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Trams off the rails?

Douglas Fraser | 20:05 UK time, Wednesday, 30 September 2009

It seems that if you suggest all is not well with the Edinburgh trams project, that can be "deeply damaging to the progress of the project".

That's according to the spokeswoman for Tie, the company in charge.

She was responding to the claim by SNP MSP Shirley-Anne Somerville that the £545 million budget could be forced up to something between £650m and £750m, and the trams will arrive years late.

Jenny Dawe, leader of Edinburgh City Council leader, responded: "The funding situation and projected delivery date for trams running on the street has not changed since being reported to the council last month".

That's reassuring. So all we need to do is find out what was reported to the council last month.

And here it is. It shows costs going up because of the well-known dispute between Tie and its main contractors: "Known areas of increased costs" included "the need for additional commercial and legal support, increases in re-charges from partners, extra traffic management cost and other related costs such as those associated with unexpected ground conditions".

Already, £7 million has been added to the utility diversion works, or 12% of works value.

With the dispute to be resolved through mediation, "it is unreasonable to expect that all adjudication outcomes will be awarded in favour of Tie Ltd".

In conclusion: "Given the above issues, it is now considered that it will be very difficult to deliver the full scope of Phase 1a within the available project envelope of £545m. Until the key issues are resolved through the contractual and legal process, it will not be possible to forecast accurately a revised budget outturn".

That's right. When the council leader said the funding situation has not changed since being reported to the council last month, what she didn't mention is that there is now no price tag at all. It's just as open-ended as when the council nodded this Status Report through on August 20.

The explanation is that this approach is smart negotiating: don't tell the other side how much you can afford.

However, recollection of the notorious Holyrood parliament building project is that, despite lengthy legal wrangling over cost, there was always a total amount placed on contracts already let, mid-range for contract prices expected, plus a calculation of risk assessment.

You may recall from nine years ago that a failure to admit the scale of that project risk assessment had Donald Dewar close to resignation, because he felt he had misled the Scottish Parliament. But Tie and Edinburgh get round the problem by offering no figure at all.

Even when I asked if the £147,030,154 being spent by Tie in the current year is on budget or not, and how that fits with the £361,765,661 spent in total by the end of this financial year, I couldn't be told a figure for what the budget had been and how these figures compare to it. I was told, however, that six months in, this year looks like it is "working well to the budget".

If the tactic is not to tell the contractor how much Tie is willing to pay on behalf of the city, perhaps it would be smarter to tell the consortium that the city can't actually afford the money to which it is already committed.

In addition to £500m - grudgingly given by the Scottish Government because it lost an early vote to its combined opposition soon after the 2007 election - the £45m promised by the council was based on assumed contributions from developers and land sales.

But now, of course, the developers have hunkered down for the recession, and land prices have plummeted.

So after a property consultant looked anew at the books, the plan now is for the council "to meet its obligations to the tram project by funding loan costs and interest payments during the economic downturn and repaying the capital once the level of developer contributions and capital receipts recovers".

According to DTZ consultants, that doesn't look likely until 2014.

If the budget goes over the £545m, and the SNP Government is unwilling to pitch in more - which it will be - the city will have to borrow more. If Shirley-Anne Somerville is even half-way right, it will have to be a lot more.

Where does this go next? We may not get an outcome to this legal mediation until the end of January.

And meanwhile, it goes on the buses, with the drive to put the tram company under the same corporate heading as Lothian Buses, to be known as TEL.

To those who don't know Edinburgh, its municipally-owned bus company, with its quality fleet, is a source of quiet civic pride. Its most recent figures were in the red, partly through fuel costs, but also because tramworks have made travel across the city so unattractive.

If the buses have to take on the debt that comes from a possible tram overspend, then don't be surprised to see FirstGroup or Stagecoach circling, vulture-style, over the city.

To suggest as much, however, may be "deeply damaging to the progress of the project".

So it's probably best to hope for the best, eh?


  • Comment number 1.

    "And meanwhile, it goes on the buses, with the drive to put the tram company under the same corporate heading as Lothian Buses, to be known as TEL."


  • Comment number 2.

    Sheffield was so far behind the councils projected revenue that they had to sell the tram network off to Stagecoach for £1M after spending hundreds of millions on it. So Stagecoach could in theory get the bus service to pay for the tramline, then pick the tramline up too for next to nothing, there is a precedent.

    Therer is no point the SNP hiding behind the vote in Douglas's article, they rubber stamped they are in power and they are accountable. Will they just wait until near election time and posture again? The residents of Edinburgh deserve more for all we have put up with from this inept council and tragic lack of comprehension about the traffic infrastructure.

  • Comment number 3.


    The real individuals who should be held to account are those who brought forward the trams idea and who backed it in Parlaiment. In this case, the SNP voted against the project, the public have the right to know where each party stands on the matter! How dare you suggest otherwise simply because you may disagree for what the group stands for.

    As I said, the SNP was against the project and the public, come the next elections, should keep that in mind. It was not the SNP Government who deicided to pay hundreds of millions... for well, nothing really.

  • Comment number 4.

    I seem to recall that Andrew Burns, the "brain" who gave us an £8 million referendum on a congestion charge which was a foregone conclusion for a resounding NO vote, thus throwing taxpayers money down the drain, was also instrumental in introducing the George Street rectractable bollards ballsup. Was'nt it this same councilor who laid the groundwork for the trams "project" which no one wanted in the first place and is costing Edinburgh hundreds of millions which could have been better spent on badly needed social housing or improved health care. Now this self same Andrew Burns is trying to make political gain about the mismanagement of the trams project he himself "masterminded". The blame for this entire trams debacle can be fairly laid at the feet of this deluded individual who has tried to make his mark on Edinburgh for his own posterity and his elevation in the Labour Party, which is now as likely as getting this tram system for under a billion quid by the end of 2015.

  • Comment number 5.

    Like many other people in Edinburgh, while regretting the combination of mismanagement and bad luck which has dogged the trams scheme, I am looking forward to the positive impact it will have on our city, and want to see this initial investment built upon, not thrown away. The proposed line 3, which would link the south of the city and the Royal Infirmary with line 1, will be cheaper to build and have a greater impact. The danger is that the political ill-will that has been generated during the construction phase will sour the project for a long time. For the good of our city I hope that won't be the case. We have had precious little investment in public transport in Edinburgh for many years. Trams can and will work well for our city.

  • Comment number 6.

    As a nation we are already the jibe of many jokes / critics around the globe, but when we do it, we do it with style aka TRAMS / PARLIAMENT / FOOTBALL etc, etc

  • Comment number 7.

    #5 DoogieH

    Please explain the 'positive impact' this glorified 22 bus route is going to have on the city and, more importantly, its residents.

  • Comment number 8.

    A good point made by Douglas Fraser, what are the actual figures? They couldn't/wouldn't come up with them because of fear of the reaction it would rightfully get. If my council tax goes up to cover the massive black hole of cash that just got bigger I will leave the city and live outside the boundary. Unfortunately nobody will want to BUY my property BECAUSE of the council tax...
    And what's this I hear bout overhead lines being required on some parts of the route?

  • Comment number 9.

    It certainly seems like a lot of dosh to replace a couple of bus routes with things that are actually not dissimilar to buses.

    Looks like the SNP might have been right about this, doesn't it? Are the opposition parties in the Parliament still chuffed they forced the tram scheme through?

  • Comment number 10.

    This tram project has gone too far.

    May 2008, the tram project was initially billed at £220 million, it was finalised at £293 million. The total cost of tram work soon came to a staggering £512 million with £40 million contributed by the City of Edinburgh Council, which soon went up to £45 million and there are reports that this has gone up to £50 million. Now the Council will not disclose the current cost. They ambiguously say over £512 million but under £545 million. An insider quoted £750 million and at minimum, £650 million. A source has put the figure to £524.5 million and that the project will exceed £550 million. The contractors were given a set figure but they asked for £80 million extra along with another year. Now that figure lies between £80 million and £100 million.

    In January 2005, officials changed the completion date of the trams from 2008 to 2009. September 2006, the date is changed from July 2010 to February 2011 which was further put back until July 2011. February 2009, the date is proposed for November 2011. Dates are now emerging for completion from anytime between 2012 and 2016.

    Work on Princes Street did not commence until 3 months after the closure. The City of Edinburgh Council recieved the rails in November 2008 and to the disgust of Leith citizens, the Council announced that the laying was postponed for three months and tracks would be laid at the end of January 2009.

    In September 2007, the Edinburgh Airport Rail Link is cancelled. April 2009, the £87 million Line 1b is postponed indefinitely. Only Line 1a is under construction for a staggering cost at a reduced capacity, serving only one stop on the entire length of Princes Street and omitting any stops opposite the Edinburgh Waverly Train Station.

    1st October 2008, the Mound and Prince Street are closed. 2nd October, both are reopened. January 2009, Princes Street is announced to be closed for 8 months. Over two weeks later in February, it is announced to be closed for 10 months. I live in Edinburgh and from what I can see in the 8 months that have gone by, the work on Princes Street will not be finished in 10 months.

    The projected figures for the operation of the trams are terrible:

    £13.2 million - income in 2012
    £17.3 million - operational cost in 2012
    £2 million - anticipated loss in 2012
    £4 million - actual loss in 2012
    £300,000 - pre-tax profits in 2012 subsidised by the buses
    £1 million - profit in 2016
    £9 million - profit in 2031

    In 22 years time, the trams will make £9 million in profit! A £545 million project to bring in £9 million?

    All of this information is freely available from the City of Edinburgh Council, TIE and news sources.

    This whole project is destroying Edinburgh. No one wants the trams. The people who voice support for the trams work for the council. The trams are nothing more than a white elephant for Edinburgh. The Glasgow Airport rail link, the Borders rail link would have better suited Scotland and serve far more people.

    I can not fathom Jenny Dawes audacity to criticise Shirley-Anne Somerville for accounting the price increases from her source which is part of TIE. Every single year there are numerous scandals, price hikes and controversies surrounding the who thing. The Council would like the citizens of Edinburgh and Leiths to believe their own figures. How many times have the figures kept increasing?

    It was announced that the Council Tax would be frozen again for another year but the money for all of this is going to have to come from somewhere!

  • Comment number 11.

    As far as the overall costs are concerned the numbers in the original finalised estimate were correct, but not in the right order for £293M read £923M.
    This is just a small mistake compared to the last large development in Edinburgh when one of the numbers was missed out completely, £40M became £440M.

  • Comment number 12.

    Well said Thomas, I don't mind political parties being blamed for what they have done but I truly object to them being blamed for something they voted AGAINST.

    A minority government cannot ride rough shod over the rest , sadly the reverse is true and the Lib/Lab/Con did just that.

    So the blame lies firmly at their door, no lies and spin can alter that.

    Interestingly ,from all that I read on blogsites at the time, it would seem that the good citizens of Edinburgh were less than enthused by the wee tram.
    They now have the evidence of mess and disruption which, to more or less a man,woman and child ,they predicted.
    Not to mention spiralling costs.

  • Comment number 13.

    I live in the future and the trams are a disaster for Edinburgh. Spiralling costs and a tram line that becoems a tram strip is not funny. Please read all about it at


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