MAYOR OF LONDON ASKS FOR £1.5 BILLION BILL

02 September 2005

The mayor of London, Ken Livingstone was due to meet John Spellar on 6th August to discuss the LU transfer to his transport authority, Transport for London (TfL).

During this meeting the Mayor will be asking the government to increase funding by an extra £1.5bn to cover the cost of taking over the London Underground after part-privatisation. This follows the collapse of his high court challenge to a public-private partnership (PPP) deal for the tube last week.

Mr Livingstone believes that PPP will result in a £1.5bn-funding gap in the first seven years of the scheme, which will need to be covered by government grants. Failure to receive extra funding would force up fares, cause significant council tax rises and other transport projects will have to be cut.

There is one final hurdle to cross before the contractors move in. 

The European Commission has yet to rule whether it will order its own inquiry into the way London Underground procured the multi-billion-pound contracts and whether some companies received preferential treatment through state aid.

The commission is expected to rule on the case in September.

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