Four more tram executives quit as fears deepen that project will be mothballed

Published on Tuesday 31 May 2011 17:35

Edinburgh's troubled tram project has been thrown into further turmoil after it emerged four senior figures overseeing the scheme are quitting - amid growing speculation the entire project may be put on hold.

The directors of tram company Tie are expected to leave shortly after the departure of chief executive Richard Jeffrey next week, following prolonged criticism of its stewardship of the project.

Council chiefs are now set to take full responsibility for the project, which is facing a 200 million funding black hole and increasing calls for it to be scrapped.

Neil Scales, chief executive of Merseytravel, Brian Cox, a former executive at Stagecoach, Scottish Government official Kenneth Hogg and Peter Strachan, a former director at Network Rail, were believed to have been told last month that the council was looking at scaling back Tie's control. They have been on Tie's board for five years, while the project has lurched from one crisis to another.

Mr Jeffrey is not being replaced, while the number of staff working for the arms-length firm is expected to be cut from more than 65 to fewer than 20 in the coming months. Tie's board is now dominated by councillors and senior council officials.

Further moves to bring the company under the full control of the City of Edinburgh Council are expected to be unveiled by the end of the month, when an update on the cost of getting the scheme working is expected.

One insider said: "It has become increasingly clear that Tie's control of this entire project has been flawed for several years now. Scaling back its involvement is being fast-tracked over the next few months."

There has been speculation that the cost of cancelling the project will be higher than completing a scaled-back first phase, which may now only run from Edinburgh Airport to St Andrew Square. However, it is uncertain whether councillors will be told the final cost of completing the first tram line, due to run to the city's waterfront.

Sources close to the project say the authority is considering "mothballing" the project, in the hope of reviving it when the city's economy and its property market improves.

The council has raised only a fraction of the contributions due from developers along key routes such as Leith Walk and the waterfront, which are unlikely to benefit from the initial phase of the tram.

Tie has been in charge of the project since well before the scheme was given the final go-ahead and 500m in funding from the Scottish Government in 2007. But within two years the company was embroiled in a bitter dispute with its main construction consortium, over claims that the final cost had soared.Council chiefs entered mediation talks earlier this year in an attempt to break the deadlock, with some work resuming in the Gogarburn and Haymarket areas last month.

However, the entire scheme is in the balance over fears that it will cost at least 700m even to finish the airport-city centre route, with the council facing having to borrow almost all of the shortfall - or enter into a private finance initiative.

Mr Jeffrey, the third chief executive to lead the project, quit just days after it emerged that Princes Street was facing closure for most of the next year to repair botched tramworks. Retailers were furious at the prospect of further disruption without any clarity on when or if trams would start running.

Council chief executive Sue Bruce has been placed in overall charge of the tram project and has been tasked with producing robust figures in time for a crucial council meeting on 30 June.

Another insider said: "There are likely to be three options on the table - borrowing a vast sum of money to try to get the thing off the ground; complete cancellation and trying to recoup as much as possible by selling off all the infrastructure; and mothballing everything for a couple of years, and tidying up the mess that has been left across the city.

"The council is going to struggle to raise the 700m and that is only going to pay for half a tram line that will most probably make a loss and is going to leave the city in debt for years."

Council transport leader Gordon Mackenzie said: "The council and Tie and the contractor are all working together on governance arrangements which are all about enabling us to take the project forward."

A spokesman for Tie said: "We've already said publicly that governance is one of the issues being addressed as part of the paper being presented on 30 June. Any matters relating to the board will be discussed at the next tram project board meeting and we will not be commenting further until after this point."