Page last updated at 15:31 GMT, Wednesday, 10 March 2010

Mayor threatens Tube legal action over 4.4bn ruling

Waterloo Station platform
Tube Lines is upgrading on three Underground lines

Mayor of London Boris Johnson is considering legal action after it was ruled Underground maintenance firm Tube Lines' costs should be £4.46bn.

Mr Johnson had argued the company should be paid no more than £4bn for maintenance work and upgrades over the next seven-and-a-half years.

But the arbiter ruled Tube Lines should receive £400m more. Mr Johnson said he was "examining legal remedies".

A spokesman for Tube Lines said they needed £5.75bn for the work.

The upgrade work is funded by a public-private partnership (PPP) plan.

In light of the ruling, Mr Johnson, who heads Transport for London, criticised the arbiter for suggesting that London Underground cut back on improvements to save money.

We are being asked to write a blank cheque in order to prop up failing Tube Lines. In other countries this would be called looting, here it is called the PPP

Boris Johnson

He described the arbiter as going "way beyond his powers" and argued it was proof the PPP was "failing" Londoners.

Mr Johnson said: "Londoners will be outraged that the Tube upgrades promised to them are now threatened.

"We are being asked to write a blank cheque in order to prop up failing Tube Lines. In other countries this would be called looting, here it is called the PPP."

He added: "We will fight this to the last and we are therefore examining all our options, including legal remedies."

'Fair and proper'

Tube Lines' upgrade of the Jubilee line has not been completed on time, leading to frequent weekend shutdowns and part closures of the line.

The arbiter has previously said Tube Lines could have delivered the Jubilee line upgrade on time and to budget.

He said an efficient company could have succeeded at "a substantially lower cost than projected by Tube Lines".

Speaking to BBC London, the PPP arbiter Chris Bolt said: "I have looked at comparisons internationally and I have looked in detail at the costs which London Underground suggested that Tube Lines should incur and Tube Lines' own costs; and then have come up with a figure of £4.46bn.

Reaction to 4.4bn Tube mediation

"If either party disagrees with the conclusion and the basis on which I have reached it they have the right to go for judicial review but otherwise my decisions change the terms of the contract and are binding on both parties.

"I believe it's a fair and proper price which is good value for Londoners," he added.

A Tube Lines spokesman said: "We happen to think he's set it [the final settlement] too low. He's only partially taken in the representations we gave him.

"London Underground set what they wanted and that's what we priced. If London Underground changes what it requires we're up for changing the work we're doing.

"There's some really tough choices we have to make in terms of the money we can spend. We're up for discussions to change the scope of work so we can get the costs within their budget."

Former Mayor of London Ken Livingstone told BBC London the £400m difference in demands between TfL and Tube Lines could entirely be accounted for by the company's parent firms lending it 150 staff at a cost of £500,000 each to the taxpayer.

Mr Livingstone said: "If they were charging £90,000, a very reasonable rate, there wouldn't be this difference."

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