2001-05-02 The board of London Transport announces preferred bidders in public private partnership for deep tube lines (London Regional Transport)

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date 2 April 2001
source Mayor of London
type Letter

On Tuesday 27 March I was, with great regret, forced to support
the first measures in the initiation of a judicial review of the
proposed PPP on the London Underground. I wanted to set down
clearly the reasons I felt I had no option but to take this serious
action, particularly as it was not in line with my earlier expectation
that it would be possible to arrive at an agreement with the
government. I also wanted to indicate my views on the way ahead
on the discussions regarding modernisation of the London
Underground.

The overall context is that having appointed Bob Kiley as
Commissioner of Transport for London I evidently take careful
account of his advice as regards all operational issues he considers
indispensable for safe, economic and efficient running of the
Underground system. Overall budgetary matters affecting the city
are a separate but related issue which falls within my responsibility
and judgements. The points below reflect this.

In order to maintain undertakings given to the government
regarding confidentiality of its proposed contractual arrangements
for PPP, members of my office are not directly involved in the
negotations with the government on PPP. Bob Kiley evidently
discusses with me and keeps me informed of the main issues of
policy in the negotiations and the stance he believes should be
taken. On 16 March Bob Kiley and I held a meeting at which he
briefed me regarding the overall progress of the talks. These
negotiations had two aspects - financial and operational. Regarding
finance I must state that I had considerable reservations regarding
the implications of the proposals put by the government in the
talks. It has become clear in the negotiations that the cost of the
proposed contractual arrangements for PPP far exceeds, to an even
greater degree than anticipated, that of alternative forms of raising
finance for the modernisation of the London Underground. Due to
this expense the subsidies that would be required from the
Treasury, over and above the payments scheduled for Transport for
London/London Underground, would commence at a figure of
£700 million a year rising to approximately £1 billion. While the
government stated that it was willing to undertake to make
payments to meet these for at least the first 7.5 year period of the
30 year period of PPP contracts I estimate that they open London to
considerable and problematic financial consequences.

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2001-02-02 Mayor's letter to Stakeholders

Railhub Archive ::: 2001-04-02 MAY-001