Final £72m for trams could be withheld

A RESCUE package for Edinburgh’s troubled tram scheme may have to be agreed by council officials without any assurance that the Scottish Government will hand over the remainder of its contested grant for the project.

The Scotsman has learned it is unlikely ministers will agree to pay the final £72 million tranche in funding to the local authority before a deadline for striking a new deal with the consortium building the network for the city tomorrow night.

But there are concerns the government will withhold all or part of the last instalment amid concerns over the final cost of the scheme and the fact that trams will not reach the city’s waterfront at Newhaven.

The government has repeatedly refused to say how much, if any, of the £72m it is prepared to plough into the project since the council performed a dramatic U-turn over where the first phase will end.

The government’s £500m in funding was forced through parliament against the wishes of the SNP in 2007.

Senior councillors yesterday admitted they had “nothing in writing” to prove the government would pay up the rest of the grant, which had been ring-fenced for the waterfront line. They said they were “reasonably confident” the full amount would be paid.

Earlier this month the council voted through a new funding package for a curtailed line to St Andrew Square in the city centre, which will cost up to £776m.

Days earlier, the government announced it was withdrawing further funding for the tram project after the council voted to cut back the initial line at Haymarket. Councillors were then recalled for another meeting after the government’s intervention.

Opposition politicians are now demanding the government clears up the uncertainty over the project’s funding before any new deal with the construction consortium is signed off.

The council is already facing the prospect of borrowing some £231m to meet the costs of funding a line to St Andrew Square, but this figure assumes the government is happy paying £500m for a drastically curtailed scheme.

The government and its transport agency, Transport Scotland, helped broker “mediation talks” in March between the council and the consortium led by German construction giant Bilfinger Berger after two years of infighting over delays and cost increases.

SNP councillors abstained rather than vote to cancel the current contract for the waterfront line in August, then backed a curtailed line to the city centre in the wake of the government’s intervention.

Lesley Hinds, Labour’s transport spokeswoman on the council, said: “We’ve heard nothing at all about what the government is prepared to fund now that a decision has been made to take the trams to St Andrew Square, or what their involvement with the project is going to be.

“We were told that the consortium needs to know that the funding is in place for the tram before it can reach agreement with the council. How on earth can the council give that guarantee if it doesn’t know if it is going to get this money from the government?”

The government refused to address a series of questions, including what assurances the council had been given over funding and whether the council had asked for a decision to be made before it agrees a final deal with the consortium.

Gordon Mackenzie, the council’s transport leader, said: “I am reasonably confident we will get the final amount.

“I am not sure it is absolutely necessary to have anything in writing before we agree a new contract. We don’t have that at the moment.

“We are concentrating on trying to get the best deal for Edinburgh.” ”