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PPP Arbiter defers final ruling on Tubes Lines review

April 27, 2010 - Martin Hoscik@MayorWatch

The Mayor and Tube Lines have repeatedly clashed over funding
London Underground PPP Arbiter Chris Bolt has deferred his final decisions on the Tube Lines Periodic Review after finding that the firm cannot finance the work requested by London Underground within the budget LU has indicated it can afford.

In a statement issued earlier today Bolt said: “On 9 April, London Underground gave me revised assumptions of what it can afford to pay Tube Lines over the remainder of its PPP Agreement. It suggested that I should adopt those revised figures in my final directions on charging and financing due to be published this Thursday, 29 April. But there is no provision in the contract for this.”

“Tube Lines had previously argued that what London Underground said in 2008 it could afford is not enough to finance London Underground’s future requirements, and I agree with this. As a consequence, London Underground can now formally notify me of changes in its affordability limits, and any other changes it wishes to make to its future requirements. I have given it until 21 May to do so.”

Today’s announcement is the latest development in a funding row between LU and Tube Lines which has seen TfL and the Mayor accuse Tube Lines shareholders of receiving what they describe as “huge sums” under “Secondment Agreements” which the Mayor recently claimed allows the shareholders to loan staff to Tube Lines “at a very substantial premium to their real economic cost”.

A recent report by MPs on the Transport Select Committee spoke of an “increasingly antagonistic relationship, stoked by the Mayor (of London, Boris Johnson), between Transport for London, and LU on one side, and Tube Lines on the other” and warned the PPP system would only work “if all parties work in co-operation and in a spirit of goodwill”.

Welcoming Bolt’s announcement, Andrew Cleaves, Tube Lines Acting Chief Executive, said: the Arbiter had “made a sensible decision today by calling on LU to cut its cloth according to its budget and only ask for what it can afford, or alternatively demonstrate once and for all that it can actually afford the work it has asked for.”

Cleaves added: “These are tough times for everyone and it is vital that LU does not commit to an investment programme it cannot fund with any certainty.”

“Over the last few months we have been asking LU to discuss ways in which to make the money they have available go as far as possible. We hope now that they will sit with us to finally resolve the issue.”

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