Edinburgh council pays out £1.1m to insure tram extension against terror attack

COUNCIL bosses are to pay out £1.1 million on an insurance policy protecting the tram extension against being delayed by a terrorist attack or a flood.

Work on the tram extension from York Place to Newhaven is due to start in November.

But opposition councillors said the move underlined the scale of the financial risk involved in the project.

Construction work on the £207 million extension down Leith Walk and on to Newhaven is due to get under way next month and be completed by 2023.

An official notice on the public contracts website announces the award of the contract for the insurance on the Edinburgh Trams York Place to Newhaven project, covering construction all risks, delay in start-up and third-party liability.

Tory group leader Iain Whyte said: “There are all sorts of questions here.

“I think anyone reading this will think it’s an extremely large amount for what are very unusual events.”

Lib Dem transport spokesman Kevin Lang said: “Last week we found the council was already raiding other budgets to help pay for works for the tram extension and there is still real uncertainty over how much the project is ultimately going to cost.

“The simple fact the council is procuring insurance on such a level underlines the significant financial risk there is, in the event of either a cost overrun or a significant delay.

“A big concern of ours was the fact the extension was approved without knowing the final conclusions of the independent inquiry and being able to incorporate all the lessons into this project.”

The insurance contract was awarded to QBE Insurance (Europe) Ltd in two lots - one for £605,937 to cover “construction ‘all risks’, existing structures and advanced business interruption, including terrorism”; the other for third-party liability valued at £644,000.

A council spokeswoman said: “Like any major infrastructure project, the Trams to Newhaven project has procured insurance against third party liability, as well as damage to the contract works due to what is termed an ‘insured peril’. An example of an insured peril in this instance would be a flood event which caused damage to aspects of the infrastructure under construction, leading to a delay in passenger services starting and hence a delay in income from the new section of tramline.”