London Underground (Hansard, 5 March 2002)

§ 18. Angela Watkinson
To ask the Secretary of State for Transport, Local Government and the Regions what percentage of the debt of the PPP deal for London Underground will be guaranteed by the Government. [36661]

§ Mr. Spellar
The Government will not guarantee any of the debt raised by the infrastructure companies to support the plans for the modernisation of the tube.
London Transport is currently consulting the Mayor and Transport for London on proposed contracts. The draft contract provides that in certain circumstances, should a private sector infrastructure company persistently breach the contract and should no alternative contractor be found, London Underground would take control of the infrastructure company and ensure that 95 per cent. of approved third-party bank and bond debt was repaid. None of the finance provided by the shareholders would be repaid, providing a strong incentive on them to meet contractual obligations to improve performance.

§ Mr. Pickles
To ask the Secretary of State for Transport, Local Government and the Regions what the cost of capital is for each PPP contract on the London Underground. [37245]

§ Mr. Jamieson
I understand that London Underground intends to make information on the cost of capital on each contract publicly available following completion of the competitions. This information has already been made available to the Mayor and Transport for London by London Underground as part of the statutory consultation process.

§ Tom Brake
To ask the Secretary of State for Transport, Local Government and the Regions when he or his Department is due to make a recommendation on the arbiter for the PPP of London Undergound; what the date, or timing, related to their appointment is; what early expressions of interest have been received; what the bidding process required with respect to their appointment is; and what discussions there have been to date regarding their appointment. [38963]

§ Mr. Jamieson
Section 225 of the GLA Act 1999 provides powers for the Secretary of State to appoint a PPP Arbiter. It also requires the Secretary of State to make such an appointment if requested in writing by a party to a PPP Agreement.
170W
London Underground is currently consulting the Mayor and Transport for London. Following this consultation, the Board of London Transport is expected to take a final decision on whether to proceed with the PPP contracts. If the LT Board confirms its decision of 7 February that it is minded to sign contracts, and subject to the Secretary of State's statutory decisions in relation to the PPP agreements, it is the intention of the Secretary of State:

(a) to appoint a PPP Arbiter as soon as possible after completion of the PPP contracts, on a permanent basis;

(b) to ensure that the PPP Arbiter is supported by appropriate staff with technical, legal and financial expertise and understanding of the contracts;

(c) to consult London Underground, Metronet, Tubelines and Transport for London before making an appointment.
Given the requirements for making public sector appointments, this will necessarily take some time. However, the Secretary of State recognises the need to prepare the Arbiter's office and ensure continuity with the negotiation of the PPP contracts. The Secretary of State therefore intends to take steps to put in place interim staff before a permanent appointment can be made.