Edinburgh Trams set for Scottish Government bailout amid plummeting passenger numbers and cash crisis

Edinburgh Trams have enough cash reserves to last only until July or August which could force government intervention

Friday, 1st May 2020, 7:30 am
Edinburgh Trams could be set for a government bailout due to losses caused by COVID-19

Edinburgh’s tram network could be set for a government bailout amid plummeting passenger figures and a cash crisis at the council-owned transport company, the Evening News can reveal.

Conversations between Edinburgh Tram’s parent company, Transport for Edinburgh, and the Scottish Government are ongoing over a potential bailout for the trams following similar support being provided to networks in England.

Passenger numbers on Edinburgh’s trams have dropped by 90 per cent since the beginning of the COVID-19 crisis, with the company only having enough in cash reserves to last until July or August.

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Edinburgh Trams could be set for a government bailout due to losses caused by COVID-19, however any cash forthcoming would not cover the tram extension.

If support is not forthcoming from the Scottish Government or does not cover the losses incurred by the trams, it is understood the current funding arrangements in place with Edinburgh City Council would be reviewed and the trams would continue to run.

This could see a renegotiation of the payments made to the council for the use of the track, or the council take back the maintenance contract for the network which it handed to Edinburgh Trams in 2018, although nothing has been confirmed and discussions with the council are not underway.

Cities including Manchester, Nottingham and Sheffield have all been promised support by the UK government to help prop up their tram and light rail networks, meaning potential funding could come to the Capital through Barnett formula consequentials.

Any cash from the government would cover the existing tram network only, with any funding for the tram extension coming through a future local government settlement, likely to include significant payments for the cost of fighting COVID-19.

Last week, the Evening News reported fears that the financial pressures on Lothian Buses could jeopardise the tram extension project, but no discussions have taken place between the council and the government about the potential need for new cash for the extension to Newhaven.

Last year, the company announced an operating loss of £9.4m after taking on the cost of maintaining the network, owned by the council, following years of steadily growing profit which had reached more than £1.6m in pre-tax profit in 2017.

Liberal Democrat transport spokesman Kevin Lang said it would be “unthinkable” if the trams were allowed to go bust.

He said: “If ever there was a time for the Scottish Government to get over its grudge against the Edinburgh trams, it is now.

“Whatever your view on the rights or wrongs of the original project, the trams are now firmly established as a key part of the city’s transport system.

“It is unthinkable that it could be allowed to go bust, especially when millions of pounds are being spent to expand the network.”

Claire Miller, the Green party’s transport spokesman, called for any money coming to the Scottish Government from support to English tram networks to be passed on in full.

She said: “Over the last 6 weeks the city’s trams, along with our buses, have done a fantastic job in keeping a service going so that essential workers, for example, can still get to work.

“But, of course, it has come at huge financial cost, given the dramatic decline in overall passenger numbers.

“Industry group UK Tram has been pushing the Westminster government hard to support the network through these times, so it is vital that when that support is agreed, the knock-on money coming to the Scottish Government is passed on in full to the tram operation in Edinburgh.”

Tory transport spokesman, Susan Webber, said the survival of the existing tram route should be a priority for the SNP/Labour administration.She said: “It really is positive news to hear about these ongoing discussions and I am aware this is only for the Tram service as it exists now.

“Such financial support for our capital city's award winning public transport network will be an essential and critical part of Edinburgh's recovery.

"Ensuring the viability of our existing bus and tram routes must be a priority.

“With the searing drop in passenger numbers that both have experienced, it is key that we prioritise financial support for the existing services. It is essential these must come first"

The council’s leader, Adam McVey, confirmed the council had written to the Scottish Government to ask for support.

He said: “We are committed to the continuing operation of Edinburgh Trams and Lothian Buses as crucial modes of transport for key workers.

“We have written to the Scottish Government to set out the current position, and to explore how Edinburgh’s transport companies can emerge from the current situation on a strong footing.”

A spokesman for Edinburgh Trams added: “Our key workers are currently providing one of Scotland’s critical national infrastructures through these challenging times.

“Our parent company, Transport for Edinburgh, is concurrently in discussions with Transport Scotland on what support may be available to enable us to continue to deliver this service for those who rely on us to make essential journeys by tram.”

A Scottish Government spokesman said: “The Scottish Government is providing financial support for public transport to maintain essential services.

“This is intended to offset the impact that reduced demand is having on the viability of local services, to maintain services for key workers and protect the industry for the future.

“We will work with Transport for Edinburgh to understand what the implications of Covid-19 will be for Edinburgh Trams and explore what support may be available.”

"We are not aware of plans to ask the Scottish Government for funding for any extension of the Tram network.

"We all want to see our capital city be a successful and attractive place to live, work, visit and do business. Transport connectivity has a key role in that, which is why both the Scottish and UK Governments have committed to jointly investing £600 million in the Edinburgh and South East City region Deal.

“The Edinburgh Tram Inquiry was established to look at how any mistakes or failures could be avoided in future major tram and light rail infrastructure projects and we look forward to receiving Lord Hardie’s findings when they are available.”