LONDON UNDERGROUND will face a funding crisis next year because of a 12 month delay in getting plans for its £7bn privately financed upgrade of the Tube off the ground, it emerged this week.
LUL planning director David Bayliss confirmed that failure to sign proposed public private partnership deals by the original April 2000 deadline would leave a funding gap and force it to scale down vital repair work.
'It is likely that we will not have the PPP deal until 2001. That leaves quite a substantial hole in the funding,' said Bayliss.
'We have to plan to manage that situation and if necessary roll over expenditure from earlier years. This means we have got to defer projects from this year in order to cover the funding gap.'
Deputy Prime Minister John Prescott and former Paymaster General Geoffrey Robinson announced the Government's plan to tackle the £1.2bn backlog of work on the Tube network last March. Under the PPP plan £7bn will be invested in Tube infrastructure by private groups over 15 years from April 2000 (NCE 26 March 1998).
Funding of £365M was made available at the same time to tackle the Tube's backlog of vital works prior to the April 2000 handover. From this cash £65M was earmarked for preparing the PPP deal.
Despite delays in finalising the details of the PPP concessions, the Government had until this week maintained that April 2000 was still a realistic deadline for handing maintenance of the infrastructure and rolling stock to the private sector.
But speaking at the Treasury Taskforce's annual PFI conference this week transport minister Lord Whitty confirmed that the PPP timetable had been scrapped.
'We have taken on board the lessons from the privatisation of the railways and will not rush the process.
'We will protect passengers and staff, as well as the taxpayer, by ensuring that the PPP sees the best value for money, and will therefore not rush our timetable. For that reason we are not giving London Transport a deadline for completion of the PPP.'
London Transport chief executive Denis Tunnicliffe told NCE this week that although LUL was still committed to a spring 2000 start date for the PPP project, there had been some slippage in the programme. 'There will be consequences and I will be discussing them with the owner,' he said, referring to the possibility of a funding gap.
But Tunnicliffe gave no indication of the timetable for these discussions with Government or of the likely scale of delays.
Bayliss confirmed that LUL needed the Government to say whether it would make new money available to make up any shortfall 'as soon as possible' so that it could set budgets and plan work for 1999/2000.
'We need to know what the situation will be so that we can plan our works,' he added. 'If we keep doing this we will be delaying projects and eventually have to run the programme down. It's a situation that gets progressively more difficult to manage.'
He added that if a decision was not made LUL would have to defer projects from this year to cover the gap. This would come as a blow to engineers who worked round the clock after Prescott's announcement last March to bring forward enough projects to spend Prescott's money by April 2000 (NCE 9/16 April 1998).