Edinburgh Tram (Line Two) Bill Committee, 24 Nov 2004

Meeting date: Wednesday, November 24, 2004

Official Report 231KB pdf

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Edinburgh Tram (Line Two) Bill: Preliminary Stage

Good morning, ladies and gentlemen. I am sorry for the slight delay. Not all the members of the public who wish to attend the meeting can get into the lift at one time, so there may be slight disruption as more members of the public arrive.

The only item on the agenda is the taking of oral evidence on the general principles of the bill. We have three panels. I welcome the first panel: Jim McFarlane and Dave McCulloch, who represent Scottish Enterprise Edinburgh and Lothian; and Graham Bell, from the Edinburgh Chamber of Commerce. Mr McFarlane and Mr Bell have both indicated that they wish to make opening statements. I invite them to do so, but ask that they restrict their statements to five minutes.

Good morning. I am the chief executive of Scottish Enterprise Edinburgh and Lothian. I am joined by my colleague Dave McCulloch, whose project management responsibilities include transport. We thank you for the invitation to address the committee this morning on the strategically important proposal to reintroduce trams to the streets of Edinburgh.

My use of the word "strategically" was deliberate: the proposals in the bill and in the parallel bill for tramline 1 cannot be considered in isolation. They form part of a raft of proposed transport investment initiatives that are key to sustaining and expanding the city's growth and prosperity. Tramline 2 is a key element of the ambition to develop Scotland's capital city as a globally connected modern business location, an exciting destination for visitors and an attractive place in which to live and work.

In its "Building Better Cities: Delivering Growth and Opportunities" review, the Scottish Executive recognised that our cities are the drivers of the Scottish economy. The Executive is encouraging Scotland's cities not only to embrace the change that is necessary to sustain that position, but to be the instigators of innovation. The challenge of turning the vision into reality is one that we at Scottish Enterprise Edinburgh and Lothian relish, as do our wide range of partners and our colleagues in the City of Edinburgh Council and the private sector.

Edinburgh is experiencing a period of sustained economic growth and prosperity, low unemployment and higher than average gross domestic product per head. The strategic plan for Edinburgh and Lothian forecasts the creation of 43,000 new jobs and demand for almost 70,000 new homes in the region by 2015. The population of the city is also predicted to grow during a period in which the overall trend is demographic decline. Passenger demand at Edinburgh airport is forecast to grow fourfold by 2030. The challenge is how to manage and sustain the growth in economic activity and population.

Many people and organisations have expended a considerable amount of thought and effort in addressing that question. I am thinking of the City of Edinburgh Council's scenario-planning project, the local economic forum, which Mr Bill Furness of the Edinburgh Chamber of Commerce chairs, the seminars on the importance of the city region economy that the Centre for Scottish Public Policy organised earlier in the year and, more recently, the Edinburgh tourism action group's new action plan and the west Edinburgh planning framework, all of which have contributed to the process.

Although much has been done, much more is being planned to deliver Edinburgh's continued economic growth. The on-going development of Edinburgh Park in South Gyle, which has premier business locations to the west of the city, is key for the city's economic ambitions. The new global headquarters of the Royal Bank of Scotland plc at Gogarburn is another development of major significance for Edinburgh and Scotland and for our standing as a global centre of excellence in financial services. Scottish Enterprise Edinburgh and Lothian and the City of Edinburgh Council have made an investment of £17.3 million in the capital streets programme, the aim of which is to revitalise the city centre and to make it more people friendly. The development of the Edinburgh waterfront will create a new city quarter around Granton and Leith docks; it is the biggest regeneration programme since the development of the new town more than 200 years ago.

Vital to the success of the waterfront and other projects is connectivity: the ability of people to move easily in and around the city. The committee should be aware that, from all the consultations that have taken place, a consensus has emerged that the current transport infrastructure of the city is not capable of sustaining predicted growth.

The recent aviation white paper states clearly that the planned expansion of the airport will mean additional traffic on the adjacent roads, with the potential of that to become a major concern unless action is taken. The white paper goes on to say that the proposed tramline would help to address potential congestion problems. Congestion on our roads is in danger of choking our ability to deliver fully on the vision of a vibrant, modern, people-friendly capital city. In my opinion, the creation of tramline 2 is essential if we are to deliver the quality and scale of development that is envisaged for the western approaches, so that they connect quickly and efficiently with other areas of the city.

Edinburgh is now in the top 10 business conference locations in the world. Most delegates arrive by air and want quick and easy access to the city centre. Our capital city is also a major tourist destination and, again, many visitors arrive by air and want to be transported quickly and efficiently to the city centre. First impressions are important in building a positive picture of a welcoming modern city. A high-quality integrated transport system running from the airport to the city centre is an essential part of that perception.

Edinburgh is at a crossroads in planning the way ahead. We need to take the road to opportunity, and signal with confidence to the world that we have the courage to act in pursuit of our ambition to be a modern and competitive European capital city. We need to tackle traffic congestion and be courageous enough to back road pricing and to deliver a high-quality integrated transport system. That is the route to competing effectively with the top cities in Europe. If we do not grasp the nettle, we risk being left to look on from the roadside. We should buy the ticket to ride. The destination is an internationally competitive city in the 21st century.

Thank you, Mr McFarlane.

Thank you for the opportunity to speak on behalf of the Edinburgh Chamber of Commerce. We represent 1,400 members across businesses in Edinburgh, from sole traders to the largest players in the Edinburgh economy. I will try to avoid repeating anything that Jim McFarlane has said, but I heartily endorse the comments from Scottish Enterprise, with which, by and large, we agree. I will add some additional comments—some are details and some are more strategic in nature.

We welcome the arrival of trams in Edinburgh as a clean, efficient and dependable form of transport. Clearly, with electrically powered vehicles any source of pollution is at the point of generation, not within the city. Pollution will only become a greater problem in Edinburgh if we do not deal with it now.

The principal effect on jobs, tourism and the retail sector will be beneficial. Edinburgh is heavily dependent on people from outwith the city to sustain its economy. We probably have about 10,000 vacant jobs at the moment, and we have a little more than 6,000 unemployed people. However, most of them could not fill the vacant jobs, so unless we are able to transport people quickly and efficiently from outwith the city into places of work, our economy will come to a set of buffers. The growth in Edinburgh's economy over the past few years is well known, but one should also consider the beneficial effects that that growth has on the surrounding regions, such as the Borders, East Lothian, West Lothian and Fife in particular. People's ability to get to and from work efficiently will be greatly enhanced by the arrival of the tram network.

There is a negative aspect, in that in some cases there will be a loss of space for other traffic, which must be considered. However, overall the benefits greatly favour the tram. One minor concern is that if tramline 2 is to share the access of tramline 1 to St Andrew Square from Haymarket, that will mean a tram every three minutes down Princes Street. I hope that whoever is responsible will be careful to ensure that that is achievable, because the great benefit of tram systems—their frequency and dependability—could be impaired if we are heading for something that is over-frequent.

We are not fully satisfied that the prioritisation of tramline 2 over tramline 3 has been fully investigated. A great number of people from across the city need to travel to the new royal infirmary. People living in the west of Edinburgh are currently experiencing considerable difficulty getting there by public transport. The south-east quadrant is where many of the 78,000 homes that Jim McFarlane mentioned will be. With the removal of Queen Margaret University College to the edge of East Lothian and the growth of new science parks there, the south-east quadrant will have grown very rapidly by 2009. We are not saying that tramline 3 should come first; rather, we are simply suggesting that the matter should be given some consideration.

On the tramline 2 plans as they currently stand, our view is that the park-and-ride sites, which will encourage people to abandon their cars at the periphery of the city and use public transport thereafter—if they have to travel by car to that point—form a key part of the progress of the city's transport policy. I wonder whether siting park-and-ride facilities at the airport is counterproductive. Should it not be at Newbridge, which would avoid creating congestion between Newbridge and the airport for people trying to access public transport that will, after all, be available at Newbridge if the plan proceeds?

For smaller retailers, there is an issue around how the work will be carried out. The indications from Lyon, for example, were that compensation schemes were set up. Because it is the most cost-effective solution, the contractors will of course wish to work on the longest possible stretch at a time. From the point of view of retailers and other small businesses located along the routes, it would be more efficient if the contractors could work on shorter stretches and complete them more quickly. There are clearly two types of business whose different desires might be in conflict with each other. We would recommend that the committee carefully examine the situation of the smaller businesses, the existence of many of which is more marginal. A small percentage of loss of business could lead to some businesses going to the wall.

As was hinted at in Jim McFarlane's presentation, we very much believe that the city, and indeed the whole of Scotland, really needs an integrated transport plan for the next 10 years. We have been firefighting in transport for far too long. Our hope is that this element of the development of Edinburgh's transport will become part of a long-term, integrated plan for a transport system fit for the growth of our economy—as we heard previously—as opposed to our continually firefighting and trying to keep up. We believe that that requires a 10-year plan and the integration of all the various ideas for alleviating existing transport problems and making the improvements that will cater for growth in the future.

I invite general questions to the members of the panel.

Quite a lot of my questions have already been answered in the submissions from both Scottish Enterprise Edinburgh and Lothian and the Edinburgh Chamber of Commerce, in which the economic benefits that the tramline will bring were highlighted. There is no doubt that efficient, effective transport systems are crucial to economic development in any area. Could you say a little bit more about what you think the added value of having a tram system, as opposed to developing existing transport systems, could be?

Mr Bell said that loss of space for other traffic and the way in which the work is planned could have a negative impact on smaller retailers. Can Mr McFarlane think of any other negative impacts? If so, how might they be addressed? On Mr Bell's final point, some critics think that tramline 2 is being built for the benefit of major businesses, and that it might be to the detriment—or at least not necessarily the benefit—of small businesses. How would the panel address that point?

Perhaps you could start on that, please, Mr McFarlane.

Kate Maclean raised a number of points. On the relationship between transport and economic development, the growth of financial services in the city is one of Scotland's great successes. That growth has not happened just because of the success of the Royal Bank of Scotland plc and HBOS plc; it has happened because there has been inward investment. Companies such as Morgan Stanley, the Hong Kong and Shanghai Banking Corporation Ltd and Aegon Asset Management UK plc are based at Edinburgh Park, as are other technology inward investors such as Oracle Corporation UK Ltd. Sound planning policy from the early 1990s aimed to create a new financial district in the centre of the city—the Exchange—and a new business district on the periphery of the city at Edinburgh Park.

However, as a country we have a tremendous habit of attempting to retrofit transport proposals. The congestion in the west of Edinburgh is apparent to everyone who has to travel through the area in the morning and the evening. All the indications are that congestion will worsen considerably in the years up to 2015. Barry Cross will talk about the figures more ably than I can, but from the transport planning perspective all the evidence is that the growth in congestion will make it fairly difficult, if not impossible, for the existing surface bus transport systems to work effectively. If we want the economy to continue to grow and if we want investment to continue to be attracted to the city, we must tackle the major, looming problem of congestion.

It is worth bearing it in mind that Edinburgh must compete with other European financial centres for the investment that I have described. Dublin is a particularly big competitor for financial investment from the United States. Dublin did not really have an international financial services industry in the late 1980s, but Ireland set out to become competitive and a new financial district was created at Dublin harbour. If we want to continue to be successful, it is vital that there should be planning and investment to support that success.

Of course, we must be aware of the downsides and the problems in relation to construction that have been mentioned. Scottish Enterprise Edinburgh and Lothian is the economic development agency for the area and it is our responsibility to work with businesses that might be adversely affected by the scheme. With partners, we are committed to major programmes of improvement in the city centre. We work extensively with the Edinburgh City Centre Management Company Ltd and other retailers. That work, which is vital if we are to sustain those businesses, will continue.

Kate Maclean asked why a tramline, rather than another transport solution, is proposed. Part of the congestion problem in Edinburgh is public transport congestion. Bus congestion is partly a negative effect of competition; there are probably more buses on the road than we need, although they are not necessarily where we need them to be. The advantage of trams is that they do not lead to congestion in that way. However, we want there to continue to be excellent resources for buses. For example, the bus lanes that have recently been introduced in Dalkeith Road represent a good example of improvements in bus access. We must remember that the trams will serve only the people who travel on particular routes, rather than Edinburgh at large, which will mostly still be served by buses.

Tram plans should certainly be considered alongside plans for heavy trains. We have always supported the construction of a rail route that passes under Edinburgh airport, which is currently the preferred option. We also heartily support the establishment of the Borders rail route, the improvement of services to East Lothian, preferably with connections at North Berwick and Dunbar, and the improvement of Waverley station along the lines of the major plans that were originally considered, which would make possible all the other improvements that I mentioned.

Trams are part of a bigger picture. The particular advantage of tramline 2 is that, while it will largely serve major employers, it will also serve their employees—individuals who find it difficult to get to work without adequate public transport. I went down the M8 yesterday and once again saw a queue of traffic from Edinburgh to Livingston. If trams can alleviate that and reduce the current figure of 40,000 cars an hour that pass across Gogarburn roundabout to get to Edinburgh Park, that will be for the good of employees, not just employers.

I endorse Jim McFarlane's comments that Edinburgh airport is key to our place in international business. At present, we are the second financial centre after London, marginally ahead of Frankfurt. However, the facilities to get into and out of town in Frankfurt are fantastic. Whether we like it or not, we are on the periphery of Europe. If we wish to continue to grow our business as Dublin has done, we must be connected to the international markets. People must want to come to the Edinburgh International Conference Centre and to come here as tourists. The proposed improvements are a key part of that.

The carrot always works better than the stick. The most effective method is not to tell motorists that they will be penalised if they come into Edinburgh; if we make it easier for people to come here without their cars, they are more likely to take that route. Therefore, a park-and-ride and tram scheme has many more attractions than the congestion-charging option has. While I do not want to set one scheme against the other, the trams are a carrot and therefore something that people are likely to use, as they do in cities such as Vienna, where trams are a form of prestige transport, not a cheap option.

I have a supplementary point on Mr Bell's hopes for a reduction in congestion in the west of Edinburgh. The promoter states that on Corstorphine Road it expects a reduction in traffic during the morning peak of 0.3 per cent. In effect, the promoter is saying that the space that is left when people shift from car to tram will be taken up by suppressed car trips—other people will just get in their cars and take up the space. It seems that the reduced congestion for which he hopes will not come about, whatever happens.

The promoter may well be right about that, but I suspect that the major alleviation will occur on the city bypass and out towards the airport and beyond. My suspicion is that the major source of traffic along Corstorphine Road is the people who commute within the city boundaries, rather than people from beyond them. However, the promoter's prognostication is not mine, so I cannot comment further on that issue.

We now come to a series of questions that are exclusively for Scottish Enterprise, on the economic case.

If I may, I will carry on with the congestion issue, which is a substantial element of Jim McFarlane's written evidence. Given the background information that we have received about the rather limited modal shift on to trams, how confident are you that congestion in Edinburgh will be reduced?

As I said earlier, Barry Cross and others will talk about the expected increase in congestion in the city in the coming years. The key point about tram systems is that they provide dedicated routes and the capacity to move large numbers of people reasonably quickly. At the peak hours, tramway 2 will have the capacity to shift about 1,800 people per hour in each direction.

We believe that the key factor in all of this is the extent to which, as I have said, the west side of Edinburgh is a premier employment location—its status has increased in recent years and may continue to increase—and the extent to which its potential may be constrained without adequate public transport. We know about the congestion that already exists, and in the summer of next year the Royal Bank of Scotland's new headquarters will open. There is also the potential for other headquarter developments on the other side of the old A8, opposite Gogarburn. It is hard to envisage all those developments being successful and the city's competitiveness being maintained without serious investment in public transport and the extension of the airport. The Department for Transport white paper at the turn of the year clearly flagged up concern about congestion in the period up to 2015.

Perhaps we can get down to some specifics. The committee has asked for more information about the A8. I think that it was Graham Bell who said that 40,000 cars use the roundabout there. There is an argument that if a tram on the tramline crosses the A8 every 10 minutes the congestion coming into that key development area in west Edinburgh could be considerably worse. The Scottish transport appraisal guidance from the promoter considers performance indicators and the possible monitoring programme. One of the possible indicators that has been set for traffic congestion is

"No change in delays by 2014".

The STAG report does not mention a reduction; a possible indicator of success would be no change for the next 10 years.

That reflects the increase in congestion that could happen if no action takes place. In other words, the tram is essential to keep us where we are now and to prevent us from getting into a worsening situation.

That is overall congestion. Alasdair Morgan has made the point that the promoter expects a 0.3 per cent reduction in traffic on the A8 going into Edinburgh. A limited modal shift is expected to take place and there is a fear of considerably more congestion on the key link into the Edinburgh Park development. I will quote from paragraph 8.4.3.3, headed "Developments Likely to Benefit from Edinburgh Tram Line Two", on page 81 of the STAG report. It states:

"Although many of the proposed and committed developments within the tram line study area are already planned to proceed irrespective of whether or not the tram itself is introduced, there may be some development areas where the full development potential or realisation, as well as the timing and scale of development, could be influenced by the operation of the tram line."

That does not exactly express a huge level of confidence that the tramline will stimulate growth in that particular area.

Scottish Enterprise was not party to the preparation of the STAG report. I go back to some of the figures in my own submission. We expect, as does the structure plan, that 43,000 jobs will come into the city over the next 10 to 15 years and that about 25 per cent of those jobs will be located in the west end of the city. We believe that that kind of growth is possible. The key point in my evidence is: how do we ensure that that goes beyond being a possibility and actually happens? Scottish Enterprise is not convinced that the existing transport system will be capable of effectively and efficiently moving the volumes of people that those employment locations require. In comparison with competitor European cities, the quality of transport in Edinburgh and in this country in general is much poorer. That is increasingly becoming a factor in location decisions.

I will come on to comparisons in my next question, but, as you know, the committee is tasked with looking at the merits of this particular scheme.

I fully understand that.

That is why we look at the limits.

For the £320 million capital cost, the STAG report indicates that tramline 2 will create 410 jobs. That is not a large component of the claimed 43,000 jobs.

Having been involved previously in work on the economic impact of transport proposals for the Bathgate to Airdrie line and the Waverley line in the Borders, I genuinely believe that the problem is with our ability to predict properly and measure such things. For example, the Bathgate to Edinburgh line, which opened in the late 1980s, was an infrastructure investment that was put in place to deal with the problem of high unemployment that occurred in West Lothian in the aftermath of the Leyland closure and the shutting down of the coal mines. At the time, studies projected that the reopening of the Bathgate line would result in perhaps 300,000 passenger journeys a year. When we extended car parking at Bathgate station four or five years ago, the number of passenger journeys a year was well over 1 million.

My belief is that people will use the system if a good one is put in place. I cannot believe that people would not use a fast, efficient tram to go to Edinburgh Park or the headquarters of the Royal Bank of Scotland.

Of course, the distinction is that that was heavy rail, whereas the tramline is a light rail project. The National Audit Office's April 2004 report "Improving public transport in England through light rail" compares projects in Manchester—both phase 1 and phase 2—Sheffield, the midlands and Croydon. The report questions light rail patronage levels, which have sometimes been considerably lower than expected.

I have read such reports.

Are you confident that the predictions for passenger numbers for tramline 2 are considerably more robust than those for tramline schemes in England, given that identical models have been used to produce the figures?

As I tried to point out a moment ago, I believe that we have a problem with the limitations of our modelling systems. However, I can safely say that the level of investment that is being made, the planned and potential economic development activity, the scope for new employment and the growth of the airport, with the expected fourfold increase in traffic by 2030, all create a compelling picture that suggests that tramline 2 will be used if it is put in place. As I have pointed out, light trams are probably the most efficient form of transport for moving significant volumes of people.

The evidence from similar schemes—I am reluctant to call them comparable schemes, because I know that they differ—suggests that light rail projects have questionable patronage levels. The report also suggests that three of the schemes delivered only moderate regeneration and social inclusion benefits.

I have read the report of the Comptroller and Auditor General, but I am not familiar with those schemes. Scottish Enterprise does not advocate tramline 2 on social inclusion grounds. We might be more vocal in making such a point about tramline 1, which will potentially serve the relatively deprived areas of Pilton and Muirhouse in north Edinburgh. Our case for tramline 2 is entirely around the need to service locations in the west side of Edinburgh where current and planned employment will be concentrated. We need to service those locations efficiently and effectively and to provide them with connectivity to the rest of the city and outwards to the rest of Scotland.

As you know, I am slightly biased in favour of another rail project.

We share that interest.

We do not want to go there.

However, that will be for another committee.

On connectivity, you mentioned that Edinburgh Park and Edinburgh airport were the two main areas of development with expansion potential. I would have thought that many of the businesspeople who come into Edinburgh for events such as conferences will have their luggage with them and will prefer to put it in a taxi that will drop them off directly at their hotel.

Hard evidence from foreign visitors shows that one of the biggest bugbears at Edinburgh airport is the taxi system, which does not work effectively or efficiently.

I have a question about connectivity and integration in the future world in which my constituents will be able to get on a train at Galashiels or Tweedbank. If there is a tramline but no heavy rail link to Edinburgh airport, they will have to get off at Edinburgh Waverley with their cases and their files, cross to St Andrew Square and get on a tram to get to the airport; to get to Edinburgh Park, they will have to get the heavy rail link. Would extending to the airport the heavy rail option that serves Edinburgh Park not provide more connectivity for the Edinburgh city region and for Scotland as a whole? You talked about passenger numbers on other rail lines, but those lines were heavy rail lines. Would full integration of the heavy rail link not provide more regional and national connectivity than the tramline would provide? Would that not be a better use of resources?

I certainly agree that the whole purpose of the heavy rail link to the airport is to provide connectivity with the rest of Scotland and to ensure that the airport is accessible to the rest of the country. It is not an either/or situation. The tramline and the heavy rail link are complementary. I return to my points about the need to move significant volumes of people—largely Edinburgh residents—who work in Edinburgh Park or the west side of the city and about the projected growth in the work force in those areas.

Marilyn Livingstone has specific questions for Mr Bell of the Edinburgh Chamber of Commerce.

You have answered quite a few of my questions, but there are some on which I would like additional information. In your submission, you talk quite a lot about small businesses. In particular, you mention the impact of the construction phase on small retail outlets. You have referred to anecdotal evidence from Europe that shows that such losses cannot be made up after construction has been completed. You suggest that a compensation scheme for the disruption that businesses experience during construction could be considered. Will you expand on that part of your evidence?

I am not sure whether what I said previously was understood. I said that I understood that such a scheme had been run in Lyon—in other words, there are European models.

I am glad that you asked that question, because some of the previous questions have asked us to compare our transport plans with those for cities in England. We in the Edinburgh economy do not aspire to compete with England—we aspire to compete on the world stage, so comparison with Europe is a much better way of looking at ourselves and how we move forward.

With road construction projects, it is not commonly the practice in the United Kingdom for retailers and the hospitality industry to be compensated. The committee is probably aware of examples of motorway service stations having to shut down while motorway works are going on. In such circumstances, the services affected get no recompense at all but, as most are part of large chains, a judgment is probably made that they can sustain the hit of one facility being unavailable.

The problem with smaller retailers, such as small family businesses and sole traders, is that, where their margins are tight, a 10 per cent loss in business can be enough to put them into the red. The bank is not going to rush out and give an overdraft to a young start-up business with a not-great track record because its trading figures drop. The next thing those retailers know, their business has gone to the wall and they are in debt.

We are asking the committee to consider that issue. If a business such as McDonald's—I am talking not about local franchises, but about businesses that are part of larger organisations—were hit by the project, there would be buffers in the organisation to deal with the impact, given that there are lots of branches. However, the corner shop owner's business will get hit if the road outside the shop is dug up for three months and no one can park outside as they pick up their morning paper. There will be losses unless such considerations are taken into account when the project is being planned—for example, in the scheduling of construction. We also ask the committee to consider the issue of compensation for such businesses.

Have you assessed how many small businesses are on the route of line 2 and are likely to face the situation that you have described?

Beyond putting a finger in the wind, no. We are not the people who are carrying out the detailed studies. Along with SEEL, we are witnesses representing the business community. It is possible to carry out such studies, however, which we could do in conjunction with other business representative organisations.

It seems to me that, if organisations submit observations on a project, they cannot just offer generalised speculation that a business somewhere might be affected. We know the route of the tramline so we should be able to say, "There are likely to be half a dozen, 50 or 100 businesses that might lose business as a result." Have you any idea?

The number of businesses would be in the hundreds.

Perhaps you could give us an indicative list in writing.

Yes, we could write to the committee with examples. Carrying out a detailed survey would require considerable resources, but we have the facility to contact our membership by e-mail and ask their opinion.

That would be helpful.

I want to expand on the points that Alasdair Morgan has teased out. Have you consulted your members along the route and, if so, what are the general views of those to whom you have spoken?

The majority are in favour and acknowledge the beneficial effects of trams on transport infrastructure and the environment. The negative aspects arise primarily from the construction period. There are concerns, particularly from the housebuilding sector about levies on construction to subsidise the scheme and there is a feeling that such a levy might hamper development, because developers might regard it as prohibitive. We do not think that that is necessarily the case, but the concern has been expressed.

People in the smaller retail sector tend to be members of the Federation of Small Businesses rather than the Edinburgh Chamber of Commerce, which largely represents business-to-business organisations. We have had meetings about the guided bus process at Sighthill at the request of businesses in the area, where the schemes have meant that parking is disappearing and that people who travel to work there will no longer be able to park at their place of work. The City of Edinburgh Council's response is, "Well, they can take the guided bus," but often the guided bus does not meet the need, because people are not coming in the direction that the bus is travelling. We know of similar examples and are finding that more and more people are beginning to express concern.

In your opening remarks, you said that there are 10,000 job vacancies and 6,000 unemployed people in Edinburgh. I am interested in social policy and accessibility. I do not know whether you have read the STAG 2 report, but it says:

"There are a number of socially deprived wards in and around the proposed route of the tram in which the tram will provide increased accessibility to employment opportunities."

Do you agree with that comment?

The Edinburgh Chamber of Commerce now has a large social partnership working remit and has staff offices at Craigmillar and at Granton in north Edinburgh that specifically help with economic development in those areas. We are not just a rich person's organisation.

Over the many years that we have been carrying out such work, we have found that accessibility to work is an issue. For example, it was argued that building various shopping developments such as Marks and Spencer would create employment for people in Wester Hailes. However, there is no bus from that site to Wester Hailes after 4 pm on a Saturday. How is anyone from that area who relies on public transport supposed to work there? We need to address certain social inclusion issues in that respect.

People based in the city centre who do not understand the culture of peripheral communities might well argue that people in those communities should simply come into the centre. However, that is a big journey for many of those people. People in Pilton, Muirhouse or wherever do not see themselves as living in the west end of Edinburgh. I agree with Jim McFarlane that north Edinburgh will be the major beneficiary of the tramline. However, if we open up channels and create greater connectivity, we will help people to open up their aspirations as well as to get to work. That said, the issue is not just about getting to work; it involves other matters such as the ability to access child care and affordable shopping opportunities.

I should also point out that the 0.3 per cent fall in congestion in Corstorphine Road that was mentioned relates only to rush-hour traffic. We hope that the trams will considerably reduce traffic over the whole day, not just during the rush hour.

We must also ask ourselves what might happen if we do not make these improvements to Edinburgh's transport infrastructure. For example, the Royal Bank of Scotland did not have to build its headquarters at Gogarburn; it could have gone anywhere in the UK, but it chose to stay in Edinburgh. For the RBS, Heriot-Watt University—whose planning application for a building to more or less double its size was heard yesterday—other people who might want to come here later and other companies in Edinburgh that might wish to expand, the option of being in Edinburgh will become less and less attractive the less seriously we take the need for proper transport infrastructure.

Will you expand on comments in your submission about the proposed developers premium on new developments in proximity to new routes? How might that inhibit such development?

Because the premium will add to the cost of houses, it might make it less attractive for developers to construct those houses in the first place. For example, there has been a surge in housebuilding in the Borders, which, although not on the same scale as development in Edinburgh, is noticeably different from anything that has happened in the past 20 years. Developers might say that they would be better off putting their resources into building houses in Melrose that will be served by the wonderful new Borders rail route, which we hope will also be connected to Edinburgh airport. Developers can choose where they want to go and, if they feel that they are being penalised for creating new housing, they might simply decide to put their resources somewhere else.

Mr McFarlane, would you like to make any comment on that question? I believe that your view might be slightly at variance to Mr Bell's.

I take a slightly different position on that matter. All the evidence suggests that developers are prepared to contribute to public transport. Indeed, you might want to return to that question when Andrew Holmes comes before the committee later.

I am a director of Waterfront Edinburgh Ltd, which is a joint venture between Scottish Enterprise Edinburgh and Lothian and the City of Edinburgh Council. The master plan and the physical infrastructure for the major redevelopment that is taking place at Granton make provision for the route of tramway 1. There is no evidence that the developers that we are trying to attract to that part of the city are discouraged by the likelihood that they would be asked to make a contribution to the cost of tramline 1. Indeed, tramline 1 will allow the area to sustain higher densities because of its ability to service the area. Developers will be able to fund their contributions through higher densities.

Scottish Enterprise is a potential developer of the proposed centre for biomedical research at Little France. We are in discussion with the City of Edinburgh Council that, should tramline 3 go ahead, we and our development partners will make a contribution to the scheme.

Thank you. That concludes questions to the panel. The committee is grateful to you for coming before us this morning.

Our next panel consists of the promoter's representatives: Andrew Holmes, Barry Cross, Garry Sturgeon and John Colgan. Good morning, gentlemen, and thank you for attending. I understand that Andrew Holmes is to make a brief opening statement.

Thank you, convener. I will try to be brief. Just before I make my opening statement, I should say that one of the issues that came up in yesterday's deliberations on tramline 1 was the impact of the line on small businesses, for which it is a major issue. If the committee would like me to do so, I am happy to explain how we will deal with that issue. Obviously, the approaches that will be taken on the two lines are linked.

I am the director of city development for the City of Edinburgh Council. As such, I am responsible for transport planning and economic development. The council's formal submission is set out in considerable detail in the papers that have been presented to the committee, which is to hold a separate meeting in two weeks' time on the financial case for the tram.

This morning, I will follow on from what Mr McFarlane and Mr Bell were saying by concentrating on some of the wider economic and planning issues. As Mr McFarlane said, the Edinburgh economy is growing. The current structure plan forecasts a considerable increase in the number of jobs. Uniquely in Scotland, the population of the city region is growing. Another significant pointer for Scotland is that Edinburgh is attracting inward migration from beyond the boundaries of Scotland. Indeed, that is the case not just for the city, but for the city region. My colleagues in West Lothian, Fife, the Borders and other local authorities are quite comfortable with the concept that a genuine city region unit is operating in this area and much of what I will say applies to the wider area.

The recent scenario-planning exercise to which Mr McFarlane referred was carried out by us and some of our neighbouring authorities and it involved interviews with key business and community leaders. There was general agreement that the key factors in the city's future economic growth and environmental sustainability lie in the transport agenda, which is about addressing congestion, improving access to employment and encouraging social inclusion. Without investment in transport, growth will not be realised and will be lost to Scotland—I will return to that point in a moment. We in the city are on the edge of opportunity in many respects, not just in relation to economic growth but in our ability as a city region to link economic growth with the wider regeneration and social inclusion agenda. As I said, transport is a key factor in that.

West Edinburgh and north Edinburgh will be served by two tramlines and there will be key connectivities. Tramline 2 will connect the major growth areas in west Edinburgh, the city centre, Gyle park and the airport and will bring in the Royal Bank of Scotland headquarters at Gogar. We should understand that the city's key long-term growth areas are to be found predominantly in west Edinburgh and to a lesser extent in north Edinburgh, with some in south-east Edinburgh.

West Edinburgh has been—and with appropriate infrastructure will continue to be—a long-term economic growth area. There are already about 30,000 jobs in the Gyle-airport corridor, with a further 20,000 jobs in the pipeline; in the long term there is potential, if we get the transport right, for a further increase of 25,000 jobs. The area is already one of the leading employment centres in Scotland and is recognised as such in the Scottish Executive's national planning framework. The Executive's "West Edinburgh Planning Framework", which is one of the components of the national planning framework, states:

"A number of factors combine to give West Edinburgh a competitive advantage over other UK and even European investment locations … Scottish Ministers regard West Edinburgh as a unique opportunity in Scotland to create an international business location, capable of attracting world class companies and headquarters opportunities."

We already have that, with the RBS and some of the occupants of Gyle park.

"The national interest in West Edinburgh can therefore be defined as being the … need to improve public transport accessibility to established development sites … realisation of opportunities for airport expansion and better surface access … need to safeguard accessibility and a strategic reserve of land for the realisation of additional high quality economic development potential … served by a high quality transport system."

On improvement, ministers see the

"need for an early and sustained step change in levels of transport investment to contain existing levels of traffic congestion in line with national and local targets, safeguard accessibility and provide a long-term sustainable solution to existing transport problems."

There is a clear national agenda for the development of west Edinburgh and the support that is required through the step changes in transport accessibility that will be brought about by, among other things, the construction of tramline 2. As I said, that growth and those opportunities cannot be secured for Scotland without a range of transport measures, of which tramline 2 is the central spine around which much of the long-term development potential will be realised.

Thank you. You heard what Mr Bell from the Edinburgh Chamber of Commerce said this morning about the efficacy of putting tramline 2 ahead of tramline 3, given that tramline 3 will provide a service to the new hospital and other key developments. Do you have any comments to make on the tenor of his evidence?

I will make some initial comments and ask my colleague Mr Cross to follow up. We are a city with growth points in a number of areas. We have a proposal for three tramlines, one of which is in the south-east of the city. Nevertheless, all the modelling and economic work that we have done predicts that the scale of growth, the size of existing problems and the number of jobs will be far greater in the west Edinburgh corridor than in south-east Edinburgh. Moreover, however they are measured, levels of congestion and therefore of difficulty of access are greater in the west Edinburgh corridor. There are also differences in the internal economic cases for lines 2 and 3.

The council recognises that line 3 is important, particularly for the south-east sector. The Edinburgh Chamber of Commerce outlined a number of the locations there. Mr McFarlane illustrated the importance of tramline 3 to the biomedipark development. The council is progressing with its proposals for tramline 3. We are close to recommending to the council that it moves forward with lodging the bill.

We would not argue with much of what the Edinburgh Chamber of Commerce said. However, we are working on the basis that the tram network benefits require tramlines 1, 2 and 3. We recognise that the driver behind the delivery of the total network will be the requirement for additional funding. The committee will probably be aware that the council is actively considering congestion charging. The council is progressing line 3 as rapidly as it can and it is addressing the funding package that goes with it. The exact priorities will be clearer once the full business cases for the lines are available and we have a clear understanding of the funding issues associated with the Scottish Executive commitment and with congestion charging funding in due course.

I refer you to bullet point 2 on page 2 of your written evidence, which states, inter alia:

"Failure to deliver the tram will slow down and may prevent economic growth on the west of Edinburgh as well as regeneration of key priority areas such as Sighthill/Wester Hailes, Newbridge and North Edinburgh."

Could you elaborate on that and explain why the tram is absolutely necessary in that respect and why other transport services, such as an improved bus service, would not fit the bill?

I will deal with your last point first. Improved bus services can deal with growing demand but—this is relevant to tramline 1—there is a point at which the capacity of an existing bus service becomes inadequate to deal with demand. There is a point further up the scale at which a tram system becomes inadequate and one starts to look to things such as much more expensive heavy rail systems. In many of Edinburgh's key corridors, the required movements and speeds are moving beyond those that a conventional bus system has the capacity to deliver, which is not to denigrate bus services. Across much of the city, bus services will continue to provide the principal means of local public transport. However, in some areas we are moving beyond bus services in terms of capacity and speed and ease of access.

On the link to economic growth, the view not just of the council—support for which I will return to—but of the Scottish Executive, as reflected in the national planning framework and the west Edinburgh planning framework, is that growth can take place only with step changes in levels of accessibility. That has come from the considered views, gathered in structured interviews, of more than 100 senior business leaders in the city. It comes through in all the work that we do with the private sector.

The growth of west Edinburgh will continue up to a point, but there will come a time when congestion will inhibit the completion of Edinburgh Park—there are already signs that development there is slowing down because of accessibility difficulties—and make impossible the major land releases in the longer term between Edinburgh airport and the A8 that are envisaged in the national planning framework, because there will be no way of getting in or out of the area.

I heard what you said with regard to the fact that the west Edinburgh area has become a "leading employment centre" and how that could impact elsewhere in Scotland. How would you reply to the argument that, no matter how much progress is made in relation to that particular development, the impact on jobs elsewhere in Scotland, such as Dundee, Aberdeen and even Glasgow, will be quite limited?

A number of factors are involved. First, as I said, we are currently working in a city region. My colleagues in the city and in the surrounding areas are all quite comfortable with that concept, which is why we are moving towards city region planning and regional transport partnerships. Whatever we do in Edinburgh will have a sizeable impact across the rest of the area.

Secondly, the labour market footprint of the city of Edinburgh is extending to Dundee, the English border and Glasgow. There is a hugely complex pattern of labour movement and commuting patterns at the moment.

More importantly, there is a spin-off in relation to the financial sector. As the Edinburgh Chamber of Commerce has said, Edinburgh is now a leading European financial centre. The presence of that financial weight in Edinburgh is making feasible the development of the financial district in Glasgow. Those areas operate not in competition but as a connected unit. What is happening in terms of the growth of Edinburgh does not threaten the rest of Scotland but adds to Scotland. For example, if the Royal Bank of Scotland plc had not come to Edinburgh, it would probably have gone to Manchester. Furthermore, it creates or adds to critical mass that affects the rest of the country, particularly in the financial sector and, increasingly, in the biotechnology industry, in which Dundee is a leader and which exists as a series of linked poles in separate centres.

On the basis of the specific impact that the tramline will have on all that, one of the reference documents that we would use is the STAG 2 document, which says:

"In respect of property related impacts the tram line is projected by 2025 to directly contribute towards the creation of minimal additional residential, retail and industrial development, but slightly higher levels of office accommodation."

Your own documentation, therefore, shows that the tramline is likely to have a limited direct impact on development.

I will ask Mr Cross to respond to that in a moment, but first I point out that the matter relates to what STAG takes into account. For example, the core driver for the promotion of the Waverley line is linked to the desire to bring economic benefit to the Borders. The same sort of issues of quantification pertain. Similarly, the core driver for the promotion of the M74 extension in the west is the desire to open up economic opportunity. It is hard to pin that down in STAG.

Jim McFarlane referred to the Edinburgh to Bathgate line. The sole driver for the reopening of that line was for it to act as a tool in the revival of the wider West Lothian economy. Little of the projected employment growth could be reflected in the cost-benefit analysis that was done at the time. However, the Bathgate line example shows that transport projects produce and catalyse much wider development opportunities than a conventional STAG appraisal can take account of.

Before Mr Cross comments, I want to respond to Mr Holmes because I find what he says interesting. You are a director of economic development and planning in the capital city, but you are saying that the STAG process is fundamentally flawed. Your view is that, although we have an evidence base for all previous projects, the STAG process for this project does not capture the previous evidence. I do not want to put words into your mouth, but what you said made it sound like the STAG process is fundamentally flawed.

The STAG process is a conservative one, which is no bad thing in itself, given the hype that has been trumpeted for transport projects in the past. My point is that the conservatism of the forecasting process is not borne out by the reality of what happens on the ground over the longer term. For example, it would be interesting to consider a comparable assessment for the Jubilee line in south London, which has transformed the economic geography of the areas that it serves.

I have only two comments. First, we will no doubt be able to delve into the matter more deeply at the committee meeting on 8 December, when we are slated to appear for consideration of the preliminary financial case. However, the tram will have a twofold effect on the creation of jobs; the first will be the jobs that arise as a direct result of the tramway and the second will be the jobs that are built into the case for the tramway—for example, in the planning framework—and which could not happen without it.

Two previous witnesses—Mr McFarlane and Mr Bell—illustrated, albeit not quantitatively, the fact that west Edinburgh is congested. That argument is understood at the qualitative level by business, industry and the citizenry. The congestion issue feeds through both the approved structure plan and the planning framework. We have recently tested successfully the congestion argument through the congestion charging inquiry. Therefore, the nature of congestion—what it does and how it suppresses development—is clear. Traffic impact assessments of current planning applications in west Edinburgh would almost certainly lead to recommendations of refusal. That does not mean that the tramway would in itself deliver development, if congestion is regarded as suppressing it.

There are two aspects to that. Overall, there is a lot of certainty in your oral and written submissions in respect of the "conservative" process. We will be looking at that "conservative" document with regards to the spending of £375 million of taxpayer's money. You referred to two aspects: congestion and developments that cannot happen. Paragraph 8.4.3.3—"Developments Likely to Benefit from Edinburgh Tram Line Two"—of the STAG 2 document states:

"committed developments within the tram line study area are already planned to proceed irrespective of whether or not the tram itself is introduced".

If the tramline were introduced, it could contribute towards minimal additional residential development.

On congestion, your written evidence to us says that

"The impacts of Line 2 vary road by road, however, overall peak traffic is reduced … by 0.3% in 2011"

on the A8

"and by 0.1% along Gorgie Road".

We may think that that is not much of a reduction in congestion but that many more people will use the trams because, as the previous panel said, many more people will work in the area. However, table 8.16 in the STAG document, which is headed "Impact of Edinburgh Tram Line 2 on Public Transport Mode Share to and from West Edinburgh (2011)", uses the same reference year for a congestion reduction and says that the total proportional change will be 1.6 per cent. That does not represent a massive increase in the number of people who use trams or a massive decrease in the number of people who use cars, and that is a peak-time figure, too.

I am not sure whether I disagree with most of your conclusions.

The question relates to the general principles. The projections are of a 0.3 per cent congestion reduction on the A8, a 0.1 per cent congestion reduction on Gorgie Road and a 1.6 per cent proportional change. The STAG document is helpful. It says:

"At first sight the gain in public transport market share appears to be modest for most movements, with a 2% increase in public transport share in the AM peak and 4% in the offpeak for all movements to, from and within West Edinburgh."

I do not argue with the fact that the impact on congestion will be modest.

We hope that the number of people who would use public transport would ratchet up. We are talking about the possible prevention of development in the area, where 70,000 jobs could be created over a longer period. I do not know what number of jobs is anticipated in the next seven years to take us to 2011—to give us the same reference year—but for argument's sake, I will talk about another 10,000 jobs in the area and Edinburgh Park doubling in size. What value will the tram offer that the Edinburgh Park rail line cannot offer, if the tram will increase public transport use by 1.6 per cent overall? When the table breaks down to west Edinburgh, the proportional change is 3 per cent for the morning peak period.

I am sorry—what was the question?

For nearly £400 million, what benefit will the tramline create over the Edinburgh airport rail link?

We will go back a stage and discuss either EARL or Edinburgh Park station, which you mentioned. We return to the set of issues that concerns the relative purposes of the airport rail link as against the tram. The Edinburgh airport rail link will have one first-rate station at the airport pole. The utility of that for a journey to work in the developments that are flagged up in the west Edinburgh planning framework will be relatively limited, but for trips between the airport and the rest of Scotland, the rail link will be a significant asset.

The Edinburgh airport rail link's utility for people who work in the final phases of Edinburgh Park will be almost zero. The benefit of the tram is not simply in where it goes, but in the fact that it has relatively frequent stops to give accessibility to the jobs that you mentioned from throughout west Edinburgh and the residential areas in the suburban swathe. The practical impact and utility of the airport rail link target a different sector of the travelling public than does the tram.

Yes—to the sum of 1.6 per cent. To be fair, if there is any other information that I have not looked at in this table or anything that I have taken in the wrong context, please get back to us in writing about the increase so that we are absolutely consistent.

We move to a series of questions with a more specific bias towards the financial case.

My first question follows on from what you have said, convener, and from what Jeremy Purvis was asking. Many of us would be glad if a fraction of the money that was spent on the Jubilee line was spent in Scotland.

You have talked about the national planning framework and the specific west Edinburgh document, which is preferred by the Executive. The problem is that the STAG 2 appraisal is also the Executive's preferred mechanism for evaluating schemes. Whenever we ask about road schemes in our constituencies or areas, we are told pretty sharpish that, if they do not measure up under STAG 2, they are not going to happen.

About the only statistic that Jeremy Purvis did not mention was the fact that the line will create 410 jobs, which does not seem to be a huge contribution to economic development. Both you and the representative of the Edinburgh Chamber of Commerce cite the success of the Edinburgh to Bathgate line. No one would deny the fact that its passenger numbers are way beyond expectations. However, if we are to use that as a possible comparator for what the tramline might do, do we know how it has contributed to the economic development of West Lothian? I know that it has provided the opportunity for a lot of people in West Lothian to commute to Edinburgh, but that in itself does not contribute to the economic development of West Lothian. It is beneficial to people in West Lothian because it addresses social exclusion in West Lothian, but does it actually contribute to the economic development of West Lothian?

I think that my colleague from West Lothian, Garry Sturgeon, might be able to give a better answer than I can. I will ask him to comment in a moment.

The bottom line is that, when the Airdrie to Bathgate line opened, the headline unemployment figure in the West Lothian Council area was something like 14 per cent. It is now down to about 3 per cent. Clearly, there has been a major shift in the economy over the period since the line was opened. The line is pretty full not only with people commuting to Edinburgh; there is a sizeable reverse commuting movement from Edinburgh to West Lothian.

That detail is relevant, but it is useful also to consider the strategic context, which can sometimes be missed in all of this. We heard clearly and consistently in the work that we did for the scenario planning project—to which both Jim McFarlane and Andrew Holmes referred—that transport is the biggest issue that faces the city region at present. We also heard that failure to deliver an integrated transport solution in the city and the city region is likely to be the most significant barrier to future economic growth in and around the city. The business community gave us that message clearly and consistently.

There is an increasing body of evidence that relates to city competitiveness in general. The committee might be aware of the work that was done last year by Professor Michael Parkinson of Liverpool John Moores University for the Office of the Deputy Prime Minister. That work considered the increasing importance of city regions and some of the characteristics of the most successful cities in Europe. The research is relevant to this debate and is worth considering. It shows that some of the best-performing cities in Europe generate between three and four times the national gross domestic product per capita. That has massive implications for national economic development policy.

Professor Parkinson highlights six key characteristics of successful cities that are worth examining. They are innovation, diversity, skills, connectivity, strategic capacity or scale, and quality of life. If we set aside for the time being the issue of strategic capacity or scale, it could be argued that Edinburgh city region has strength and, in some cases, a competitive advantage in each of those characteristics, with the obvious exception of connectivity. If we do not address the constraints on connectivity and integration within our transport systems in the long term, we are not going to be able to take maximum advantage of our strengths and competitive advantage. That is important not just for Edinburgh; it is important for the wider region and Scotland because, as we know from work we did earlier this year, Edinburgh brings jobs and investment to Scotland that would not otherwise come.

If we do not resolve those issues at the higher strategic level, it will not just be Edinburgh and the Edinburgh region that suffer—the rest of Scotland will, too. Andrew Holmes's point about the benefits to Glasgow's international financial services district from the continued growth and expansion Edinburgh's financial services district is relevant and important.

A priori, Jeremy Purvis and I would accept that that is the case. It is just a bit disappointing that the only specific appraisal that we have does not seem to back that up in any way. However, we seem to have exhausted the question.

The preliminary financial case update talks about reassessing the extension from the airport to Newbridge if both tramline bills are passed. What will happen if it is reassessed and the line 2 extension is delayed or does not go ahead? What would that do to the economic development case?

The reappraisal that is referred to is the type of reappraisal to which I referred earlier when I was answering the question on tramline 3. There will be a point at which we will have a detailed financial case and we will understand the revenue streams from congestion charging, if that is implemented. At that point, we will have to consider the network and address the question of whether the finance is available. Our current work on tramline 2 has shown that we will need to re-examine the Newbridge extension.

On the planning position on the Newbridge extension, those who were on the trip will recall the Newbridge development pattern and the potential development of the fields to the north. That will be dependent upon either a tram link or a robust park-and-ride and tram link. There is a link, but although the site is accessible, it is a congested location. We will have to reassess it on the basis of available finance.

Will not that have a knock-on impact on the claims for economic development? We are being told about the impact that the tram will have on the potential for economic development, but now we are hearing that one of the prime areas for economic development might not get the tram. Am I wrong?

The tramline would have an impact at that end but to be fair, most of the areas where there is potential for job growth lie to the east of the Newbridge extension and would not be affected by any rephasing of that section. It would not affect the core west Edinburgh planning framework opportunity, which is the area between the airport and the A8, and the area east of the Royal Highland showground does not affect the extension of Edinburgh park. It will have an impact on the areas immediately surrounding Newbridge and Kirkliston. As Barry Cross said, the trick will be to assess ways of ensuring that other things link into those areas. If it is a rephasing, it is just that.

Rephasing?

The possibility of an extension of a tramline to Newbridge in the long term should be maintained if it is not feasible to do it as part of this financial case. However, as Barry Cross has said, a considerable amount of further work has to be done before we get to that point.

I will turn to some other points that have been raised in evidence this morning. One was about developers' contributions. What will it do to the case for the scheme if such contributions are not forthcoming?

A substantial amount of the financial case stems from developers' contributions. They are not something new. If someone goes out of the city through west Edinburgh and drives through the Gogar grade-separated junction, they might reflect that every penny of that was paid for by developer contributions a dozen years ago. There is nothing new in the principle of major, seven-figure developer contributions. That exists now as part of a formal tram contribution policy and as part of the city council's formal supplementary planning guidance.

To be fair, the difficulties that one has with developer contributions for transport generally come further down the line. Of the three things for which we currently approach developers for their contributions—transport, education and affordable housing—it is transport for which contributions are historically most willingly given. That is because, in developers' eyes—not mine—transport is most directly linked to their own development. In principle, there is no reason why developer contributions for transport projects should dry up.

Where exactly will the developer contributions come from? So much development has already taken place out at Edinburgh Park. We have already referred to the Royal Bank.

Developments are continually taking place within the sphere of influence of all the tramlines across the city. Those are both commercial developments and private residential developments. The financial case digs down into that. Substantial amounts of development have still to take place in South Gyle and Edinburgh Park. There is a constant recycling of development sites, moving up from the old industrial estate concept at Sighthill. There is also the west Edinburgh planning framework development. A considerable amount is still in the pipeline as regards tramline 2 and, even more so, in respect of tramline 1.

The Edinburgh Chamber of Commerce raised a point about the effect on small, local businesses during the construction phase. Have you assessed how many businesses might be affected?

Because so much of tramline 1—I beg your pardon; I mean tramline 2. I have been at tram committees back to back.

It is groundhog day for you, I am afraid.

The advantage with tramline 2 is that so much of it is off street. The only sections that will affect small businesses will be in the Haymarket area, where the line comes back on street. I suppose that some businesses on Shandwick Place will fall into that category. Compared with tramline 1, only a small handful of small businesses will be affected by the construction of tramline 2.

We recognise that there is a short-term problem. However, at Haymarket, if everything comes to pass—the commercial development on some of the adjoining sites, the revamping of Haymarket railway station and the introduction of the tram—the prospects for footfall should be good in the longer term for all the small businesses in the area. It is a matter of how we get those businesses through the construction phase.

We would do a basket of things. A team in our department that operates in local shopping-centre regeneration and the like has been working on nothing but support for small businesses and small business improvement over the past three or four years. The basket of measures includes publicity. It also aims to ensure that local parking opportunities are improved in a number of areas, even if only temporarily—that can be done fairly simply under traffic regulation orders. It covers good signage, clean sites and tight control over contractors, so that they have incentives to do things quickly.

One difficulty that I must acknowledge is the ability within the current compensation framework to hand over money directly. We are still exploring that issue. However, we have a reasonably good track record in dealing with such disruption. Indeed our track record is better than that of many of the public utilities, which are some of the main sources of that sort of disruption to small businesses.

In your evidence, you compare the west Edinburgh bus system service and the airlink 100 bus service with tramline 2. It is clear that the airlink service offers shorter journey times than any other bus link offers or than tramline 2 would offer. The submission says:

"tram … attracts some passengers who would never consider bus".

Given that the airlink service is faster than the tram would be, why do you think that passengers will be attracted to the tram?

It is quite difficult to put one's finger precisely on what differentiates people's propensity to use the bus from people's propensity to use the tram, but there is something. There is evidence that with a given journey time the propensity for people to shift from car to bus is lower than it is for people to shift from car to tram. I think that the witness from Edinburgh Chamber of Commerce touched on the interviews during the scenario-planning process, when a substantial proportion of interviewees—Garry Sturgeon can clarify that—said that transport shortcomings were a significant issue and, in particular, that there was a need for a tram. They did not say that there was a need for a tram or for a bus that would have the same journey time as a tram.

Airlink has successfully captured a proportion of the airport market; it uses brand-new vehicles and it operates on greenways. Nevertheless, it is a limited-stop service, which is part of meeting the required journey times. The tram would penetrate significantly greater areas of office development. For example, the tram route runs down the centre of Edinburgh Park and three stops would serve Edinburgh Park. Airlink cannot do that. The situation is similar at the south end of Edinburgh Park and on the route into town. No doubt when Neil Renilson of Lothian Buses plc gives evidence to the committee, he will say that he considers airlink to be one of his three most successful service developments. However, we think that the service has gone about as far as it is possible to go with bus development. At peak times, airlink gets caught up in congestion because it is on street. Tram offers a step change in reliability and offers the additional quotient that will attract people who would not normally use bus. People always know where tram routes and stops are, which is a significant aid to capturing people who do not often use public transport.

Jeremy Purvis mentioned the fairly minimal decreases in congestion on roads such as the A8 that are expected by 2011. At last week's meeting, we spent some time talking about the proposed level-crossings on the A8 and Eastfield Road. Do you have further information on the assessment of the potential impact of the two level-crossings? It struck us that putting a level-crossing on a busy road such as the A8 might lead to significant additional congestion.

As you know, Eastfield Road is the main access to the airport and it is busy, but we must keep the matter in context. We are talking about a relatively limited number of trams with linked traffic signals. If there was a pedestrian flow across the road, for example, we would put in a pedestrian crossing that would potentially be called much more frequently. Many roads throughout the city have such crossings and the perceived impact on congestion is low.

I would like to pick up on that point. On the dual carriageway section of the A8—

I am sorry. I thought that you were talking about Eastfield Road.

Is there not also a level-crossing on the A8?

Yes.

I am talking about both. I think that the A8 crossing is probably more significant, although I mentioned Eastfield Road.

I suspect that a pedestrian bridge is being built on the A8 because of the problem of pedestrians crossing the road—

It is for safety rather than anything else.

Will there be a significant congestion issue there with the stop-start effect on traffic at peak times?

From our work to consider the impact of the crossing, we do not think that the issue is significant. Again, we should go back to the context. We are not talking about the A8 as it was before the M8 extension was built, but about the A8 with a community at Ratho station and on which we are currently considering extending the speed limit because of the Royal Bank of Scotland and for other purposes. We are talking about a tram crossing, not a junction with heavy flows disgorging on to the road, and about very limited delays on an undoubtedly busy road.

Okay. I do not know whether we can take the issue much further.

We can certainly provide a calculation and try to illustrate the headline figures. Perhaps you will want to consider whether that calculation allays your fears.

I understand what you say about the M8 taking traffic away, but I think that there has been a replacement effect. Certainly, the A8 seems to have been a busy road whenever I have come along it lately at peak hours. I am thinking about the knock-on impact of any stops and starts in traffic if they happen three or four times within, say, half an hour.

I can give queue lengths if that would help.

Perhaps something in writing would be helpful.

I understood that we were to receive something from someone in writing on the matter, which is important. We are all familiar with the road in question. It has wall-to-wall metal at peak hours. It is clear that the stopping and starting of traffic could have a significant impact. Therefore, we must have something in writing.

I want to follow on from Mr Morgan's question about people moving from buses to trams. I think that Barry Cross said that there was something out there that explains why people do so. Your written evidence says that that something is within Europe. You carried out a survey on the number of passengers who travel on trams who formerly travelled in cars, and the figure was about 11 per cent. I know that you are aware of the NAO report, which showed too optimistic patronage levels in a number of the light rail options. I am interested in how much of the passenger forecast—the patronage level—for the project, if it comes about, involves people coming from the airport direct into the city. How much of the forecast will be put at risk by EARL and passengers choosing a brand-new train that will probably do the journey in less than half the time? If you do not have that information to hand, perhaps—

Certainly, we have it to hand. It is in a patronage report that we could give to the committee.

If we have not got it already. Forgive me; we may have received the document and I have just not got to it yet.

We could provide the information either in writing or when we are before the committee to answer the preliminary financial case.

It would be helpful if you were able to do it in writing in advance.

No problem at all.

Finally, we turn to important aspects of social policy, on which Marilyn Livingstone will lead our questioning.

The STAG 2 report's executive summary states:

"Overall, the objective of improving accessibility is met."

The issue is one of great importance and I want to tease out the background to that statement.

How will tramline 2 assist in the reduction of social exclusion in west Edinburgh? In your response, would you please pay particular attention to the claims that the tram will benefit residents in areas such as Sighthill and Wester Hailes? You will be aware that some parts of those communities are a considerable distance from the tram stops on line 2.

I will start by addressing the question in general terms before moving on to address the situation in Wester Hailes and Sighthill.

If one was to travel along the route of tramline 2, one would notice that the bulk of the route lies within largely residential areas. I am thinking of areas such as greater Stenhouse and Broomhouse. I think that it is accepted that there are few residential areas beyond the south Gyle access.

By directly linking those residential areas to the rest of the network—not just to line 2 but potentially to line 1—we are giving people access to a much larger section of the city than is the case at the moment. I am thinking in particular of the growth areas in north and west Edinburgh. We will deliver the possibility of journeys to work that, at present, would take a long time.

For example, a journey from Broomhouse to Granton requires a change of buses in the city centre. People would not readily make that journey at the moment. In essence, the tram will shrink the city; it will give people access to job opportunities across the piece. The committee might ask us to return to the subject of the residential areas that lie off the tram route when we appear to give evidence on integration.

We are attempting to deliver not just a tram network, but an integrated tram and bus network. The novel step that we have taken with the tram is that we have appointed—or Transport Initiatives Edinburgh Ltd has appointed on our behalf—Transdev Edinburgh Tram Ltd, which is a tram and bus operator of global experience. What Transdev brings to the equation this early in the process is an ability to develop the tram project and, in partnership with the bus operators, the bus network, so that it complements and feeds into the tram network.

Simply because someone lives some distance from the tram network does not mean that they will not gain the benefit of the tram network. Although we have to go through the development process, the likelihood is that at least some buses that travel from the likes of Wester Hailes, which has a very good bus service, into the city centre will be interlinked with the tram to provide access to the tram—it will act almost as a feeder service. People will gain access to the benefits of the whole of the tram network.

We involved an operator at this stage in the process specifically to address some of the issues in the NAO report. We have the Executive's support for the innovation and a number of cities in England are keen to develop similar links. Through that kind of engagement we can ensure that tram is not seen as being superimposed on what the city is doing and that we do not end up with duplication and the tram serving only a narrow corridor where its benefits are felt; its benefits will be felt much wider than simply around the network.

Have you had any indication from Transdev about how successful it thinks that approach would be? I recall that one of the problems with the post-war tram systems was that they were not extended to serve the new peripheral housing estates that were built in most of our cities in Scotland. Although many cities tried to develop feeder services to the tram terminus, they were not successful, because people did not like swapping modes of transport, especially in a Scottish winter, and if they were on the bus, they preferred to take it right into the city centre.

You are quite right. That is why I was careful to say that the likelihood was that some of the buses would be taken off. It is important that the issue that you raise is addressed. There is no point in losing bus passengers by adding a compulsory interchange for absolutely everybody. It is about giving people the opportunity to access a tram network that goes not simply to the city centre but, I hope, to Leith, Granton, the waterfront and west Edinburgh and about providing access to jobs in those areas, which the bus alone does not do at the moment.

In the 1950s model, people were being asked to get off a bus and on to a tram when the tram was no faster and was probably less comfortable than the bus that they were getting off, which is different. The issue was raised yesterday in the Edinburgh Tram (Line One) Bill Committee meeting. We heard from a representative of the social inclusion partnership in north Edinburgh, whose key point was about the ability of, for example, a single parent in north Edinburgh, who is reliant on workplace child care, to get connected to potential areas of employment within a feasible time using a reliable service. That takes us beyond the threshold of ensuring that people can access worthwhile employment; a variety of factors are involved. As Barry Cross said, we are a relatively compact city and we have to consider the opportunities that are opened up citywide.

I also serve on the Equal Opportunities Committee, which is conducting a disability inquiry this year, which includes considering access for people who have mobility issues. We have to get this new tram development right. We must consider issues such as the distance that people have to travel from their place of residence to the tram. What benefits do you see the trams being able to bring people with mobility issues, particularly given the provision of low-floor buses? How do you see the system working to extend accessibility for people with mobility issues?

You are quite right. Those issues relate not just to tram. A tram network that is highly accessible has to be partnered with increasing accessibility on the bus network. As you will know, perhaps from what you saw in Nottingham, tram provides the ability to have level-floor transfer, whereby even if someone can hardly pick up their feet, they can shuffle across, because the tram can be berthed accurately against a platform.

We are addressing accessibility to buses in a parallel project, in common with many cities. As you travel around Edinburgh, you will see that the low-floor bus fleet is increasing, which brings huge benefits not just to people in wheelchairs but to mothers with buggies, people who use sticks and people who simply find it less easy to get around. Our part of the partnership is to roll out a programme of improvements at bus stops. For example, on-street stops, which are associated with our guided busway, allow the berthing of the bus alongside the stop with level transfer. It will always be difficult to secure that level of accessibility to buses and to ensure that nobody obstructs a bus stop when they park their car, but we are working on the parallel project, which is important. If you travel on some of the new French tram networks, you will notice that the facility is provided for all types of users, many of whom simply could not use public transport before that service was provided.

It would be helpful if you could give us further information on the project.

We can put that in writing in the form of a monograph. If you have half an hour to spare, you might want to have a look at the bus stops in north-west Edinburgh. We have improved a huge number of stops on the back of a Scottish Executive public transport fund award.

Gentlemen, that concludes your contribution to the proceedings. It sometimes seems a little unfair when witnesses are hit with facts and figures and find it difficult to come up with answers immediately, so I underline the importance of our receiving further written submissions, particularly in answer to Jeremy Purvis's questions about the basic economic case in relation to congestion and passenger use. Thank you for coming—I am sorry that you have had a difficult time, but given that we are talking about capital investment of £375 million you will appreciate that the committee requires to be quite satisfied that the case is sustainable.

In the final part of the meeting, we will consider the application of the European convention on human rights. I welcome Rahul Bijlani, from Bircham Dyson Bell. He has intimated that he does not need to make an opening statement, so we will go straight to questions.

The promoter's written evidence on ECHR matters relates mainly to article 1 of protocol 1 and to section I, article 8, which are the most relevant provisions. Will you explain how the promoter had regard to any other provisions in the convention when drafting the bill?

The whole of the convention, as incorporated by the Human Rights Act 1998, was considered during the drafting of the bill. We have submitted written evidence on article 1 of protocol 1 and on section I, article 8, as you said. The only other article that is engaged in any way is article 6, on the right to a fair trial, because the bill creates a number of minor criminal offences, such as obstruction of the construction of the tramway, obstruction of the operation of the system and failure to give a name and address when receiving a penalty fare. The offences would be punishable not by custodial sentence but by fines on a standard scale after ordinary prosecution in the courts. The usual court system would apply, so there would be no infringement of article 6.

Paragraph 6 on page 58 of the promoter's written evidence on the general principles states:

"the approach taken by the Bill in respect of private land interests is the standard one."

The submission also refers to the land acquisition and compensation provisions as being standard ones. For the purposes of the uninitiated, of whom I am one, will you expand on that and tell us in lay terms what the standard provisions are?

In essence, what we have tried to do with the Edinburgh Tram (Line Two) Bill is to incorporate the general law on compulsory purchase, so that what happens once the bill is passed and the promoter has the authority to acquire lands is exactly what would happen if an ordinary compulsory purchase order had been made. The way that we have done that is by incorporating the standard legal provisions that are contained in the Lands Clauses Consolidation (Scotland) Act 1845, which governs the procedure after a compulsory purchase order has been made. That includes a notice to treat, entry on to land and some basic provisions on compensation. We also apply the ordinary law on compensation generally, which is contained in the Land Compensation (Scotland) Act 1963 and the Land Compensation (Scotland) Act 1973. Those acts set out who is entitled to compensation and the basis for the calculation.

The only way in which the compulsory acquisition procedure under the bill differs from an ordinary CPO is the procedure up until the point at which a compulsory purchase order is confirmed. Usually a compulsory purchase order is an order-making procedure. A local authority will make an order and there are provisions for notification of persons having land acquired, for an inquiry and for confirmation by the minister. In this case, that role is fulfilled by the private bill process, in which there are provisions for notification of objection and for a hearing. That is the only difference between this process and a standard compulsory purchase order. Everything else is the same.

Is the promoter's thinking that article 8 rights are likely to be engaged by the proposed scheme? If not, perhaps you could tell us why not.

Our thinking is that article 8 rights will be engaged, but we do not consider that they will be infringed. Issues that are possibly not obvious in the bill will arise, such as noise and vibration due to construction and to the operation of the tram, which could engage article 8 rights. However, as I said, we do not consider that those rights will be infringed. Article 8 is not an absolute right; it is a qualified right, so a public authority can interfere with the right to respect for private and family life where that interference is in accordance with the law and is necessary in a democratic society for one of a number of reasons, which include the economic well-being of the country. Interpreting article 8 to establish whether there has been an infringement involves a balancing act, to balance the fundamental rights of the individual that are being interfered with and the public benefit of the scheme that is causing the interference. Provided that the balance is fair and that there is no disproportionate interference with an individual's rights, there will not be an infringement of the rights enshrined in article 8.

Mitigation measures in respect of matters such as noise and vibration are set out in the environmental statement. All those matters have been considered and safeguards have been put in place. The residual impacts are likely to be slight. Our view is that the balance between interference with individuals' rights and the public benefit of the scheme is a fair one, so there will not be an infringement of article 8.

Article 1 of protocol 1 deals with the need for compulsory acquisition and those powers are in the bill. In the promoter's evidence to the committee, it was stated that only land required in connection to the scheme will be acquired. Does that mean that people who might think that their land is being acquired will ultimately find that that is not the case? If so, can the promoter give any indication at this stage whether it is likely that any of the land earmarked for compulsory acquisition will not be required? You will appreciate that it is important that people know what is likely to happen.

The way in which the bill is drawn up gives the promoter the power to acquire land within the limits of deviation, but it is not obliged to do so. The limits of deviation exist to ensure that a central line for the tram works is shown and that there is flexibility to accommodate the situation if, when one gets on to the ground to carry out the works, something unforeseen arises such as ground levels being slightly different or if the final engineering design of the scheme changes route by a metre here or a metre there. If the tram route moves to one side of the limits of deviation, the other side of that particular parcel of land might not be required.

To acquire land, a notice-to-treat procedure or a general vesting declaration procedure must be followed once the bill has been passed. At that point, the promoter will be able to include whichever parts of the lands it requires. That might not be all the lands that are within the limits of deviation, but that depends on facts that will not be known until further down the line. That is why we need the flexibility in the bill at this stage.

That is accepted, but it would be highly unsatisfactory if people whose land was likely to be purchased had made financial and other plans on that basis only to find late in the day that the situation had changed. If the scheme is to go ahead, we would certainly seek reassurances from the promoter in due course.

There are no further questions on ECHR issues, so I thank you for your contribution, Mr Bijlani.

That concludes today's meeting. I thank all the witnesses and members of the public who have attended. The next meeting will on Wednesday 1 December at 9.45 am.

Meeting closed.