Edinburgh Tram Inquiry: Where did it all go wrong?

Tuesday September 19th 2023

Edinburgh Tram St Andrews Square

Written by Local Democracy Reporter, Donald Turvill

As the findings of the inquiry into Edinburgh’s tram project are set to be published, almost nine years after the investigation was first announced, we take a look back at the city’s most controversial and costly construction projects and speak to some of those who were involved.

There was applause as the first tram rolled out of Gyle station, while onboard the passengers who had bagged a coveted ticket enjoyed what was described as a carnival atmosphere.

The bright clear morning in May 2014 was a landmark for the city as trams once again started taking paying customers – the first time in 58 years they had rattled through the ancient city.

The cheering and clapping that greeted the event was for many an expression of relief rather than celebration. There was no official opening, no grand ribbon cutting – and after years of disputes over contracts, resulting in a single tram line that was horribly over budget and behind schedule, it wasn’t hard to see why.

“This was not a celebration, it was an embarrassment for the city,” former Labour councillor and transport convener Lesley Hinds said.

Just three years earlier frayed councillors were feeling the heat over the project – and came close to cancelling it entirely.

On a Thursday morning in summer 2011, the city’s leaders had gathered to discuss how to rescue the city’s then half-built tramway.

Already it was more than £200 million over budget, despite being significantly scaled-back two years earlier – and then again just weeks prior.

But surely, locals thought, the botched construction of the ever-shrinking line which had ground the city centre to a standstill and devastated businesses along the troubled route couldn’t get any more shambolic?

Unfortunately for the people of Edinburgh, it could.

“It was a momentous meeting; it was shocking,” the Greens’ Steve Burgess remembers of that August day 12 years ago.

In the Main Council Chamber, there was a white elephant in the room. Was it time to cut losses and abandon the project altogether? Regardless of what happened next, the city council had already “failed the public and its staff,” trade union representatives said at the meeting.

Following a debate and four rounds of voting members settled on slashing another 11 stops off the line – in addition to the 10 which had previously been cut – to save £55m.

Trams would now only run between the airport and Haymarket – meaning they wouldn’t even reach the city centre. The grim announcement followed a similar one just two weeks earlier that they wouldn’t reach Leith, leaving residents who had put up with years of disruption and were previously told that a modern, exciting transportation system would play a major role in the area’s regeneration left with nothing.

“It was just unbelievable – unthinkable,” Cllr Burgess said of the decision which was backed by 25 votes to 19, with 13 abstentions.

For one City Centre ward councillor, this was when everything began to “career out of control” to the point it wasn’t clear if saving the illusive tram scheme would be possible at all.

“We really didn’t know which way was up,” the Conservatives’ Jo Mowat said. “The whole thing was just ruinously embarrassing. It was quite horrendous, and had been so awful up to that point because we’d closed Princes Street twice, people couldn’t get across the road and businesses were going bust.”

Of course, the plan to further truncate the line would never come to pass, as within days of the jaw-dropping vote at the City Chambers the council was forced into a u-turn by the SNP-led Scottish Government, which had opposed the trams from the start, as it threatened to hold back £72m needed to progress works.

Within days, the u-turn was complete as it was announced the terminus would be St Andrew Square as previously planned. Eventually this was changed to York Place around the corner.

And as the money ran out the council had to take out a £231m loan to finish the job.

Just weeks later, Princes Street, after being shut to traffic for almost a year during initial disastrous track-laying works in 2009, was closed for another 10 months and ripped up again to repair crumbling tarmac around the newly-laid tracks.

The state of the capital’s main thoroughfare – peppered with “World War One trenches,” as Cllr Burgess recalled – will be, for many, the image that sticks in the mind from that torrid time when it seemed the city’s tram nightmare might never end.

It was, as one outgoing city transport boss famously put it, “hell on wheels”.

But at last, the cursed project was on course for completion – with a final £776m budget and 2014 completion date set.

Complications up to this point were mainly caused by disputes between German contractors, Bilfinger Berger, and the council’s arms-length company Transport Initiatives Edinburgh, better known as Tie, which managed the project until the controversies in 2011 led to it being wound up and replaced with outside consultants Turner and Townsend.

Almost as soon as spades hit the ground in 2008, rows broke out over incomplete designs, alleged changes to Bilfinger’s work specification and underground utilities along the route which hadn’t been diverted in time for track laying, with unexpected obstacles and artefacts discovered as roads were dug up.

Costs began to spiral out of control as the project was hit with longer delays and increased cost estimates. By 2009, disputes had reached boiling point and Bilfinger halted works, demanding additional funds be made available.

Cash-strapped Edinburgh Council, which later had to hand over at least £66m following a ruling by an arbiter, then officially cancelled the ‘1b’ line which was due to run from Haymarket to Granton, alongside phase two which would have completed the network’s northern loop.

In the end, the capital was left with a tram line shorter than even half what was initially promised, costing £400m more than was first budgeted – around £1 billion in total including interest payments – and arriving five years late. ]

So where did it all go wrong for Edinburgh Trams?

This question has been the focus of a nine year-long, £13m public inquiry which is finally about to deliver its verdict.

“In the beginning, it wasn’t chaos, we were going through a process,” Cllr Mowat said.

“There was a lot of debate, a lot of concern – it was a lot of money. It was about regenerating Leith, it was about housing and jobs and we were signed up to it.”

She added: “We know we got to a point where we were being told lies. At the time we didn’t know we were being told lies, I now know we were being lied to and it’s difficult to pinpoint when that started.

“We then discovered that the contract we had was this weird bespoke contract which left us very very exposed.”

Cllr Burgess similarly said the contract was “full of holes” and added: “I was told that the contractor had a team of lawyers whose job it was to pick holes in the contract. Whereas if they’d had an off the shelf contract that was more bulletproof we wouldn’t have had the situation in which – well, the word was that the contractor had bid low and then was trying to extract more and more money.”

Former Lord Provost Mrs Hinds, who tabled the ill-fated amendment to halt the line at Haymarket, and subsequently took over as the council’s transport convener in 2012 after Labour gained power in a coalition deal with the SNP, said many of the problems were born out of the original agreement between Tie and contractors.

“[The contract] wasn’t detailed enough, it wasn’t robust enough and everything wasn’t tied down,” she said. “Whatever you learn whenever you do any capital projects is when you’ve signed a contract, don’t start changing things – and that’s what happened.”

She added: “Another issue was political differences, within the council you had divisions.

“And thirdly there was the Scottish Government; it went through the Scottish Parliament, but what the SNP did was they removed all the Transport Scotland officials, just kept putting more and more money in and never asked any questions.

“The Haymarket decision was maybe just a moment where we all thought: ‘Either we’re going to dump this all or actually be grown-ups and see how we can take this forward.’

“When I first started as transport convener the reputation of the city was pretty bad and I wanted to feel as if I could come in, make a difference and turn it around. It was a challenge, but I like challenges.

“We ended up having meetings between the council and the tram project. Every week there was a meeting of officials – I just invited myself – and I wanted to make sure that all these professionals advising me were working together and all disputes were coming out early for the benefit of the contract, the council and the Scottish Parliament.”

Inquiry proceedings have heard that prior to this throughout Tie’s involvement there were issues with transparency and councillors and officials not being armed with all the relevant facts in terms of costs and timescales when facing big decisions about the project.

Former Lib Dem council leader Jenny Dawe said there was a “huge amount of secrecy” surrounding contractual disputes when she was quizzed by Lord Hardie in September 2017.

She said: “The information we were getting was that the dispute resolution was going in favour of Tie – they described it as a win or lose situation, we were winning and the other side was losing… it soon became obvious that that really wasn’t perhaps quite what the situation was.

“Also about the costs and the timing, very often we were told, ‘oh no we can’t tell you that’ particularly when matters reached what might be called a stand-off with the consortium.

“We were basically told, ‘No we can’t give you that information’.

“Certainly the implication was ‘you can’t be trusted not to tell the consortium what we, Tie, are thinking and so we’re not going to give you information’.”

Although she did not think this “impeded the decision-making” of councillors who were making big calls on the progression of the scheme, Ms Dawe added “highly confidential memos” submitted to the inquiry suggested councillors “were perhaps being kept in the dark”.

Meanwhile former council accountant Rebecca Andrew told the inquiry she had “concerns about Tie’s lack of transparency and cooperation with council officers throughout my dealings with the company”.

She said: “There was not a systematic or proactive way for sharing important information with Council officers.”

She added if “difficult or awkward questions were being asked” then senior staff from Tie would “complain to council senior management”.

Former chairman of Edinburgh Trams and Lothian Buses David Mackay, who was Tie’s interim chairman in the first few months of construction, said during his hearing he became “alarmed” at a growing number of stories written from leaked reports appearing in the press.

“I was regularly very concerned that the contractor was in receipt of information which they should not have been,” he added.

Councillors sitting on the company’s board had “split responsibilities” and “were looking for re-election,” he said.

“I think inevitably politicians find it difficult not to follow the party line. So the SNP were anti-tram. Others were very pro-tram. And that led to a conflict.”

Mr Mackay – who said the first few years of construction had been “hell on wheels” and called Bilfinger a “delinquent contractor who scented a victim” upon his sudden departure in 2010 – told the inquiry that confidential information being used for political knockabout led to officials being “very, very cautious about what was said in front of councillors” at times.

He said as a result some reports to councillors were subject to “very heavy editing” to avoid sensitive information.

“A lot of the information that we provided to the city officials was confidential, and I was concerned that if it went in an open council report, it would leak and would leak very quickly. And that would damage our strategy,” he added.

Bilfinger Berger has previously blamed the debacle on Tie’s failure to divert utilities in time. In 2011, as things started to get back on track, then consortium boss Dr Jochen Keysberg said the contractors experience had been “extraordinary”, adding that learning of delays in preparatory work was “the biggest surprise”.

Bilfinger UK declined an interview with the Local Democracy Reporting Service and was subsequently asked via email what it thought had gone wrong with the project, how political disputes affected construction and its reaction to being branded a “delinquent contractor”.

The company responded in a statement saying: “The business has engaged fully with the inquiry throughout its nine-year duration and remains focused on delivering its long-term role to help maintain the city’s tram system.”

Whilst it has been up to Lord Hardie to answer ‘what went wrong?’, the question of ‘was it all worth it?’ is one for the people of Edinburgh, and Scotland, who in the end paid for the trams, and finally, over a decade behind schedule, have a completed line between the airport and Newhaven.

“I’m not sure we’ve learned the right lessons out of it,” Councillor Mowat said.

“If we can learn the right lessons out of it, potentially. But that needs Holyrood to learn some lessons out of it, which is the way that Government funding works in Scotland.

“You cannot ever leave a local government to try and put in infrastructure of this scale, it opens up so many bigger questions about local government; if you answer those then possibly.”

Cllr Burgess added: “The tram was a very controversial thing for the city, the whole thing was deeply unpopular; it was a crisis really.

“I think the thought was we needed to stick by it and get it done, and of course it did prove as soon as it was done and the tram was running it was a success.

“Every time you have to tell somebody there’s no money for something they say ‘why are you spending all the money on trams? And they still say that.

“I think now that people have seen the trams up and running I think people like them and they’re a positive thing.”

Mrs Hinds said there will “always be people who are anti-tram.”

However she said the arrival of the Newhaven line had sparked “a real change in people’s attitudes”.

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