Crisis deal to rescue tram cost city £66m

The Evening News can reveal that the council agreed to pay the massive sum to settle the dispute with the construction consortium headed by Bilfinger Berger that had halted the project.

Council chief executive Sue Bruce thrashed out the deal in top secret talks with the contractor that were held at the luxury Mar Hall hotel and chaired by London-based mediator Michael Shane.

The fee covered costs relating to the changes in the design of parts of the project and also who was liable for delays to work caused by problems that arose during construction. But the real bill will be far higher when legal fees and administrative costs are taken into account.

It is understood the £66m is on top of previous payments totalling around £20m made by the council to settle a host of disputes with the contractors.

It is already known that the mediator cost £14,700, while the hire of Mar Hall cost £7000 and £1300 was spent on the nearby Gleddoch House Hotel, where seven council staff racked up another £2382 in expenses.

City leaders today said all of the Capital’s councillors were responsible for the claims as they agreed to sign the original contract.

Councillor Gordon Mackenzie, the city’s transport leader, said: “The council and the contractor agreed on the figure of £66m against outstanding claims and that is part of the overall package of £776m.

“We were already in the realms of 700 or 800 claims thus far and that could have increased. This figure settled all these claims and got the project moving forward.”

The figures have sparked further calls for First Minister Alex Salmond to call an immediate public inquiry.

Cllr Mackenzie laid the blame at those who drew up and signed the original contract. He said: “The claims settled for things we thought were covered by the original contract, so the original contract has been shown to be flawed. Clearly, any inquiry will look at how that arose and it would be wrong of me to pre-judge that.”

Cllr Andrew Burns, leader of the city’s Labour group, said: “This sum of money is very significant and this is the type of issue that will be looked at very carefully by any public inquiry.

“What I do not understand is why it has taken so long for these figures to seep into the public domain.”

The figures emerged as the council is going through signing off its annual accounts for the 2010-11 financial year. Audit Scotland had been chasing figures relating to the tram project right up to its deadline for signing them off at the end of last week.

The council has also formally written off £6m of work carried out between York Place and Newhaven, following the decision to end the line in the city centre.

But local representatives do not want the tram line to the Waterfront axed permanently.

Cllr Allan Jackson, convener of the city’s audit committee, who represents Forth ward, said: “I will be bending over backwards to finish the line to the Waterfront.”