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TfL shortfall threatens Piccadilly line upgrade

Capacity upgrades for London Underground's Piccadilly line could be hit if Transport for London (TfL) cannot find more money for tube upgrade contractor Tube Lines, the company's chief executive Terry Morgan warned yesterday.

Tube upgrade contractor Tube Lines owns 30-year PPP contracts to upgrade the Piccadilly, Jubilee and Northern lines - one-third of the London Underground network.

TfL has only £4bn to spend on improvements to the Jubilee, Northern and Piccadilly lines between 2010 and 2017, although the PPP Arbiter indicated that a spend of between £5.1bn and £5.5bn would be reasonable for an economic and efficient company.

Assuming TfL fails to plug this £1.5bn hole in its finances, new signalling to increase capacity on the Piccadilly line by 25% is the obvious casualty, said Morgan.

"The biggest investment project is the upgrade. Signalling for the Piccadilly line has been procured, but it has to be funded," said Morgan.

"There may be other ways to cut it, but that is the only really big item," he said.

Tube Lines are already upgrading the signalling for the Jubilee line, to complete at the end of 2009, and then use the same systems to upgrade the Northern line by 2011. Both these schemes are funded, but the Piccadilly line upgrades are not.

TfL approached the PPP arbiter in April, asking for 'restated terms', or his verdict on what future Tube Lines spending should be.

For the seven and a half years from July 2010, Tube Lines projected spending £7.2bn. TfL's own estimate was £4bn. The arbiter's estimate, which both parties must work to, is in the region of £5.1bn-£5.5bn.

This leaves TfL up to £1.5bn short of cash during this period.

London Mayor Boris Johnson said he had written to the Department for Transport (DfT) asking for extra funding to plug this gap, but a statement from the DfT issued earlier this month read:
"It's time now for TfL to manage its generous budget settlement and deliver the high-quality transport that Londoners expect,'' referring to the £40bn settlement reached for TfL by the DfT last year.

"Without the funding, what will give?" asked Morgan.

Engineers have previously stated that Transport for London has suffered financially by contributing to the £16bn Crossrail project, and buying failed tube upgrade contractor Metronet back from private hands after it collapsed in 2007.

A TfL spokesperson said: "The upgrade of the Piccadilly line is going forward, as contractually committed under the PPP and pursuant to which sub-contracts have already been placed. Therefore elimination of this vital upgrade is not an option that anyone is considering."

Countdown to funding settlement:

  • 31 December 2008: London Undergrounf issues restated terms

  • 30 June 2009 : Tube Lines provides pricing

  • 31 December 2009: Terms and pricing agreed

  • 30 June 2010: Completion of legal and finance review

  • 1 July 2010: Start of second review period

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