Blair unwilling to drop 'nightmare' PPP Tube plan

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'Part-art, part-science' helped reach conclusion the Government wanted

Government gets green light for Tube sell-off

Tony Blair indicated yesterday that the Government will proceed with the controversial part-privatisation of London Underground, a scheme critics call a "nightmare version of Railtrack". The Prime Minister insisted he would proceed with the much-derided plan "not out of pride, but because we believe it to be the right thing to do".

Ken Livingstone, the Mayor of London, and his colleagues said that, unlike the decision to place Railtrack into administration, it would take an Act of Parliament to unravel the "disastrous" partnership envisaged for the Tube system. Bob Kiley, Mr Livingstone's transport commissioner, has said privately that keeping his job would be a "dilemma" for him, given his ferocious denunciation of the scheme.

Mr Kiley and the Livingstone camp at Transport for London(TfL) said the blueprint was a "one-way shovel" for delivering taxpayers' money to commercial companies. The £13bn partnership would result in few tangible improvements to passengers in the first seven years or so, they said.

Officials at TfL will examine the "hugely complicated" PPP contracts when they are published today and consider legal action under European law. Mr Livingstone's colleagues said there was a "mismatch" between draft contracts and the obligations private companies told the Health and Safety Executive they were committed to. Mr Kiley said when the "inevitable disaster" came the Government would find there was no effective "escape clause" to protect the public.

The three consortiums taking over 30-year leases would earn a 35 per cent return on capital and break even in year three. But in negotiations the companies had reduced to a minimum any financial risk to themselves.

More than 100 companies would be involved in running the system under the PPP and the Underground "conservatively" estimated it would need four times as many employees to oversee contracts.

Mr Blair insisted that using conventional public-sector finance to improve the Underground would cause the loss of billions of pounds in investment. Challenged over the PPP at Prime Minister's questions, Mr Blair said: "The reason we are engaged in this public- private investment partnership is so the infrastructure work, which is urgently needed, can be done.

"All the evidence is that if we do it in that way, it will run over budget and over time. However difficult the decision may be, what is important is to take the right decision for the future."