A VITAL £40m loan to rescue the Merseytram scheme will be paid back using tunnel toll money, it was agreed yesterday.
The latest Merseytravel rescue plan fuelled a renewed optimism that the scheme can get back on track.
However, Liverpool and Knowsley councils still need to agree to underwrite a £25m contingency fund to ensure it can go ahead, before putting the new financial package to the Government at the end of the month.
Leader of Liverpool City Council Mike Storey said last night that both authorities were keen to move the project forward.
He said: "Obviously, we need to look at financial regularities, but the scheme will benefit both councils. We need to get together and work out how it should best be done.
"This was a good day for Merseytram."
Cllr Peter Millea, leader of the Liberal Democrats on the Passenger Transport Authority, said yesterday's decision would not mean an increase in tunnel tolls.
He said: "That would be illegal. This is a big step forward for the tram scheme. It shows that we have confidence in it and we are willing to go that extra mile.
"Now we just need Liverpool and Knowsley to agree to underwrite the last bit of money.
"There has been speculation that the Liberal Democrats have gone cold on this project, but all our members in that meeting today voted for the loan to go ahead. We want the tram scheme to succeed."
Liverpool City Council will decide whether to underwrite half of a £25m contingency fund at the next Executive Board meeting next week. The Merseytram scheme was £65m short after the Government refused to increase its £170m funding package.
In addition to the £40m from the tunnels, £25m of Objective 1 funding has been applied for.
Liverpool and Knowsley are being asked to act as guarantors to cover any unforeseen rising costs. The two authorities will not necessarily have to pay a penny.
The Daily Post understands that Knowsley has already indicated it will underwrite the money, though the council wants to pay slightly less than Liverpool, in line with the proportion of populations in the two areas.
Liverpool has been slightly more cautious but the Daily Post understands that senior council members have said they are willing to press ahead.
The ruling Liberal Democrats are keen to see the project finally get off the ground.
Of the 18 members, nine were in favour of the loan, five members from Wirral and Sefton abstained, five were absent and one from Wirral objected.
Labour leader of Wirral Borough Council Steve Foulkes said: "We do not agree that the tunnel tolls should subsidise the Merseytram scheme.
"It is now up to Liverpool and Knowsley Councils to decide whether to underwrite the contingency and they will discuss that at the next full council meetings.
"We can only hope they decide not to so this loan does not go ahead."
A spokesman for Merseytravel said last night: "Arrangements whereby Merseytravel can borrow up to £40m from the tunnels have been agreed.
"We can now move on to the next stage in the process."
A spokesman for Liverpool City Council said: "The city council only received a formal request from Merseytravel about funding for Merseytram in the last few days.
"This project represents a major financial commitment for the council, and the latest proposals will need to be carefully considered.
"It is difficult to give a timescale for when this detailed evaluation will be completed as this is a very complex undertaking and we have not seen all the documentation and agreements reached by Merseytravel on this issue."
jessicashaughnessy@dailypost.co.uk
