HC Deb 13 January 2003 vol 397 cc396-7W
Mr. George Osborne

To ask the Secretary of State for Transport (1) how much money has been spent by his Department on(a) consultants' fees and (b) lawyers' fees for the London Underground PPP; [88978]

(2) what has been the cost to his Department, and its predecessor Departments, of preparing the PPP for London Underground. [88977]

Mr. Jamieson

As my right hon. Friend the Secretary of State explained when giving evidence to the Transport Select Committee on 18 December 2002, the estimated cost to London Transport and to the Department of preparing for the PPP, including the costs being repaid to all bidders, is likely to total around £500 million.

The PPP amounts to an unprecedented modernisation of the entire underground network over the next 30-years. The level of bid development costs reflects this and also the lengthy duration of the bidding process, which commenced in October 1999. Nonetheless, the level of bid costs represents only an extremely small proportion of the value of investment that will be delivered over the life of the contracts.

It is normal practice for eligible bid costs to be recoverable under PFI contracts. In this instance, the amounts to be recovered have been verified through an independent review to ensure that the costs have been reasonably and properly occurred and were appropriate for a transaction of this nature.

The Department has sought to keep its costs to a minimum by making joint use of London Transport's advisers, expenditure on which is regularly reported to Parliament, mostly recently on 25 November 2002, Official Report, column 63W. As this made clear, London Transport's expenditure on external consultants, including legal advice, from 20 March 1998 (the date of the Government's announcement) to 30 September 2002, for work on the PPP and restructuring of London Underground, was £96.3 million. As a result of the delayed implementation of the PPP, London Transport currently estimate that the final amount should be between £103–£105 million, an increase of between £5–£7 million over its December 2001 forecast. Around £1.6 million of this increase arises from the Mayor's second unsuccessful legal challenge in July 2002. The court granted that these costs should be fully recovered from Transport for London.

The Department has separately spent around £1.5 million on independent external advice where this has been appropriate.