John McLellan: A strange obsession with expensive trams

Sydney’s tram system may be even more expensive than the new one in Edinburgh, where the city council is ignorning the potential of other investment opportunities, writes John McLellan.

If you thought Edinburgh’s tram fiasco was bad enough, spare a thought for Sydney, where their new 12km light rail system has been delayed by two years and will not now take its first passenger until March 2020. The bill has gone up from about £800 million to just over £1 billion, but to complicate matters the New South Wales government is being sued by a contractor, Spanish infrastructure firm Acciona, for £600m. Another contractor is after £2m compensation.

And guess what the main problem was? Digging up Australia’s oldest street uncovered pipes and cables no-one knew were there and the row is over who agreed to pay for the utility work. If Edinburgh learnt nothing from Dublin, Sydney obviously learnt nothing from Edinburgh.

So the Australians are facing a bill of approximately £83m per kilometre, compared to the £55m it cost Edinburgh for each of the 14km of the Airport-York Place route. The 5km tram completion through Leith therefore might seem a snip at £33m a kilometre, but then all the hardware and rolling stock have already been bought and a substantial amount of the utility removal has already been done. We’re assured the £165m budget is robust and all eventualities are factored into a contingency allowance, but not all the utility work was finished and Leith’s development history goes back to the 12th century, compared to just over 200 years for Sydney’s George Street.

But with the announcement last week that Edinburgh Tram profits jumped a whopping 600 per cent to £1.6m in 2017 on the back of a 19 per cent increase in passengers to 6.6 million, it will take a lot more than fear of the unknown to derail the city administration’s determination to press ahead with the completion to Newhaven.

Another organisation owned by Edinburgh council which recorded a profit leap in 2017 was the Edinburgh International Conference Centre, with an impressive 87 per cent increase to £1.2m 2017 from £640k in 2016, generating an estimated economic impact for the city of £55m in 2017, up from £51.6m. As a tourism gateway for the rest of the country, what’s good for Edinburgh is good for Scotland.

Yet for some reason the city’s SNP-Labour administration does not seem to share the same enthusiasm for the EICC as it does for the Leith tram project. The original EICC opened in 1985 at a cost of £38m and the Lennox Suite extension and Atria office block above it cost a further £85m by the time it opened in 2013. But the Atria was sold two years later for £105m, so a brave investment decision has to all intents delivered a free conference centre which is not only turning a healthy profit but is at the heart of Edinburgh’s international business tourism and marketing programme, with 200 events last year.

The EICC recently produced an outline proposal to build and operate a 400-bed hotel on council-owned land in nearby Fountainbridge to give it control over discounted accommodation for conference delegates. The idea was to give it a competitive advantage over rivals to secure bookings well into the future and increase its annual turnover by about £3m, and a total revenue receipt for the council of about £3.4m. This compares to the £6.8m another arms-length organisation, Lothian Buses, paid back to the council from a £153m turnover.

On Thursday Edinburgh council decided to use the land for office space to help start-up digital businesses to grow, which is laudable enough and the demand is there from firms now outgrowing the nearby Codebase incubator, but the question remains about how the EICC grows its business.

The council administration has only set itself an unambitious commitment to tackle any financial shortfall the EICC encounters, when the conference centre already knows it needs to spend £35m in the next 20 years to keep up with international standards. Go no further seems to be the message.

Of course direct comparisons between a tram line and a conference centre are difficult, but it’s still ironic that the council is happy to invest £165m in something which made £1.6m, and for which it will be paying interest for years, but is now seemingly reluctant to invest any further in a self-sufficient asset which attracted 94,000 delegates last year. Presumably many of them used the tram.

Meawdowbank loses some sparkle
Meanwhile, on the other side of the Capital, the final go-ahead has been given for the reconstruction of the council-owned Meadowbank sports complex, the granting of detailed planning permission for the replacement yesterday bringing to a close a decade-long wrangle over its future.

Costing over £40m, the new facility will still be a significant Edinburgh asset, but the scaling down of the stadium from 5,000 seats to 500 means its days as an international athletics arena are now over. While the end of the scene of triumph for such Scottish sporting greats as Lachie Stewart and Liz McColgan, the reality is that the number of major meetings which would justify a like-for-like replacement is tiny.

Of the four major UK athletics venues created in the past 30 years, three are football grounds with regular big crowds: West Ham in London, Manchester City at the Etihad, and Scotland and cup matches at Hampden. Without a major anchor tenant the fourth, Sheffield Don Valley, proved a white elephant and was demolished.

But permission in principle to develop the rest of the Meadowbank site for housing and commercial development has also been granted and the opportunity to create something special for the community has almost certainly been lost.

Why newspapers are vital

The overview published this week for the Cairncross review of the future of the UK Press is a sobering read for people like me who have spent their entire working lives in news and journalism. Revenues have halved in the past 10 years to a total of approximately £1.9bn from advertising and £1.7bn in circulation revenues last year.

Yet the number of employees has not fallen by the same proportion, down from 23,000 full-time posts to around 17,000, a fall of around 25 per cent.

If there is a note of optimism in the report, it is here: “We estimate that legacy newsbrands are responsible for around 50 per cent of all original news journalism in the UK, bigger than broadcasting and online put together. As doubts are raised about the potentially corrosive effect of ‘fake news’, hate speech and cyber bullying enabled by the digital platforms, newspapers (and other news media) may become more rather than less critical.”

Newspapers and newsbrands are still vital, but the fact you are reading this shows you know that already.