Livingstone to launch challenge against PPP

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Ken Livingstone is set to throw the Government's public-private partnership for London Underground into chaos by launching a last-ditch legal challenge to stop the plans.

The Mayor of London and Bob Kiley, his transport commissioner, have received legal advice that they can object to the scheme on the grounds that the PPP contracts are not "reasonable".

Their action could mean that the courts, and not just the Government, will have to decide once and for all whether the controversial part-privatisation meets value for money and safety tests.

Mr Livingstone will claim that the court hearing need not take long, but ministers are bound to counter that it will mean more delay for Londoners desperate to see investment in the Tube.

It would also intensify political pressure on Stephen Byers, the Transport Secretary, and his repeated promises that he would not proceed with the PPP if it failed to offer taxpayers good value.

Although Mr Livingstone and Mr Kiley have no formal veto over the contracts, they and their successors will be expected to manage them for the next 30 years. They have been advised that they can challenge the PPP not only because the arrangement would force them to manage an unreasonable contract but also because they have not been adequately consulted as required by law.

The Mayor's transport body, Transport for London (TfL), underlined its determination to oppose the PPP yesterday when London Underground allowed it to use new figures claiming that the private sector would make huge profits from the deal. TfL said low-risk transfers in the contracts mean the consortia lined up to take over the network will have a potential rate of return of between 45 and 57 per cent – unprecedented for a public-private project. A spokeswoman for London Underground said it did not "recognise" the 45-57 per cent figure and the percentage rate of return was more likely to be in the mid-teens.