to fund a 55m overrun on the original cost – but any other funding still has to be found.

It had been hoped that the sale of 10 surplus trams could bring in up to 25m but there is doubt about whether such a sum can be achieved.

Director of finance Donald McGougan said the project remains of "national importance", although he admitted the government has not confirmed its position on where the line should end.

Councillor Gordon Mackenzie, the city's transport leader, said: "What we heard from the director of finance was that the Scottish Government asked council officers to do intensive work on funding. We will see the outcome of that in several weeks and that will help us to make a final decision on this.

"I can't be confident that we will get anything from the Scottish Government but we have to give them the opportunity to see if there is a way Edinburgh can, for example, get more of the 100m a year it puts into the business rates pot."

Labour councillors had argued the option with the "least risk" was to build to Haymarket but they failed to win the support of any of the other groups.

Councillor Andrew Burns, leader of the Labour group on the council, said: "We do feel that the St Andrew Square option pushed through by the administration comes with serious financial risks, which is why we wanted to go incrementally, to Haymarket first."

He said the council is already 1.3 billion in debt and that 10 per cent of the current budget already goes on debt repayment, so increasing the debt again will add further pressure.

SNP leader Steve Cardownie, who had called for a referendum on the tram project, said: "This decision will have an impact on the council's revenue and capital budgets and that money could have been spent on other things."

Councillors called for former bosses of tram firm TIE to be hauled before a public inquiry into the beleagured project.

Tory finance spokesman Iain Whyte said it is clear that advice given by TIE to councillors in the past was "just plain wrong". "We need to get to the bottom of why that advice was wrong," he said. "If that means going after individuals that gave us wrong advice we should look into that."