Lothian MSP Shirley Anne Somerville has demanded answers from Transport Initiatives Edinburgh (TIE) following claims that the cost of the project exceed the original budget by £250m and take two years longer than planned.

However, claims that the final cost of Edinburgh’s tram project could reach £750m have been described as “scaremongering” by council leader Jenny Dawe.

Ms Somerville, a vocal critic of the tram project's management, said: “I think the people have a right to know how much this project will cost and they will lose faith in the new management of TIE unless they get that information.”

The suggestions were described as “speculation and purely scaremongering” by Ms Dawe, who claimed that both the council and TIE were committed to ensuring that the project came in as close to the original £498m budget as possible.

A spokesperson for TIE also dismissed the claims, stating: “Not only is this information incorrect, but it is deeply damaging to the positive progress of the Edinburgh tram project.”

In response to the suggestion that the trams will not be up and running till 2013, the spokesperson added: “Categorically, there is nothing to suggest that the programme will extend beyond 2012, as has been stated publicly.”

Meanwhile, a survey published this week suggests that the tram works have caused a poor impression amongst Edinburgh's potential retailers, resulting in a 10 percent drop in rents.

Stuart Moncur of Cushman and Wakefield, the real estate firmwhich published the survey, said: “Princes Street continues to suffer from the tram line works, which are making it difficult for people to move around the street. This is having a negative impact on the performance of many retailers. Even those visiting the city centre who are interested, now are reluctant to make any kind of long-term commitment."