By Richard Johnstone | 30 May 2013
Auditors have said that the botched Edinburgh tram project continues to present a ‘substantial’ challenge to the city council as it attempts to implement budget cuts and restore public confidence.
An examination of Edinburgh City Council by Audit Scotland also warned that the scheme to construct a tram line through the Scottish capital, which is running late and will only be partly built, could face further cost increases.
The original plan was for the line to run from Edinburgh airport through the centre to Newhaven in the north of the city, at an estimated cost of £545m. However, the project has been delayed following a dispute with the main construction firm, and it will now only be built from the airport to the city centre, at an estimated cost of £742m. It is expected to open next summer, around three years late.
In its Best Value examination for the Accounts Commission, Audit Scotland said the council now has ‘a good understanding’ of the challenges it faces in the scheme. Following a settlement agreement with tram contractors Bilfinger Berger, signed in September 2011, there has been ‘satisfactory progress’ on the truncated route.
However, the report stated that, given the complexity of the contract and the history of problems, there are ‘still risks of further delays and overspending’.
The commission also highlighted concerns about the scale of the changes needed as the council attempts to make £107m worth of savings by 2017/18, more than a tenth of current annual spending, due to budget cuts. It is expected the authority will need to save around £33m from its annual £1bn budget in 2014/15, with cumulative savings of £107m required over the following three years.
Accounts Commission chair John Baillie said ‘absolute priority’ must now be given to ensuring savings are delivered.
‘The council does have plans for the next four years but there are significant risks and uncertainties around whether these targets are achievable,’ he added. ‘Its prospects for future improvement depend heavily on it achieving planned savings and addressing the funding gaps that remain.’
Responding to the report, Edinburgh City Council chief executive Sue Bruce said that the council would prioritise meeting savings targets.
She added: ‘Indeed, the auditors found that we already manage our finances well and have a good understanding of what we need to do.
‘Although we still have a lot of work ahead, the overall assessment is very positive and shows that we remain on the right path to creating an excellent local authority that serves the city effectively and efficiently.’
Council leader Andrew Burns added that the watchdog recognised the importance of the strong political leadership that the governing Labour and Scottish National Party coalition is providing.
He added: ‘I agree with the commission that we need to deal with the significant financial challenges we face. Our new approach to publishing and consulting on a draft budget earlier than any previous council will help us to do that.
‘I’m confident that the follow-up review in 18 months’ time will show that we have made further significant progress. In the meantime, we will continue with our commitment to report openly and regularly on our achievements against the pledges we made.’
