E&Y report fails to quash Tube doubts
Despite the government's decision to go ahead with the part privatisation of the London Underground, fresh doubt has been thrown on to the benefits for commuters, despite a favourable report from Ernst & Young.
Transport secretary Stephen Byers today released findings from E&Y’s report on the public private partnership of the Tube, which backed up his view that the scheme would be value for money for the travelling public.
But Maurice Fitzpatrick, economist at Tenon Group, said the PPP plan could lead to as much as a 15% hike in Tube fares.
With current fare income standing at £1bn a year, Fitzpatrick calculated the difference between borrowing direct from bond markets and relying on private finance would be £150m a year, the equivalent of increasing fares by 15%.
The finance will be keenly watched by Jay Walder, the FD brought in by Bob Kiley to aid Transport for London’s plan to raise funding from a bond issue.
The E&Y report follows a warning from London Mayor Ken Livingstone that the PPP could cost lives.
Comparing the plans with the break-up of the railways, Livingstone said any tragedies similar to Hatfield would be magnified ten-times.