Edinburgh trams: New deadline in contract dispute

Councillors have now agreed that the route ends at St Andrew Square, in the city centre

Edinburgh City Council has a new deadline to settle the contract dispute with its main trams contractor.

The council now has until the 14 September to renegotiate a deal with the company Bilfinger Berger.

Major construction was halted more than two years ago following a dispute over who should pay for additional costs.

The council last week overturned an earlier decision and voted to lay tracks all the way from the airport to St Andrew Square in the city centre.

At a special meeting last week, Edinburgh councillors threw out the decision made just a week previously to terminate the line at Haymarket, more than a mile west of St Andrew Square.

The U-turn came after the Scottish government said it would withhold £72m of funding for the project.

The council had also been warned by the contractors that it had until 17:00 on Friday to agree a route or end the contract and pay £161m in cancellation charges.

The original budget for taking the line from Edinburgh airport through the city centre to Newhaven in the north of the city was £545m.

But the cost of the tram project grew steadily, with estimates for partial completion to St Andrew Square reaching more than £830m.

The city council will have to borrow up to £231m to take the line into the city centre.

The latest council decision authorised chief executive Sue Bruce to enter a settlement agreement with the contractor on "an unconditional basis as to funding".

This means the council expects the additional funding needed, to take the line to St Andrew Square, to remain within the £231m previously set out.

The council and the contractor now have just over a week to reach a deal.