30/08/2011 Newsnight Scotland

On tonight's programme: If it is at all possible, given the

history of this farce - another day of complete absurdity hits the

Edinburgh trams. The Scottish Government - which had

been clinging to the "nothing to do me, guv" mantra suddenly pops up

with a threat to withdraw funding if the line doesn't go to St

Andrews Square. "You're sabotaging the whole project," screams the

opposition. Is anyone involved in this not just playing politics with

hundreds of millions of pounds of our money? Good evening.

It reads like another episode of a soap opera that stretches

credibility to the limit. First, we learned of a council meeting this

Friday to presumably do another spectacular U-turn. Then, John

Swinney intervenes to tell everyone that he'll be signing no more

cheques unless the tram line goes to St Andrews Square. You'll recall

that last Thursday, the council, much to the surprise it would seem

of even some of those who proposed it, decided the line should stop at

Haymarket. We'll ask the Finance Secretary just what's going on

shortly, but first Catriona Renton spent the day amongst the stunned

For commuters, it has been a living hell. Just when it seemed the

triumph saga could not go further off the rails, it did. This morning,

the Scottish government said it would withhold �72 million, the

balance of the �500 million of taxpayers' money they reluctantly

agreed to spend on the trams in the first place. But Thursday's

decision from councillors, that the end of the line would be at

Haymarket, was the last straw. And once again the contractor is about

to announce revised costs for changing the terminus again. It is

a project that has lurched from disaster to its failure. For 18

months at the other end of Princes Street's was chaos, causing hassle

for locals and businesses. The original plan was for the tramline

to run all away from the airport through the city centre down past

here. That ambition has long disappeared. It has caused a

considerable amount of money to restore this part of the road, to

say nothing of the damage to local businesses. Now, the question is

what has all that been for? about a year, the straw was

struggling. We had to close another straw as well because it was in the

centre of town. -- another stall. Do you think whatever we end up

with will be worth what you have gone through? Not in the slightest.

Not at all. We think there should be some sort of compensation for

business owners in this area. Underlined just got even shorter.

Last week, councillors rejected plans to borrow an extra �230

million to run the line into St Andrew Square. He at Haymarket this

could be the place where the trams do or do not terminate, but there

was work scheduled to start here a week on Saturday, to go on until

spring 2012, lanes -- Lane track and overhead cables. That decision

is currently on hold. If it does go ahead, that will mean a more re-

routing and destruction and of course lots of more noise. And what

on earth does the Edinburgh council tax payer make of it will? What do

you think of the tramp situation? Well, I have had three letters in

the -- in the Scotsman this week expressing my opinion. They should

stop the whole damn thing. It has caused so much destruction. I can

see nothing in its favour. It is a joke! I think it is a farce, a

complete waste of money. It is an embarrassment for the city. It is a

bit silly. Very badly planned. just then the whole thing is

ridiculous. They should never have done it in the first place. But so

much time and money has been spent of an -- that you cannot really

back out of it. It has just gone five o'clock and councillors across

parties are meeting together trying to thrash out some sort of

consensus about which track to go down ahead of Friday's meeting. Now,

here is a nugget, from the report for business and economic Research.

It reports that to pave the whole road along the original route with

gold would cost �361 million. A mere fraction of the estimated

billion pounds that some believe the tram project will now reach.

The Scottish government says the report is deeply flawed, but it

makes you think. The Finance Secretary John Swinney

spoke to me just before we came on air. I began by asking him what he

had announced today and why. What I said today is that in light of the

City of Edinburgh's council's decision to terminate the tram

project at Haymarket, I think this is such a substantial deviation

from the original plan that ministers had reluctantly agreed to

find that we no longer could provide any further finance for the

project. It concerns that I have that the Haymarket route does not

take the trams into the city centre, which was a key part of the

operation of the tram project. Also, the project would require ongoing

financial subsidy from the public purse, which in the current climate

is an justifiable. So because of those standard changes to the

project, I made it clear to the council that the government will be

providing no more funds. What you expect to happen now? The council

has decided to consider this issue at a special meeting this Friday.

Officials of the council I am sure will be working on the alternatives

for the council to consider. What I made clear in the communication

from ministers to the City Council today is that ministers are

prepared to consider alternative proposals that would be more

consistent with the original design of the scheme stop -- the scheme.

These alternative proposals might be more expensive and you would

reconsider the funding, which you? I made it clear in 2007 when we

accepted this vote which went against us in Parliament, and all

of our opponents required as to guarantee funding for the project,

that we would provide �500 million as a maximum. We will not be

increasing that funding. I made it clear to the City Council today

that the way in which they intended to spend a proportion of that

public funding was unacceptable to the government and I was not

prepared to release funding to relate -- to allow that to happen.

Many listening to this tonight will be thinking why were you prepared

to release �450 million worth of fonts, over 90% of this project,

when not even one-third has been completed. Where was your due

diligence when it became painfully obvious to everyone involved that

this was not working was Mark that this was not working? The due

diligence was to make sure the money was being spent in the way it

was intended and that all requests for payment were appropriate and in

order. But you cannot be satisfied as to that. Even on that test alone,

you as a government surely cannot be satisfied. What I am satisfied

about is that the money that has been spent on this project to date

has been spent for the purposes of that project in a way which was

properly administered and accounted for. What we have to question of

course, and these will be the issues that will be material to the

public inquiry taking place, is why the costs increased so

significantly at a time when the government has been able to deploy

considerable skill and effectiveness in bringing major

capital projects not only in on time but in some cases under budget.

And you had the expertise of Transport Scotland to help you do

this. When you saw this was floundering years ago, would it not

have been politically responsible to that given the transport

Scotland expertise to this project rather than to be as grudging as

you have been in your support of it? It was clear from the outset

this was not a project we supported, but we accepted the will of

Parliament and I accepted it and Adam -- I agreed to fund it to the

tune of �500 million. But we have to be clear about where

responsibilities lie. The responsibilities for managing and

delivering this project rest on the City of Edinburgh Council. The

Government's was a principal funder of that project. What you can see

from any analysis of major public projects is where there is more

than one party involved in the governance, that can lead to real

project uncertainty. So the control of the project Rusted exclusively

with the City of Edinburgh Council. Let us look at that uncertainty.

You have now made conditional that funding on a proposition that the

council abstained on voting last week. The SNP councillors have

maintained a principle of consistent opposition to the tram's

project. What are would say to all councillors in the City is that I

do not think anybody could look at the events of the last few days to

see an absurd decision that was taken by the council last Thursday

being able to be taken forward in this fashion. So I appeal to

councillors in the City of Edinburgh to look in a considered

way at a way forward for the project. The government has taken

decisive action to ensure that that can be taken forward by the council

and it is now up to the councillors to respond positively to that

challenge. The bottom line is you have left no option at all. They

either do what you want or it folds. What the government cannot

countenance is the design of a project which fails to meet any of

the central propositions to which it was originally intended and to

which inquires -- requires an on going public subsidy. That is not

acceptable. That is the issue that has to be addressed and the

intervention that ministers have it made today is designed to do that.

Listening to that is Councillor Lesley Hinds, Labour's Transport

Spokesperson, and, for the Conservatives, Councillor Jeremy

Bank you for coming in, you had a meeting this evening with the

contractor has. -- thank you. And with council officials. What was

discussed, Jeremy Balfour? We had an update on where we are since

last Thursday and in what of discussion is taking place in

regard to this bombshell by the SNP. They have suddenly intervened in a

local project and have said you cannot have the money to do what

the council wants to do. And the SNP are clearly split on this. One

of you from the national government and a second from the local council

-- one opinion. The SNP policy for the people of Edinburgh is no

longer credible. What is no longer credible is the fact this project

has been so badly managed that the SNP government would be failing in

their duty and their legal obligations were afraid to provide

you with any more cash, unless she come up with a profitable route,

which is not what you are proposing at the moment. A few people do not

understand, there is a difference between a project and a contract

and what we decided last Thursday was we wanted to get out of a

contract as soon as possible and get the trams to Haymarket as. We

then said we wanted to we procure to get the tram as far as we could

with the money. How much would that cost? We have to wait and see. And

those figures would only be available at that stage Sam Michael

White is that acceptable to wait and see. -- at that stage. The

public have lost confidence in those figures and now you say it

will cost more and when you get that done, it even more, and we

cannot tell you what that will be. This has become just incredible,

literally. What is happened is week as councillors have been given

advice. We have been given reports and have acted on those. And we are

not just councils -- and these are not just council decisions,

transport Scotland, the Scottish government, all said the figures we

had when we made the original decision that SNP councillors

backed was credible and financially all right and we went ahead on that

basis. We have been let down by other people's. Lesley Hinds,

looking at the specifics of what you discussed with the contract is

tonight, what new figures did you get, what is your understanding of

what it would cost if the contract was cancelled? The discussion, I

thought it would be a way forward. And it was reasonably constructive

and was the first time in four years all the parties have been

sitting round to discuss that. And it was the first time we had a

discussion with the contract has. People will be absolutely

astonished that is the case, sorry to interrupt you, but I imagine a

lot of people will be thinking, how can we have got to the stage and

this is the first time you have had this to -- you have had

constructive discussions about the specifics? What figures you can now

save are absolutely the case? understand it, if the contract was

cancelled, it would be around �161 million to cancel it and that

funding would come from the revenue budget from next year which would

mean cuts. You are asking the figures are we have been given this

evening and I am trying to explain that. Those are the figures we have

been given today. I want to confirm something, is it your understanding

of the contract consolation costs are negotiable? -- that the

contract. And understanding is that is the cost we have been told, 161

million -- our understanding. Conflicting advice has been given

to the council, undermining public confidence, because the advice is

that these contract costs are negotiable were they to be

cancelled, and secondly that Lothian bosses for example could

refuse to subsidise this whole enterprise -- bosses. So there are

a lot of a knowns. So could the contract cost speak negotiable and

do they not have to be paid in a year? -- Could the contract costs

be negotiable. We are going with what we have been told and that is

frustrating because the figures can change from one day to the next.

What was fascinating about your interview with John Swinney is his

SNP government in 2007 took transport Scotland away from the

management of the tram company, they took them off and washed their

hands of this. Then all of a sudden, of this week, they come forward and

say they will do with -- say they will withdraw funding. John Swinney

has had no responsibility for this in four years and insisted

transports Scotland came off the project management board. But we

have also made it clear that the government has responsibilities not

to finance projects there are not viable. They have to exercise

responsibility in how they spend public money. They have supported

you but now say, as many people agree with, that stopping it at

Haymarket is an absurd decision, to quote the finance secretary. That

is the feeling among a lot of people, so you cannot make it

financially viable to stop it at Haymarket. We now hear that you do

not have costings for that. The made a decision on the facts and

figures we had and we believed the Haymarket option was the least risk.

We were given a guaranteed prize for the Haymarket option but not a

guaranteed price for the option of St Andrews Square. If I could just

say about the subsidy, I have met with Lothian at Transport today and

they have said they had no involvement at all about the

figures regarding the option to go to the Haymarket. They were asked

for input into the auction of St Andrews Square and New Haven but

have had no involvement in Haymarket figures. So we have to

question as elected members that information we are being given at

3.1 million, to �4 million, which is what they would say would be an

operating cost two Haymarket, and I have to question the figures we

have been given and by eight -- we have been given by officials and

others who come forward with these statistics. Jeremy Balfour, what

comes out is astonishing. You are basing so much of the cost of this

project on figures that have never been discussed with anybody. Are

you satisfied Lothian at transport is obliged to pay this subsidy? --

below the and bosses. Week as a Conservative group were the only

group who wanted to terminate this contract -- we as. The amazing

thing that happened is that the SNP and for the last five years have

said they opposed the tram project were not willing to vote with us to

terminate this -- who for the last. If we had terminated at last

Thursday, we would not be discussing it tonight. --

terminated it. What about the utilities? A survey recently

indicated 550 conflicts between the final design and positions of

utility pipes and cables on Princes Street particularly into Shandwick

Place. The contingency budget for this has been cut to under 10%,

which is the absolute base people normally put in for an emergency

contingencies in this project. Is it inevitable if this project goes

ahead at Princes Street and up Shandwick Place that there will be

multi-million-pound problems in terms of utilities? That was a

concern in regard to St Andrews Square a we did not have a

guaranteed fixed price. -- and we did not. We thought there was too

much risk to go to St Andrews Square and so we propose to

terminate the contract, at the preferred option, and the least bad

option was to go to Haymarket. Too much risk was to go to St Andrews -

- St Andrews's. You do not have any option but to change your mind

about this on Friday, do you? not have a report or information in

front of me and we are waiting and trying to find out as much as we

can before Friday. I have a concern that by Friday, we as elected

members will not have the information to make a really good

decisions. Will you ever have that information? I feel that is the

frustrating part for elected members. The administration, the

SNP and Liberal Democrat administration who are running this

council, they keep everything to themselves. Today was the first

time I feel we sat around as all groups to take a way forward for

this project. Thank you both. The papers tomorrow, the Herald is

leading with the Old Firm in backlash over sectarianism. And the

Scotsman, the Catholic QC warns of bigotry after his split from the UK.

That's all from me. I will be back Only one more day left of this

course a map and it looks like it will be another cool day. -- of

this bad summer. Some sunshine, but the cloud will fill in into the

afternoon. Quite bright for west. It looks like it will be dry.

Drive through the Midlands and towards East Anglia, a little

sunshine. -- it will be dry. Not bad on the south coast,

particularly Cornwall and Devon. Temperatures up to 18 degrees.

Underneath the cloud, as most of Wales will be in the afternoon,

temperatures a little lower. Rather cool in Northern Ireland again,

light winds and if you see sunshine it will not be too bad, but for

most of the day it will be cloudy. We start with sunshine and increase

clad in Scotland, some light showers, but many places will be

dry. Quite cloudy. Temperatures on Wednesday a little up on today but

it warms up fervour on Thursday with brighter skies and probably

more sunshine -- further. Bigger picture across the UK on Thursday.