Edinburgh Trams to run at loss for fifteen years

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  By Angela Haggerty
 
Edinburgh City Council has revealed it expects the city’s trams to run at an operating loss for the next 15 years in the latest round of trouble to hit the controversial project.
 
Councillors were told in a report that an initial start-up loan of up to £3m would be required for the trams, which have already run up a massive bill of £776m, with possible £250m interest payments taking the potential final bill to more than £1bn. The trams are expected to finally launch next year – four years after the originally intended.

Edinburgh City Council is expected to receive around £51m in payments and dividends over the next 15 years but will have to cough up an estimated £85m in maintenance and refurbishment costs.  A spokeswoman admitted the council would also face any financial burden brought about by the trams underperforming.

The report also detailed plans to integrate the tram system with the city’s existing Lothian Bus services, with a new transport company to be created to oversee the new set-up.

The council’s transport convener, Lesley Hinds, insisted money would be ploughed back into the city’s transport system and bus services would not be affected: “This operating agreement will enable us to take full advantage of the depth of knowledge and expertise at Lothian Buses.

“Although the arrangements are still in draft form, we’ll ensure that any dividend drawn from income will go back into Edinburgh’s transport system and that there will be no financial impact on the city’s bus service.

“We’ll ensure that ticketing and timetabling are fully integrated across bus and tram and I’m determined that all modes of transport in Edinburgh are considered as we develop our approach,” she added.

Last year, Hinds described the fiasco as an embarrassment and said the people of Edinburgh would be ashamed at the money spent on the project and subsequent damage to the capital’s reputation.

The scheme has received waves of criticism since it was given the final go ahead in 2007 following a defeat of the SNP in Holyrood.

The SNP bitterly opposed the project and included plans to scrap it in its election manifesto, but the administration was defeated by a coalition of Labour, Liberal Democrats, Conservatives and Greens.

The price of the scheme has spiralled from its initial costing of around £375m and has been hit with endless snags.  Money was originally pledged by the Scottish executive in 2003 under Labour for three tram lines, but after disputes with contractors and two of the planned lines being scrapped the budget has been pushed higher and the development hit by delays, leading to calls for a public inquiry.

With the project costing at least double the original estimate, the final outcome will be a nine-mile route eight stops short of the original destination.

The latest report to councillors will be the subject of a full meeting next week and the council will be presented with a report in August finalising arrangements for the integrated tram and bus service.