Safety body 'unlikely' to clear PPP by deadline

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The Government's plans for a public-private partnership for London Underground were put in further doubt when it emerged that safety chiefs were unlikely to clear the project for its scheduled start date next year.

The Health and Safety Executive is "highly unlikely" to accept the revised safety proposals for the PPP in time for the 1 April deadline set by ministers, The Independent has learned.

The fresh problems coincided with an admission by Stephen Byers, the Transport Secretary, on Wednesday that his officials were working up alternative "fallback" plans to abandon the PPP. Mr Byers stressed yesterday that he would not be "dogmatic" about the controversial proposals and pointed out that he would not approve them if the costs were too high.

In a separate move, the HSE is understood to have indicated that its own assessment of London Underground's safety case would not be governed by the 1 April date. The independent safety watchdog accepted this week the latest version of safety plans for the shadow PPP structure set up for the Tube ahead of next spring. But the crucial final version of the privatised safety plans is not now expected to be finalised until late this month or January. On-site inspections and other checks mean that the HSE may not approve it in time for April.

The date for final bids from private companies, due next Monday, has also been put back to later this month. Private bidders believe the delay will not affect them, but sources at the HSE suggest it could.

Mr Byers did not reject comparisons yesterday with his action over Railtrack. He said it had pleased large sections of the Labour Party which were also opposed to PPP.

"We are not looking at this in a dogmatic way. What we are saying is public-private partnerships will have to satisfy the value-for-money test because we are investing some £13bn into the London Underground and we want to get a benefit for every pound we are investing."

Ken Livingstone, the Mayor of London, revealed that Mr Byers had told him privately that the Tube could be handed over to the public sector if safety and value-for-money tests were not met.

London Underground, bidders for the £13bn Tube PPP, government advisers and Transport for London all appeared to be taken by surprise by Mr Byers' claim that there is a worked-out "Plan B" for London Underground, should the scheme fail.

Although the Government has always said that PPP bids must pass a value-for-money test, it has never before admitted that the alternative would be to keep the Tube wholly in public hands and run by Bob Kiley, the head of Transport for London.

One PPP insider said: "We don't know whether Byers is signalling a U-turn on the PPP and conveying a message to Kiley. Or if this is a message to the bidders, telling them that their final offers better be competitive as the Government won't roll over."

The two consortia left in the race for the three PPP contracts will submit final prices for the work in the next few weeks.

London Underground yesterday admitted that if PPP contracts are not signed on time, the £98m budget for consultants' fees will rise still further. The main PPP advisers to London Underground are the consultants Pricewaterhouse-Coopers, Accenture and PA Consulting, engineers Ove Arup, lawyers Freshfields and auditors KPMG.

It is estimated that the seven original private-sector bidders for the PPP contracts will have spent up to £150m between them on the process. Most of this money will not be reimbursed.

The Government has also had to pump hundreds of millions of stop-gap funding into the Tube, as the PPP was supposed to be in place in April 2000. For its part, Transport for London has spent £2.2m fighting the PPP plans.