The Government set itself on a collision course with Ken Livingstone yesterday after John Prescott refused to back down from plans to part-privatise London Underground.
The Deputy Prime Minister told MPs that he would press on with his policy of setting up a public-private partnership (PPP) for the Tube even if Londoners elected a mayor next month who was opposed to it.
Appearing before the Commons Transport Select Committee, Mr Prescott stressed that he was not in favour of wholesale privatisation nor the bond issue scheme favoured by Mr Livingstone.
PriceWaterhouseCoopers, the Government's advisers on the plans, had assessed that the bond scheme would cost some £4.5bn more than the PPP, he added. Mr Prescott said that he was determined to push ahead with the policy and would sign the PPP contracts with private contractors after the mayoral elections on 4 May.
In evidence to the committee, he said that transferring negotiations from the Government to the mayor would create uncertainty for bidders and could lead to significant delays in the work starting.
"The Government considers that a far better solution is to hand the Underground over to the Mayor with a funding solution in place," he said.
Mr Prescott made clear that he was fully prepared to be "in conflict" with the newly-elected mayor if he or she disagreed with his flagship PPP policy."I'm obliged to make a decision on what I feel is best value," he told the committee.
Mr Prescott said that the issue of bonds versus PPP was not one of ideology and pointed out that London Transport had been told to draw up proposals to compare the relative costs of the two rival policies.
George Stevenson, MP for Stoke-on-Trent South, pointed out that several independent experts had suggested that the bond scheme was cheaper than the PPP.
He cited estimates that the Government would be faced with a funding gap of £175m within two years of embarking on its private scheme.
The Deputy Prime Minister admitted that "there may well be" a gap in funding but pledged that the Treasury would plug the hole if needed.
"There have been various estimates made. We have always made clear if it was necessary to meet a difference, we were prepared to do that," he said.
* Ken Livingstone declared war on a swathe of Government policies yesterday as he unveiled his long-awaited manifesto for the mayor of London.
The former GLC leader outlined proposals to oppose ministers on everything from transport to crime as he made his final push for votes ahead of the 4 May election.
Frank Dobson, Labour's official candidate, immediately accused his rival of "gesture politics" that would cost Londoners at least £1,200 a year each and the capital £17.6bn in total. Labour also accused Mr Livingstone of "running scared" of the voters after his low-key launch of the manifesto on the internet, without a press conference to answer questions on its contents.
All of his opponents claimed that Mr Livingstone had stolen their own policies and attempted to present them as his own in a "pick 'n' mix" approach to the mayoralty.
- More about:
- Debt Market (bond Market)
- John Prescott
- Ken Livingstone
- Labour Party
- London Underground