Tram funding plans to push cost of building line to £1bn

The SNP group leader, who opposes the project, spoke out after more details emerged of how the council intends to pay for the increased cost of taking the tram route from the airport to the city centre.

Next week’s full council meeting will be asked to endorse funding proposals put together by council chief executive Sue Bruce, which involve borrowing around £250m, to be repaid at £15.4m a year over the next 30 years. Total repayments over the life of the loan will come to £462m. Added to the original £545m budget for the project, it will take the full cost of the project through the billion pound barrier.

Depending on the outcome of the City Centre ward by-election, which was being counted today, the balance of power on the council could change, making it more difficult to get the plan through.

Cllr Cardownie said: “The project was originally to cost £545m to take us from the airport to Newhaven. Some people said at that stage it would be more likely to be £1bn. They have been proved right about the cost, but wrong about the route – we’re now going to be paying almost £1bn, but we’re only getting as far as St Andrew Square. We’re getting half the route for twice the price.”

But transport convener Gordon Mackenzie insisted borrowing was the best option. “It is exactly the same principle as using a mortgage to buy a house, “ he said.

The council says the borrowing will not affect council services. A source said cash to repay the loan would come partly from provision the council had made in its long-term financial planning for an overspend on the trams. Loans taken out in the 1990s at high interest rates were now coming to maturity, giving headroom to allocate extra funds to the trams. And fare revenue once the trams were running would also be used.The source said: “That money could otherwise have been used for other things, but there is nothing cancelled in terms of capital projects or council services.”

Meanwhile, the private company due to take over the trams project today pledged to bring in key staff who worked on similar schemes in Croydon, Dublin and Nottingham to ensure the trams are delivered.

International consultant Turner & Townsend, which is to replace council firm TIE as project manager, said it would use the expertise gained in its previous work on tram, light rail and rapid transit projects.

The move to appoint the company – revealed by the Evening News yesterday – is seen as the final demise of TIE, which critics have blamed for a lack of expertise in the past.

The arms-length company is expected to be wound down over the next couple of months, though it is understood it has to remain in existence as a legal entity for contractual reasons.

A spokesman for Turner & Townsend said its team working on the trams would be a mixture of staff already based in its Edinburgh office and others who had worked on the earlier projects.

Labour group transport spokeswoman Lesley Hinds said she was shocked by the move and voiced concerns about the cost involved. She said: “I have said a number of times that we should shut TIE down. But I was told the cost of that would be prohibitive.

“But now they are going to pay a private company.”

Anti-trams campaigner John Carson said: “Turner & Townsend must be the only consultants they haven’t employed already. The contracts are a mess and no amount of project management will change that.”

Neil McCowan, director at Turner & Townsend, said: “We will bring an unrivalled level of experience and skill to the table, which we’ll use to ensure it is delivered in the most cost efficient manner possible.”

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