Cash-strapped council in trams row to borrow more money to extend line

EDINBURGH’S disastrous trams project may be extended using a multi-million pound loan from one of Britain’s wealthiest investment groups.

The city’s cash-strapped council is understood to be considering borrowing more money for the scheme, in a move that will exasperate fed-up residents.

It was reported yesterday that Henderson Global Investors (HGI) – the firm behind a big shopping centre development near the city’s Leith Walk – has been approached to help bankroll an extension to Leith.

Council chiefs believe running trams through the heavily populated area will deliver annual profits, instead of leaving them needing to subsidise a loss-making network. But a loan deal with HGI – estimated at around £80million – would increase repayments, which are already as high as £15million a year.

With a Scottish Government contribution of £500million, the city council has had to borrow almost a quarter of a billion pounds to fund the £776million cost of the existing nine-mile track from Edinburgh Airport to St Andrew Square.

Once interest payments over 30 years are included, the final cost will reach an eye-watering £1billion – making it the most expensive transport scheme permile in the world. City transport convener Councillor Lesley Hinds said: ‘We have always said the next stage would be to finish off the line. We have got the rails and the trams to go down to Newhaven, but for this to go ahead, we need public support and we also need resources.’

One source told a local paper: ‘It makes no sense for the council to subsidise a tram route when the money could be better spent securing and paying for a more profitable route.’

Much of the preparatory work for the Leith section has been completed.

But John Carson, a former head of maintenance at Network Rail and vocal critic of the tram project, dismissed predictions of an £80million price tag as ‘pie in the sky’.