Money Down the Tube? London's Big Journey into the Unknown: Analysis: The Tube ; after Four Years, Two Judicial Reviews and Pounds 400m Worth of Consultancy, London Underground Is about to Pass into `Public- Private' Hands

Article excerpt

"I'M NOT giving up; we got beat." With just seven little words, Ken Livingstone finally accepted yesterday that he could no longer stand in the way of the Government's public-private partnership for London Underground.

The pounds 20bn project, equal in worth to all the other PFI schemes combined, will go ahead in April after the Mayor of London agreed to end his legal battle against it. Under a deal struck with Alistair Darling, the Secretary for Transport, Mr Livingstone and his Transport for London body are expected to take over responsibility for the Tube once contracts are signed.

After four years, two High Court judicial reviews and pounds 400m in consultants' fees, one of the longest running political sagas of recent times is at an end. The project's backers say the PPP will improve a network that has been stretched to breaking point by decades of under-investment.

Hundreds of new trains, miles of new track and signalling and scores of refurbished stations will appear, they say, with the private sector using its expertise to keep costs under control and deliver on time.

But critics claim the generous terms of the contracts give the private firms a licence to print money, with their liability for cost overruns capped and negligible transfer of risk. Tube stations will be tarted up before new trains are bought - a curious priority. Only 12 more trains will be in place by the end of the first seven- and-a-half year review period.

Although there is a blizzard of performance targets set for the companies over the 30 years in which they will control the track and trains, the investment programme is a glorified maintenance project and not a radical network upgrade, the PPP's opponents say.

The statistics covering the scheme are gargantuan. The contracts were among the most complex produced by Whitehall, with 2,800 pages consisting of 135 volumes and two million words of legalese, works specification and financial jargon.

The size of the project has not been helped by the repeated delays to what was originally a flagship example of New Labour's big investment idea: a public private partnership that took the best of private expertise while stopping short of outright privatisation.

Although backed strongly by John Prescott's Department of Transport, Environment and the Regions, the Tube PPP was the brainchild of the Treasury. But from the moment Mr Livingstone declared his interest in becoming Mayor in 1998, it was clear Gordon Brown would have a fight on his hands. When the former GLC leader won on a platform of outright opposition to the PPP, the collision course was even more apparent. Mr Livingstone warned that private profit would be put before safety.

The arrival of Stephen Byers as Transport Secretary saw further delay, although it led to a new promise from the Government that the project would only go ahead if it passed a value for money test against the public sector, and if the Health and Safety Executive approved it. Both tests were passed, despite protests that the analyses were rigged.

Yet despite the legal challenges by Mr Livingstone and Bob Kiley, his Transport Commissioner, the die was cast by a crucial clause in the Greater London Act. This stated that the Underground would not be handed over to the Mayor until the contracts were signed. …