THE PPP Arbiter has ruled that Tube Lines will receive £4.46 billion in its next Control Period. The decision leaves the London Underground contractor with a shortfall of more than £1 billion. Even so, Transport for London, which had offered just £4 billion, says it may now challenge the Arbiter’s ruling.

TfL said the Directions from the Arbiter showed that the Tube Lines public-private partnership was ‘not delivering’, and that ‘Londoners and taxpayers being asked to write a blank cheque to prop up ailing and failing Tube Lines’. It warned that all options were being kept open, ‘including legal remedies’. TfL also revealed that forensic accountants are probing what it described as ‘examine massive and secretive payments to Tube Lines’ shareholders’, who are Ferrovial and Bechtel.

Tube Lines said it would now be analysing the Arbiter's ‘complex’ Directions.

Andrew Cleaves, who is the acting chief eexcutive of Tube Lines, added: “We consider that this decision could present Tube Lines with a significant challenge in its efforts to deliver the investment in the Tube that the system continues to require. We have worked hard with London Underground to make this partnership work. During the last seven years, Tube Lines has achieved significant improvements in reliability, cost and safety. With the support of London Underground, we can do even better in the next few years.” 

However, the development marks another deteroriation in the relationship between TfL and Tube Lines, and recalls the increasing tension between TfL and the former PPP contractor Metronet some three years ago. In that case, a decision on funding by the Arbiter was followed by the collapse of Metronet as an independent firm in July 2007, and its activities were then taken back in-house by TfL. A recent report by the House of Commons Public Accounts Committee concluded that the Metronet collapse had cost taxpayers more than £400 million.