£1bn to complete full Edinburgh tram line

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THE full cost of completing the first line for Edinburgh's crisis-hit tram project is set to top £1 billion - double the funding awarded by the Scottish Government.

But after months of uncertainty and a two-year legal dispute with the main construction consortium, it is still unclear whether the full line between Edinburgh airport and the city's waterfront will ever be finished.

New figures revealed last night by the under-fire city council disclosed that 469 million of the 500m awarded to the project has been spent - up 29m in the space of a month.

However, despite no prospect of any extra funding from the SNP administration at Holyrood, council officials are strongly recommending pressing ahead with building a truncated line to the city centre.

Described in a long-awaited council report as "the first building block of a future network", the line to St Andrew Square would cost up to 773m and not be open until 2014 at the earliest - three years later than planned. But taking it all the way to the city's waterfront is estimated to cost a further 160m at current prices, meaning the 11.5 mile network would cost about 81m per mile.

The report admits it will be another "several years" before a case could be made to finish the line, despite businesses in Leith suffering widespread disruption from tramworks over the past three years.

The council has warned against voting for a cheaper option, which is favoured by some opposition councillors, or curtailing the line at Haymarket, which has a price tag of 70m, as this would need a subsidy of some 4m a year.

• Analysis: Cancelling project at this stage would tarnish city's worldwide reputation

As The Scotsman revealed yesterday, the cost of cancelling the project is estimated at up to 750m, although this figure has been controversially omitted from the final report for legal reasons.

Councillors are due to make a final decision next Thursday on whether to press ahead with the project, although it is thought they may put it off until the autumn by demanding a fuller explanation of all the key figures.

Crucially, the local authority is still locked in a bitter legal battle with the main construction consortium, led by German outfit Bilfinger Berger, with the dispute now into its third year.

Council chief executive Sue Bruce, who has led efforts to resolve the problems afflicting the project since arriving in her post in January, warned that if the council attempted to tear up the contract, rather than reach a mutual agreement with Bilfinger, it could find itself locked in a "protracted legal dispute" with "no clear outcome".

She said: "This really is the critical juncture for the project. We will be working closely with the Scottish Government in coming months to look at the various funding options that we may need to progress based on the decisions taken by councillors next week. The recommendations are designed to ensure that we secure a return on the substantial investment made to date and, at this time, progressing to St Andrew Square and generating revenue appears the sensible way to ensure this happens."A fresh spate of political wrangling has broken out amid claim and counter-claim over who is responsible for the fiasco. Work has all but ground to a halt over the past year and a programme to repair botched works in Princes Street has been put back until the autumn because of the uncertainty over the project's fate.

The council says the Scottish Futures Trust and government agency Transport Scotland will be asked to help bail out the project, despite SNP ministers saying they will not grant any more funding for the scheme.

First Minister Alex Salmond has backed opposition demands for a public inquiry. He told MSPs: "I think we should let Edinburgh council continue its deliberations. But certainly I think a public inquiry would be an excellent thing to do."

Liberal Democrat council leader Jenny Dawe, who has been under fire for not keeping the work under closer scrutiny, said: "Nobody would have wished for the problems that have beset the scheme. However, we must find a way forward that sees trams running on our streets in the next couple of years.

"This report is crucial for the tram project. The options presented give elected members a lot to think about over the next week in deciding the future of integrated transport for the city."

However, her deputy, SNP group leader Steve Cardownie, repeated his party's demands for the project to be axed, despite warnings from Ms Bruce that the council could not borrow millions of pounds or seek private finance to meet the cost of cancellation. He said: "Our fear is for the future. If this line only goes to Haymarket it will require a 4m annual subsidy from Lothian Buses, and this will mean that bus fares will go up and bus routes will be cut, and we have no faith in the business case that's going to be presented to us because we had no faith in the original business case."

Labour group leader Andrew Burns said: "I'm extremely disappointed at the lack of detail in this report. Frankly, I do not find many of the initial cost assertions to be robust."

Lesley Hinds, who was lord provost when the project was piloted through the council by the former Labour administration, did not rule out voting for the project to be scrapped.

She described the trams as "a disaster - but not from day one", adding: "If you look at the Audit Scotland report that came out in June 2007, when the SNP/Lib Dem council and the SNP government took over, it gave it a clean bill of health."

She rejected accusations the tram project had been forced on the council by the pre-2007 Labour government at Holyrood and called for an inquiry into how it was allowed to overrun.

Ms Hinds said: "What happened in the Scottish Parliament, which is what happens in a democracy, is parliament agreed to go along with this project, and the SNP, in my opinion, just threw their toys out the pram and said, 'Here's your 500m - you get on with it', and took no responsibility."

Denzil Skinner, chair of Essential Edinburgh, which represents most major businesses in the city centre, said: "No-one is suggesting we are in a good place with the tram project, but the only sensible course of action would appear to be to build the route into the city centre.

"That is what the retailers and other businesses who have suffered very substantial disruption were promised as the long-term gain for all of the pain suffered.

"The cost of completing the route to the city centre, while high, is not substantially different from the cost of scrapping the project, and the option of a route that stops at Haymarket is entirely unviable."

Among the options for the council to bridge the huge funding gap are securing permission from the government to extend its borrowing powers, working with the Scottish Futures Trust to put a funding package together with the help of private finance, or setting up a tax incremental finance scheme to build the tram line with money that would be refunded to the government once it is up and running. Bringing in a private operator, which could see a company offer to finish and run all or part of the tram route, is seen as a last viable option, as it risks possible competition with council-run Lothian Buses.