Council to hand back millions in latest tram twist

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THE tram project was today facing another hole in its funding after it emerged council chiefs may have to hand back millions of pounds in business contributions if the route only goes as far as Haymarket.

Payments by companies due to benefit from the trams were supposed to raise £25 million of the council’s £45m share of the project costs.

But last week’s decision to stop short of taking the trams to the city centre could mean the council has to hand back the £5m it has already collected and write off the other £20m.

Council chief executive Sue Bruce was today meeting the contractors building the project to discuss the way forward following last week’s surprise decision.

Meanwhile, a consortium of international transport companies is said to be interested in taking over the tram project.

An earlier offer by Canadian train manufacturer Bombardier and RATP, which operates the Manchester trams and Paris Metro, was rejected in July. But it was claimed today the consortium was still interested and believed it could complete the route to St Andrew Square for £169m and all the way to Newhaven for £214m.

The consortium was also said to be offering to finance the project and be paid once the trams are operating.

However, city development director Dave Anderson said the consortium’s figures had to be treated with “a huge degree of caution”.

It is understood leaders of the party groups on the council will hold talks tomorrow and a special council meeting, which may be asked to reverse the Haymarket decision, could be held as early as Friday.

Council leader Jenny Dawe said she had been “staggered” at the level of public reaction to the outcome of last week’s meeting when Labour and the Conservatives combined to back the option of halting the route at Haymarket instead of borrowing £231m to take it to St Andrew Square.

She said people had been sending emails asking “Can’t you revisit this because it seems the daftest solution of all”.

Council rules say there must be a “material change” in circumstances before a decision can be reconsidered within 12 months.

Scottish Lib Dem leader Willie Rennie suggested a Scottish Government decision to withhold the remaining £60m of its funding from the project could provide such a change.

He said: “The Scottish Government will not want to fund this loss-making scheme. Their action could help stop the Haymarket scheme and resurrect the profitable St Andrew Square option.”

The Haymarket option has been estimated at £704m, but fears have been voiced that tens of millions of pounds could be added to the cost because of the need to build a turning circle.

Councillor Dawe said: “A turning circle will have to be fitted in somewhere, otherwise we will have one tram going back and forth.”

But the Labour group dismissed the concerns and called for the council administration to get on with the job of building the tram to Haymarket.

mblackley@edinburghnews.com