City Guide to Edinburgh, Scotland

City Guide to Edinburgh, Scotland

Where now for Edinburgh Trams?

By actionman - Posted on 07 May 2011

The election result in Scotland could not have been a greater blow for Edinburgh City Council and Transport Initiatives Edinburgh (tie).   They must have been desperately hoping that a strong Labour showing in the polls, would have given them the chance of going to the Scottish Parliament with a begging bowl asking for some more money to complete the project.   That dream is in tatters and they have the prospect of a severe rebuff from Chief Minister Alex Salmond.  

One cannot imagine thet the SNP will have a change of heart on support for the trams.  Alex Salmond and all his Ministers have been so absolutely clear that "not one penny more" is to be given to the Council for this miserably failed project.   In any event the SNP Government will have a long list of worthy beneficiaries for any extra funding which might be available.    They will certainly not want to miss the opportunity to make life extremely uncomfortable for LibDem leader Jenny Dawe and that other senior LibDem, Councillor Gordon Mackenzie, one of the last remaining tram enthusiasts, as Chairman of the Transport Infrastructure and Environment Committee.  

With the Council elections looming next year, one can forsee huge problems for the LibDems as a party due to their support for the trams.   But one escape ploy that the LibDems might grab at is to try and shift the blame on to the Labour Party who were in power, and initiated the Edinburgh trams project, in March 2003.     Apart from this there would seem to be little that the LibDems can do to avoid being routed at the polls next year in the Council Elections.

Although this strategy might be attractive politically, it would do nothing for the delivery of the project and would still leave tie liable for meeting all the bills and contractual liabilities that have been incurred.   But tie is a private limited company, wholly owned by the City of Edinburgh Council, however, the Council  transferred ownership of tie to Transport Edinburgh Ltd (another Council owned company) in August 2009.   One wonders whether this is a cunning strategy to allow tie to go bankrupt and, hopefully, avoid legal liability for all the debts incurred through the trams project contracts?   This would deliver a costly snub to the contractors consortium.   Strictly speaking, of course, tie is trading illegally as it cannot meet all its contracted debts - but no one seems too bothered about this aspect!

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Last week Edinburgh Trams responded to speculation - which I read about sometime ago on your blog and was picked up by the Evening News - that the trams would stop at Haymarket.

On its Facebook page Edinburgh Trams said: " decision has been taken to terminate the route at Haymarket, nor has any decision been made regarding the number of trams which will be required. As soon as there is progress agreed we will make those decisions public. In the meantime, following mediation, positive progress towards an agreement is being made."

It adds: "Edinburgh Trams remains committed to delivering the tram route. As we've said before this will need to be delivered as a phased construction. The first section will be the test track between the airport, Edinburgh Park and Gogar to enable driver training and control system testing. The next phase of the route will be open to the public and run from the airport to Haymarket following which the St Andrews [sic] Square element will be delivered."

Sounds to me like it might not "terminate" at Haymarket but there might be a long wait to complete the Haymarket to St Andrew Square phase now with no money forthcoming from the SNP government.

Of course, we must wait for the outcome of the mediation process. Now that we know that there is no more government money for the project, hopefully it will lead to a speedier resolution of some sort and everybody can move on.

In recent weeks TIE have beguin to use the intellectually bankrupt idea that because so much has been spent (wasted) with nothing to show for it---there is no choice than to go on and spend more and more money until there is 'at least something to show for it'.

That's equivalent to building the Titanic and then, after it sinks, arguing to spend more money on building another, in the hope that it won't sink this time.

It's not mere bad luck, or just "one of those things", that has led us to witnessing the now farcical situation  to which the project has descended---it is the flawed plan itself compounded by a flawed management structure and, finally, an institutional inability to admit or face up to mistakes, that has led to what has now become a byword across the world for hapless project management.

The problem isn't that we ever had a great and visionary plan struggling for lack of money--it's a desparately flawed plan that was launched on a raft of unwarranted assumptions and groundless expectations-- and we can throw another £100M, £200M even double the cash burn with another £500M but we still won't have a tram system that will ever make money.

Following this plan is simply to follow the recipie for disaster that has in fact delivered disaster---the plan isn't the solution, it's the problem


On 20 December 2007, the City of Edinburgh Council was presented with a report, entitled "Edinburgh Tram Contracts Acceptance".

Section 8 deals with CEC's Guarantee and delegation of authority and paragraph 8.10 says the following: "The fundamental approach to the Tram Contracts has been to transfer risk to the private sector.  This has largely been achieved." (Dodger begs to differ).  It goes on, "The Council sits behind tie and ultimately carries all contractual responsibilities and is responsible for contract payments.  A Draft Guarantee Agreement between the City of Edinburgh Council and the Infraco contractor, BBS, is being negotiated by the Council Solicitor and, with the approval of Council, will be required to be executed on behalf of the Council before the Infraco contractor will agree to sign the Infraco contract.  This agreement commits the Council to underwriting in full the payment obligations and financial liabilities which will be assumed by TIE, pursuant to the executed Infraco contract."

The Infraco contract was signed by TIE in May 2008 and, at that point, the Council became contractually committed, through execution of the Guarantee supporting TIE's financial obligations, to BBS.

So the Council bears full responsibility for meeting financial obligations to the consortium.

Oh dear!   The last post from Dodger leaves the City of Edinburgh Council seemingly with no 'get out of jail card'.    This is really bad news for the Council Tax payers in the city, who will doubtless see their Council Tax rise steeply as soon as the SNP Council Tax freeze has to be abandoned.   I certainly do not want to see higherCouncil Tax bills, but all the economic pundits seem to feel that a freeze is unsustainable - this is when the householders of Edinburgh will begin to feel the full effects of the incredible foolishness of the LibDem and Labour parties who have pushed through this crazy and appallingly planned scheme.

Re Dodger's point....Congratulations on the contractual data mining!


It's hopeless isn't it...they must have been extremely impressed in 2008 by the Banking model of Risk management (which collapsed in flames in the autumn of that same year when Lehman Bros disintegrated) in which the 'arms length wholly owned private company' gets all the rewards ----and the public bear all the risks.


Just like RBS where 'we' own 83% ---and would have owned it all had not the last Government produced some shareholding sleight of hand designed to avoid appearing to 'Nationalise' the lot--- so with TIE.  Despite ownership we have to put up with the Directors and senior executives careering along paying themselves high salaries and bonuses and when it all goes wrong they just shrug their shoulders.

It's disappointing for us all in the City because the threat of administration and liquidation could otherwise have been used to exert some leverage on the Contractors ---- as it stands though it still isn't an argument for continuing an open ended committment to build a tram that will probably continue to lose money (and disrupt a decent bus system) throughout it's life and will still be losing money when the tracks are ripped up for the next 'Big Idea' later this century.