Tram line chaos branded an 'embarrassment'

Published on Friday 14 August 2009 10:03

THE Capital's controversial tram line was today branded an "embarrassment" after it emerged the project may now not be up and running until 2013 as a result of a bitter legal dispute with contractors.

Deputy council leader Steve Cardownie said the beleaguered project was now Edinburgh's "second folly" as it became clear council bosses face a growing funding crisis and a lengthy legal wrangle with German contractor Bilfinger Berger.

Tram chiefs today admitted for the first time that the 545 million project would not come in on budget as sources claimed that plugging a 90 million shortfall would require the city to borrow against future tram and bus profits.

There are now fears the 11-mile route could end up costing closer to 600 million, with the council having to take money from other areas of its capital budget to pay for the scheme.

There were also suggestions that tram chiefs are now looking seriously at scaling back the route, adding weight to previous suggestions that bosses have looked at building just the Edinburgh Airport to Haymarket stretch or cutting back the route from Newhaven to Ocean Terminal.

The news came as senior council sources said there were around 400 outstanding disputes with German contractor Bilfinger Berger.

Tram firm TIE is now taking the consortium, made up of Bilfinger, Siemens and Spanish firm CAF, to a formal dispute resolution process.

The move could end in a costly and protracted legal battle, forcing the cost of the project even higher.

However, the Evening News understands that Bilfinger's consortium partners are growing increasingly unhappy about the firm's behaviour and could be ready to reduce its role.

In a report for next week's full council meeting, council chiefs said officially for the first time that it would be "very difficult" to complete the "full scope" of the airport to Newhaven line within its budget.

The council has raised only a fraction of its own 45m contribution to the project and is thought to be facing a shortfall of up to 90m.

With the Scottish Government pledging to pay "not a penny more," council chiefs are left with the prospect of borrowing against future tram and bus profits, leasing rather than buying the 50m tram fleet, and cutting other council spending.

Sources have also raised the prospect of raising bus profits by pushing up fares, cutting off-peak services on loss-making routes and reducing frequencies on others.

Cllr Cardownie – whose SNP group has always opposed the trams – said council taxpayers would find it "unacceptable" that money be taken from vital services such as new schools to pay for the trams.

He said: "My understanding is that we are too far gone in terms of scrapping the project. It looks like our worst fears are being realised. I was never confident that this project would come in on time and budget, and it seems we were right to believe it would become a Holyrood on wheels.

"It's extremely embarrassing for Edinburgh. It's a line that nobody wanted and it's now Edinburgh's second folly."

Stephen Bell, TIE's tram project director, said that if the dispute with Bilfinger was not resolved and work not speeded up, then the trams would not start running until 2013.

He branded Bilfinger's behaviour "disappointing," adding: "We did not expect an international contractor would behave in such a manner."

Meanwhile, new figures showing projected initial tram losses show that the official figure has doubled to more than 4m in the first year, although the Evening News understands the true figure could be considerably higher.

Contractors have now carried out around 70 per cent more utility diversions for the first phase of the project than was originally planned, pushing up the cost by 7m.

However, the delays caused by moving thousands more metres of cables and underground pipes means the cost of the project is likely to increase.

The next stage of track-laying, which had been due to start in Shandwick Place at the end of this month, has become the latest part of the project to be put back.

Council leader Jenny Dawe, said: "It is clearly regrettable that the dispute (with the consortium] has escalated to this stage, but we are giving TIE our full backing as we must ensure that contractual obligations on the tram project are met by BSC. The process may take several months but is crucial that TIE enter into these proceedings to ensure we get best value for the project in the long term."

Richard Jeffrey, TIE's chief executive, added: "We have always been clear that we will pay for what is just and offer fair recompense to our contractors as laid out in the tram contract.

"We appreciate that this development is very disappointing for all parties concerned, but equally we know from the support we have had that the Capital would wish us to stand firm in our pledge to the city under the agreed contract."

Bilfinger Berger could not be reached for comment.