Costs derail Capital tram line

The city council is due to recommend putting off plans for a tram loop around the city centre by 2010, meaning just one route will run through the Capital from Leith to Edinburgh Airport.

The decision to shelve huge parts of the scheme comes after the cost of the plans rocketed from 473 million to 714m.

A council source said today: "The sums just don't add up. We simply cannot afford to build both the tram lines with the money available at the moment. It means that most of the Tram Line One route can't go ahead at first, and neither can the line from Newbridge to the airport."

The decision means that only one tram link, from near Ocean Terminal at Leith's Western Harbour to the airport, is now expected to be up and running in four years' time. This will become known as "phase one", saving the council at least 200m.

A second phase, linking Princes Street with the north of the city and Granton, will be shelved until a later date - unless the project can be delivered under budget, which the promoters today insisted is still possible.

But an overall funding gap of at least 120m has so far proved impossible to fill without tapping into council tax revenue.

Two future stages are also to be outlined - the link from Granton to Leith as phase three, with the airport to Newbridge as the fourth step. However, these sections are unlikely to be completed until well into the next decade, because there are not enough people living in the areas to ensure a profit.

Council insiders previously said the Newbridge link was almost certain to be scrapped because of the cash crisis. But a new council report due out tomorrow will go even further, and recommend shelving most of Tram Line One.

Officials were this morning putting the final touches to the document, which was due to be handed to all councillors by tomorrow morning. A debate will be held at next Thursday's full council meeting.

The existing proposals are for two separate tram lines, and MSPs have spent months scrutinising the precise details.

Tram Line One was to have been a loop from Princes Street to Haymarket, Roseburn, Granton, Ocean Terminal and Leith Walk. Tram Line Two was to have run from Princes Street to the west of Edinburgh as far as Edinburgh Airport, and then Newbridge.

Trams chiefs insist all the routes will be completed, but only when money becomes available.

The entire scheme was originally priced at 473m, but the Evening News revealed in September that this cost did not include inflation.

If both tram lines were to be built as planned, the estimated price is now 634m.

But Transport Initiatives Edinburgh (TIE) - the council-owned company in charge of the project - is also forced to include a contingency fund of up to 14 per cent by the UK Treasury. This is because similar projects have gone over budget.

City council chief executive Tom Aitchison said today: "A report will be released in the next 24 hours, which will prepare the way for Edinburgh's tram project - subject to [an inflation-linked grant] from the Scottish Executive. This would allow us to build a first phase from Leith Waterfront through to the airport, which would serve the major growth areas.

"We will also be looking at subsequent plans for a route through Roseburn to Granton as that may also be possible within the first phase."

The city council has admitted that it cannot realistically afford to contribute more than 45m towards the trams scheme. Councillors have promised that no cash will come from general revenue or council tax profits, with most of the money coming from landowners along the route.

The Executive has agreed to provide a grant of 375m, and although it has previously ruled out increasing this, transport chiefs have successfully persuaded ministers to consider linking the funds to inflation, which would take the handout to 490m.

With a total of 535m, the council will be able to afford the first phase of the scheme, with cash left over to put towards the rest of the route in the future.

The Lib Dems have previously called for the council to use the money already guaranteed, and get trams up and running as soon as possible.

In September, transport spokesman Phil Wheeler predicted it would be "impossible" to tackle the massive shortfall facing the local authority, and suggested building the same route from Ocean Terminal to the airport that has now been endorsed by council officials.

The likely new alignment means the Roseburn Urban Wildlife Corridor - a picturesque area popular with cyclists and walkers - could now be saved from trams for the time being.

Trams still need Royal Assent, and a debate among MSPs is expected in March. Any funding commitment made by the council or TIE is still dependent on the legislation being approved.