Transport: `Jobs lost in Tube sell-off'

Up to half the employees on London's Tube service could be sacked by the private sector to make London Underground profitable, according to the Adam Smith Institute. The right-wing think-tank produced plans, in a document called "Underground Revolution", for "involving the private sector" in running the Tube service.

Avoiding the word "privatisation", the report's author, Kenneth Irvine, said a model would be the Manchester tram service - which is overseen by the public sector, but not run by it. Mr Irvine - the brains behind the privatisation of British Rail - says LU is "even less efficient than BR".

"I have no doubt private-sector management and marketing expertise would improve productivity and revenues. Just look at how successful the privatised rail companies have been," said Mr Irvine, who has made more than pounds 1m in share options from the floatation of Prism - a rail operator.

The institute's proposals would see the track, signalling and stations of Tube lines being bundled together and franchised to the private sector.

There are practical difficulties. Some lines, such as the newish Victoria line, could be parcelled off as a single entity. But the Piccadilly and District line share both track, signals and an operations room. The "vertically integrated" companies would be taken over by private firms, which would be paid dwindling subsidies in order to upgrade the crumbling tunnels and poor track.

LU say there is an "investment backlog" of pounds 1.2bn. In a leaked memorandum, the last government estimated that privatisation would net at least pounds 1.2bn for the Treasury - but noted pounds 600m would be required to upgrade the system.

Mr Irvine says extra money for investment could be raised by selling the Tube's ageing rolling stock. And he points out that by offering long- term subsidies the Government could spread payments over 20 years. "South Yorkshire Passenger Transport Executive has proposed the sale and lease back of its Supertram fleet to cover operational loses," said Mr Irvine. LU declined to comment, but a spokesman noted: "The Adam Smith Institute is often referred to as `right wing'."