It’s a story which was always going to break at some point during the Coronavirus pandemic – doubts about whether the Trams to Newhaven project in Edinburgh will still be viable after all the financial implications of the restrictions are taken into consideration. The Edinburgh Evening News of 25th April 2020 ran with the lead story “Tram to Leith in doubt” with a two page article inside the paper going into more detail and based on comments from the opposition Scottish Conservation Councillors.
For a project which is, and always will be, controversial in some quarters as a result of the issues with the first phase of construction and became quite the political hot potato anything which may cause changes to it is always going to bring out opponents to say how it is in “doubt” and that is exactly what seems to have happened here. The Scottish Conservative Councillors on the City of Edinburgh Council – who earlier this year blamed the extension of Council tax increases for the city – have briefed the press about how the financial situation throws the extension into doubt, whilst also giving a general warning about the state of the Council’s finances. Whilst there is no doubt that as with the majority of Councils, the City of Edinburgh Council will see a massive squeeze on their budgets going forward it remains very early to call out the tram extension as a way for savings.
You may remember that as part of the funding for the project Lothian Buses are due to provide a £20 million dividend with borrowing against future revenue also due to go towards the £207.3 million budget, and both of these funding streams could be put at risk by the financial implications of not only the current Coronavirus lockdown but also the likely subsequent adjustment period which could last for several months for at least the remainder of 2020. There are also suggestions that after restrictions are fully lifted, whenever that may be, public transport usage may fall by as much as 20% which gives concerns over the borrowing against future fare revenue.
As with many other transport operators across the UK, Lothian Buses are seeing their revenue drastically reduced at the moment with people heeding the advice to only travel for essential journeys. The Conservative Councillors have claimed that this reduction seriously puts into doubt their ability to provide their £20 million dividend to the project and thus may mean it isn’t possible to go-ahead with the entire project. Lothian Buses themselves have said it is too early to say what long-term financial impact there may be.
There is no doubt that the finances of the Council are set to be affected by the pandemic with a report claiming that if there is a three month lockdown £53.5million could be lost; and it is these losses that the Conservatives have said shows that the viability of the project is seriously compromised and have called on the ruling Council to produce a plan showing how it plans to deal with this.
For their part, officials at the City of Edinburgh Council have denied that the project is already in doubt stating that it is too early to know the full implications, especially considering we are still in relatively early days of any restrictions.
Cllr Adam McVey, Leader of the Council, is quoted in the article: “The tram team have put in an enormous amount of hard work with our contractors to take us through this challenging period. The implications of COVID-19 are unlikely to be understood for some time but we will make every effort to mitigate the impact and get the tram project back up and running when we’re able to reopen the construction site. The Tram Project is being delivered for the future of our city and it’s important to note that the project is largely funded through borrowing repaid by future tram revenues, so any impact to the council’s budget now is limited.”
Work on the extension was suspended from 23rd March with no date set for its resumption. This is likely to, at the very least, have implications for the planned programme of works with a planned completion date in 2023 now up in the air.
On the basis of comments above, then no major public projects should ever go ahead as a result of Covid. However as far as England goes, scrapping the HS2 project would go a considerable way towards an East-West northern rail project that is so badly needed!
In the short and medium term the benefits from building a rail project are going to be if anything more important than the benefits from operating it. This applies to the Newhaven tramway, Bristol-Portishead railway, West Midlands metro, Network Rail electrification, etc., just as much as HS2.
Once the pandemic eases the overriding need will be to create employment and to get the economy moving again. Infrastructure projects are key to this, and new rail schemes best of all, due to the wide range of skilled and businesses involved – construction, steelmaking, electrical engineering, communications technology, workforce training….. right down to the local shop selling coffee and sandwiches to on-site workers. Moreover. all those companies and employees are paying taxes to the Government, rather than getting unemployment support from it. And, unlike some other public expenditure, the end result is a worthwhile asset for many years to come.
This applies not only to shovel-ready schemes such as in Edinburgh, but also to developing new lines and systems. Employing designers, planners, engineers, environmental specialists etc. again benefits the wider economy – and for these higher-paying jobs the multiplier effects are even stronger.
It is notable that many other countries are already ramping up new rail, metro and tram projects to help overcome the coronavirus slump, and the UK needs to do the same.
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