THE SCOTTISH Government has been told to “dig deep” and help prop up Edinburgh’s £207 million tram extension – with ministers urged to put aside their past “stubborn attitude” to the project.

Edinburgh City Council has insisted that extending the trams project to Newhaven, still on track to be completed by 2023, remains financially viable despite the Covid-19 pandemic wiping out a promised £20 million dividend that council-owned Lothian Buses was due to hand over.

A stark report to councillors has also warned that it could now cost up to £107 million to cancel the project – with local politicians warning they could be faced with the trams extension taking away funding from frontline services and the project now adding further risk to the authority’s reserves, already facing severe pressure.

Officials have indicated “the total cost of cancellation is calculated at £107.4m compared with £207.3 to build the line and that this £107.4m would be incurred with none of the benefits”.

The council’s depute leader, Cammy Day, has now called on the Scottish Government to put its past feelings about the first problem-hit tram project aside and stump up cash from its unallocated reserves and £1.2 billion of unallocated funding passed on from the UK Government to help support the project through the pandemic.

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The city council is facing pressure of £85 million on its expenditure and income due to the pandemic – and alongside emergency funding from the Scottish Government, has been forced to drain more than £20 million from its reserves.

The council’s unique relationship with the city’s transport arms-length companies is also adding to the authority’s financial strain.

Last month, Transport Scotland awarded Edinburgh Trams £2 million to cover losses during the pandemic.

READ MORE: £4m funding boost for Edinburgh Trams and Glasgow Subway branded 'disappointing'

The council’s business plan for the tram extension, based on borrowing paid back by future fare revenue, assumes that passenger levels will return to normal by 2022/23 - believed to be the same timeframe Edinburgh Airport, one of the main sources of tram passengers, is working to.

Mr Day, who is also the leader of the council’s Labour group who runs the authority in partnership with the SNP, has stressed that is it stands, the tram extension will still be kept within its budget. But he warned any prolonged pandemic “will need the support of the government” or it “could become another huge budget pressure for us to fund”.

He said: “As far as I’m aware, the Scottish Government support is covering the losses of Lothian Buses but they are not covering anything over and above the loses.

"Not only should the government continue to cover the losses of our public transport companies, I would be asking that the Scottish Government digs deep and uses some of that £700m of unallocated reserves or the £1.2 billion of Barnett consequentials it wasn’t allocated to support this.

“If we are all trying to respond to Edinburgh’s biggest challenges which are the carbon zero target of 2030 and responding to poverty, then this is something they should be supporting.”

Mr Day has warned that the Scottish Government’s opposition to the first crisis-hit tram project is contributing to ministers shying away from offering support.

He added: “Because the previous SNP government didn’t like the trams, they don’t seem to be keen to support it.

“It would be appropriate for the city for them to dig deep and help the tram at a difficult time. The Scottish Government need to stop playing silly politics with the trams and appreciate the huge benefits it will bring to the capital city."

“They have just got a stubborn attitude that we don’t like the trams so we’re not supporting it."

The first tram project was opened three years late, cost £776 million – more than double its original budget and the route was cut short.

HeraldScotland: The original tram construction on Princes StreetThe original tram construction on Princes Street

Council officials have not approached the Scottish Government for emergency funding for the project, believing money is only on offer for “ongoing business survival rather than capital projects”.

Officials hope after May’s election, capital funding could be available for the next planned tram line, to run from Granton in the north of the city to the Edinburgh Royal Infirmary in the south.

The Edinburgh Tram Inquiry, which then first minister Alex Salmond said would be “swift and thorough” now totals £11.3 million in public funding - with no timescale still set for Lord Hardie to report his findings despite the public examination closing more than two years ago.

If councillors decided to cancel the project now, it would require immediate use £32 million of its reserves this year, which would “need to be funded through the cancellation and/or delay of projects in the council’s capital programme” which includes new schools buildings and affordable housing.

Opposition councillors, who voted against the tram project going ahead before the Covid crisis say they've “been proved right” about the financial risks involved.

Susan Webber, the Conservative transport spokesperson on the council, warned the “financial burden on the council is more apparent than ever” – claiming a decision to cancel the project could now put services at risk.

She added: “This very grim, bleak decision is whether if we cancel it, we put pressure on our resources this year and have no money for anything or we take this risk where in two or three years.

HeraldScotland: Edinburgh's tramline is being extended to Leith and NewhavenEdinburgh's tramline is being extended to Leith and Newhaven

“This is not about transport, it’s about the viability of vital services going forward and this decision cannot be taken in isolation as merely just about transport.”

Kevin Lang, the Liberal Democrat transport spokesperson, said the “hole in the finances is larger than the hole in Leith Walk”.

He added: “We are going to be spending money and sending reserves whether we immediately cancel or we push ahead with it – there's no easy answer.

“It’s affordable right now because there’s money there that can finance it. If the money is spent on this, it’s not there for other things.

"Almost everything had to go right in terms of the finances – but the history of the project does not suggest that everything goes right. There were lots of assumptions and this issued has demonstrated how right people were to have concerns.”

Council officials have warned that “the impact of Covid-19 on financing costs is uncertain” adding that the future use of reserves for the project could total as much as £93 million.

Transport convener, Lesley Macinnes, said the justifications for the tram extension "hold up" despite the "unprecedented impact" of the pandemic.

She added: “The delivery of this project is essential for the capital’s green recovery, providing sustainable, low-carbon travel to one of the city’s most densely populated areas. We now have reason to be cautiously optimistic as we progress with construction.”

A Transport Scotland spokesperson said: "We are not aware of any current plans to ask the Scottish Government for funding to extend the Edinburgh Tram network. We do however all want to see our capital city be a successful and attractive place to live, work, visit and do business - and transport connectivity across all modes has a key role in delivering that.

“The Scottish Government is already providing considerable financial support for public transport to maintain essential services, including Edinburgh Trams. This is intended to offset the impact that reduced demand is having on the viability of local services, to maintain services for key workers and protect the sector for the future.

"We continue to work with Transport for Edinburgh to understand what the long-term implications of Covid-19 will be for Edinburgh Trams."