Letter: Price of Ken's Tube

Click to follow
The Independent Culture
Sir: Writing in The Independent, Ken Livingstone attempted to wriggle off his commitment to Labour's National Executive Committee and its selection panel that he would abide by Labour's general election manifesto ("Mr Blair has been given bad advice about how best to finance the Tube", 24 November).

The commitment to a public-private partnership for the London Underground was in our national manifesto (as Ken admits), and in our special London manifesto. It was also provided for in the Greater London Authority Act, which was approved by Parliament with Ken's support earlier this year. Ken says his alternative is to issue bonds.

There is nothing magic about bonds. Bonds are issued by private companies, government and even local councils. They are just a form of borrowing. Ken's bonds would simply be public borrowing by another name.

New York City went bust in the Seventies through overextending itself on debt - including, in part, education bonds. But the crucial comparison can be made much nearer to home.

If the Jubilee Line Extension (JLE) had been built on mayoral bonds, Londoners would have been landed with a pounds 1.5bn bill for the overrun. Inevitably fares would be increased, when Ken wants to freeze them.

And as the director of infrastructure finance at Deutsche Bank has been quoted as saying (in The Financial Times), "Ultimately, the taxpayer will pay more with Ken Livingtone's proposals."

Under our Public Private Partnership (PPP), London Underground would do what it does best - run trains, signals, safety and stations. Private construction companies would maintain and renovate the infrastructure then hand it back to the Underground. Crucially, the private companies would bear the risk of any cost overrun, not Londoners.

This week I opened the Light Rail extension under the river from Docklands to Lewisham. It was built as a PPP, with the private sector raising the money and constructing it - through a private-sector bond issue. Unlike the JLE, it was finished on budget and ahead of time, not 18 months late.

JOHN PRESCOTT

Deputy Prime Minister

Department of the Environment, Transport and the Regions

London SW1

Comments