London Underground PPP: background

This note looks at contemporary assessments of the investment needed to upgrade the London Underground, some of the proposals consequently put forward to bring this about and the Labour Government’s final decision to fund future development with a Public Private Partnership (PPP).

By the late 1990s there was general agreement that it should be a priority to secure investment in London Underground in order to improve services and bring the network up to modern standards. This could only be achieved with a stable funding regime to allow investment to be planned ahead.

While the previous Conservative Government announced its intention to privatise the Underground, the Labour Government that took office in 1997 opted instead for a PPP. In taking this decision it faced opposition from a number of quarters, including unions and safety campaigners and the first Mayor of London, Ken Livingstone. Mr Livingstone and his Transport Commissioner, Bob Kiley, took the government to court over the decision and championed an alternative method of raising money, via the issue of bonds secured against future fare revenues from London. This was rejected by the Treasury.

Mayor Livingstone was ultimately unsuccessful in his challenge and the PPP went ahead in 2003.

Plagued by problems, the PPP collapsed in 2010 when Transport for London bought out the private companies in the Tube Lines consortia; this followed the administration of Metronet in 2007. These matters are dealt with separately in HC Library note SN1746.