How should an ambitious, rapidly growing capital city spend its limited resources to best serve its residents?
It is a dilemma that administrations running cities worldwide have wrestled with for decades.
But in Edinburgh, as 2026 approaches, the question feels more pressing than ever, with decisions looming that could shape the city’s future for generations.
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Most notable is whether the council should keep pouring time, money, and resources into a tram extension – estimated to cost somewhere in the region of £2 billion – at a time when the Scottish Government is sending its clearest signal yet that it wants nothing to do with funding the project.
The major plans to extend Edinburgh’s trams from Granton to the Royal Infirmary were put under the microscope recently when the council launched its first public consultation, coinciding with The Herald’s in-depth series exploring the Future of Edinburgh’s Trams.
From the wrangling over potential routes to tearing up cycle paths – and whether lessons from past botched tram works have truly been learned – our series left no stone unturned. By the end, it was hard to escape the sense that we had more questions than answers. But one stood out above the rest: who will pay?
In August, a remark from Edinburgh’s council leader Jane Meagher in the City Chambers – that she would “look into funding options” – was met with laughter from councillors, some of whom are growing increasingly sceptical about the viability and affordability of a tram extension.
Some councillors are growing increasingly wary of how affordable the tram extension will be (Image: Gordon terris/Herald&Times)
Since then, little has changed, except for the mounting pressure on the city’s beleaguered minority Labour administration to find answers on funding.
Consultation responses – likely dominated by calls to save the Roseburn Path, which forms part of one proposed route alignment – are now being sifted through, with a report on the analysis expected by mid-2026.
With £1 million already sunk into the tram plan, and a full business case expected to cost £44m before a single new track is laid, the lack of clarity over who will pay for an extension is set to continue haunting the council in the new year. The stakes are even higher with a Scottish general election in May and a council election just 12 months later, likely to see candidates using the tram as a political football – promising either transformative transport infrastructure or to save the capital £2 billion by opposing it.
When Scottish voters go to the polls in five months time, it will be two years since the government’s transport secretary Fiona Hyslop said financial support for a tram extension was not considered “affordable in the current fiscal climate” who encouraged the council to explore “alternative public/private delivery models”.
In the Scottish Parliament this month, Ms Hyslop confirmed once again the government “has no plans to fund a stand-alone extension of Edinburgh’s tram network,” which she added is a “separate project” to a new mass transit initiative “to improve connectivity across the region”.
And in the City Chambers this month, Cllr Meagher gave what some may interpret as the beginnings of a reverse ferret, when she said: “We don’t even know if we will be doing the tram extension”.
She said it would be “premature” look for funding “until such time as we do have results of the consultation” despite separate written answers from transport convener Stephen Jenkinson confirming council officials had already met with representatives from the UK Government‘s National Wealth Fund “for support with the development of a funding and finance strategy for proposed tram extensions”.
Another major decision coming down the track is how to allocate spending from the city’s new visitor levy – a rare opportunity for the council to dip into a fresh pot of money. This revenue stream could fund transformative projects, but it’s already sparking debate over whether the cash should boost tourism or be redirected to local services.
The council will be keen to channel spending into projects that make a visible difference and benefit both residents and visitors – especially given the disruption to accommodation providers already. But with pressure mounting from festival bosses, housing campaigners, and tourism lobbyists all vying for a slice of the estimated £50m a year the levy will generate, the allocation of the tourist tax is shaping up to be one the other big political bun fight of 2026.