'We're bust now if we cancel' warning to council over Edinburgh tram extension project

A row has broken out over Edinburgh City Council’s tram extension project, after an opposition council leader warned “we’re bust now if we cancel, or we might be really bust in three or four years time if we carry on”

A new financial report, carried out on behalf of the council by London-based consultancy firm Steer, shows that the cost of cancelling the tram extension to Newhaven could be less than the cost of completion.

The report lists four possible scenarios, each dealing with varying levels of demand for public transport, which the scheme relies on to fund its £207.3m budget.

While the first and most optimistic scenario assumes that demand for the central tram line returns to pre-covid levels by 2022, and demand for journeys to the airport returns by 2023, the fourth and most pessimistic scenario projects a drop in demand of just 20 per cent in the years following the pandemic, which would force the council to use £93m of its reserves and take until 2055 to pay back.

'Bust' warning: Councillor Iain Whyte

Now, opposition councillors have warned the council could be faced with difficult decisions in the future in order to continue financing the tram extension to Newhaven.

At a meeting of the council’s transport committee to hear the report, Inverleith councillor and Conservative group leader Iain Whyte introduced an amendment to send the report to the next full council meeting for approval.

He said: “I think you will agree with me that the discussion this morning has largely been about financial risk, the risk to the reserves of the council and the cost to the council of either continuing with or cancelling this project.

“It strikes me that those risks show a huge downside of either option, and all of that has been surrounded by a huge amount of uncertainty, which as we’ve heard from officers we haven’t done any planning to see how we could pay for any of it.

Work on the 'trams to Newhaven 'project is already proving controversial

“It strikes me, also, that basically what we’re saying is, given our reserves are already being run down because of the Covid situation this financial year, we’re not making savings we said we would make, that essentially we’re bust now if we cancel, or we might be really bust in three or four years time if we carry on and the passenger demand doesn’t come back.

“All of those risks and scenarios to me are financial items, and unlike the business case where you decided to put us in this risky situation and go ahead with trams, paid for through risky future revenue, unlike that, this hasn’t been presented to the finance and resources committee.

“At this stage, the only option I have to make sure those councillors are aware of this is to send it to full council.”

Pentland Hill councillor Susan Webber, Conservatives, seconded his amendment, and warned the council could be forced to make cuts to services to fund the tram extension.

Councillor Webber said: “The administration has repeatedly assured us that the trams will not have any impact on council services, but my line of questioning today clearly dictates there is going to be some choices to be made on capital, reserves and revenue going forward.

“Those choices will be on all our other services, whether it be health and social care, schools, communities and families - we cannot, it is not responsible, to make a decision of this magnitude at the transport committee.”

Liberton and Gilmerton councillor and chair of the transport committee, Lesley Macinnes, SNP, said: “I would like to draw attention to the fact, not only the level of attention and detail that has went into this report, but also draw attention to the fact that I do not appreciate the kind of inflammatory language that’s been used around this to talk about us ‘going bust’ over this.

“It’s a quite clear attempt to find a headline, and I think it’s irresponsible at this point, when we’re attempting to make a decision - a complex decision and complex understanding of what this can deliver for the city long term and in short term, and how we might proceed on this.

“I would also point out that hindsight’s a wonderful thing when you want to apply it, and I think it would be very difficult to turn round and criticise us for having taken the decision at the time, which was based on a full, comprehensive, detailed, and admired full business case - of which we took a decision as a council.

“I hasten to add, councillor Whyte, it is not me choosing to put the council at risk over this, that was a democratic decision by this council and I would appreciate a slightly tighter use of language when you’re referring to that type of decision in the future, and not attempt to place it on any one individual’s shoulders.”

Councillor Whyte’s amendment was voted down by four votes to seven, however, he invoked a council rule that allows members to send agenda items to full council for ratification, as long as a quarter of committee members agree.

As councillor Whyte had the backing of three other members of the committee, the report will now go before the full council for further discussion.

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