fbpx

News & Blog

Read the latest business news, blogs and thought leadership articles from our members, as well as updates on the Edinburgh Chamber of Commerce's work in the city.

News & Blog

Business case for Trams to Newhaven remains on track despite COVID-19 challenges

Posted: 9th November 2020
  • Positive economic case for Trams to Newhaven remains
  • Project still on track to be delivered within original budget
  • Majority of stress-test scenarios demonstrate impact on Council reserves of project cancellation would be greater than continuing construction

The review aims to assess the impact any changes in public transport demand as a result of the crisis could have on the economic and financial case, first approved in March 2019. On Thursday (12 November 2020) members of the Transport and Environment Committee will be asked to consider the updated FBC and to approve continuing with the construction of the project.An update to the final business case (FBC) for the Trams to Newhaven project, which reflects the impact of the ongoing COVID-19 pandemic, concludes that the economic case for the scheme remains positive.

The Council’s economic advisers have developed a series of possible scenarios to stress-test the findings in the original FBC. These range from a return to business as usual to a permanent reduction in demand, taking into account short-term COVID-19 impacts and views on future growth. In each of the scenarios, modelling suggests that the economic case for the project remains, with a benefit-to-cost ratio of above one.

Financial assessment has found that the project can still be delivered within the budgeted £207.3m and that, in all but one of the scenarios, the impact on Council reserves if the project is cancelled would be greater than continuing construction. While it is possible there could be a future call on Council reserves to support financing costs as a result of COVID-19, in each scenario the scheme will finance itself, albeit in different timeframes.

The refreshed FBC also highlights that the completion will play a key role in the future growth and development of the city. Delivering the tram line to Leith will unlock a large area of the city for housing and economic development, while providing a low-carbon, clean mode of transport to densely populated communities.

Transport and Environment Convener Councillor Lesley Macinnes said:

“It’s clear that the events of this year have had an unprecedented impact on the way we travel and that we’ll continue to feel the effects for the foreseeable future. In light of this, it’s essential that we assess the potential economic and financial impacts on such a significant transport infrastructure scheme.

“I’m pleased that the economic and financial cases for Trams to Newhaven hold up despite the ongoing pressures resulting from COVID-19. The delivery of this project is essential for the Capital’s green recovery, providing sustainable, low-carbon travel to one of the city’s most densely populated areas. We now have reason to be cautiously optimistic as we progress with construction.”

Transport and Environment Vice Convener Councillor Karen Doran said:

“The Trams to Newhaven project is exactly the kind of investment we need post-COVID-19 to ensure Edinburgh is a thriving, forward-looking place for people to live and work in and to deliver much needed housing, jobs and investment into north Edinburgh.”

Work on the Trams to Newhaven project was instructed to stop on 25 Marchfollowing guidance from the First Minister on COVID-19 and recommenced in June. While the site shutdown incurred costs, these have been covered by the overall budget and delays have been mitigated. An updated programme shows that the project is still working towards Spring 2023 for completion and is forecast to be delivered within the agreed budget.

Over recent months, Edinburgh has experienced a significant drop in demand for public transport, with long-term consequences expected including a decline in income to the tram service. The review of the FBC takes this into account, with even the most optimistic of scenarios projecting that passenger numbers won’t return to pre-COVID levels until the mid-2020s. Finally, the review of the FBC acknowledges the impact of COVID 19 on Lothian Buses and does not rely on any further payment of the extraordinary dividend which was anticipated in the original FBC.

Since March 2019 several local and national strategies have emerged to further support the introduction of high capacity, high quality public transport in the city. While Scotland’s National Transport Strategy 2 (NTS2) envisions ‘sustainable, inclusive, safe and accessible transport’, Edinburgh’s draft City Mobility Planstrives for a greener, safer and connected transport system.

The tram will support the delivery of transport policies such as City Centre Transformation, which proposes a series of interventions to provide a more liveable, people-friendly city centre and requires a mode shift to public transport to help deliver a 10-15% reduction in city centre car traffic in the medium term and a 25-30% reduction in the longer term.

Read the full report, Trams to Newhaven – COVID-19 Final Business Case Refresh, online. Watch Transport and Environment Committee live via webcast from 10am on Thursday, 12 November.

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
Read more here