Tube Lines faces funding gap of up to £1bn

Tube Lines faces a funding gap of up to £1bn between the amount it says it needs to spend on the three lines it looks after and what the regulator believes is required.

PPP arbiter Chris Bolt said the programme to maintain the Northern, Jubilee and Piccadilly lines should be between £4.6bn and £5.1bn.

But Tube Lines' estimate is much higher at £5.6bn.

Bolt, Tube Lines and London Underground are now expected to sit down for negotiations over how to address the funding gap.

The differing claims over cost mark the start of a process in which Tube Lines and London Underground both give estimates on how much money should be spent to maintain the three lines between 2010 and 2017.

Bolt will have the final say on how much is spent, after listening to arguments from both parties. His decision is expected by 30 June 2010.

Speaking about his report, the Public Private Partnership Arbiter's Guidance, today, Bolt said his estimate of £4.6bn to £5.1bn was based on the cost of repair and construction of other urban railways around the world.

He said: “Costs are likely to be in the range of £4.6bn to £5.1bn for the second seven-and-a-half years of the contract. I have reached this view on the basis of a detailed review of the figures put forward by Tube Lines and LU and other evidence including benchmarking with other metros.

"To deliver the expected contracts is costing more than when the contracts were originally placed. It is no surprise that construction costs are rising - the big question for Transport for London is can they afford all this?"

London Underground managing director Tim O'Toole said: "We do not have the option of scaling back the works to offset this expected demand because the Tube will become less reliable and its capacity will shrink at a time of growing demand, and, in any event, the PPP contract produces an increase in operating charges as a result of any reduction in capital spending, thereby frustrating attempts to cut funding demands."