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Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: Well it's also been a miserable week for weather on the tube because it was so sticky on the tube thousands of people getting stuck in tunnels and sweltering temperatures, but it's also been a crucial week for the future of the tube. The government of course wants a public-private partnership for the Underground but the London Mayor, Ken Livingstone and his Transport Commissioner, Bob Kiley are adamantly against it and they're both with us this morning. Ken joins us from Brighton, there he is, good morning Ken.

KEN LIVINGSTONE: Good morning David.

DAVID FROST: And Bob Kiley is right here with me in the studio. Have we reached the point now, the end of the road for everything except legal action Ken?

KEN LIVINGSTONE: I think the Prime Minister could still intervene but the decision of the Cabinet suggests that's very unlikely so I suspect in two week's time we will be in the midst of the first court case and I'm sure there'll be many more to come between one of the new devolved authorities and central government. When you can't agree, whether it's the Scottish Parliament or the Welsh Assembly or the Greater London Authority, there's a disagreement in government inevitably the only way you can turn is to the courts.

DAVID FROST: Right and Bob Kiley, if the government were to prevail in court or whatever and get their pattern imposed would you still be willing to stay and run it?

BOB KILEY: Well I like to take this a day at a time, I've learned in the last six months that it's a mistake to think even 48 hours in advance so my working assumption is that we will prevail in court, so it's not a question I'm going to face.

DAVID FROST: Oh I see, I see. Are you that confident Ken?

KEN LIVINGSTONE: Well our lawyers are saying the chances are somewhere between 30 and 50 per cent, but this is a judge who has transport experience, he has a record on the bench of being fairly pragmatic and I don't think once that judge has looked at the safety case and certainly the, the additional costs of the government scheme that he cannot possibly say that this is a safe and an efficient system.

DAVID FROST: Right well let's have safety from you Bob and extra costs from Ken, what, what is the safety issue in this, why, if there is a different financial structure that the government want make it less safe?

BOB KILEY: Well two things happen on the operating side. One is that the tube is arbitrarily divided into four parts, three infrastructure companies and then the Underground left to drive the trains and manage the contract. By definition that kind of fragmentation deepens the safety issues. But then second, that in effect the maintenance activities and the driving activities, the track and the, and the under-girding of the track are being separated from train operations themselves which also elevates the risk profile. So going into it, thirty years now you've got fragmentation and the division of maintenance from operations which are really prescriptions for not good things. Look what happened above ground when the same thing occurred.

DAVID FROST: Above the ground?


DAVID FROST: Railtrack?

BOB KILEY: British Rail was essentially subjected to the same metamorphosis resulting in Railtrack and all the separate train operating companies and that has not worked.

DAVID FROST: That's a potent point for you actually, that one, isn't it? Now Ken will you come on to the other point you were talking about. Why is the government scheme more costly than your scheme?

KEN LIVINGSTONE: Well our preferred option would be that we should be able to issue bonds like any large company does, raise money on the markets and we could most probably get money at about 5 or 6 per cent. The real cost of this way is about three times that rate of interest and so we're looking at something like a 700 million subvention from the Treasury, from the taxpayer each year and something like about 500 million coming in from the fare payer on the Underground and already the fares on the Underground are the highest in the Western world and so you're getting something like about 800 million of the work a year but you're paying 1,200 million for it. That's an incredible mark-up and it comes out of the pockets of ordinary Londoners and national taxpayers.

DAVID FROST: Stephen Byers who took over from John Prescott as your guiding light or Minister, sounded quite emollient last week talking about all of this, is there any difference, do you both find, in dealing with a Byers ministry as opposed to a Prescott ministry?

KEN LIVINGSTONE: I think Stephen's very concerned that this issue shouldn't poison the rest of the relationship between myself as Mayor and the government because working with the government we can do a lot on a whole range of other issues, we're in agreement on congestion charging, we're in agreement on increasing the amount of affordable housing and so I think both Stephen Byers and myself decided well this is off to court, the judge is going to decide, we're not going to turn it into a, some sort of civil war and open other fronts.

DAVID FROST: Right, so that that's vital to maintain that, maintain that relationship. Have you found anything, any difference since Stephen Byers came in, in your actual day-to-day negotiations Bob?

BOB KILEY: Well he's, he's an easier man to talk to, I think he's got a steep learning curve that he's still climbing when it comes to the Tube. I don't think we've heard the last word on this subject. The court action notwithstanding.

DAVID FROST: What about the overall transport strategy for London, Ken, is, is your announcement on that going to be solely about the ongoing tube row?

KEN LIVINGSTONE: Oh no we put together a package, I mean everyone forgets, you know as many more people are travelling by the trains, the buses, the taxis, the tube is one part of it. We've got, because we've had now about a year to get our plans together with the buses we've got a very impressive package of improvements on the bus side and of course we've got very clear proposals about what we want to see in terms of new Underground lines being built and a real expansion of capacity. I mean what you've got to get is as London's population goes up new lines in place, more buses running and we're about, we're well on track on the bus side the trouble is it's the tube that's falling down.

DAVID FROST: The tube is falling down, and what about congestion charging, how far has that got now?

KEN LIVINGSTONE: There'll be a firm decision on that next week when we announce it and then Londoners will know where we're going but I don't really want to announce it today.

DAVID FROST: You don't want to announce it in full today but do you think it'll be popular?

KEN LIVINGSTONE: I think everybody knows that you've got to do something, the congestion in London is so bad that literally you can often get out and walk quicker than you can by sitting in a car, get your journey quicker and if someone's got a better idea we'd love to hear it, but I mean no one has come up with an alternative to the idea of congestion charging yet.

DAVID FROST: Can you, can you Bob, tell us is there any idea, is there any new idea before it, before the tube comes to court that you can suggest this morning that might be a basis for an agreement with the government?

BOB KILEY: Well one of the frustrating aspects of these discussions for the last six months is that there always has been an alternative which we proposed first in December and then again in April and I've yet to have the first discussion privately or publicly with the government about that alternative and I think if, if they pulled back and just looked at it carefully they would see that most of their objectives could be achieved quicker and less expensively and for example 85 per cent of the train fleet will be either replaced or refurbished within the first seven and a half years, if they go my way and under their proposal it's not clear that there will be any new or refurbished trains within the first ten years, concentrating on the stations and other matters.

DAVID FROST: So are you an optimist or a pessimist today Ken?

KEN LIVINGSTONE: I'm an optimist, I, I believe that the case is so overwhelming against the government that that must influence the judge's decision. The judge is going to look at these facts and come to the sort of conclusion that every independent expert has come to and the broad public, overwhelmingly they just don't stack up as a safe and efficient system.

DAVID FROST: Thank you very much indeed, thank you both very much indeed this morning. As ever a pleasure to see you both.


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