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Tram chiefs admit: we have no idea what final bill will be

Edinburgh’s leaders warned the city may have to cut short its tramline scheme as it failed to come up with a final bill for Scotland’s biggest infrastructure project.

Council officials said yesterday they would need to set aside at least an extra £55 million to cover ballooning costs for the controversial scheme, which until last night had been priced at a maximum of £545m.

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But in a damning report on the scheme, officials admitted they couldn’t guarantee they would not need to ask for more cash to ensure final delivery and it made it clear officials could not say what the final bill for delivering the scheme would be.

The SNP, which shares power in Edinburgh but opposes the tram project, said its councillors were being asked to sign a “blank cheque”.

Edinburgh’s Nationalist deputy leader, Steve Cardownie, said: “We are being asked for another £55m but we are not being told what we will get for that, where the trams will run to, or when they will start operating.”

The city is getting £500m from the Scottish Government for the Labour-devised scheme after the SNP administration was forced to pay up after it was outnumbered by opposition MSPs. But the Government last night again made it clear that Edinburgh could expect “not a penny more”.

The council-owned business responsible for delivering trams -- Transport Initiatives Edinburgh, or Tie for short -- has seen its costs soar in a dispute with its main contractor, German company Bilfinger Berger.

Officials, whom The Herald understands are hoping for “a mature divorce” from the firm, yesterday admitted whole stretches of the proposed line, originally planned to extend from the airport in the west to Leith in the east, may not be built.

They warned the line may have to be laid in phases, in what they called an “incremental” development. It could, they said, initially run from the airport to Haymarket, in the west of the city centre, to York Place, at the east of Princes Street, or a number of other possible termini further east.

A part of the report described as “ominous” by one insider reads: “It is now considered prudent for the council to plan for a further 10% over the currently approved funding of £545m, on the understanding that further potential risks have been identified beyond this level.”

Officials believe they have identified ways of borrowing the extra money needed -- some of it against future revenues from the trams. But they admit that approach contains problems -- not least threats by the UK Government to cut council borrowing -- and there are doubts as to the prudence of borrowing more than enough to cover costs of £600m.

Gordon Mackenzie, a Liberal Democrat councillor and transport spokesman, yesterday claimed the report had brought “much greater clarity regarding all aspects of the tram project” and “dispelled some of the myths” surrounding overspending.

Mackenzie also described proposals for a 10% contingency as “reasonable”, adding: “Of course, if we were not in dispute with the contractor there would be no need to do this.”

Tie’s chairman, David Mackay, stressed that his organisation was not asking for the extra 10% immediately for the full line from the airport to Newhaven, near Leith, or Phase 1a.

Referring to the row with Bilfinger, he said: “We have indicated the dispute means we are unlikely to deliver Phase 1a within the funding envelope, but we will continue towards this.”

Labour councillors have insisted the project is worthwhile but poorly managed, while the SNP has insisted from the outset it is ill-conceived.

Labour transport spokesman Charlie Gordon last night called for the two sides to get together to ensure at least some of the line is built.

A spokeswoman for the Scottish Government said: “We have made it clear we will make available up to £500m for Edinburgh’s trams and not a penny more.”

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