Scottish Government ‘can’t afford’ £44m Edinburgh Trams project business case

Edinburgh’s new tram project has been dealt a blow just months after its launch, after the Scottish Government said it could ‘not afford’ to fund the development of a business case.

Edinburgh Council’s Lib Dems have raised concerns it leaves a “gaping £44 million black hole” in plans to build a north-south line – and are calling for a public consultation agreed by councillors to be paused.

Kevin Lang, Lib Dem leader in the City Chambers, said it would be wrong to proceed while it was “unclear who or how the next stage of the project would be financed”.

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Transport convener Scott Arthur said the council was exploring “all options” for funding and have had “constructive discussions” with Ministers at Holyrood.

He said in the face of the climate emergency investing more in mass rapid transit in the capital city would be “a massive step in the right direction” and did not support the calls to halt the public engagement process.

In a letter seen by the Local Democracy Reporting Service, transport secretary Fiona Hyslop said financial support from the Scottish Government for a business case “is not affordable in the current fiscal climate, nor in line with the recent recommendations of the Tram Enquiry”.

She said: “It may be that alternative public/private delivery models need to be explored by CEC.”

The council’s transport committee agreed in February to proceed with a 12-week consultation on a new tram line connecting Granton and the Royal Infirmary via the city centre, which it’s estimated would cost £2 billion and take 11 years to build.

A campaign quickly emerged to protect the Roseburn Path, an old railway line turned active travel corridor which forms part of officials ‘preferred’ northern route. But councillors agreed this option should be presented ‘objectively’ alongside the alternative – which would go across Dean Bridge and through Orchard Brae – when plans are put to the public later this year.

The costs associated with pre-construction work, such as the development of a business case to be approved by the council, were estimated at around £44m.

“The council has no funding allocated at present for such costs,” a report said.

It was “expected that Scottish Government/Transport Scotland would allocate funding as the project moves forward” but this was “clearly uncertain given current Scottish Government financial constraints”.

The report said there had been “positive discussions with the Scottish Government and Transport Scotland on support to develop an Outline Business Case and Final Business Case in the future”.

Responding to a letter from Edinburgh Central MSP Angus Roberston on the potential impact on the Roseburn Path, Ms Hyslop said the tram extension “could have role to play” in a new mass transit scheme for Edinburgh and South East of Scotland (ESES) as was recommended by the Scottish Government’s second Strategic Transport Projects Review (STPR2) in 2022.

However, she said: “It is important to note that ESES mass transit aims to
provide a step change in public transport across the region – being multi-modal and cross boundary in order to complement the current bus, tram and heavy rail networks and provide improved connectivity between the city and surrounding communities, as well as more direct connections between communities outside of Edinburgh.”

The transport secretary said the Clyde Metro and Aberdeen Rapid Transit schemes were able to secure Business Case funding “by working with partners to re-prioritise spend profiles within the respective City Region Deals,” adding: “Such an approach should also be considered by CEC and to be considered in the context of ESES mass transit, not just for tram in isolation.”

Commenting, Cllr Lang said: “This cabinet secretary’s letter has delivered a gaping £44 million black hole in the tram extension’s finances.

“The decision to proceed with a consultation was based on advice that Scottish Ministers would fund the next stage of the project. Fiona Hyslop’s letter shows this is simply not going to happen.

“The option of turning over the much-moved Roseburn path for the tram had already sparked huge concern and controversy. From the thousands of people who have signed the local community petition, it is clear how much this important green corridor is to local people.

“However, it would be wrong to proceed with any public consultation when it’s unclear who or how the next stage of the project would be financed. We now know it won’t be the Scottish Government and, given the state of local finances, it simply cannot be Edinburgh Council. So the question is, who’s picking up the tab?

“Given all this uncertainty, the planned consultation needs to be paused. We shouldn’t be using council resource on a public consultation when we have no idea how the next stage would even be paid for.”

The Lib Dems will table an urgent motion at tomorrow’s transport committee to “pause plans for the public consultation” and call on officers to clarify “how the development of a final business case can be funded in the absence of Scottish Government funding”.

Cllr Arthur said: “I am aware of the letter which was sent to Angus Robertson MSP just two weeks after the Scottish Government dumped its 2030 climate targets.

“We know that mass rapid transit for Edinburgh is at the core of the Scottish Government’s Strategic Transport Projects Review, and will help us boost the regional economy and cut climate emissions.

“Within that context, I hope and expect Angus Robertson MSP is using his place in the Cabinet to fight for investment in Edinburgh.

“Since the letter was sent council officers have had constructive discussions with the Scottish Government on how to take foreword the mass rapid transit ambition detailed in their Strategic Transport Projects Review.

“As part of this process, different funding models are being considered to ensure the best outcome for the regional economy. I hope to be able to bring an update on this work to the Transport and Environment Committee next month.

“Scotland is at a crossroads where it’s response to the climate emergency is concerned, and investing in mass rapid transit in our capital city would be a massive step in the right direction.”