Edinburgh tram inquiry reveals 'litany of avoidable failures'

The investigation has estimated the total costs of the truncated original project at £835.7 million – almost £300 million over budget, while an additional £207 million was required to complete the line to Newhaven.

In his findings, Lord Hardie has highlighted particular mistakes by Tie, the company set up to deliver the project, Edinburgh City Council and Scottish ministers.

John Swinney has been highlighted for particular criticism, including for meddling in the fiasco and "pulling strings" after Transport Scotland controversially walked away from the toxic project in 2007.

Read more: After nine long years, the Edinburgh Trams Inquiry trundles into view

The four-volume report sets out 24 recommendations for the consideration of the Scottish Government including considering new legislation to allow for civil and criminal sanctions against people or companies who knowingly submit reports that include false statements to councillors.

The project aimed to construct a tram line from Edinburgh Airport to Newhaven, as well as the purchase of tram vehicles to operate on the network.

City councillors expected the project to be completed within the £545 million budget and open by the summer of 2011.

But the project was delayed and ended at York Place instead of Newhaven and opened almost three years later than expected – at a reported cost of £776.7 million, over budget by £231.7 million.

The inquiry has found that the costs have been understated due to the council allocating costs to other budgets and failed to include the net present value of borrowing £231 million to complete the shortened project.

Read more: Edinburgh's tram extension success 'shows toxic legacy is history'

The investigation also revealed a substantial claim by a landowner of which there had been no awareness at the date of the reported cost – with Lord Hardie giving the “best estimate” of the cost of the restricted line of £835.7 million.

The city council has spent an additional £207.3 million to complete the line to Newhaven, which opened earlier this year.

The report highlights the actions of Tie, the council and Scottish ministers as being principally responsible for the failure to deliver the project on time, within budget and to Newhaven.

Mr Swinney, who was finance secretary at the time, was criticised after a“conduit of information” from Transport Scotland “was lost” by the Scottish Government’s decision to walk away from the project, as well as “the chance for Transport Scotland to influence directly decisions taken by the board”.

The former deputy first minister was accused by Lord Hardie of attempting to “seek to exert influence in the background” after Transport Scotland had walked away.

The investigation reported that Mr Swinney met former Edinburgh Trams chairman David Mackay in February 2009 “regarding the ‘Princes Street Dispute’, when Mr Swinney told him to ‘get it sorted’”.

Lord Harvie agreed with evidence that this was Mr Swinney “pulling strings” and accused him of "directing" the city council "as to what should be done".

The inquiry also accused ministers of "an abdication of responsibility for ensuring that public funds provided by Scottish ministers for a specific project were spent wisely”.

The inquiry pointed to Tie’s failure to keep to the procurement strategy that had been intended to manage risk out of the project and the company’s failure to work collaboratively with the council and others including Parsons Brinckerhoff.

There was also a failure by Tie to report accurately on progress and a failure by city council officials to monitor progress.

Tie was also criticised for a failure to follow the guidance about optimism bias when preparing various versions of the business case such that the cost of the project was underestimated. The business case for the Newhaven extension included an optimism bias of £50 million.

Read more: Edinburgh City Council to launch £1bn plans to build north-south tram route

Tie also failed to achieve the price certainty sought by the city council and to transfer risk to the company brought in to complete the project in accordance with the procurement strategy Lord Hardie also found that the governance structure did not follow any recognised model.

There was a lack of clarity as to who had responsibility for the performance of certain tasks and there was some overlap regarding the respective roles of the various bodies created, and individuals appointed, to deliver the project.

City council officials have also been criticised for failing to protect the local authority’s interests as the client and promoter of the project bearing the risk of exceeding the allocated budget of £545 million.

Lord Hardie said: “The inquiry process has been thorough and robust but also complex, with literally millions of documents that had to be carefully reviewed and detailed contractual issues to investigate.

Lord Hardie

“This work has been time-consuming but necessary to produce a report which not only provides answers to what went wrong with the Edinburgh trams project, but also clear recommendations for future transport projects.”

He added: “What is clear from the inquiry’s work is that there was a litany of avoidable failures on the parts of several parties whose role it was to ensure that public funding was spent effectively and to the benefit of Scotland’s taxpayers, and that the Edinburgh trams project was delivered efficiently.

“Poor management and abdication of responsibility on a large scale have had a significant and lasting impact on the lives and livelihoods of Edinburgh residents, and the reputation of the city.”

Leader of Edinburgh City Council, Cammy Day, said "it’s clear that serious mistakes were made" which had a "significant impact on the city".

He added: "There’s no getting away from the fact that the original project caused a great deal of disruption to residents and businesses, as well as damaging the city’s reputation and on behalf of the council, I want to apologise for this.

I won’t, however, apologise for building a tram system, or for our ambition to develop it further.

"After all, creating a better connected, environmentally friendly transport system is essential for a modern, successful city and we need to transform the way people move around if we are to achieve our net zero goals."

SNP Transport Secretary, Mairi McAllan, pointed the finger at the inquiry itself, following the scathing assessment of Mr Swinney and Transport Scotland walking away from the project.

She said: "The Scottish Government places the highest importance on the efficient spending of public money.

"It is why the public inquiry was set up and given statutory powers to thoroughly investigate matters. It is also why we committed significant resources to diligently support the inquiry and to engage meaningfully and openly with it.

“However, the inquiry took too long, was too costly and in some instances the evidence heard does not support the conclusion drawn.

“Clearly all organisations and individuals who gave evidence to the Inquiry, including the Scottish Government and Transport Scotland who have just received the report, must take our time to consider the detail and the recommendations.

"Having done that I will provide a more comprehensive response to Parliament, and respond to members' questions, in due course.”