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Last Updated: Tuesday, 13 March 2007, 10:55 GMT
London's transport crisis
John Ware
By John Ware

London already feels as if it is bursting at the seams. But because of sustained immigration from abroad and migration from within Britain, by 2026 London's population is forecast to grow by perhaps 1.2 million.

Tube train
Tuesday 13 March 2007
1930 GMT on BBC Two

Outside London, by 2020 there will be half a million new homes in the south-east, many within commuting distance.

As one of the leading financial centres in the world, London is also now the cutting edge of Britain's economy.

How will one of the fastest growing capitals in the West keep moving in order to keep growing?

About 30% more capacity will have to be built into London commuter lines. The estimated cost? About 10bn.

And that is just the start of the Herculean financial and engineering challenge facing London, never mind the rising estimated cost of the Olympics which vary between 6bn plus (Mayor's office estimate) - and 9bn (Treasury sources estimate).

The Treasury still does not trust local authorities to make the right decisions when it comes to major transport projects.
According to Mayor Livingstone's transport authority, Transport for London, capacity on London's underground and buses also needs to expand by 40% over the next two decades - not to mention getting Crossrail finally off the drawing board where it has been for about 20 years: a new railway running 10 miles underground connecting new economic centres in the East and West of the capital, estimated at a final cost of perhaps 16bn.

Add to that the current 16bn London Underground (LU) upgrade, a further major expansion of the buses, light rail and traffic management systems, renewal and maintenance of roads and bridges, the capital outlay for London alone over the next 20 years climbs to around 50bn.

Road charging

The Treasury is unlikely to fund most of this. The Chancellor has allowed the Mayor some limited "prudential" borrowing but that is only about 6% of what will eventually be needed.

Almost certainly a London wide road charging scheme would be needed to help pay the enormous interest on the total borrowing required.

A crowded Underground train
A million people enter central London between 7am and 10am

Yet major projects like Crossrail usually pay for themselves over time from the extra tax revenues generated by all the new businesses they generate.

Although the Treasury is looking favourably at a plan to share the cost of Crossrail between taxpayers, fare payers and business, it is yet to finally commit to the project and may not do so until after the Olympics.

Tube maintenance

The Treasury still does not trust local authorities to make the right decisions when it comes to major transport projects. Power has yet to be fully devolved to London.

Will London's looming funding crisis force the issue?

After all, the Treasury's way of organising the 16 billion upgrade of LU does not look to be heading for the value for money triumph that ministers claimed it would be.

LU, the public owned tube operators are in a Treasury imposed "partnership" with two large private infrastructure consortia who are maintaining and upgrading the tube.

LU officials tell me it takes longer to get things fixed than before the Treasury broke up the underground, and often they are not fixed properly or on time.

An early Treasury forecast that the Public Private Partnership (PPP) would remove the need for public subsidy was hopelessly optimistic with taxpayers now having to put in more than 1bn a year.

Yet already the largest private Infraco (infrastructure company), Metronet, may seek compensation for a projected overspend of up to 3/4bn by 2010.

Funding gap

The Transport Select Committee say they do not share Transport Secretary David Alexander's confidence that the PPP's contract incentive system will persuade Metronet to improve.

Behind the PPP was the Chancellor's determination to ensure private sector management of the tube's rebuilding.

But this rationale seems hard to justify after Mayor Livingstone replaced LU's old management with a team of troubleshooters from the US transport private sector.

For London to avoid degenerating into a user-unfriendly city, the mayor's multi-billion pound shopping list will somehow have to be funded.

LU's American managing director Tom O'Toole says: "London is now the pre-eminent world city. You want to keep everything moving. No-one expected 15 years ago for London to be in this position. Why give it up?"

Of course, major engineering projects have very long lead times. So, even if all projects are eventually delivered, moving around London is going to get a lot stickier for the next 10 years or so than it is now.

London is growing fast but the only major capacity-enhancing project currently under way is the LU upgrade. (Yet Londoners may not feel much of a difference since this will simply offset some of the growth.)

Are we getting there on London? Answer: we could be.

But probably only if there is further devolution with new governing arrangements to give the mayor the same financial freedoms as the mayors of most other Western cities to raise money - where he or she takes the electoral consequences if they mess up.

Episode two of Are We There Yet? was broadcast on Tuesday 13 March 2007 at 1930 GMT on BBC Two.

SEE ALSO
Doubts over 2012 transport plans
20 Feb 07 |  UK Politics

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