Good news on tram funding but don’t turn it bad - Iain Whyte
Edinburgh’s tram line seems to be the perennial example of something that is both good news and bad news. Although popular with passengers it was hugely costly and disruptive to build over two lengthy periods. Passenger numbers are yet to reach what was projected and it doesn’t break even once borrowing is accounted for.
This week more good and bad news emerged over the original tram project in a report to council. Councillors knew the bad news from a 2023 private report that the council maladministered the tram project.
The council agree with Lord Hardie’s Tram Inquiry that significant failings in risk management and governance occurred. No surprise to the residents who watched work grind to a halt and cost double what was supposed to be a fixed price.
The council has finally admitted this publicly because it has settled a legal action out of court with the law firm that advised on the original tram contract.
This part is the good news because it will ultimately mean some compensation for the taxpayer over the project’s failings.
I can’t say what that compensation will be because it is confidential as part of the settlement, although it will eventually be published in the council’s annual accounts.
What I can say is it will be a significant sum as the council sued for £222m. An out of court settlement must mean a negotiated sum somewhere between zero and the claim.
The key thing is that any windfall to the council should be considered as hard-earned taxpayers’ money. It must not be squandered.
Yet already the Labour administration and other councillors are asking officers to think up “priorities for the spend”.
They have obviously rejected out of hand the concept of paying off some of the debt incurred in the tram project, even though this would reduce the future burden on the taxpayer as interest rates are rising.
This is one-off money, so spending on day-to-day services will just bring a problem when the funds run out.
If we are not to pay off debt, we should find a project that everyone can get behind and leave a legacy.
My bid would be to repair Princes Street’s pavements.
One thing is certain. Whatever the sum it won’t be enough for more tram lines.
Even £222m is less than ten per cent of the projected cost of the line from Granton to the Royal Infirmary.