PwC tube estimates 'grossly incompetent'
MPs have accused PricewaterhouseCoopers of 'gross incompetence' in drawing up its financial estimate for the cost of reorganising London Underground and procuring the public private partnership.
Link: PwC: D&T Tube report not ‘balanced’
An early day motion put down last Tuesday by Harry Cohen, a certified accountant and Labour MP for Leyton and Wansted, severely criticised PwC over the quality of its work: ‘PricewaterhouseCoopers, who was paid £21.4m for its advice, was grossly incompetent in its financial estimate.’
The criticism was based on a report by the National Audit Office, which pointed to PwC’s original estimate of £110m for the cost of reorganising London Underground and procuring the PPP. The actual cost was £180m.
On Wednesday, the public accounts committee questioned PwC partners Paul Davies and Martin Callaghan over the expense of the London Underground project and the cost of borrowing from private engineering firms at an 18-20% rate of return.
Davies said investing in the tube was ‘a totally different kettle of fish’ from typical public finance initiatives. He cited complicating factors including multiple assets with an ‘existing condition’, line upgrades on existing lines and the risk involved in bringing new systems together.