The part-privatisation of London Underground ran into fresh controversy last night over the disclosure that commercial firms could make up to £4bn in profit from the project.
Figures from the 30-year PPP contracts, with an independent value-for-money assessment, show taxpayers will foot most of the bill if the firms let costs rise out of control.
Eight construction and maintenance companies who make up the Metronet and Tube Lines consortia – due to take over the Tube – admitted they expected returns of at least £2.7bn on the deal, five times the direct investment they will put into the network.
In his first detailed profits forecast, Brian Staples, chairman of Tube Lines, told shareholders he expected his company alone to make £10m a year on its £60m investment.
The revelations were seized on by Ken Livingstone, the Mayor of London, who said they proved the PPP contracts were "a licence to rob London".
Bob Kiley, the Mayor's transport commissioner, said the contracts had clearly been reduced to little more than a glorified maintenance programme instead of a thorough capital overhaul of the dilapidated network.
Mr Kiley warned of the possibility of legal action against London Underground as he published both a limited version of the PPP contracts and a report by Deloitte Touche that concluded the deal did not represent value for money. The Deloitte Touche report found the proposed equity returns for the commercial contractors were "very high" and had unusual protection from risk if anything went wrong.
The contracts also showed more than £3bn of capital investments had been stripped out of negotiations in the past year and crucial issues of risk had not yet been finalised, Mr Kiley said. "It's a real roll of a dice in a dark room," he added.
A spokeswoman for London Underground said the rate of return in the contract was less than 20 per cent and that was not unusual for big PFI deals.
"The bidders' returns depend on whether they do what they say they are going to do. If they do, it good news for them, good news for the Tube and good news for our customers," she said.
"If they don't deliver the improvements to the service according to our specification they won't be rewarded. There has got to be an incentive for people to do it."Reuse content