Project costs reviewed

Business case remains for £207m tram extension


Construction work under way in Leith

Edinburgh’s tram extension to Newhaven remains economically viable and can be delivered with the £207 million budget, according to the latest assessment of the project.

An update to the final business case (FBC), which reflects the impact of a sharp decline in passengers during the ongoing COVID-19 pandemic, concludes that the economic case for the scheme remains positive.

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) members of the council’s transport and environment committee will be asked to approve continuing with the construction of the line from York Place to Ocean Terminal.


The council’s economic advisers have stress-tested the findings in the original FBC, and in each of a number of 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, says a report to the council.

Tram in Constitution Street

Tram scheduled to run along Constitution Street

The refreshed FBC also highlights that completion of the line will play a key role in the future growth and development of the city.

Delivering the tram 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 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.

new tram route

Tram route with dotted line showing extension and new stops

“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.”

Committee vice convener 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 halted on 25 March following guidance from the First Minister on COVID-19 and recommenced in June.

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