John McLellan: Council contradicts itself over tram cost

After 26,000 letters, the meetings, the press releases and positive speeches, how could it possibly be that the poor, misguided Edinburgh public came to believe that paying for the £165m tram completion to Newhaven would impact on other council services?

An artist's impresions of how the trams will look passing Ocean Terminal in Leith
An artist's impresions of how the trams will look passing Ocean Terminal in Leith

This is, you see, a total misconception and the council administration wants to put you straight on this once and for all. Spending £165m on three miles of tram will have no effect on other services. Got it? There, I’ve done my bit for council communications.

Well at least that’s the claim in the latest announcement which actually spells out it is a “misconception that the project will divert resources from other council services”.

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Surely everyone knows the intricacies of internal local government budgeting, don’t they? Get with the project, people.

The statement says: “The Outline Business Case (OBC) explicitly states that the tram will not redirect funds from existing council budgets over the life of the project.” This is technically true, because in the three years of construction only interest will be paid on the borrowings and the bill will be met by taking money from Lothian Buses so budgets directly under council control will be unaffected.

But barely a penny of the £165m will have been paid by the time the line opens and indeed the outline business case published last year, to which the council’s latest statement refers, revealed the full cost had

yet to be covered.

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It said: “The model suggests a likely total funding gap of £8m in the short to medium term, after utilising £20m of assumed extraordinary dividend from Lothian Buses.” In other words, the council will still need to

find £8m even after taking £20m from Lothian Buses, which the company is expected to produce on top of its normal dividend and despite the acknowledged disruption to its services the tram work will cause.

But here’s the sting: “The council will need to finance this from its revenue budget.” The revenue budget is the cash for all council services apart from housing, so the council’s latest statement effectively dismisses something as a “misconception” which its own tram business case clearly says could have a financial implication for other budgets. So not a misconception at all but a legitimate concern.

Cryptically, the business case says that £7m of this £8m comes from the existing tram line and would have arisen anyway, which suggests a cost is being switched from one area to another. But it’s still a cost the tax-payer has to meet.

In the strange world of public finance, when funding holes get down to single figures, the problems seem to disappear. What’s a million here or there between friends, after all? The same approach is being taken to

the funding for the new Meadowbank sports centre, still around £6m short of the £41m estimated cost which is predicated on a density of housing to which the local community is already opposed. It’ll be alright

on the night, folks.

Unfortunately, this means that whenever funding problems are cited there are demands to borrow more money as if there are no consequences. The council administration’s determination to press on with the tram extension has led to the understandable riposte of “if you can borrow for the trams you can borrow for this” to any argument that money is tight.

By far the loudest cheers at the Save Meadowbank meeting a couple of weeks ago were when the tram cost was mentioned and the speakers weren’t being complementary. Were they suffering under a misconception? I don’t think so.

BLOB The council’s latest trams communication effort is unquestionably commendable, and the 3.5 million social media views particularly impressive. But this has created a precedent for other consultations about

proposals with city-wide implications, given the perception the Meadowbank stadium consultation wasn’t extensive enough. Surely not another misconception?

Edinburgh set to lose pro ice hockey

A fortnight ago, I said it was hard to see what a revived Murrayfield Racers ice hockey team could achieve at the ageing Murrayfield rink that the now defunct Edinburgh Capitals couldn’t. It appears the Elite League agreed and has rejected Racers’ bid to take up the vacant Capitals’ slot even though it does not yet have another applicant. So having lost pro basketball, Edinburgh is now set to lose pro ice hockey and still doesn’t have a decent concert arena.

Asda-Sainsbury’s merger may lead to closures

Sainsbury chief Mike Coupe’s claim that the Asda merger will not result in store closures runs thin in Chesser where the Asda superstore is flanked by Sainsbury supermarkets at Longstone and Gorgie. Not that the new

company will want to give up sales to a rival, but three big stores within two miles of each other doesn’t make sense. What about turning Longstone into, say, a garden centre? Oh that’s right, the council rejected an application by B&Q to expand its store on the site because of traffic impact ... and then let Sainsbury build a supermarket with a car park underneath. Genius.