Tube Lines admits to £50million loss on overruns

He revealed the figure, penalties incurred under its Public Private Partnership (PPP) contract with London Underground, to a London Assembly transport committee yesterday morning.

But he promised the upgrade will be fully operational by the end of October at the latest. The signalling is now fully installed and the current weekend closures are being used to test the technology, which is similar to that used on the DLR.

Mr Finch said: "We had a good performance of the system over Christmas. It exceeded all our expectations. We will have weekend closure through Easter and into May and that will make substantial progress.

"There are always early issues to iron out on any new signalling system but at the moment it is working well.

"We will gradually introduce it on passenger services at weekends towards the end of May and it will be fully into service by the end of October. We may well beat that deadline."

Tube Lines is due to start work on upgrading the Northern line from next month, although it and London Underground have yet to publish dates agreed for weekend closures on the line. 22 dates have been agreed but the committee raised concerns that unless all the dates are published the big losers will be passengers and taxpayers.

It could mean a delay to the start of the work, although the upgrade is supposed to be finished by January 2012.

Next month will also see the final adjudication of the PPP arbiter, Chris Bolt, on how much funding Tube Lines will receive from London Underground for the next seven-and-a-half years of work on the Tube network.

Tube Lines wants £5.75billion, while London Underground has offered £4billion. In a draft adjudication last month Mr Bolt indicated he would set a figure of £4.4billion, although he has since received extensive representations from both parties. His decision is due on March 4.

Should Tube Lines fail to obtain the figure it seeks, then it will have to ask its investors, chiefly Bechtel and Ferrovial, for more money, seek a loan from London Underground or scale back its planned work.