Tram cost to reach £700m... even if scrapped

Published on Wednesday 22 June 2011 16:24

Edinburgh's troubled tram project has been thrown into even more doubt after it emerged it will cost at least £700 million to get the scheme up and running - and up to £50m more to scrap it.

Council officials have warned of the huge damage that risks being done to the city's reputation and its economic prospects if the planned network is abandoned within the next few days.

However, the 700m price tag will only build a truncated line to Haymarket, in the capital's west end, and it is thought another 70 million will be needed to run it into the city centre.

The news means the cost of the project has soared by around 170m in the space of 12 months - with the start date now shifted back to 2014 - three years later than planned.

It also means that almost 250m will need to be found to meet the costs of pulling the plug as at least 440m of the Scottish Government's 500m grant has already been spent.The council's transport leader, Gordon Mackenzie, last night said: "The most sensible option does seem to be to build the line as far as St Andrew Square, but we need a lot more clarity on the figures and possible funding packages."

The Tories' leader in the council Jeremy Balfour added: "The people of Edinburgh have been kept in the dark about this project for far too long. It has to stop."

The cancellation cost, which is said to range between 690m-750m, includes cancelling all contracts, winding up the council's tram company Tie, and dismantling the parts of the network that have been built.

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However, it is thought that a long-awaited report into the fate of the project, due to be published today, will beg more questions than it answers, particularly over how the council is likely to find the extra funding needed to get the project up and running.

The council is still locked in a legal battle with the main construction consortium, with the wrangling now into its third year. Peace talks led to work resuming on two key stretches, in the Haymarket area, and near Gogarburn and Edinburgh airport, but work elsewhere is still at a standstill.

The Scotsman understands that the Scottish Government will be officially asked to intervene to save the project - for which it has provided the bulk of the funding for so far - over the summer despite capping its contribution at 500m.

Councillors will be asked to press ahead with the project, or choose to pull the plug, at a crucial meeting next Thursday, although it is understood they will delay a final decision to the autumn due to the level of uncertainty over the figures that have been produced.

One senior source said: "The only credible solution out of this mess is a tramline from the airport to the city centre. If the tram doesn't go to St Andrew Square it will be incredibly hard to sell it to the people of Edinburgh or businesses in the city who have suffered so much disruption.

"The report will strongly recommend going down this route and allowing the officials at the council to bring back options in the autumn for making this happen.

"Building less than half a line to Haymarket will not attract nearly enough commuters to make the finances stack up."

However, another insider said: "If a decision needs to be taken now then Haymarket is by far the better option as the council can probably find the funding to do this. But it's hard to believe this will now cost 700m.

"The cost of building the whole route to the waterfront was only 545 million little more than a year ago."

The SNP's councillors are thought to be on the verge of a major U-turn by backing plans to press ahead with delivering the project as far as St Andrew Square - even though there is no sign of a rescue package to pay for such a move.

Council chief executive Sue Bruce has had a number of talks with senior Scottish Government officials since she started her post with the city in January, but she was unable to provide councillors with details of possible bail-outs during briefings earlier this week.

The government's transport agency, Transport Scotland, last night reiterated its insistence that there would be no further funding for the project.

Extending the council's borrowing powers or agreeing funding for a tax incremental finance scheme, similar to the one which the SNP agreed to help the regeneration of the city's waterfront, have both been discussed privately.

Selling off Lothian Buses, of which the council is the majority owner, has been ruled out as a non-starter politically, while the council is thought unwilling to take on huge debts to fund the scheme because of the impact this may have on other key projects.

Work to repair botched tramworks on Princes Street was put off from the start of next month until September to allow councillors to make a final decision on the project next week.

However, in a bizarre twist, opposition councillors have threatened to pull the plug on the project they have supported for years, insisting the local authority should not be committing any further public money to the scheme, even though the government has footed the bill to date.

Labour and Tory councillors have also cast doubt on the new figures provided by the council and are insisting they would rather see trams running to Haymarket rather than agree a costlier deal to have them running to St Andrew Square without clarity on who foots the bill.

Labour group leader Andrew Burns said: "We have supported this project since inception, we have attempted to provide positive input while in opposition, yet we feel that the project must be completed within the current funding arrangement."We will not support additional council funding being provided to the tram project."

Tory leader Jeremy Balfour added: "We will need to have proper scrutiny of these figures and ensure they are accurate. We don't want to see any further taxpayers' money going into this.

"The cost of building the line to Haymarket does seem very high compared to the one for St Andrew Square and we need to see full justification for the cost of cancellation."

Marco Biagi, the Nationalist MSP for Edinburgh Central, last night said he was also sceptical about the new figures.

He said: "The people who were putting together the figures have an interest in making them appear as big as possible so that the project would go ahead.

"I think the cost of completion to St Andrew Square is an underestimate as indeed all the previous works have been."

A spokesman for Transport Scotland said: "The Scottish Government opposed the project, but in June 2007 the Scottish Parliament voted in favour of funding up to a maximum of 500m - a figure ministers will not increase. The project is and always has been the responsibility of Edinburgh City Council and the cost of cancellation or taking the trams project forward is a matter for them."

A city council spokeswoman said it would not be publishing a full report on the tram project until later today.

But she added: "The costs associated with the various options for phase one of the tram project are still subject to commercial negotiations and legal scrutiny."

One transport users' group last night urged the council to press ahead with a tramline from the airport to St Andrew Square.

In an e-mail to all councillors, Dr Niall McCormick, chairman of the Scottish Association for Public Transport, said: "No rational person wants to see the council spend over 400m and end up with a failed project.

"The council should agree to complete the tramline from the airport to St Andrew Square, the government should help to facilitate additional finance arrangements, and Transport Scotland should assist with the setting up of a task force with the council to complete the project."

Edinburgh Chamber of Commerce, the city's main business group, has argued strongly against cancellation because of the potential damage it could do to the city's reputation overseas.

However, a survey by the Federation of Small Businesses in the capital published last month found that 41 per cent of members believe the whole project is likely to be cancelled.

More than 90 per cent said they did not believe that the full first phase of the tram, due to link the airport with the city's waterfront, would ever be built. The poll also found that 83 per cent of small businesses believe the tram would have little or no impact on the city's economy.