Funding the London Underground

For the past few years there has been a bitter ongoing dispute about the future of the London Underground with regards to how it should be financed, given its urgent need for improvements.

The New Labour government has proposed a PPP (Public Private Partnership) scheme, under which three private companies will maintain the track, signals and stations, while the publicly owned London Underground will be responsible for the staffing of the stations and trains. Currently, the government is pressing ahead with these plans, despite the fact that the PPP is deeply unpopular. The Mayor of London Ken Livingstone, as well as large sections of the press, a number of experts, and the majority of the population do not want the tube to be funded in this way, especially given the sorry state of the national train system (see: Railtrack) following control being put into private hands. Livingstone, backed by Commissioner for Transport Bob Kiley has an alternative plan, to finance the tube with bonds, keeping it in public hands. They say this will be safer and less costly than allowing private companies to run it.

One thing all sides agree on is that the Underground is in terrible condition at present, and badly needs investment. The system is notoriously overcrowded, with passengers packed in trains like sardines during the rush hour, and stations frequently having to be closed due to dangerous congestion. In addition, there are often delays due to signalling problems and stations closed for repair.


A good definition of what a PPP is is given on the Irish government website (

A Public Private Partnership (PPP) is a partnership between the public and private sector for the purpose of delivering a project or service traditionally provided by the public sector. Public Private Partnership recognises that both the public sector and the private sector have certain advantages relative to the other in the performance of specific tasks. By allowing each sector to do what it does best, public services and infrastructure can be provided in the most economically efficient manner.
In the case of the London Underground, the government's PPP plan works like this: The publicly owned LUL (London Underground Limited) will have three contracts with private companies, each lasting 30 years. They will be divided up in terms of tube lines - one company will manage the Bakerloo, Central, Victoria, and Waterloo & City lines. Another will run the Circle, District, East London, Hammersmith & City, and Metropolitan lines. And another company will run the deepest lines – Jubilee, Northern, and Piccadilly.

Ken Livingstone claims that these companies may be making a profit margin as high as 30%, unlike London's bus companies which only make 8%. A number of commentators have also made a comparison between this break-up of the lines and the one that occurred with the national rail network, although the government maintains that it is completely different. They point out that the tube will still be controlled by the public, and contractors will be accountable to the public, whereas the railways that were privatised by the Tories were fully privatised. Despite this, the PPP has been dubbed by many as 'Railtrack Underground'.

Fighting the government's plan

There are two main reasons why Ken Livingstone was elected mayor, both of which are largely about what he is against rather than what he is for. The first reason is the undemocratic way the government tried to stop Livingtone from standing. The second is that he was against the partial privatisation of the tube. And it is only the government that maintain the PPP plan isn't partial privatisation.

The mayor has had the upper hand in the argument from the beginning. He appointed Bob Kiley, an American who is credited with turning around the New York subway and other underground systems, to head Transport for London (TfL). Kiley is hardly a left-wing radical or natural ally of Livingstone's (he used to be a CIA man and union basher), yet he said the government's plan was destined to failure. TfL went to court to challenge the government's right to overrule the mayor, but lost. It had been decided when London was given a mayor that the government would handle reform of the tube and then pass it over.

The two sides have also fought the issue with reports from external accountants. TfL commissioned a report from Deloitte & Touche, which sided with TfL against the PPP. The government tried, in court, to prevent Kiley from making the report public, saying it was rushed and inaccurate compared to the PriceWaterhouseCoopers and Ernst & Young reports they had commissioned, which sided with them.

At the time of writing, Transport Minister Stephen Byers has announced that the government's plan is going ahead (this is after a few days of suspense when it looked like the government might back down). This is despite the fact that the Commons Transport Select Committee is against it. The 45 out of 50 Labour MPs that are against the plan refer to those in favour as the 'Taliban', it was revealed on Newsnight. The plan is still subject to approval by the Health and Safety Executive – while the government claims this test will be stringent, Livingtone claimed on Newsnight that Gordon Brown told him it wouldn't be a serious test. Livingstone says that he is still seeing what he can do to prevent the scheme from happening.

The story of the debate over tube funding is a lengthy and complex one. Please point out any errors and omissions in this writeup. Listed below are some headlines from the Evening Standard, taken from their website. I chose to reproduce them as I think it gives an interesting look at what the conflict over the tube has been like. Also try some of the URLs given at the end of this writeup for further information.

Key headlines, in chronological order, from the Evening Standard
As listed at

'PPP to cost £1bn more for Tube';     Kiley and the PPP's 'fatal flaw';     PPP 'would bankrupt some lines';     Mayor wins right to challenge PPP;     PPP will shut lines 'at same time';     Mayor consults lawyers on PPP;     PPP choices a 'stab in back' ;     London voters reject Tube PPP;     Huge blow for PPP;     Think tank questions PPP;     Kiley declares all-out war on PPP;     Labour rigs MPs' backing for PPP;     Experts say Tube PPP won't work;     Blair warns Mayor over PPP;     Kiley accused of influencing LU report;     Kiley alarm as report slams safety;     Blair sacks Kiley from LT;     Sacked Kiley roasts Blair;     LT wins gagging order on Kiley;     Tube sued for Jubilee chaos;     GLA Labour leader slams Kiley;     Tube protesters to picket court;     And now they want to export it;     Legal showdown on PPP;     PPP protest as court battle starts;     Kiley - the people's champion;     Livingstone in court over PPP;     Act 'has no provision for PPP';     Anger as Ken loses PPP battle;     PPP faces new court challenge;     Battle for control of Tube is over'    

For more information, see: – London Underground Ltd's site, and the government's views – London Transport / Transport for London, against the PPP – The Institute for Public Policy Research, a 'centre left thinktank' – the Evening Standard, contains a lot of information about the tube – The Guardian, another newspaper, again with lots of info