The Thick of It

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Wednesday, September 10, 2008

Tube PPP mess

As has been mooted for several months, London's tube upgrade faces spiralling costs and could run out of money. The PPP was meant to take these sorts of risks away from the public purse, but as we have seen with the collapse of Metronet, if the private contractors can't make money out of a project, the risk ends up in public hands.

In my first post-university job I screened PFI bids. PFI bids were normally deemed "better value" than direct public investment because of the transfer of risk to the private sector. The risk of delay and spiralling costs was with the private, not public sector.

The Guardian quotes tube boss Tim O'Toole as stating that without full funding for the PPP, "The infrastructure is so old and unreliable that we are going to see a contraction in capacity," - London cannot cope and needs more capacity, not less.

Boris Johnson has stated he will go to the Department for Transport to seek additional funding. This represents a test of how the Labour government will work with a Tory mayor - or not. For London's sake I hope that Transport Secretary Ruth Kelly opts in the best interests of Londoners and pays up. I worried political point scoring might win and our tube may crumble.

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