Following on from the controversy surrounding the Edinburgh trams project, the Scottish Government has informed the City of Edinburgh Council that it will withhold £72 million for the project, in light of the Council's decision to take the tram only to Haymarket.

Ministers are now of the view that this represents a fundamental change to the basis on which the Scottish Government originally agreed to contribute up to £500 million.

The Council was legally committed to building the tram line to Newhaven, and negotiations had been ongoing since councillors rejected plans to borrow an extra £230m to take the tramline into St Andrew Square, as approved by Council at the end of June, 2011.

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At a meeting last week, they backed the Labour amendment, deciding to end the line at Haymarket.

Finance Secretary John Swinney commented: "The Government had the obligation to give the tram project a further £72 million. Ministers have made clear to the City of Edinburgh Council today that in light of the council's decision last Thursday, which takes the project far, far away from the original concept that ministers committed funding towards, that we're not prepared to make that money available.

"It's time for the council to think long and hard about where it's going with this project. What's clear is the Government will not be funding a project that just goes to Haymarket. It is now down to the council to come forward with new proposals, which will be considered on their merits."

Read the letter issued to the City of Edinburgh Council by Transport Scotland

Also see Edinburgh Tram Decision Could 'Screech To Halt'

(JG/CD)