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Edinburgh tram project hits buffers as end of the line moves

Council votes for the network to stop short of the city centre after total cost of plan was set to pass £1bn

Severin Carrell, Scotland correspondent
guardian.co.uk, Thursday 25 August 2011 20.23 BST

Edinburgh's crisis-hit project for a new tram has been thrown into chaos after opposition councillors voted to end the line before it reaches the city centre as its total cost threatened to exceed £1bn.

During dramatic scenes on Thursday afternoon, Labour and Conservative councillors won a rebel motion to stop the first phase of the project at Haymarket, 11 stops short of its original destination.

Their revolt came after it emerged last week that building the line into the city centre would cost more than £1bn in additional loans and interest, nearly double its original £545m budget, with repayments of £15m a year for 30 years.

According to the last detailed budget presented to councillors, ending the trams at Haymarket, west of the city centre, will lose the scheme £4m a year.

It also means the trams will end roughly two miles and three stops short of St Andrew's Square, next to the city's main train and bus stations, which was chosen as a last-minute compromise to save the project from complete collapse. Running the line that far was expected to generate £2m a year in profits.

The project, once seen as the spine for a network of tram lines around the city, was originally intended to run for 11.5m (18.5km) from Edinburgh airport, through the city centre, to Leith and then Newhaven on the coast.

The shock vote raises significant doubts about the future of the project, which has already been hit by bitter contractural disputes, continual disruption for residents and political battles within the council's ruling coalition between the Liberal Democrats and Scottish National party.

The SNP abstained during the critical votes, leading to a humiliating defeat for Lib Dem council leader Jenny Dawes and its chief executive, Sue Bruce, who had brokered a significant face-saving deal on the trams earlier this year.

In line with the party's national policy, the SNP has opposed the tram project, arguing it was a significant waste of public spending. This left Labour and the Tories able to narrowly defeat the Lib Dems and the Scottish Green party.

The project's future came under even greater doubt when it emerged on Wednesday that council officials had overestimated the cost of cancelling the entire project by £100m and that the total cost of building the line could hit £1bn.

They had originally calculated it would cost £750m to abandon the tram line completely, compared to £700m to take the line to Haymarket and £770m to take it to St Andrew's Square. This was seen even by its critics as a persuasive reason for pressing on with the project.

Officials then admitted they would need to borrow £231m in order to build the line, with an additional cost of £15.4m a year in repayments for 30 years. The rapidly escalating costs led to fears amongst trades unions that the council would eventually sell Lothian Buses, the city's publicly owned bus company, to pay off the tram's costs.

Labour and the Tories ignored repeated pleas from business leaders, including the chamber of commerce and the Federation of Small Businesses, to press on with the full project during Thursday's votes.

BBC 26 August 2011 Last updated at 15:51 GMT Share this pageEmailPrint

Edinburgh trams: Plan to stop at Haymarket 'bonkers'

The chief executive of Edinburgh's Chambers of Commerce has described the decision to cut short the controversial city tram route as "bonkers."

The line will now only go between Edinburgh Airport and Haymarket.

At a vote on Thursday councillors threw out a proposal to borrow an extra £231m to extend the line to St Andrew Square.

Graham Birse told BBC Scotland that many businesses in the city would be dismayed by the sudden change of plan.

He said: "It seems to me to be a political solution and not a practical one.

"No business person in Edinburgh would take to their board the proposition that we should invest £700m in a project that is going to make a £4m a year annual loss.

"And to borrow £11m a year to sustain it is just bonkers."

The decision prompted Edinburgh MSP Margo MacDonald to call for a public inquiry into the fiasco.

Officials have warned that a tram line to Haymarket would require a £3m to £4m ongoing annual subsidy, which could also impact on the profitability of Lothian Buses.

The Lib Dems lost the council vote after their coalition partner, the SNP, abstained.

SNP councillor Tom Buchanan has defended his party's decision not to back the Liberal Democrats.

He said SNP members abstained because they think there should be a referendum and he has called for full a public inquiry.

He said: "The people of Edinburgh have a right to say whether they wish this project to continue, whether they wish it go to Haymarket, whether they wish it to go to St Andrew Square, whether they wish it to go to Newhaven.

"Why are they not prepared to let the people speak on this?"

Labour's move to have the line stop at Haymarket was supported by the Tories and was passed with 25 votes.

Edinburgh Labour leader Andrew Burns said the decision to complete the tram project to Haymarket was the option with "least risk".

Following the meeting Edinburgh Council leader Jenny Dawe described the decision as "heartbreaking".

Gordon Mackenzie, Edinburgh City Council's transport convener, said Princes Street would still have to be closed to have the tram lines redone on health and safety grounds despite the trams not travelling that far.

He said: "Clearly we are all appalled by the decision.

"We have started working on the consequences and have met with the head of legal services to plan how we deal with this, there are a lot of loose ends here.

"The quote to Haymarket was based on continuing through to St Andrew Square.

"Now the line is terminating at Haymarket we have got to put in a terminus there for it.

"That needs to be designed, which will take several months, causing delays.

"Delays cost the council £300,000 a week, so already we are into a very big number."

Edinburgh's city-centre tram back on track – but costs may hit £1bn

Councillors reverse decision to stop tramline at Haymarket, two miles short of the city centre

Severin Carrell
guardian.co.uk, Friday 2 September 2011 20.28 BST

Councillors in Edinburgh have voted to rescue plans to build a tram line into the city, which could eventually cost £1bn.

Eight days after residents were told the council had voted to stop the trams two miles short of the city centre, it agreed by a majority to reinstate the longer route at an emergency meeting on Friday.

The city's ruling Liberal Democrat and Scottish National parties voted together to save the line after the Scottish government threatened this week to pull £76m in essential funding.

The vote, which was supported grudgingly by the Labour councillors who last week voted to stop the line, came less than four hours before a deadline from the city's main contractors, the engineering firms Bilfinger Berger and Siemens.

After last week's decision to stop the project at Haymarket, the council was warned it had until 5pm on Friday to agree a route or end the contract and pay £161m in cancellation charges.

Jenny Dawe, leader of the city's ruling coalition, ignored calls that she should resign for mishandling the scheme, but acknowledged that last week's vote had "trashed" the city's reputation.

She said: "What we have now is a decision to go to St Andrew's Square, which I believe is the right decision for the city."

Bungled decisions and setbacks have increased the project's official costs from £520m in 2008 to the latest figure of £776m. The new line to St Andrew's Square in the New Town will cost the city about £86m per mile, but that figure too is expected to rise.

Although officials hope to strike a more competitive deal with the contractors or get more government funding, the city will have to borrow up to £231m to build the extra section of line. The costs of that loan over the next 30 years would push the total figure beyond £1bn.

That money will be spent on building a line that will still end eight stops short of the destination agreed in 2008 – a terminus near the old fishing port of Newhaven on Edinburgh's seafront.

Proposals for Edinburgh to have a tram network began in 2000, under the then Labour-run council. By 2008, the aspiration was to have a full network of at least three lines, taking the trams from Edinburgh airport some 11.5 miles away through the western suburbs of the city, its famous Georgian New Town, and then on through Leith to serve an ambitious but now recession-hit new docklands housing project along the city's shoreline.Within months of the works beginning, costs began to balloon out of control. Digging work to clear 28 miles of known water, gas, electricity and telecoms pipes revealed further unrecorded utility pipes. The council also discovered that their construction contracts left the city carrying all the extra costs.

Councillor Gordon Mackenzie, the city's transport convenor, said that increased the costs of relocating utilities by 85%. As a result, tram officials confirmed last week the city has already spent £430m but has only laid 1½ miles of track.

This has infuriated the tram project's many prominent supporters, including Graham Birse, chief executive of Edinburgh chamber of commerce.

He denounced last week's Haymarket vote as "bonkers", and said: "There's plenty of evidence out there about the contribution that trams make to the prosperity of a city, the connectivity of cities and the image of cities as open for business and attractive to inward investment.

"In the time it has taken the Edinburgh tram scheme to develop, there have been 32 other schemes developed or delivered elsewhere in Europe."

Dawe believes the line to the city centre can be built for less than £776m and insisted that figure followed "very extensive risk analysis". He is hopeful that the first test runs of the city's trams will start early next year, and estimates the first commercial services could start in 2014.Critics of the project, including Edinburgh's Labour and Tory councillors, fear the £776m bill will quickly increase, hence their vote last week to stop the line at Haymarket. Andrew Burns, the Labour leader, said: "We must not be under any illusion that this project will remain at £776m. It will not."

Their predictions are supported by John Carson, an engineer who was involved in rescuing Railtrack and extending France's high-speed TGV to Amsterdam. He believes Edinburgh's tram project could cost £1bn by 2013.

"The current scheme is unworkable. The figures are highly suspect and they will be back asking for more money in a year's time," he said. "They will be asking for another £200m in a year, 18 months."He says part of the problem is the trams themselves, which weigh 57 tonnes and are 43 metres long.

"They're the most expensive, the longest and the heaviest trams in the world. They're not designed for Edinburgh," he said. "They should've bought what every other country and every other municipality has, the standard tram from 10 to 20 metres long."

Some polls suggest a majority of the city's 480,000 residents want the project entirely scrapped, disgusted by the rapid escalation in costs, the upheaval to their daily lives and the repeated errors made in its costings. Late last month, the council's lawyers found a £100m mistake: officials had overestimated the costs of cancelling the project by double-counting.

A straw poll this week by the city's commercial radio station, Radio Forth, found that 63% of more than 2,900 residents want the project scrapped, while 35% favour taking it to St Andrew's Square. Only 1.7% backed last week's vote by Labour and the Tories to stop it at Haymarket.

BBC 14 September 2011 Last updated at 15:43

Edinburgh trams: Ministers step in to finish project

Scottish ministers have stepped in to help run Edinburgh's troubled tram project, to ensure its completion.

A team of officials from government agency Transport Scotland has been sent in to take up senior positions at the city council.

At the same time, ministers have agreed to reinstate £72m of government funding they earlier decided to withhold.

The move came just hours before a deadline on resolving a dispute with tram contractor Bilfinger Berger.

Infrastructure Secretary Alex Neil said the government was taking forward the project in "partnership" with Edinburgh City Council.

But he stressed the government had powers of veto and "the power to direct", while insisting: "The buck still stops with the city council".

Major construction on the trams - due for completion in summer 2014 at a cost of £776m - had been halted more than two years ago, following a dispute over who should pay for additional costs.

Senior Transport Scotland director Ainslie McLaughlin will sit on the new project board set up to see the trams project through, while as many as four other staff at the agency will work with council officials in key, senior roles.

Mr Neil said: "The Scottish government has a strong track record, through Transport Scotland, of delivering major projects like the M74 early and under budget and secured significant savings on the three contracts to deliver the new Forth Replacement Crossing.

"As part of the arrangements put in place today, ministers will receive regular updates on the progress of the project, and will also retain a veto over strategic decisions in respect of remaining government funding."

Edinburgh City Council had earlier made a decision to run the tram line from the airport to Haymarket, rather than to St Andrew Square in the city centre.

That prompted ministers to withhold the remaining chunk of the £500m of government funding for the project.

But ministers have now agreed to provide the final £72m, after the council overturned its decision.

The original budget for taking the line from Edinburgh airport through the city centre to Newhaven, in the north of Edinburgh, was £545m.

Mr Neil said TIE, the arms-length company originally set up by Edinburgh City Council to deliver the trams, "effectively is no longer".

Edinburgh City Council, which had been given until midnight to settle the contract dispute with Bilfinger Berger, reached a resolution on Wednesday afternoon.