12 December 2002
New Inquiry and Public Meeting
Mrs Gwyneth Dunwoody, Chairman of the Committee has issued the following press notice:
London Underground PPP: New Developments
On 4th December the Secretary of State for Transport made a written statement announcing that
commercial agreement between the preferred bidders and London Underground had been reached;
London Regional Transport could give the preferred bidders and their financial backers an indemnity (guaranteed by the Department for Transport) "against the material adverse consequences of any legal challenge" in relation to the Commission's state aid decision;
the Tube would not be transferred to the Mayor until there was no prospect of further legal proceedings from the Mayor or until such proceedings are completed.
In addition a minute relating to the indemnity was laid before Parliament, which was asked to consider the proposed indemnity by 12th December, since financial close on the first PPP would take place "on or around 31st December".
In parallel, London Transport consulted TfL. TfL's response has been copied to the Transport Committee.
There are many serious questions raised in TfL's response;
handover of the Tube could now be delayed for several years. Sections 220 to 224 of the Greater London Authority Act provide for PPP Administration orders. They come into effect only when LUL has been transferred to the Mayor; what happens if a contractor fails between completion and handover?
is it true that handover will not take place until the law has been changed to the Infracos' satisfaction?
if changes to the law are requested for either of the reasons above, how can the contract be signed before Parliament agrees to those changes?
Why is it so important to sign the contract with Tube Lines early, when the other PPPs will not be ready until Spring?
The Department may have satisfactory answers, but in view of the importance and urgency of this matter, I have written to the Secretary of State for Transport today. In addition, I will propose to my colleagues that the Transport Committee takes evidence on this from the Secretary of State on Wednesday 18th December.