True cost of Edinburgh tram line has exceeded £1bn, says report
A damning report on the chaos that beset Edinburgh’s tram line says its true cost has soared to well over £1bn because of a “litany of avoidable failures”.
The long-awaited report from a public inquiry into the project calls for new powers to prosecute businesses that make “false statements” to councillors, and substantial changes in the way Scotland oversees tram projects in future.
Lord Hardie, a retired judge, concluded that Tie, the company originally set up to deliver the line, but also Edinburgh council and Scottish ministers shared the blame for its huge cost overruns, delays and the resulting damage to the city’s economy.
“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,” Hardie said.
Cammy Day, the Edinburgh council leader, apologised for “the serious mistakes” the council had made and admitted the debacle had seriously affected residents and damaged the city’s reputation.
However, Day said the tram had since “flourished”, with 1.2m tram journeys recorded in August this year.
“I won’t, however, apologise for building a tram system, or for our ambition to develop it further,” he said. “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.”
The 11.5-mile (18.5km) line was originally due to open in May 2011, at a cost of £545m, running from Edinburgh airport through the centre of the city and on to the old port of Newhaven via Leith.
Hardie found that those expectations were doomed from the start. The company set up to deliver it was too inexperienced and ill-equipped to do so; council officials repeatedly failed to properly oversee its work and costings; and Scottish ministers wrongly withdrew support from Transport Scotland, the agency best equipped to help.
Poor project leadership and a failure to properly forecast the expense of moving underground gas, water and electricity pipes led to major cost overruns and repeated delays. These issues were worsened by Tie executives giving misleading information to council officials, Hardie said.
To stem the soaring costs and get a partial service running, the council decided to stop the line at York Place, on the eastern edge of the New Town, 3 miles short of Newhaven.
The council claimed that first section would cost £776m but Hardie said it actually cost about £836m once other associated spending was factored in.
The first section was completed in May 2014, leaving the council to spend another £207m on building the final section to Newhaven, which eventually opened in June this year, 12 years later than originally promised.
The complete line cost £1.043bn – nearly double the original estimate. Hardie said that bill would climb once debt interest payments were included, with the council facing debt repayment costs worth 1% of its total budget each year for 30 years.
Hardie said the most seriously affected parties were residents and businesses along the length of the line, who endured years of “disruption, inconvenience and loss of amenity”. It damaged the city’s economy and set back much-needed urban regeneration, particularly in Leith and Newhaven.
The tram project was targeted by Alex Salmond’s minority government as soon as he won power in May 2007. After Holyrood blocked his attempt to scrap the project, John Swinney, the then finance secretary, instructed Transport Scotland to minimise its engagement with it.
Hardie said that decision was a “fundamental error” that meant “important safeguards” to ensure the scheme was properly run were not in place, even though ministers spent £500m on the trams.
Responding to Hardie’s criticisms, Swinney said he had taken the view that it was a local project that the council had a statutory duty to manage. His job had been to protect the government’s budget. “When it was beyond obvious that the project was in deep difficulty, I encouraged a resolution of the problems,” he said.
The Scottish government hit back soon after Hardie’s 961-page report was released. Promising a fuller response at a later date, Màiri McAllan, the transport secretary, said it “took too long, was too costly and in some instances the evidence heard does not support the conclusion drawn”.