22/06/2011 Newsnight

to staunch the loss of life and Tonight on Newsnight Scotland, the

fox at the Edinburgh tram project takes another bizarre twist. --

fiasco it turns out that it will cost more to mothball it than to

extend it. Good Evening. It's a bargain, nothing for just �7 50

million. That's the eye-watering cost to the taxpayer for cancelling

Edinburgh's disastrous Tam project. A truncated scheme would still be

even �150 million over budget. I'll try to find out why and what the

money might have been better spent on in a moment. Government sources

have told the programme that ministers would enthusiastically

back a public inquiry. Kenneth # There he was, digging his hole

# Hole in the ground # So big and sort of round it was

# And there was I # Digging it deep... # Dispute,

disruption and delay. That's all the nation's capital has to show

for its grand trams project. As for the bill, which makes the overruns

of the Holyrood building seem positively puny, all of Scotland is

helping to pay that, in return for what exactly? Perhaps nothing at

all. Cancelling would be the best thing. I don't agree with the trams,

but I think it would be a shame to stand there seeing as though we've

spent so much on it. The official report says completing the line

just from Edinburgh Airport to Haymarket would cost �700 million,

taking it from there and to St Andrews Square would increase the

bill by over 10%, not much more the story goes than just cancelling the

whole project outright. Trouble is, there's less than �500 million in

the budget and one, albeit unofficial estimate of how much it

will cost to restore Edinburgh to the way it was, is another nine

figure sum. The people of Edinburgh have learned to take any figures to

do with the tram scheme with a heavy dose of salt. The figures

have been produced with people in vested interests in continuing. We

were told that we'd get lines running to Newhaven for �5 45

million that. Didn't happen and I don't expect �77 0 million to be

the final cost for St Andrews Square if the council decides to go

ahead with that. But the council's transport convenor wants to plough

on with the most expensive option. When you look at the costs, there's

very little between them. When you add in is subsidy required to run

to Haymarket, for example, that brings it close up to the cost for

St Andrews Square, and when you look at cancellation, it in fact,

you would not be allowed to pay that over the 30 years when you

would have a capital asset. So we'd be faced with finding hundreds of

millions of pounds right now. I think that the options, within you

look at them, they have strengths and weaknesses, but the most

sensible option is there by quite a distance. The SNP tried to kill the

project four years ago, but then a minority administration, they were

voted down by the Unionist Partys. On trams, the SNP have lost the

argument. The Transport Minister claimed as minister that the costs

were out of control. They're not. Does Wendy Alexander accept that

there must be constraints on the ability of other parties to commit

the Government or to infer the Government should be committed to

financial commitments out with the budget process? I say to the

Cabinet Secretary, if you have one shred of evidence that costs were

out of control, the word "cost" would have appeared in your

statement today. The city council Labour group today said things were

fine back then, they claim it was the Liberal Democrat SNP

administration which succeeded them that made a mess of it. The SNP

don't have a councillor on the board of the tram company, at least

until recently Labour did, alongside two Liberal Democrats and

a Tory. # We're on a road to nowhere... #

It is actually possible to build and run tram projects, they exist

in many European cities, albeit in some which were fairly easy to re-

develop after World War II, but more recently, the British Isles

This is not the first time a botched job has been dubbed

Edinburgh's disgrace. Work on the national monument began in 1826 and

was never completed. Delays and cost overruns on the Holyrood

Parliament project led to a public inquiry, but at least the

building's been up and running for years. Now there are calls for a

similar inquest into the trams. One focus would be the contract between

Tie and the contractors, which has not prevented several costly

disputes. We need to work out what's gone wrong and find out

whether the figures being banded about are true. Part of the problem

is that the firs keep changing, we need an independent inquiry to work

out really what is going on and how much it will cost to make it right.

Glasgow ease Transport Museum opened yesterday, it has four trams,

four more than Edinburgh. They are not going anywhere, but they are

not meant to. Edinburgh's spent millions before a single tram's run.

Transport Scotland's underlined the distance ministers have maintained

since they tried to stop the project. The Scottish Government

opposed the project, but in June 2007, the Scottish Parliament voted

in favour of funding up to a maximum of �500 million, a figure

that ministers will not increase. The project is, always has been,

the responsibility of City of Edinburgh and the cost of

cancellation, of not taking the tram's project forward, is a matter

for them. To prove Edinburgh could do it once, these pictures, the old

Edinburgh trams which made their final run to the depot, 55 years

ago. Maybe those really were the days. Might even be funny if it

I'm joined from our Edinburgh studio by the Liberal Democrat

councillor, Gordon MacKenzie who's transport convenor at Edinburgh

city council. Seems rather extraordinary that we could end up

paying �7 50 million for this tram project and end up with nothing?

Yes, it does. But we have to be very careful about the figures.

They've come out in a leak today and I can't confirm that because

it's part of an ongoing commercial discussion, but yes, it's

potentially one of the outcomes that we'd have to reach a

commercial settlement with the contractor for them to walk away

from this and we'd be left with nothing for over �70 million if the

figures are correct. -- �700 million. And it would be cheaper to

build a tram network, but it's about �700 million to build the

thing to Haymarket? Yes, again, the figures are subject, in many cases,

to an element of commercial discuss yet, but the figure of �700 million,

there's also the running costs which you would apply to that. The

report suggests there would be a deficit of �3-�4 million a year on

that, Fuad that in, the cost over 25-30 years, today's cost would be

about �7 50 million as well. There's quite a lot of similarity

between the cost to Haymarket and the cost to St Andrews Square from

those figures. And you and your preferred option would be to build

the thing to St Andrews Square which is another �0 million or so,

isn't it? I would caveat it by saying we have to have a look at

the detailed figures. I've not seen the report yet. I've obviously read

the leaked reports and have had a briefing on it. We need to see if

it stacks up, because there's been a lot of figures going around in

the past which have not proven to be accurate, unfortunately. We need

to look at that as well. But the figures to St Andrews Square would

suggest we'd make a surplus of �200 million a year and, on the basis of

that, the net cost to the council is slightly less than the total

cost being suggested. So there are elements of that which can take the

costs up or down relating to whether it's Haymarket or St

Andrews Square, it brings it in to about the same level is the sense

of what I'm getting from the reports. Whichever option you

choose, including mothballing it, you are going to need a couple of

hundred million? Yes. Where are you going to get that? We don't have a

detailed plan on that and that's part of what we'll have to get from

council officers. Do you have a The fall-back position would be to

get an agreement by the Scottish Government on a truncated route.

You would have to get that agreement as a starting position.

The Council would have to raise the money through borrowing. That would

be a very substantial cost to the Council, somewhere in the region of

10 to �12 million per year. That would have an enormous impact. We

want to explore with the Scottish Government and hymn alternative

means of funding the project. -- any. I do not want to close the

door on Nani options. -- any. I am going to lose the discussions on

the detail with officials from his got his Government. I will not rule

anything out. This covers Government may want to rule certain

aspects out. -- at the Scottish Government. We need to see what the

best way his to help Edinburgh to resolve a huge problem financially.

The problem you have is that giving you have spent almost half a

billion pounds and achieved nothing, why unearthed should anybody

believe you when you say that for another 200 million you can get a

tram line to send Andris Square? You do not have Annie credibility.

-- any. Transport Scotland, the Scot has Government have been aware

of the discussions we have been having. -- Scottish Government.

keep using words like vigorous assessment. What you guys have been

doing is nothing short of a national joke, not to mention and

national scandal. You have no credibility left. We have got other

independent people who have not been previously involved. You have

had an lee macro number of them and their Rezai and or get fired. --

any. -- they resign. Many of the officials involved, for example,

the chief executive, he was not a chief executive when the project

kicked off. There are a lot of people with their own personal

reputations who were looking at these figures and will be asked to

endorse them before councillors take it decision. Getting fresh

people in to look at it will help us to raise confidence and the

figures. People do Nat have a lot of confidence and the figures.

Quite rightly so. -- people do not. For presumably you would welcome a

public inquiry? A absolutely. No doubt. It has to be an independent

inquiry. People like myself who have been involved, even people

Butt macro it has to be taken out of our hands. --.... Somebody who

can look at this rigorously and tell us in it where it went wrong,

how it could have been done differently. We do not want to make

the same kind of mistakes we have made here. Presumably you would

also accept that the political leadership and the officials who

have been run in this well after the go? No, I do not accept that. -

- will have to go. People want to have confidence raised in the

figures that come before them. An independent objective inquiry will

tell us what we need to know of that where blame lies. -- to Noel

where blame lies. You have on several occasions sat where you're

now and told me a load of things that never actually happened. --

you are now. I told you what I believed to be true. When I say you

have no credibility left, what is your answer? I have told you the

best information I had at the time. We had information in 2000 and that

said this is a good product. -- 2000 and date. -- do 1008. All 57

of us Papa macro Hans up on the basis of the advice we had. -- put

par macro Hans up. You told me he had won a shed load of cases which

had been independently adjudicated. Not only was that not true, but the

fact it was not true lead to be also -- to the wholesale

reorganisation. I do not recall saying that. If you recall saying

there had been mixed results through mediation. What I said was

the results were mixed. And there were. We want some aspects and we

lost on major points. Do not have go away. We had joined from

Edinburgh by the Labour and Brett city Councillor Leslie Heimans and

Colin Keir, also happens to be an SNP. -- Councillor Lesley Hinds.

Which option would you now Professor of the ones that have

been out land? -- would you prefer. None of them. One of the problems

is we do not get details of the report until tomorrow. That gives

us a week to scrutinise it or ask questions. I do not think any of

the options are ones we would like to consider. What option do you

want? The trouble is we have not seen the report. It will be put to

the Council next week. My real concern is that yet again every Tom

rico macro to a Council meeting, another report comes forward with

different figures. -- every time we There was no political leadership

at the heart of this decision making. Everybody seems to agree

that part of the problem has been the original contract was drawn up

between the Council and the developers, the contractors, which

was done under an Labour administration, so you're not

exactly blame us in this? That is not the case. In 2007 Independent

although Scotland carried out a report and said this Drahm project

was robust. -- tram project. The contract was not actually signed.

It was signed in March 2008. That report said that 95% of that

contract was a set price. It was a set price we would keep do. We were

given assurances by officials that the contract was robust. And 90 per

us - my Nagi 5% of that contract would be kept to. -- 95%. I feel

disappointed. We have had four years of a coalition Council to

have mishandled it. Colin Keir, which of the options would you

favour? I have no real faults on an inner core of them. I have not seen

the report. I have not been briefed. Will it can say -- what how can say

is that this is the worst Ed mack - - nightmare for Edinburgh and the

Scottish taxpayer. It is vastly over-budget. We have not had

anything to do with the management of this. I think it is a little

rich of cancer Leslie Hines. I have a Labour amendment from 30th April

2009, backed by the Tories, saying that not only should we carry on

with the line, but they were looking for the director of finance

to find money for the second line. They obviously knew something.

Aaron the same position as Labour. The SNP wants to come over all

innocent on this. John Sweeney says he will not give any more money to

the project. -- John Swinney. You have been running the Council since

2007. To say you have nothing to do what this is simply ridiculous?

Absolutely not. We have a situation where we agreed that there would be

no input from the SNP into the management of this. That was

because of are or opposition. We never took up the option of a

member of the board. That is a curious way to exercise

responsibility for running Edna? With respect, this is a project we

disagreed with. We wanted nothing to do with this. Hang on. We have

been running Ed Matts. None of this is Al macro fault. -- Edinburgh. It

has turned into a national catastrophe. I agree with you. It

is simply appalling. I have welcome Richard Jeffries's resignation. --

I welcomed. I have not been impressed by the standard of

management. Every report has a negative aspect. Gordon McKenzie,

what is happening now. A few days ago you were talking about flogging

some of the project off to a private developer. You are shaking

your head. What you were. reports say in the press said at a

meeting with the developer. That is correct. They were interested in

funding extensions to the tram network. I said, that is fine, tell

me about it. They told me about it and they went away. The press have

reported that. I have not been tried to flog off part of the tram

network. -- trying. If somebody says, we will do you a line to

Newhaven and operated and you would not have to pay anything up front,

for the long-suffering residents of Leith Walk, who may get something

in return, that would be a good deal, wouldn't it? It might be if

the price was right. You would have to pay either an excess Church or

some sort of lease arrangement. -- charge. We're not in a position to

have a negotiation about extending the tram network of how we have

resolved a contractual dispute. It is a moot point. -- until we have

resolved. Councillor Lesley Hinds, what you want Gordon McKenzie to

do? A want him to show some leadership and I want the SNP to

take responsibility. They will take special responsibility for be

members of the administration and working with it Lib Dems. It is

about time they took some responsibility. They cannot say for

the last four years... Gordon McKenzie needs to take some

leadership and speak to the SNP. do what? I have been speaking to

many businesses and the community. They want to know how much the tram

is going to cost, and what the timescale is. What I am getting a

feeling from is that what is looked for next Thursday is to continue

again and not to make any decisions. And to come back in October. The

Scottish Government and giving strong -- getting strong signals

that there will be some money. At - - giving strong signals. What the

Scart his Government is doing and private is not what they're saying

in public. -- the Scottish Government. I have not heard

anything. What would you like Gordon McKenzie to do? I would like

to see the report first of all. I cannot make a definitive

determination on the back of what I have not seen. I would suggest that

it would ever happens, we have to see what is in the best interest of

the taxpayer. Unfortunately, the work is nowhere near finished. If

what we're hearing his crew, whatever happens, the taxpayer will

take a hit. -- is true. Thank you will. David Mellor is outside the

Admiral City Chamber. -- Edinburgh City Chamber. Councillors will meet

at their next week to did -- to decide the fate of the project.

What is the feeling of the people that Mark? -- Edinburgh?

feeling is one of depression. There is not much to be cheerful about as

you head off to bed. It has clearly been another very difficult day for

elected representatives and officials here. I think the mood on

the street generally is one of growing anger. Deep, deep sense of

frustration. Michael Uoka authorities across the country, the

City is facing difficult Financial Times. -- like other authorities.

They will have to argue for more money to go towards a tram project.

Difficult times for everybody. People in Edinburgh probably find

it difficult to believe that there are people in Scotland who do not

regularly visit Edinburgh. The residents have had to put up with

extraordinary disruption. Tell me Extraordinary disruption over the

years. If we take one particular area, Gordon, Leith Walk, for

example, which suffered very, very serious disruption over an extended

period, as utilities were moved ford the tram lined to be built, an

area now where of course no-one's talking about tram lines even being

laid in the years to come now. The focus, at best, is on completing

this line all the way to St Andrews Square. So take a walk down Leith

Walk, if that's not too much of a pun, and you will pick up on a real

sense of the transport convenor and what he said. People will ask where

is the Liberal Democrat Jenny Doyle in all of this. If we saw gravity

emerging, Boris Johnson wouldn't be to the foredefending the local

authority's position. We hear very little from Jenny Doyle and

there'll be questions increasingly asked about her handling of the

project. The buck stops with her. The phrase that springs to mind is

a great city failed by its elective representatives.

Thank you very much indeed for Thank you very much indeed for

joining us. A quick look at tomorrow's front-pages which are

talking about this issue. Fresh blow for trams as Holyrood rejects

bailout is the line in the Herald. Cost of scrapping now seen as �750

million. The Scotsman, tram cost to reach �700 million even if scrapped.

The Guardian, Obama takes gamble on Afghan retreat, it says,, and the

Daily Telegraph, give voters shares in bailed-out banks. That's it for

tonight. I'm back tomorrow. Good We are left with heavy showers in

eastern England tomorrow. In the afternoon, still heavy showers over

the Pennines in particular across Yorkshire, down into Lincolnshire.

Scattering of light showers in the Midlands. Sharp ones in East Anglia.

The threat of showers at Wimbledon again during tomorrow. Perhaps the

driest weather will be in the south-west of England. Very few

showers in the afternoon. Not as breezy as it was today.

Temperatures still nothing startling.

Wales, South Wales, seeing plenty of sunshine in the afternoon. North

Wales seeing more showers. Across Northern Ireland, a lot of cloud

around, more showers to come again and temperatures only 15.

Not much warmer in Scotland where we'll see more showers in the

north-east compared with today. Probably turning drier in the

south-west. You can see we have some showers there in Edinburgh on

Thursday. There may be the odd one around, even into Friday as well.

Most of the showers in the north- east of Scotland on Friday.

Further south, heavy showers, London, fewer showers in Cardiff,

but it clouds over with a little rain in Cardiff on Friday. Many