THE bill facing the taxpayer to compensate Edinburgh shops and other firms for lost business due to tram works is expected to top £10 million by the end of the year, with warnings it will continue to rise.

Beleaguered firms are lodging claims for money lost because of the controversial project at the rate of more than 10 a month.

Almost 300 businesses in Edinburgh city centre said they have lost out financially because of the tram works that have shut down key thoroughfares for months at a time and decimated shopper numbers.

The latest figure of 298 given to The Herald is a rise of 75 from April. It is thought this tranche involves claims totalling between £7m and £10m, with compensation coming in the form of cuts of potentially more than 20% on annual rates bills or a similar package.

Business leaders believe this is just the start of a flood of claims as shops and other firms in surrounding streets – not just those who face on to tram works – now bid for compensation.

Shop owner and West End Association member Michael Apter said: "The trams will end up costing £1 billion to build but will cost the city £1bn in lost profits."

The Lothian Regional Assessor has agreed about 60 businesses in Shandwick Place – an area badly affected by the tram works – can be part of a specific compensation deal which includes backdated rebates.

But near neighbours, who say they have been just as badly damaged, are not included.

As well as across the west end, claims are now in from businesses in Rose Street, George Street, Frederick Street and Hanover Street.

Mr Apter said it was imperative there was parity with compensation. He runs Paper Tiger in Stafford Street – one of many businesses in areas near roads dug up for the tram works which have lodged claims.

He said: "A business that is 25 metres from my front door is able to claim there has been a material change in circumstance but we are not. It is nonsense. I know what it has cost our business over the past five years.

"It has had a catastrophic effect on trade. Shandwick Place was closed for nine months in 2008 and is due to be closed until the fourth quarter of next year."

After lodging similar claims to the Shandwick Place shops, around 100 businesses on Princes Street could be next to receive compensation. For major stores such as Debenhams and Primark, which each pay more than £1.2m in rates, this would mean a yearly saving of £240,000 apiece.

The payouts would mean a bigger price to the taxpayer, already facing the £776m bill (up from £545m) for the 11-mile tram route between Edinburgh Airport and St Andrew Square.

Hundreds of smaller firms in the city's west end are also now pushing for the rates reduction that would save them between £5000 and £10,000 a year.

Graeme Strachan, depute assessor, said: "There are currently 298 appeals lodged with the Joint Board relating to tram work disruption. Most of these relate to properties located directly along the route of the tramway. Appeals have also been lodged from streets in close proximity to the tram works.

"All appeals currently lodged require to be dealt with by December 31, 2013.

Lesley Hinds, Edinburgh's transport convener, welcomed the agreement to compensate Shandwick Place firms and added the council is optimistic more will be granted.