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Funding concession wins Kiley London Transport chair

LONDON'S TRANSPORT Commissoner Bob Kiley last week accepted that private groups chosen to carry out the £13bn Tube upgrade must be allowed to raise their own finance. In exchange he has won a bigger role in the negotiation of upgrade contracts.

The government hopes he will now drop his campaign to get the Tube upgrade funded by publicly backed bonds under a deal which also sees him installed him as chairman of London Transport (LT).

As LT chairman he will negotiate directly with the preferred bidders for the Tube upgrade. He will also retain his role as London's transport commissioner.

Kiley is expected to use his new role to modify the public private partnership (PPP). He wants Transport for London to control operations, safety and maintenance, while investment spending and track replacement is put in the hands of the private sector.

Under the government's PPP plan, LT will be responsible for safety while the private sector controls maintenance and the upgrade programme.

Kiley was cautious about his ability to change the PPP structure.

'I am not sure that satisfactory modifications to the PPP to meet my concerns are possible. Selecting preferred bidders - which I disagreed with - could have an impact on my ability to persuade private firms to accept my point of view. But I have agreed with the government to give it my best effort, ' he said.

The agreement was sanctioned by prime minister Tony Blair. It does not head off the judicial review that is due to rule next month on the legality of the Government's efforts to control the PPP.

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