Setback for LU in upgrade dispute

London Underground (LU) appears to have lost the fight to ensure that the £460m shortfall of funding for the next phase of upgrading the capital's Tube network be raised by the private sector contractor Tube Lines.

Chris Bolt, official Arbiter of the public private partnership (PPP), has ruled that Tube Lines "cannot finance the work" and has asked LU to either restate the price it can pay or cut back the scope of the work. But LU said yesterday that the decision was little more than a timetable extension and it would continue to press its case.

LU has maintained throughout that any shortfall must be raised by Tube Lines, as a mechanism to test the credibility of the company's plans to deliver at the price set by the Arbiter, which was £1.39bn lower than Tube Lines' pitch. LU now has until 21 May to produce revised proposals, and Tube Lines will have until 1 June to respond. Work on the seven-year tranche is to start on 1 July.