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On Tuesday 27 March I was, with great regret, forced to support the first measures in the initiation of a judicial review of the proposed PPP on the London Underground. I wanted to set down clearly the reasons I felt I had no option but to take this serious action, particularly as it was not in line with my earlier expectation that it would be possible to arrive at an agreement with the government. I also wanted to indicate my views on the way ahead on the discussions regarding modernisation of the London Underground.
The overall context is that having appointed Bob Kiley as Commissioner of Transport for London I evidently take careful account of his advice as regards all operational issues he considers indispensable for safe, economic and efficient running of the Underground system. Overall budgetary matters affecting the city are a separate but related issue which falls within my responsibility and judgements. The points below reflect this.
In order to maintain undertakings given to the government regarding confidentiality of its proposed contractual arrangements for PPP, members of my office are not directly involved in the negotations with the government on PPP. Bob Kiley evidently discusses with me and keeps me informed of the main issues of policy in the negotiations and the stance he believes should be taken. On 16 March Bob Kiley and I held a meeting at which he briefed me regarding the overall progress of the talks. These negotiations had two aspects - financial and operational. Regarding finance I must state that I had considerable reservations regarding the implications of the proposals put by the government in the talks. It has become clear in the negotiations that the cost of the proposed contractual arrangements for PPP far exceeds, to an even greater degree than anticipated, that of alternative forms of raising finance for the modernisation of the London Underground. Due to this expense the subsidies that would be required from the Treasury, over and above the payments scheduled for Transport for London/London Underground, would commence at a figure of £700 million a year rising to approximately £1 billion. While the government stated that it was willing to undertake to make payments to meet these for at least the first 7.5 year period of the 30 year period of PPP contracts I estimate that they open London to considerable and problematic financial consequences.
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