PPP arbiter recommends less money for Tube Lines

The figure is the draft recommendation of the Public Private Partnership arbiter, and is some way off the £5.7billion Tube Lines was seeking for the work on the Jubilee, Northern and Piccadilly lines from mid-2010 to 2017.

Tube Lines claims it is more efficient than London Underground, which is responsible for maintaining the rest of the network, but will struggle to carry out the work for the proposed amount.

Mr Finch (pictured) said: "A settlement at this level is not conducive to private sector involvement in the Underground, nor does it reflect the reality of the Underground working environment.

"The Arbiter recognises that LU is a difficult client, but rather than including a costed assessment of that impact, he expects Tube Lines to cover its costs by making claims against LU now and more in the future.

"The Arbiter has acknowledged even at this level that LU has a stark choice to make, either to do less work or raise additional finance.

"However, this document is a draft and we have a further six weeks to make representations which we will do robustly."

Negotiations will continue, with the arbiter due to give his final decision next March. Tube Lines has attracted criticism for its late delivery of the upgrade of the Jubilee line, which is unlikely to be finished until next summer.

The recommendation, closer to Transport for London's offer of £4.1billion, met with approval from TfL and Mayor of London Boris Johnson, who called for any further money to be provided by central Government.

He said: "I welcome the arbiter's rejection of Tube Lines view of costs, and his recognition that they should be much closer to London Underground's. I am determined that any additional costs must not fall on London's fare payers and taxpayers.

"I also urge Tube Lines to work with London Underground to focus on the job in hand, to complete the delayed Jubilee line upgrade as soon as possible. Only by ensuring these upgrades are delivered can the Capital continue to function as the heartbeat of the national economy."

London Underground managing director, Richard Parry, said: "We are determined to see the Tube improvements promised delivered in the most economic and efficient way possible for fare payers and taxpayers. The draft costs determined by the PPP arbiter are much closer to London Underground's assessment than Tube Lines.

"The upgrade of the Tube is vital and will deliver the greater capacity and reliability we need to enable London to continue to grow and prosper. Although it has not been without its frustrations, we are making great progress in transforming the Tube."

The PPP agreement between Tube Lines and London Underground is reviewed every seven-and-a-half years and covers all aspects of the contract including costs, performance revenues and financing requirements.