Experts warn of higher early losses

Published on Friday 20 March 2009 21:12

THE trams will initially lose millions of pounds a year more than expected because of the recession, experts claimed.

The lack of planned housing and office developments along the tram route in Edinburgh could severely dent fare revenue, they said.

Edinburgh city council might be forced to increase borrowing or put up the council tax, parking fees or bus fares.

One firm will oversee both the trams and Lothian Buses' operations. The tram service is projected by the council to lose 2 million when it starts operating in 2011, and then make a 1 million profit in 2012.

However, critics said the figures, compiled two years ago, painted a "pretty rosy picture" to ensure that the project went ahead. Some have estimated that the initial annual loss will reach 5 million.

They also pointed out that a string of developments along the 12-mile Edinburgh airport-Newhaven route, which would have generated significant extra passengers, had been shelved since the economic downturn.

These include housing in Newhaven and offices at Edinburgh Park. A source said: "The world has changed and these figures have been blown out of the water. The implications are very simple – the council will have to find more money. It may choose to borrow, but other options include putting up parking charges or bus fares."

Nigel Griffiths, the Labour MP for Edinburgh South, said: "It's worrying that we could face yet more cuts to vital bus services because of money being used to subsidise the tram project."

A council spokeswoman said: "The figures quoted in the business case for the tram project still stand. Any change to the figures would need to be reported to and approved by the council."