Politics: Prescott wins pounds 300m bonus to bring Tube up to scratch before sale

THE LONDON Underground is to receive more than pounds 300m in additional cash to upgrade the ailing network in the run-up to the sale of the capital's track and stations.

According to a pre-arranged pact, Gordon Brown, the Chancellor, will make it clear in his Budget speech today that the money was won by John Prescott, the Deputy Prime Minister. Mr Prescott will take the political stage on Thursday to outline his plans partially to privatise the Tube. He is expected to say that the network will be broken up into two or three infrastructure companies and then leased to the private sector for 20 years.

In the most plausible scenario, "subsurface" lines - the Circle, District, Metropolitan, Hammersmith and City - will form one franchise and the deep lines - the Victoria, Piccadilly, Jubilee, Central, Northern and Bakerloo - will form another, or be split into two.

Railtrack, which owns the nation's track and stations, will be allowed to bid for the whole system, raising the spectre of a private monopoly in place of a public one. Mr Prescott, however, is keen not the let that happen.

Today's budget will make good some of the cuts imposed by the previous administration. In the last Conservative budget, London Transport's spending was cut from pounds 920m in 1996/97 to pounds 150m in the year beginning 1999. LT has also had to absorb about pounds 500m extra costs from the delayed Jubilee Line Extension (JLE).

In order to alleviate some of the short-term cash shortages, Mr Prescott has wrung the funding from the Treasury. There will be pounds 100m for next year and pounds 200m for 1999. Tight Treasury constraints have been bent - which will see money saved this year added to the next 12 months' budget - yielding at least another pounds 70m for the Tube. The Chancellor may also write off some the JLE's extra costs.

The money is desperately needed for the crumbling network. Mr Prescott has accepted that any reorganisation will need to raise pounds 7bn to bring the system up to scratch.

The Deputy Prime Minister needs to tread carefully. He has had to placate the left by annoying Labour's modernising faction - by bandying phrases such as "publicly owned and publicly accountable" - while requiring new Labour's high priests to endorse his plans.

The result is a compromise. So train operations will be kept in the public sector - until they fail the public's aspirations. Then they can be sold off. Mr Prescott will also need to deal with criticism (already made by some trade unionists) that the private-public deal will fragment the Tube.

And Whitehall advisors are already hatching ways to diffuse one political time-bomb: City fees. Mr Prescott has been warned that a Tube sell-off could cost pounds 100m in advisors' costs.

Travellers face disruption on London Underground next week because of a one-day strike by guards. Members of the Rail Maritime and Transport union who work on the Northern Line will walk out on 26 March over the abolition of guards' jobs as the service switches to one- person operation later this year.