Following the outcry over the anticipated cost overruns for the crisis hit Edinburgh trams project, Alex Salmond today in first minister's question time called a public inquiry into the project "an excellent thing to do". Salmond and the SNP did not support the trams from the start, and have kept their distance from the project and its ongoing woes, saying it should be dealt with by Edinburgh City Council.
The latest trams report, officially published today, leaked yesterday, looks at the various options for resolving the troubled project. Edinburgh City Council deliberates on 30th June what its next move will be. The report acknowledges £461m has already been spent on the project and the eventual cost of just scrapping the trams could be as much as £740 million.
An issue that has been eclipsed by the massive cost and time overruns is the unintended consequence of air pollution caused by closing city roads for the new trams and diverting traffic through residential neighbourhoods in the New Town.
One city centre residents' group has written an open letter to Alex Salmond expressing their concerns that information isn’t being presented to Councillors and the Public as the Council's meeting on the future of the tram on the 30th June approaches.
In the letter they say: "The Scottish Government need to be more active. They deemed this project worth £500 million of public money and should insist on a further examination of the project finances".
The full text of the open letter (dated 21st June 2011) to the first minister follows below.
"Dear First Minister,
Edinburgh Trams – Step in now to stop disaster
After a reasonably constructive meeting with Sue Bruce, the Chief Executive of the City of Edinburgh Council and Vic Emery, Chairman of Transport Initiatives Edinburgh (tie) there appears to be hope for a degree of realism and a somewhat more open approach to resolving the ongoing tram project problems.
However, despite this improved atmosphere, many citizens of Edinburgh remain concerned lest political ambition and fear of the personal consequences of apparent failure, should force through a decision that the project must be finished – or part finished - at any cost. Analysis available to the public provides no clarity on whether these fears are groundless. Decisions are being framed by assumptions about what is viable before the data is available, leading some Councillors to reportedly state what they believe to be viable, even though they claim no confidence in the predicted costs. On this dubious logic, Haymarket is eliminated from consideration, whilst St Andrew Square is considered capable of 'washing its face' in only two or three years time by
the Transport Convenor, Councillor Gordon Mackenzie [Scotland on Sunday 12 June 2011]. Even at this late stage in the project, however, Councillor Mackenzie cannot tell the public what any option will cost to build and finance, what benefit any option will bring, nor what the operating deficit is likely to be. Why this drive to borrow yet more money to get trams along Princes Street – is it just to salvage political reputations? The time for that is long past.
The Scottish Government need to be more active. They deemed this project worth £500 million of public money and should insist on a further examination of the project finances and the Benefit Cost Ratio (BCR) of each of the first phase options by Audit Scotland. During this process it would be prudent to ensure that the public purse is not committed to further long-term expense - at a time when public finances are so stretched we need a careful pause in proceedings to ensure that existing cuts to Council jobs and services are not made far worse by a project that, in the short term, can only replace or compete with an existing and highly efficient, bus network. The examination by Audit Scotland is essential as the public cannot be expected to have faith in financial statements made by the Council regarding the trams project, given such a poor record by the Council and tie of getting cost predictions right.
We welcome the Scottish Government original commitment to limit the amount to £500 million "and not a penny more". We would ask that the new administration confirms this position. It is simply not right to commit any new money, either as capital or lease, on such an uncosted extension. Better to cut now rather than squander more of our limited resources.
Any attempt by the Council to cover cost inflation through a Public Finance Initiative (PFI) should be vetoed as this would introduce a set of stakeholders whose interests trump those of tram users whilst setting an even higher bar for the revenue targets to meet. The consequence would be much higher fares for the benefit of what is a very short extension from the transport hub at Haymarket as a first phase.
No matter which tram plan is adopted, one outcome that must be guarded against is the use of Lothian Buses as the cash cow for the larger operating costs of trams as against buses. The tram follows existing bus routes, but is neither as flexible, nor as capable, of serving the communities using these services. Cancellation of existing bus routes to force use of the tram, or imposition of a tax on ticket prices will reduce the quality of service enjoyed by many and increase costs for all.
This will all reduce the city's overall public transport user numbers – in direct contravention of the tram project's stated objectives - and open Lothian Buses up to more competition on profitable routes or even to be sold. In turn this makes it harder for Lothian Buses to invest in the low and zero-emission technologies which will have a far greater impact on future air quality in Edinburgh than a single tram line can provide. These impacts could have very serious implications for the viability and future of Lothian Buses which has hitherto been one of the local taxpayers' greatest assets.
The Council should not focus on an accounting return for this project, based on sunk costs being written off and assumptions about subsidies from concessionary fares schemes. It should consider whether continuing with the project in its present form, under existing management and flawed financial and contractual planning, is compatible with the aims of the project – to provide a clean, integrated and affordable transport system.
Several technical engineering challenges remain and although the Council states that it is confident that everything has been resolved, this confidence should be considered in the light of ill-conceived predictions on cost and failure to appreciate that the light-rail system planned was too wide to allow integration with traffic in many places including Shandwick Place. It is not possible to say how accurate the Council's predictions are about the future, but the public does not have grounds for confidence. Indeed the public have been 'outsiders' for most of this project. Abstractions from the analysis have considered the 'public benefits' but have not acknowledged that there would be significant losers in this project as well.
Vitally, the public health impacts of this project have, so far, been largely ignored in the presentation of the tram as 'Clean and Green'. The Council's own 2003 STAG report predicted that when the proposed line was completed, some 134,500 homes (275,000 people approximately) would be exposed to a worse level of air pollution, from NO2 and Particulates. However, tie's Chief Executive stated some 5 years later that the tram, "will enhance Edinburgh's reputation as a good place to live, work and visit through a range of environmental benefits from air quality to noise reduction to less congestion."
Having apparently missed the fact that air quality, noise and congestion would deteriorate for 134,500 households, it would be bordering on the criminal for the Council to ignore this huge potential liability for damage to health in any analysis of the benefits, costs and future liabilities of this project.
An independent review is desperately needed.
James G. Fraser
The SNP have not been able to come up with any relevant or worthwhile contribution to this whole mess apart from standing on the side saying "We told you so".
If it costs 700million to scrap the scheme with no value whatsoever left to the city then that is the craziest of all the options. What a total and utter waste of money. But this is what the local SNP are suggesting we do.
So that leaves Edinburgh Airport to Haymarket or Edinburgh Airport to St Andrew Square as the remaining two options. The staff at City Council recommend St Andrew Square (cost: 770 million) as the economic option for getting out of this mess in the long term. On balance I agree with them. Stopping at Haymarket, they say, would cost 700 million to complete, but another 4 million a year to subsidise.
I totally sympathise with the residents concerns and I think the council is being foolish in not recognising the unintended consequence of heavier traffic moving through city neighbourhoods. But there are other strategies that can be taken to reduce that pollution and vehicle traffic coming into the city. The council should act now on alleviating that pollution.
I don't like the added pollution. I dont like the added costs. I don't like the mess we're in. I don't like the incompetence and waste that has gone on, and the holier than thou position that the SNP are taking.
I hope that Council bites the bullet and votes for St Andrew Square as the destination and we get on with building this tramline. And that we open it by 2013.
There is no doubt that the SNP Government have enjoyed watching the other parties getting themselves 'hot and bothered' over the trams issue which no one really wants any more, due to the disruption, increased pollution and economic disaster for traders all along the proposed route. There needs to be a pause for a total rethink of the plan. The utter folly of trying to force a light railway - because that is what it is, not a tram - through a World Heritage Site city has been exposed for all the shambollic planning that took place. We know it was hurried through and the contract signed in haste, lest the SNP be in a position to cancel it. The city is now paying the price for this folly.
Let the tram works get to Haymarket - or whereever they can without borrowing yet more money - as this will lead to the destruction of Lothian Buses. Then put the whole scheme in mothballs while a proper health survey is carried out and a re-examination of the whole concept takes place. Work can be restarted again in a few years when there is more money available.
If the Haymarket option didnt require a 4 million pound a year subsidy then it would make a lot of sense.
Events are beginning to move quickly now as parties jockey for position and this brings ever more amazing revealations.
The First Minister calling for a Public Enquiry while welcome, can't really be described as amazing...however the news that the contractor can terminate the contract more cheaply than the client is telling the elected members it can be done for, surely is!
The Report contains two assumptions that are breathtaking in the way they carefully massage the figures in an attempt to lead the debate.
In this respect they illustrate precisely why this project has been so catastrophic, and if continued it will continue to be a disaster. Despite being a wholly owned Council company tie has throughout acted just like any company with a deep interest in the project continuing
Instead of giving councillors a balanced view of the possibilities yet again a partial document has attempted to create a situation in which one option is rosily presented and others presented as being so hopeless that no sane person could ever wish to vote for them.
The two most egregious parts of the Report concern the BCR,and the inflation of the price to pause the project at Haymarket. Doing which would allow vital re-design and rethinking to be done before pushing on from there when finances have been rebuilt and the world situation itself less threatening.
It's possible to drown in the figures tie produce but earlier this year Audit Scotland took an overview during which they said that the tie 'latest' BCR (Benefit to Cost Ratio) IF the whole Airport to Newhaven stretch was built for a total cost of £640M would be 1.37.
IE £1.37 of Benefit over the life of the system for each £1.00 spent.
IN a worse case scenario in which development at Leith and the Forth was delayed, this BCR would fall to 1:10.
This is what tie were telling Audit SCotland in December and January this year--that the whole of Line 1A (Airport to Newhaven) could be delivered for £640 M and a BCR between 1:10 and 1:37.
Yet just five months later the Business Plan is that just a line to St Andrew's Square would be built, far shorter than tie were still confident of delivering in January, but for over £130M pounds more, and £230M more than the whole system (Line1A AND Line 1..Roseburn to Granton) had been costed as recently as 2008....yet the BCR now , which one would expect to be around 1:0.70 or 1:0.80 at best , is suddenley revealed to be 2:20.
THis acheived by treating every pound so far wasted as just pretend money, already spent , so able to be ignored in order the tram be announced a success...it's pitiful, and demands that a full public enquiry be mounted and full Audit by Audit Scotland before any decison is taken.
But in addition to remove the possibility of Haymarket being accepted any and every cost has been thrown at this proposal--including the closure costs of tie--- the closure of tie, an independent though wholly owned company, and it's costs are nothing to do with this project.
There is a continuing stain of basic unfitness for purpose about this system where the Councillors believe tie is their company, but in fact it is acting like any private secrtor company massaging the figures and the case in order that their pet project, and indeed sole reason for existence, be allowed to continue to provide a gravy train ----whether that is by reason, argument or as in this report virtual blackmail.
It would indeed be nice if the First Minister did something about the chaos in Scotland's capital city other than smirking smugly whenever it is mentioned, as seems to be his typical response. Pathetic behaviour.
The reliability of the figures with the three options is definitely at issue (I've linked to your comment from my latest blog post), especially as the detailed analysis is "redacted" for supposed commercial reasons. Most of the political parties seem to be questioning where the figures for these options came from and I wouldnt be surprised if councillors say they need more information and put off a decision on 30th June.