COMISSIONER of Transport for London Robert Kiley unveiled his programme for the ’rehabilitation and management’ of London Underground on December 13. Appointed by TfL Chairman and Mayor of London Ken Livingstone, the former head of New York’s Metropolitan Transportation Authority had been asked by the mayor to review the government’s Public-Private Partnership scheme (RG 3.00 p160) and prepare his own strategy for meeting LU’s long-term capital requirements.
Kiley has rejected as ’fundamentally and fatally flawed’ the basic structure of the PPP, whereby LU trains and infrastructure have been divided between three Infracos that are to transfer to the private sector under maintenance and renewal contracts lasting up to 30 years. Retaining a unified management structure, Kiley proposes total capital expenditure of £10·25bn in 2002-16, generating £700m a year from a combination of operating revenue and committed, long-term government funding at an annual level of £250m.
Supported by a maximum of 50% of annual revenue, Revenue Securitisation Obligations with a value of £3·81bn would be issued by a special purpose vehicle. RSO proceeds of £1·89bn and ’private at-risk investment’ of £210m would fund £2·1bn of Private Performance Contracts, whereby the private sector would improve and maintain assets and provide between 5% and 10% of the investment. In this way, Kiley hopes to achieve ’the benefits of private-sector efficiencies and low-cost public financing’.
Kiley was due to meet Deputy Prime Minister John Prescott on December 15, and was hopeful of a sympathetic hearing for his proposals to raise funding outside government spending limits and without government guarantees. A long-standing critic of the PPP, Livingstone was ’confident’ that the government would adopt Kiley’s strategy, citing ’warm support from all quarters’.