Boris fights government on Tube costs

London Mayor Boris Johnson today put himself on a collision course with the Government over Tube costs.

Mr Johnson and Transport for London (TfL) have been at loggerheads for months with Tube maintenance company Tube Lines over costs for upgrade work under the Underground's public-private partnership (PPP) plan.

Mr Johnson has been furious that Tube Lines' upgrade of the Jubilee line has not been completed on time, leading to frequent weekend shutdowns and part closures of the line.

Today, in a draft ruling, the PPP arbiter Chris Bolt said that Tube Lines' costs for 7.5 years from July 2010 should be £4.4 billion.

This is far less than the £5.75 billion that Tube Lines says it needs to spend, but more than the £4.0 billion London Underground (LU) figure.

Today, Mr Johnson and TfL said any additional costs to LU over and above the £4.0 billion "should be met by Government who imposed the PPP structure on London".

Mr Johnson said: "Londoners need and deserve a more frequent and reliable Tube, delivered at an acceptable price.

"I welcome the arbiter's rejection of Tube Lines' view of costs, and his recognition that they should be much closer to London Underground's. However, I am determined that any additional costs must not fall on London's farepayers and taxpayers.

"I also urge Tube Lines to work with LU to focus on the job in hand - to complete the delayed Jubilee line upgrade as soon as possible. Only by ensuring these upgrades are delivered can the capital continue to function as the heartbeat of the national economy."

In "draft directions and guidance" today, Mr Bolt said that Tube Lines could have delivered the Jubilee line upgrade on time and to budget and could now have been progressing well with the upgrade of the Northern line.

On costs, he said that an efficient company could deliver its obligations at "a substantially lower cost than projected by Tube Lines, though not as cheaply as suggested by LU".

Mr Bolt said he would make his final decisions on charges next spring.

He added that before that he would be "seeking an assurance from LU that it is able to afford the cost figure I propose to direct".

Mr Bolt went on: "If it cannot give that assurance, it will need to review the scope of its requirements for the next 7.5 years. I am also seeking its views on whether it would offer better value for money for any additional financing to be raised by Tube Lines or by TfL."

Tube Lines was one of two private maintenance companies charged with upgrading the network under 30-year contracts within the PPP agreement.

The other company - Metronet - collapsed in 2007 and its work was taken over by TfL, with Tube Lines carrying on its responsibility for the Jubilee, Northern and Piccadilly lines.

Yesterday, it was announced that Tube Lines' boss Dean Finch, who had only been in the job a few months, was leaving to become chief executive of transport giant National Express.

Gerry Doherty, the leader of the TSSA rail union, said: "We are heading for another Metronet-style disaster whereby taxpayers have to bail out a failed private contractor who is simply not delivering the goods as promised.

"This underlines the economic madness of Gordon Brown in imposing PPP on LU when everybody who knew anything about transport said both Metronet and Tube Lines would fail.

"The sad thing is that Londoners have had to pay higher fares, vital maintenance work has been delayed, and the poor old taxpayer once again picks up the bill."

Mr Finch, who is staying on at Tube Lines until a successor is found, said today: "A settlement at this level is not conducive to private sector involvement in the Underground, nor does it reflect the reality of the Underground working environment.

"The Arbiter recognises that LU is a difficult client, but rather than including a costed assessment of that impact, he expects Tube Lines to cover its costs by making claims against LU now and more in the future.

"The Arbiter has acknowledged even at this level that LU has a stark choice to make - either to do less work or raise additional finance. However, this document is a draft and we have a further six weeks to make representations, which we will do robustly."