Tram tax shortfall leaves bosses hunting for 'plan B'

TRAM bosses are under pressure to find a "plan B" for financing the project after new figures showed just £4.5 million had been raised through a controversial tram tax.

Information released by the city council showed that between April 2006 and February this year the local authority secured 4,569,847 from developers along the route.

Royal Bank of Scotland, Scottish Widows, Sainsbury's and Miller Homes were among those contributing to the project, but the final total leaves bosses well short of the 25m they need. The shortfall today led deputy council leader Steve Cardownie to accuse tram firm TIE of having a business case "built on sand".

Earlier this month, it emerged that 108 developers had committed 12.5m in contributions to the cost of the tramline.

But figures obtained by the Evening News show that less than 5m has actually been received by the council.

There are now suggestions that the council may be forced to borrow against the future income of the project.

The use of so-called "tax increment financing" is set to be used by the local authority to help bankroll the 84m redevelopment of Edinburgh's Waterfront.

Council bosses have raised around two-thirds of their 45m contribution towards the project, but only after borrowing 21m.

Cllr Cardownie said tram bosses needed a "plan B", but said he would fight "tooth and nail" to make sure the money did not come from council budgets such as schools and roads.

He said: "The whole business case for the tram project was built on sand. The use of developers' contributions was another optimistic part of the plan predicated on assumptions.

"Surprise, surprise it's not happened. The business plan was full of presumptions and they have been found wanting."

Council chiefs have struggled as a result of the recession, with major projects such as the 850m redevelopment of the St James Centre pledging just 1.4m in "tram tax".

The Scottish Civic Trust has described the uniformed charging regime as tantamount to taxation, adding that the policy now needs to be questioned.

A city council spokesman said: "We are in constant dialogue with developers and remain optimistic that contributions will pick up."

Two-thirds of project's budget already spent

ALMOST two-thirds of the budget for the tram project has already been spent, new figures show.

More than 350 million of the total 545m has already been used, according to Transport Minister Stewart Stevenson.

Responding to a parliamentary question from Lothian MSP Shirley-Anne Somerville, Mr Stevenson said 146m had been spent since the last update in December 2008. At that point, 206m had already been spent.

Last year, Ms Somerville said sources close to the project believed it would not be delivered for less than 750m, denied by tram firm TIE.

The Scottish Government is contributing 500m to the scheme but has said that "not a penny more" will be given to the council.

Earlier this year, Bilfinger Berger, the German contractor involved in a dispute with tram bosses, said it would take at least another 100m above its budget to complete the project.

TRAM TAX PAYMENTS

Highest

October 2007: 767,705 from New Edinburgh Ltd for a non-food retail warehouse at Hermiston Gait

October 2008: 572,396 from Kilmartin Property Group for the development of offices on Greenside Row

November 2009: 439,631 from Scottish Widows for the development of Exchange Place offices in Semple Street

Lowest

November 2008: 1,000 from Majestic Wine Warehouse Ltd for development of premises on Leith Walk

July 2008: 1,400 from Whitelaw Associates for change of use to a guest house on Queen Street

September 2009: 5,000 from Grant Caledonia Ltd for residential development in Saughton Crescent