Staff got £2m in golden goodbyes after tram fiasco
STAFF on the botched Edinburgh tram project were handed more than £2million in ‘golden goodbyes’, a damning report has revealed.
Employees faced no consequences for poor performance and there was no appraisal scheme in place, the expert review states.
The report was presented yesterday on the final day of evidence at the tram inquiry into how costs spiralled from £375million to nearly £1billion, and why the project was three years late.
It was submitted by Stuart Fair, a senior consultant at the Chartered Institute of Public Finance and Accountancy. He describes how employees of Transport Initiatives Edinburgh (TIE) – the firm handling the scheme, owned by City of Edinburgh Council (CEC) – worked without facing ramifications for poor performance.
TIE was wound down in 2011 amid controversy over the trams.
Mr Fair – also a tutor at Strathclyde Law School – states staff received ‘termination payments’ totalling £2million.
The report states: ‘We could not find any evidence of a performance appraisal scheme in existence that covered TIE staff and CEC staff associated with the trams project.
‘TIE Ltd was founded in 2002 and remaining TIE staff were provided with termination payment in 2011. For the course of TIE’s existence in that format we could find no evidence that performance management of staff was implemented and that there were explicit consequences for poor performance.’
The inquiry has previously heard from now-retired transport official Neil Renilson – tasked with running the trams once finished – who said CEC moved staff to the project ‘to rid themselves of certain employees who were deemed to be sub-standard performers’. Mr Fair’s report also highlighted a lack of transparency and oversight around payoffs.
The document states: ‘Bonus and termination payments were negotiated on behalf of CEC by the director of city development and TIE executives.
‘Neither the director of finance or the head of legal and administration were involved in this process. Given termination payments were made in excess of £2million, a lack of transparency in this process does not equate to good governance.’
It was thought the ‘golden goodbye’ payments were much less. Council figures in 2012 claimed seven directors were given £400,000 in compensation.
But Mr Fair’s report states the payouts’ total is £2,008,126.
Mr Fair also warned the true cost of the tram project may be even higher than believed.
It is understood the trams cost £776million, plus more than £200million in interest on unplanned loans required to cover construction costs.
But in spoken evidence, Mr Fair said: ‘We’re not wholly convinced that the £776million of the final project cost is the true cost associated to this particular project.’
He said significant construction work and legal costs for contract disputes had not been added to the tram bill in violation of ‘proper accounting practice’.
The inquiry, before Lord Hardie, will adjourn until late May, when closing submissions will be heard.
A spokesman said: ‘Lord Hardie will now take the time to consider the evidence. The subsequent report will be made available at the earliest opportunity.’