Cash options: Where the extra money may be found

EDINBURGH City Council is counting on a promised shake-up of local government funding to provide it with the extra cash needed for the project.

Persuading ministers to let it retain more of the capital's business rates is another possibility.

Scottish Government and council officials will discuss options, but ministers have repeated they will not provide any more direct grants beyond the already committed 500 million.

The council hopes the situation will be sufficiently clear for it to make a final decision on pressing ahead with the trams next month.

The council anticipates receiving an extra 20m a year from an SNP manifesto pledge to even out council funding across Scotland.

This is based on the Scottish Government changing the funding formula so no local authority gets less than 85 per cent of the Scottish average - since Edinburgh currently gets only 80 per cent.

A spokesman said: "We are committed to the introduction of a new funding floor to ensure no local authority receives less than 85 per cent of the Scottish average in terms of revenue support.

"The commitment is that this will be funded by additional money from central government.

"Until each annual local government finance settlement has been calculated, it is not possible to predict which councils will benefit or by how much."