London Underground in multi-billion dispute over upgrade costs

24 March 2009

24 March 2009 | Jake Kanter

London Underground (LU) and supplier Tube Lines (TL) have only a few months to resolve a major dispute over maintenance costs.

The organisations have a difference of more than £3 billion in their calculations of the cost of upgrading the Jubilee, Piccadilly and Northern Lines by 2017.

According to a London Assembly Transport Committee report released last week, the LU argued the programme would cost £4.1 billion, while TL said the work would reach £7.2 billion.

The PPP Arbiter, the body that mediates financial disputes between LU and its suppliers, estimated the costs should range between £5.1 billion and £5.5 billion.

The upgrade programme will enter its second phase next year.

Following the disagreement, LU submitted a detailed specification of work to TL and it has until June to provide a revised price estimate. If the two parties are unable to agree, then the arbiter will determine a cost by the summer of 2010.

The committee said Transport for London's nine-year business plan assumes that its £4.1 billion estimate for the work is accurate. But if the arbiter proceeded with its forecast of up to £5.5 billion, LU would face increased costs of at least £1 billion.

Valerie Shawcross, chair of the Transport Committee, said a "looming funding crisis" meant projects such as congestion relief and tunnel cooling at stations could be delayed or even shelved.

She called on the government to step in and match any legitimate cost increases set out by the arbiter.

"Delays or reductions in scope can only mean that overcrowding on trains and at stations and the condition of the infrastructure will get worse," she said.

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