£5 million payout to trams firm pension fund

TIE managed the Edinburgh trams project until Turner and Townsend took over

TRAMS bosses are to spend another £5 million pounds providing pensions to the controversial firm that originally managed the project.

Edinburgh City Council will have to pay off the massive deficit in the pension pot of TIE, the arms-length company they set up to run the trams project, over the next five years.

Company staff had accrued £12.2 million in the fund – but only £7.6 million is left.

The council will have to fill the outstanding £4.6 million gap because of the decision to wind up the company, which will cease to exist on Monday.

The bill comes on top of redundancy payments totalling £2.1 million as well as £2.8 million-a-year fees from the company brought in to take over from TIE, Turner and Townsend .

Transport spokeswoman for the council’s Labour group, Lesley Hinds, said: “I am concerned that every day there is a new figure.

“I will be asking what the ongoing revenue cost of TIE will be, because we also have the £700,000-a-quarter impact of Turner and Townsend.


“When I first suggested we do not have TIE any more because it has lost the confidence of the public, [the council’s transport leader] Gordon Mackenzie said it would be far too expensive to do that, then months later it was announced that it would be disbanded. What other costs are there going to be? Is the office where they are based on a long-term lease, for example, and what will that cost? You just wonder where these costs will stop.

“What councillors need to get is a proper indication of what these costs are likely to be in the future.”

The council will pay out £930,000 a year, for the next five years, to the Lothian Pension Fund, which administers the TIE scheme.

A council spokesman said: “The costs associated with winding down TIE, including all costs associated with redundancy payments made to TIE staff and , in a few cases, early access to pension, have been reported in full to the councillors.

“The deficit in the pension fund for the TIE Ltd is an issue that has existed independently from the costs directly associated with the change from TIE Ltd to the new project manager, Turner and Townsend, and is therefore a liability that would have fallen on the council regardless of the decision to close the company down.”

TIE took out a 10 year lease at offices in the Haymarket area of the city in 2006.

But it is understood that a clause in the agreement allows them to break the lease in the fifth year, which would allow them to break the contract early next year.