Full text of document

2001-11-15 Letter to Sir Malcolm Bates from Robert Kiley (Transport for London)

2001-10-26 Your tube: publicly run, privately built (Department of Transport, Local Government and the Regions)

2001-09-19 Preferred bidder in public private partnership for sub-surface lines (London Regional Transport)

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date 26 November 2001
source Transport for London
type Press release

A Transport for London (TfL) Review of the Government's original financial analysis of the Public Private Partnership (PPP) for the London Underground, presented to Parliament in 1999, today shows that the projected £4.5bn worth of savings to the taxpayer could not be justified within the original analysis.

And the value for money analyses performed on the 'live' PPP bids have failed to show any savings over the publicly funded alternative.

The £4.5bn saving to the taxpayer was presented to Parliament in 1999 as a "clear steer" to proceed with the PPP by Deputy Prime Minister, John Prescott. But the TfL Review of the Government's financial analysis, undertaken by PricewaterhouseCoopers (PwC), shows that when the original figures are viewed against a standard value for money calculation the £4.5bn figure vanishes.

Furthermore, the TfL Review discovered that the financial methodology undertaken by PwC in 1999 to reach the £4.5bn figure is not the same methodology now being used to assess whether the 'live' PPP bids are actually value for money to the taxpayer.

The TfL Review concludes that the presentation of the PwC methodology as a valid basis for the calculations, leading to the £4.5bn figure, is "misleading".

Commissioner of Transport for London, Bob Kiley said: "I have said all along that the PPP will not prove value for money. This analysis proves the Government's claim that their discredited part-privatisation of the London Underground would save the taxpayer £4.5bn has been flawed from day one.

"What's more, the Government has been using differing financial methodologies to evaluate value for money at different stages of the PPP process. It is time to end this fundamentally-flawed scheme before the public are forced to suffer another Railtrack on the Tube."

The TfL Review also found that:

Over the first 7 ½ year period, the only fixed-period of the PPP, the Government grant required by the public sector alternative is, on average, £9m less than that required by the private sector under PPP;
Accepting the 1999 PwC analysis, of the £12.5bn investment projected by the Government under PPP, 96% will come from fares or taxpayer-funded Government grant;
When the full weight of financing costs to the PPP is taken into account, total public funding of the PPP would have to rise to £12.3bn, or 98%, of the £12.5bn figure.

[More information regarding this matter including a summary of the report can be found in our PPP section.]

Railhub Archive ::: 2001-11-26 TfL-001