Cost of cancelling trams cut by £19m

0
Have your say

TRAMS bosses today admitted they had got their sums wrong – on the day councillors decide whether to carry on with the project.

The estimated cost of cancelling the scheme was cut by £19.5m after it was discovered officials had “double counted” some of the works.

The council now says the up-front bill for scrapping the trams would be £161 million instead of around £180m. The overall cost of cancellation is now estimated at £610m.

It is the latest in a series of changes in the figures presented to councillors on the costs of abandoning the project.

The original estimate of £750m, published in June ahead of the last trams debate, was never officially confirmed and officials now say the real figure was £690m.

But they say that was based on a “hostile” split between the council and the contractors.

Consultations with the contractors involved suggested an amicable agreement would mean a bill of £630m.

The latest revision, due to the double-counting, lowers that to £610m.

The council’s report for today’s meeting, published just last Friday, gave the figure of £180m for the initial one-year cost of cancellation, but that was amended yesterday to £161m.

A spokeswoman said: “The finance guys looked at it and realised they had double-counted some of the priority works. It was a genuine error.”

A senior official said: “The figure in the report has been adjusted to £161m from £180m. This relates to the one-year revenue impact that would fall to the council in the event that the project was cancelled.

“This figure is calculated by taking into account the agreed walk-away figure from the contractor, adding that figure to the other costs and commitments on the project to the end of August less the money paid out to date. This total walk-away figure adds up to £610m.

“The total cancellation costs has never been £750m. Councillors were briefed on a confidential basis in the lead up to the council report in June where the cost of cancellation was estimated at £690m. This number was based on a Legal and Quantity Surveying analysis of the entitlements the contractor would have under the contract.

“The council have now received a walk-away figure from the contractor, though this is not legally binding, which brings the cancellation figure down to £610m and the subsequent revenue write off to £161m.”