Edinburgh City Council Report: How We'll Pay For the Trams
Following the 30th June decision to press ahead with building a curtailed tramline to St Andrew Square, and yesterday's announcement that private company Turner & Townsend will replace Tie in running the crisis hit Edinburgh Trams project, an Edinburgh City Council report has now laid out how it will make up the shortfall of some £231 million. This is over and above the original £500 million from the Scottish Government and Edinburgh City Council's £45 million, which was budgeted for the full line to Newhaven.
Following a "more granular and detailed assessment of specified risk" the authors of the report state (3.13): "The review of the budget has validated the base budget allowance for the project to York Place at £742m. The quantified risk allowance for the project has been validated at £34m, giving a total budget requirement of £776m. The review has also confirmed that the funding required for completion of the project to York Place is £231m in addition to the previous budget sum of £545m."
The report recommends the funds being raised by borrowing against revenue streams contained within the Council's Long Term Financial Plan. The 30 year loan would cost £15.3m a year to repay. Council's gross expenditure in 2011/12 is £1.4bn, so this would work out at 1% of revenue.
The council statement on the release of the report adds: "It is however recommended that the council continues to seek talks with the Scottish Government - although the council could sustain this level of borrowing, it would place additional pressures on the Council's budget."
The Council's Transport Convener, Cllr Gordon Mackenzie said: "The significance of the tram to the city's future economy is often overlooked because of the financial overruns and this is unfortunate. While we would not wish to have to take on additional borrowing for this project it is within the Council's capability and the alternative is surely something that is unpalatable given the damage it would cause to Edinburgh's reputation."
Approval of the funding options at the Full Council would allow for a settlement agreement to be finalised and tram works to restart.