Edinburgh Tram Business Case - December 2010 PDF Print E-mail
Monday, 13 December 2010 10:32

The latest revision to the Edinburgh Tram Business Case has been published and is due for consideration by the council later this week.  Patronage figures have been redacted as being 'commercially sensitive', although such information has not been redacted from previous iterations of the Business Case.

Phased Implementation

A  phased implementation of Line 1a will see priority being given to completion of the line from the Airport to St Andrew Square for the total project funding of £545 million.

The report extolls the virtues of a phased implementation, including:

  • Greater control over impact upon the City - the Council will be in a better position to mitigate the impacts of temporary traffic diversions; avoid the critical embargoed periods, execute the works in a way which responds to the concerns of stakeholders and provide greater certainty as to start and completion dates.
  • Control over scope change on-street - building upon the experience on Princes Street, the Council should be in a better position to carry out due diligence on the extent and specification of road and pavement reconstruction and to respond to obstructions and unforeseen utilities works with fewer concurrent work areas to manage.

If the phased approach is so beneficial to the project, one must wonder why this approach was not adopted from the outset.

The Impact for Leith

'Consideration of incremental delivery has focussed(sic) on prioritising the section from the Airport to St Andrew Square and deferring the north-eastern (i.e. on-street towards Leith) sections of Phase la.'

One of the reasons for promoting this decision is that, 'A tram operating from the Airport to St Andrew Square... secures a high proportion of the economic benefits anticipated in the FBC.'.

With the expectation that the full project funding will be utilized in constructing the first phase of Line 1a to the city centre, any additional phases of construction to the Foot of the Walk or Newhaven would only be realized, 'as and when funding sources are identified and economic conditions allow', this despite the environmental benefits which would, 'greatly assist in reducing general traffic emissions on the already congested Leith Walk corridor.', and the public need which offers, 'a convincing case for tram on Leith Walk by virtue of the sheer volume of existing demand for public transport'.

Patronage Levels

By redacting the projected patronage figures it is not possible to validate the claims, 'that following an initial period of tram patronage build up, the TEL business as a whole is profitable for Phase la and after one year the partial opening of Airport to St Andrew Square combined operation will be profitable'.

Of particular interest would be the proportion of these journeys which are dependent on future developments.  The report admits that, 'The forecast of patronage and revenues... remains very sensitive to the quantum and timing of new development in North and West Edinburgh.', and on the 10% 'modal shift' of these passengers from private car to tram.

Integrated Tansport

The claim that the, 'TEL business as a whole is profitable' relies on the tram operations being combined with Lothian Buses.  The report states that for the truncated route from the, 'Airport to St. Andrew Square 73% of year 1 (2012) tram passengers will have transferred from existing public transport, predominantly Lothian Buses, with the remaining 27% being new to public transport'.

If up to 73% of the tram passengers are gained to the detriment of Lothian Buses, claims that Lothian Buses will not subsidize the tram operations do not ring true. Indeed it seems much more plausible that only a return to the historical profits of Lothian Buses, offset against the anticipated losses of the tram operation would see the TEL business, 'as a whole' being profitable.

In order to maximize the transfer of passengers from buses to trams, there wil be a significant reduction in the number and frequency of buses on certain parts of the tram route (e.g. Leith Walk).  This is obviously only possible where the two operations are combined, and the apparent benefit of integrated ticketing, is in fact an enforced necessity.

Under-utilization of Trams

The planned service levels quoted in the report assume journeys to Leith, rather than St Andrew Square and will see 6 trams per hour (tph) running in each direction between the Airport and Leith from 2012, and a further 6tph running in each direction between Haymarket and Leith, thereby doubling the frequency of trams between Leith and Haymarket. By 2013 this 6/12tph is expected to increase to 8/16tph.

Edinburgh Trams have stated that the anticipated journey time from Newhaven to Edinburgh Park will take 40 minutes: even on the higher tram frequency, this would still result in a significant under-utilization of the 27 tram vehicles in the Edinburgh Tram fleet.

These service figures also appear at odds with the stated completion date of end 2012 / start of 2013 for the Airport - St Andrew Square stage.

Concessionary Tram Travel

'It is a fundamental assumption that TEL bus and tram will both participate in the national concessionary ticketing scheme. The relevant agreement has not yet been finalised.'

Once again the percentage of revenues attributable to the concessionary scheme have been redacted from the report.  This scheme currently excludes rail travel, and unless it is extended to include light rail (such as the tram), it will doubtless significantly impact the potential profitability of the TEL business model.

Funding

In September 2009, the position with regard to the Council's £45m funding contribution to the EdinburghTram was as follows:

CEC Contribution Breakdown

Planned Contribution

Achieved Contribution

Council Cash

£2.5m

£2.5m

Council Land

£6.2m

£6.2m

Developer Contributions – Cash

£25.4m

£3.2m

Developer Contributions – Land

£1.2m

£1.2m

Capital Receipts (Development Gains)

£2.8m

£0.0m

Capital Receipts

£6.9m

£2.0m

Total

£45.0m

£15.1m

in December 2010, this is now:

CEC Contribution Breakdown

Planned Contribution

Achieved Contribution

Council Cash

£2.5m

£2.5m

Council Land

£6.2m

£6.2m

Developer Contributions – Cash

£25.4m

£4.9m

Developer Contributions – Land

£1.2m

£1.2m

Capital Receipts (Development Gains)

£2.8m

£0.0m

Capital Receipts

£6.9m

£2.0m

Prudential Borrowing (in advance of developers' contributions)

 

 

Total

£45.0m

£16.8m

The Council's actual contribution to the project to date is £34m. £2Sm of this has been borrowed under the Prudential Framework in advance of receipt of developers' contributions and capital receipts.

A number of options have been considered for raising monies for future phased developments, including borrowing against the future profits of TEL. Once again this appears to fly in the face of the claims that Lothian Buses would not be used to subsidize trams.

Based on current project expenditure, the Scottish Government's capped contribution of £500m will be exhausted by Period 10 of the Financial Year 2011/2012, thereafter 100% of the costs would have to be funded by the City of Edinburgh Council as the funder of last resort.

 

Last Updated ( Wednesday, 15 December 2010 08:10 )