Runaway trams must be halted

Sunday 26 June 2011

Until recently, the most notorious public sector procurement project was the new Scottish Parliament building.

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However, the ongoing debacle of the Edinburgh trams scheme is beginning to make Holyrood look like a model of financial probity.

In the beginning, the case was clear. For £545 million, Scotland’s capital would get a tram link from the airport to Newhaven, on the north side of the city, via the city centre. The costs would be recouped once the line became profitable.

It hasn’t quite worked out this way. After years of incompetence, we last week learned that a shorter line to Haymarket would cost £700m, while a service to St Andrew Square would come in at around £770m.In other words, about half a tram line for 40% more than the initial price for a complete line.And whatever option is pursued, it will be delivered at least three years later than predicted.Amid the chaos, two things are clear. First, many of the problems stem from the disastrous contract agreed between the arms-length body responsible for the scheme, Transport Initiatives Edinburgh (TIE) and BSC, the private sector consortium delivering the scheme. This has resulted in endless disputes between TIE and German construction contractor, Bilfinger Berger.Second, the reign of departed chief executive Richard Jeffrey has to be questioned. After he took over in 2009, he adopted a strategy of pursuing Bilfinger legally. This ill-judged approach has led to virtually no work being carried out on the line and has racked up a multi-million-pound legal bill. Even worse, TIE lost many of the adjudications.What still remains unclear is how the supposed checks on overspending – money was not supposed to be paid out until milestones had been completed – unravelled to the extent that so much of the budget has been spent to so little effect. Our revelations today pile further misery on the taxpayer. Not only were the consultants who worked on the Bilfinger contract paid bonuses, rent and expenses, but they also pocketed fees of around £1000 a day.As the Sunday Herald has pointed out in numerous exposés, the people who have benefited from TIE’s stewardship are the external advisers and the senior staff.Today’s story also reinforces the problems associated with councils handing over powers to arms-length bodies like TIE.Whether it is the local authority in Glasgow or Edinburgh, devolving decision-making to shadowy bodies with weak political accountability has proven to be a terrible mistake.So, what is to be done? The key concern is to avoid a rushed decision by blindly accepting the “new” completion figures. Edinburgh councillors, and perhaps even Audit Scotland, have to ask tough questions about the assumptions underpinning these forecasts.Cancelling the project and having nothing to show for £750m would be catastrophic, but spending another penny on a runaway project with no end in sight would be worse.

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Runaway trams must be halted

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