Johnson threat over tube funds ruling

London Mayor Boris Johnson said today he is considering legal action over a key funding ruling that threatens to derail Underground improvement plans.

He said Londoners are being "asked to write a blank cheque" to prop up "ailing and failing" Tube maintenance company Tube Lines.

His comments came after Chris Bolt, the arbiter for the Tube public-private partnership (PPP) plan, ruled that Tube Lines' costs for the 7.5 years from July 1, 2010 should be £4.46 billion.

This was far less than the figure wanted by Tube Lines - which maintains and upgrades the Jubilee, Northern and Piccadilly lines - but the sum is around £400 million more than London Underground (LU) reckons it can afford.

Mr Johnson said: "The arbiter has ruled that the costs should be £4.46 billion, thus demonstrating that Tube Lines' breathtaking original demand for £6.8 billion was simply an attempt at daylight robbery.

"Londoners will also be outraged that the Tube upgrades promised to them are now threatened. Simply put, we are being asked to write a blank cheque in order to prop up an ailing and failing Tube Lines, and to guarantee massive and secretive payments of £400 million to its shareholders, Ferrovial and Bechtel.

"In other countries this would be called looting, here it is called the PPP."

Mr Johnson went on: "It is a system that no Londoner voted for and which is letting us down, while the Government seeks to wash its hands of the mess it created.

"We will fight this to the last and are seeking urgent advice on the arbiter's idea to pass Tube Lines' obligations to raise finance on to London's fare and taxpayers. We are therefore examining all our options, including legal remedies."

Mr Johnson and Transport for London (TfL) said that Mr Bolt had proposed that TfL "either cut back on the Tube improvements promised to Londoners or simply provide more public funds without an effective scrutiny of Tube Lines' future plans".

Mr Bolt said: "I have listened carefully to the representations made by both Tube Lines and LU and made a number of changes to my draft directions.

"Overall, this leads to a small increase in the costs allowed for the next review period (up to the end of 2017).

He went on: "If I adopted LU's preferred interpretation of the contract, this would not remove the problems of affordability resulting from my final directions on costs.

"Any Tube Lines financing would require additional prudential borrowing approval which the Department for Transport has indicated that it is unlikely to give. It could also mean that the revised terms constitute a material change in risk and could make it impossible to raise finance.

"So I am giving LU a further opportunity to either confirm that it is able to meet the full costs of its requirements or to revise them."

Tube Lines acting chief executive Andrew Cleaves said: "We note the arbiter's decision. We consider that this decision could present Tube Lines with a significant challenge in its efforts to deliver the investment in the Tube that the system continues to require.

"We have worked hard with LU to make this partnership work. During the last seven years, Tube Lines has achieved significant improvements in reliability, cost and safety. With the support of LU, we can do even better in the next few years."

He went on: "The Tube requires sustained, high levels of long-term investment. It is important therefore that there is general support for this massive improvement in the Tube in order to deliver the LU's vision of a world-class railway for London.

"The arbiter has previously agreed that we have already shown a real commitment to drive down costs and increase performance outputs for the benefit of passengers. Our costs for doing the same work as LU are a third cheaper and, according to the arbiter's own data, will continue to be less expensive in the future.

"It is clear that the arbiter has relied on international benchmarking to help drive down public spending and is expecting both us and LU to become more efficient still by adopting some of the delivery methods used by other, more modern Metro systems around the world.

"This will require a step change in the way that Tube Lines and LU work together. We will wholeheartedly welcome working more closely with LU to simplify and modernise working practices on the Underground and give Tube passengers more, for less."

Caroline Pidgeon, the Liberal Democrat London Assembly transport spokesperson, said: "This announcement signals the need for a complete review of how the Tube is upgraded.

"A serious look is needed into short block closures of a few stations, where the upgrade work is completed over a few weeks.

"Passengers and local traders ultimately will suffer if LU and Tube Lines don't get their heads together and ensure our Tube is modernised as quickly and painlessly as possible."

Bob Crow, general secretary of the Rail Maritime and Transport union, said: "Rather than banging on about how Tube Lines have let down Londoners, it is about time Boris Johnson did something about it.

"The company's failures on both the Jubilee and Northern lines are well documented and there's no doubt that their contract could be terminated and their work brought in-house, ending the misery of Tube privatisation once and for all."

Baroness Jo Valentine, chief executive at business group London First, said: "The arbiter has concluded what is economic and efficient. Whether or not TfL should have budgeted for more, this is no doubt difficult medicine to swallow. But making the Tube fit for the 21st century, so Londoners can get to work reliably and on time, is a high-value prize.

"Boris should draw this public and acrimonious commercial negotiation to a close and deliver for London the vital modernisation of this critical infrastructure."

An Office of Rail Regulation spokesperson said: "We support NR's work to encourage safe use of level crossings. Their stark Don't Run the Risk campaign in particular has stressed the importance of level crossing safety to the public by highlighting the dangers of misuse.

"We would also welcome compulsory questions about level crossings to be included as part of the driving theory test.

"Level crossing misuse poses a safety risk to those travelling by rail, road and foot.

"The regulator is clear that safety at level crossings needs to be continuously improved. That is why we are currently revising our own level crossing guidelines, supporting the Law Commission's work to update level crossing legislation, and will continue to press for increased penalties for level crossing misuse by motorists."